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The Nacol Law Firm PC
The Nacol Law Firm PC

Tax Year 2009 - Divorce and Dependent Exemption Tax Deduction Changes

January 16th, 2010

2009 tax year and forward, the Child Dependent Exemption Tax Deduction rules related to divorce have been amended by the Internal Revenue Service.

The changes to the 2009 tax code are as follows:

1. The custodial parent, for 2009 & forward, is the one with whom the child resides the greater number of nights during the year, regardless of the divorce decree terms.

2. You must obtain IRS Form 8332 (Release of Claim to Exemption for Child of Divorce or Divorced Parents) to claim the exemption if you are the non-custodial parent. The divorce agreement or court order will not be used to substitute for IRS Form 8332.

3. The custodial parent can unilaterally revoke the release of a child exemption for calendar years 2009 & forward, even if the release was made prior to 2009.

The parent claiming a dependency exemption on the child/children is the only parent eligible for the following tax benefits:

  • Dependent Exemption Deduction
  • Child Tax Credit
  • Child and Dependent Care Credit
  • Education Credit or Education Expense Deductions
  • Earned Income Credit
  • Head of Household Filing Status

With all the new changes, all non-custodial parents who plan to take a dependency exemption should obtain IRS Form 8332 for 2009 & forward tax years. A divorce agreement or court order cannot be substituted!

In any future settlement agreements that include a provision for a non- custodial parent to take a dependency deduction for one or more children in one or more future tax years, have the custodial parent complete IRS Form 8332 when executing the settlement agreement. Sometimes it is very difficult to get ex-spouses to sign off on papers at a later date!

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Texas Contract Interpretation

December 8th, 2009

The most basic principal of contract interpretation is that a contract is interpreted objectively and not subjectively. This idea originated at Harvard Law School, but still holds true in Texas today.

The formal view of contract interpretation ignores what the contracting parties thought the bargain to be and instead asks what a reasonable third party would interpret the words of the contract to mean. This approach is reflected in the following quotation from Federal District Judge Learned Hand:

A contract has, strictly speaking, nothing to do with the personal or individual intent of the parties. A contract is an obligation attached by the mere force of law to certain act of the parties, usually words, which ordinarily accompany and represent a known intent.

A contract requires a meeting of the minds. A determination of whether there was a meeting of the minds is based on objective standards of what the parties said and did, not on their alleged subjective states of mind. In re Hudgins, 188 BR. 938, 942 (E.D. Tex. Bankr. 1995), cited in Spectrum Creations L.P. v. Carolyn Kinder Int’l LLC, 2008 WL 416246, *45 (W.D. Tex. 2008).

An integrated agreement may be either fully integrated or only partially integrated. A fully integrated contracted is a final and complete expression of all terms agreed upon between or among the parties. A partially integrated contract is a final and complete expression of the terms regarding an agreement, but not a final and complete expression of all terms agreed upon between the parties. Some of the terms agreed upon are not contained in the written agreement.

Under the Parole Evidence Rule, if the parties have integrated their agreement into a single written contract, all prior negotiations and agreements with regard to the same subject matter are excluded from consideration, whether written or oral. Parole evidence is admissible to supplement or explain a partially integrated contract, but is not admissible to contradict it.

The primary duty of a court when considering the validity of a contract is to ascertain the intent of the parties from the contract as a whole, known as the “four corners rule,” not from isolated parts of the contract. This rule requires the court to look at the words of the contract, not prior drafts or exchanges of letters or other documents or testimony to determine the intent of the parties. To achieve this goal, the court must examine the entire document and consider each part with every other part so that the effect and meaning of one part on any other part may be determined. No one phrase, sentence or section of a contract should be isolated and considered apart from the other provisions.

Terms of a contract are given their plain, ordinary and general meaning unless the instrument shows that the parties used them in a technical or different sense. Words should be taken in their immediate context.

The expression of one thing is the exclusion of another. This is used to control, limit or restrain the otherwise implied effect of an instrument, and not to annex incidents to written contracts in matters with respect to which they are silent.

When words of a general nature are used in connection with the designation of particular objects or classes of persons or things, the meaning of the general words will be restricted to the particular designation. In some cases a list of consistent terms will include an overly-broad term that seems to reach beyond the scope of the other things listed. Ejusdem generis will limit an overly-broad term to be consistent with the list. However, the doctrine is not limited to lists. It can also apply to sentences in a paragraph.

When a contract is unambiguous, the court should apply the pertinent rules of construction, apply the plain meaning of the contract language, and enforce the contract as written.

It is a generally accepted rule of contracts that where several contracts are executed contemporaneously or at different times and pertain to the same transaction, they will be read together although they do not expressly refer to each other.

There are other general rules such as: Specific terms will prevail over general terms. Earlier terms will prevail over later terms, except in the instance of a Will. Handwritten terms will prevail over typed terms and typed terms will prevail over preprinted terms. Words prevail over number or symbols. Courts are required to follow elemental rules of grammar for a reasonable application of the legal rules of construction.

It is also a rule universally recognized that if an instrument admits of two constructions, one of which would make it valid and the other invalid, the former must prevail.

There is a presumption against illegality. When a contract by its terms, construed as a whole, is doubtful, or even susceptible of more than one reasonable construction, a court will adopt the construction which comports with legality. It is presumed that in constructing contracts the parties intend to observe and obey the law.

Finally, when agreements between parties are reduced to writing, the written instrument is presumed to embody their entire agreement, and the court should not read into the instrument additional provisions unless this is necessary to effectuate the intention of the parties as disclosed by the contract as a whole. Danciger Oil & Ref. Co. v. Powell, 154 S.W.2d 632, 635 (Tex. 1941).

Do you need a business contract reviewed by a Dallas attorney? Contact Dallas business contract attorney Mark Nacol today!

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Mental Illness and the Child Custody Case

November 25th, 2009

According to the National Institute of Mental Health, an estimated 26.2 percent of Americans age 18 and older – about one in four adults – suffer from a diagnosable mental disorder in a given year. This figure translates to 57.7 million people. Many people suffer from more than one mental disorder at a given time. Nearly half (45 percent) of those with mental disorder meet criteria for two or more disorders, with severity strongly related to co-morbidity. Mental illnesses are biologically based brain disorders. A diagnosed mental illness in a custody case may not only affect the eventual outcome of the case, but may also determine how counsel prepares his or her particular case strategy.

There are degrees of severity and levels of functioning with all mental disorders, and in the context of a contested custody case an extreme position can be easier for an attorney to handle. The fact finder is evaluating each parent’s ability to meet the child’s needs and the parties’ particular parenting abilities. A psychiatric diagnosis is not in and of itself a measuring tool. The specific acts of each parent must be examined in detail.

One important factor to consider is a request for psychological testing or the appointment of a counselor or psychiatrist to evaluate the parties. If the party with the mental illness has not admitted they have an illness, the results of court-ordered evaluations may force the issue and may also provide additional evidence to support a modification of temporary orders.

Counsel may want to recommend to the court that the child attend therapy. You may suggest the use of the therapist, psychiatrist, or psychologist of the person with the mental disorder for recommendations to the court of the parent’s visitation with the child.

Counsel may also want to consider a temporary injunction in addition to the standard temporary injunction for the preservation of property and protection of the parties and the children. Some issues to consider are preventing the use of alcohol within 24 hours of possession of the children; preventing the mentally ill party from operating a motor vehicle while taking medications, and preventing the parties from making disparaging remarks regarding the other party.

It is important that counsel identify and define the particular drugs the mentally ill patient is taking. Counsel should request a HIPPA Release (specifically related to mental health disclosures) allowing access to medical and prescription drug records of the mentally ill party. Research should then be performed as to the effects of each drug on the mentally ill person.

It may be necessary to have an Amicus Attorney appointed to represent the interests of the children. The Amicus Attorney has a powerful role in the contested custody case and can assist in gaining information on the mentally ill party. All parties should cooperate fully with the Amicus Attorney for the best interest of the children. It is important to make yourself available to the Amicus Attorney and to be pro-active in setting up appointments. It is important that counsel instruct you as to what to say and what not to say to the Amicus Attorney. It is also critical that counsel respond to any discovery propounded by an Amicus Attorney timely.

Be sure to educate yourself about the particular mental disorder you are dealing with. Make sure your experts have experience in handling the particular mental disorder in questions. Counsel should use the testimony of experts to offer aid and/or educate the judge and/or jury so they have a clear understanding of the mental illness and its foreseeable consequences to the spouse and/or family members.

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Contracts in Texas

November 4th, 2009

A contract is defined as a promise or set of promises with legal consequences.  Normally, contractual promises are enforceable in a court of law.  The law gives official recognition of the written contractual promises and offers remedies when the promises are not fulfilled.

 

The Supreme Court of Texas has noted that every contract includes an element of confidence and trust that the parties will faithfully perform their obligations.  There is no duty of good faith and fair dealing unless the duty is created by express language in the contract or a special relationship of trust and confidence exists between the parties to the contract.

 

In Texas, the requirements for a valid written contract are: 

1) an offer;
2) an acceptance in strict compliance with the terms of the offer;
3) a meeting of the minds (which is actually a subpart of the accepted elements, not an independent element;
4) each party’s consent to the terms;
5) consideration; and
6) execution and delivery of the contract with the intent that it be mutual and binding.

 

A basic element of the contract is the promise, which may be an express or implied promise made by one party for the purpose of assuring another person that a particular action or restraint from a particular action will occur.  This is objectively determinable from the parties’ words or actions and not from either party’s subjective intentions. 

 

Contracts may be unilateral or bilateral.  A unilateral contract has only one promisor; the promisee makes no commitment.  Mutuality of obligation is not essential for a unilateral contract to be formed.  A unilateral contract is completed by the promisee’s performance of the act or acts called for by the promisor, not by the promisee’s making of any reciprocal promises.  The promisor becomes bound to provide the promised benefit when the promisee delivers the bargained-for performance.  There is no binding unilateral contract unless the promisee performs, or at least partly performs the acts requested by the promisor.  Until such time, the promisor may revoke its offer.  An option agreement is a common unilateral contract.  An option agreement is a promise, or offer, by the optionor that the optionee may accept or reject.  Until the option is exercised in accordance with the offer, the contract remains unilateral.  The contract becomes binding when the option is properly exercised.

 

A bilateral contract is one in which there are mutual and/or bilateral promises made between the parties.  If the parties have entered into a bilateral contract in which their promises are the only consideration for the agreement, their obligations must be mutual and binding for the contract to be valid.  A common example of a bilateral contract is one in which one party promises to deliver goods to the other, and the other party promises to pay the specified purchase price.

 

There must be an offer, an acceptance and consideration for a contract to be recognized and enforceable. To prove a valid offer a party must show
1) the offeror intended to make an offer,
2) the terms of the offer were clear and definite, and
3) the offeror communicated the essential terms of the offer to the offeree. 

 

The offer may dictate the manner, time and place of acceptance of the offer.  Under such circumstances, an offer not accepted in a timely or proper manner lapses.  When an offeree rejects an offer, the offer is terminated.

 

An acceptance must be identical to the offer or there is no binding contract.  Generally, an acceptance must not change or qualify the terms of the offer or the offer is rejected.  When an offer prescribes the manner of acceptance, its terms must be followed in such manner of acceptance in order to create a contract.  If an offeree fails to accept in the prescribed manner and attempts to accept in some other manner, a contract is formed only if the offeror waives strict compliance with provisions concerning the manner of acceptance. 

 

An oral offer may be accepted by execution of a written instrument that embodies the terms of the agreement.

Further, a written offer may, in some circumstances, be accepted orally.  Acceptance may also be shown by conduct. 

 

An acceptance is valid only if made before an offer is revoked or lapsed.  An acceptance takes effect and creates a contract when it is communicated to the offeror.  Acceptance is not effective when some abstract conduct other than communication to the offeror occurs.  The accepting party may change his or her mind until the act of acceptance is actually communicated to the offeror. 

 

Although an acceptance is effective only when communicated to the offeror, when an offer may be validly accepted by mail, the “mailbox” rule provides that the communication has been made and the contract is binding when the offeree deposits a properly addressed letter of acceptance in the mail, regardless of whether it is actually received by the offerror. 

 

Mutual assent is often described as a “meeting of the minds.”  Evidence of mutual assent in written contracts generally consists of the parties’ signing the contract and delivery of the contract with the intent to bind.  To determine whether a meeting of the minds existed, a court reviews what the parties actually said and did.  The parties’ failure to agree on a material term precludes a meeting of the minds necessary for a valid contract. 

 

In some cases, what appears to be a valid offer and acceptance results in only a voidable contract because one party’s consent was, in fact, procured by fraud, undue influence, duress, or mistake. 

 

Under Texas law, a party must protect personal interests by reading a contract before signing it.  Absent fraud, the person is not excused from the consequences of failing to meet this obligation.  If a person signs a contract without knowledge of its contents, they are presumed to have consented to the terms of the contract.  Claims of belief that provisions differed from those plainly set out in the written contract are not generally admissible.

 

Do you need a business contract or an employment contract reviewed by an attorney? Contact Dallas business contract attorney Mark Nacol today!

 

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The Whistleblower - Part IV - Qui Tam Claims

November 4th, 2009

As reported in a front page story of today’s Washington Times in September of 2009, internationally respected whistleblower, Bunnatine Greenhouse, has issued an appeal to the U.S. Senate to pass strong protections for all federal employees. Mrs. Greenhouse was the only major Bush Administration executive to challenge the Halliburton “no bid” Iraq reconstruction contracts.  Ms. Greenhouse wrote a letter to Congress.  “We urge every American to read Bunny’s letter and to TAKE ACTION!,” said Stephen M. Kohn, NWC Executive Director.  “This is not a Democrat or Republican issue.  This is not a partisan issue. This is an issue that goes to the heart of accountability and oversight.

It is estimated that almost 10% of the U.S. annual budget is paid to persons and/or companies defrauding the government.  Some overcharge the government for products sold directly to the government, while others engage in government contract fraud, defense contractor fraud, Medicare fraud, Medicaid fraud, or other public benefit fraud. Any situation in which the government has been defrauded should be closely examined.  To minimize fraud committed against the government, Congress passed the False Claims Act. 

According to an annual report issued by the Department of Justice, approximately $1.2 billion was recovered in whistle blower claims and lawsuits filed by private citizens through their lawyers in the fiscal year October 1, 2000 to September 20, 2001, with more than $210 million of those funds being awarded to whistleblowers themselves.  The amount is continuing to grow.  It is estimated that $3.1 billions was collected from businesses defrauding the government in the year 2005.

The False Claims Act was Amended and strengthened in 1986.  The amendments broaden the definition of fraud to include submitting claims with deliberate ignorance or reckless disregard for the truth of statements made in the claim for U.S. Government spending or funds upon which the fraud claim is based.  The burden of proof that must be met by the qui tam attorney is a preponderance of the evidence, that is that the evidence presented is more likely true than not.  The 1986 amendments included provisions to protect the federal whistleblower from retaliatory action by their employer.


A person who has knowledge of fraud against the government may retain a lawyer and file a court case under seal against the company or person committing the fraud.  Following the filing of a lawsuit, the United States attorney has sixty days to investigate the allegations.  The U.S. Government intervenes in approximately 25% to 33% of all whistleblower cases.  If the U.S. attorney finds that fraud was committed, then the U.S. Government takes control of the case and either enters into a settlement or pursues the lawsuit itself. 

If the government fails to intervene, the private citizen may pursue the action independently.  If the lawyers are successful in proving fraud against the government, substantial penalties can be assessed, which can be up to 3 times the amount the defrauder stole from the government (the tax payers).  Out of damages imposed the whistleblower may receive between 10% and 30% of the recovery, in some cases recovery could be millions of dollars. 

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ADOPTION IN TEXAS - Who May Adopt and Be Adopted.

November 3rd, 2009

(a)  Subject to the requirements for standing to sue under Chapter 102 of the Texas Family Code, an adult may petition to adopt a child who may be adopted.
(b)  A child residing in Texas may be adopted if:

(1)  the parent-child relationship as to each living parent of the child has been terminated or a suit for termination is joined with the suit for adoption;
(2)  the parent whose rights have not been terminated is presently the spouse of the petitioner and the proceeding is for a stepparent adoption;
(3)  the child is at least two years old, the parent-child relationship has been terminated with respect to one parent, the person seeking the adoption has been a managing conservator or has had actual care, possession, and control of the child for a period of six months preceding the adoption or is the child’s former stepparent, and the nonterminated parent consents to the adoption; or
(4)  the child is at least two years old, the parent-child relationship has been terminated with respect to one parent, and the person seeking the adoption is the child’s former stepparent and has been a managing conservator or has had actual care, possession, and control of the child for a period of one year preceding the adoption.

(c)  If an affidavit of relinquishment of parental rights contains a consent for the Department of Protective and Regulatory Services or a licensed child-placing agency to place the child for adoption and appoints the department or agency managing conservator of the child, further consent by the parent is not required and the adoption order shall terminate all rights of the parent without further termination proceedings.

Prerequisite to Filing Petition for Adoption
Texas Family Code Sec. 162.002 states:
(a)  If a petitioner is married, both spouses must join in the petition for adoption.

(b)  A petition in a suit for adoption or a suit for appointment of a nonparent managing conservator with authority to consent to adoption of a child must include:

(1)  a verified allegation that there has been compliance with Subchapter B ; or
(2)  if there has not been compliance with Subchapter B, a verified statement of the particular reasons for noncompliance.

Pre-adoptive and Post-placement Social Studies
In a suit for adoption, pre-adoptive and post-placement social studies  must be conducted as provided in Chapter 107 of the Texas Family Code.

Preferential Setting
The court shall grant a motion for a preferential setting for a final hearing on an adoption and shall give precedence to that hearing over all other civil cases not given preference by other law if the social study has been filed and the criminal history for the person seeking to adopt the child has been obtained.
Preparation of Health, Social, Educational, and Genetic History Report 

(a)  This section does not apply to an adoption by the child’s:

(1)  grandparent;
(2)  aunt or uncle by birth, marriage, or prior adoption; or
(3)  stepparent.

(b)  Before placing a child for adoption, the Department of Protective and Regulatory Services, a licensed child-placing agency, or the child’s parent or guardian shall compile a report on the available health, social, educational, and genetic history of the child to be adopted.

(c)  The report shall include a history of physical, sexual, or emotional abuse suffered by the child, if any.

(d)  If the child has been placed for adoption by a person or entity other than the department, a licensed child-placing agency, or the child’s parent or guardian, it is the duty of the person or entity who places the child for adoption to prepare the report.

(e)  The person or entity who places the child for adoption shall provide the prospective adoptive parents a copy of the report as early as practicable before the first meeting of the adoptive parents with the child. The copy of the report shall be edited to protect the identity of birth parents and their families.

(f)  The department, licensed child-placing agency, parent, guardian, person, or entity who prepares and files the original report is required to furnish supplemental medical, psychological, and psychiatric information to the adoptive parents if that information becomes available and to file the supplemental information where the original report is filed. The supplemental information shall be retained for as long as the original report is required to be retained.

Contents of Health, Social, Educational, and Genetic History Report
(a)  The health history of the child must include information about:

(1)  the child’s health status at the time of placement;
(2)  the child’s birth, neonatal, and other medical, psychological, psychiatric, and dental history information;
(3)  a record of immunizations for the child; and
(4)  the available results of medical, psychological, psychiatric, and dental examinations of the child.

(b)  The social history of the child must include information, to the extent known, about past and existing relationships between the child and the child’s siblings, parents by birth, extended family, and other persons who have had physical possession of or legal access to the child.

(c)  The educational history of the child must include, to the extent known, information about:

(1)  the enrollment and performance of the child in educational institutions;
(2)  results of educational testing and standardized tests for the child; and
(3)  special educational needs, if any, of the child.

(d)  The genetic history of the child must include a description of the child’s parents by birth and their parents, any other child born to either of the child’s parents, and extended family members and must include, to the extent the information is available, information about:

(1)  their health and medical history, including any genetic diseases and disorders;
(2)  their health status at the time of placement;
(3)  the cause of and their age at death;
(4)  their height, weight, and eye and hair color;
(5)  their nationality and ethnic background;
(6)  their general levels of educational and professional achievements, if any;
(7)  their religious backgrounds, if any;
(8)  any psychological, psychiatric, or social evaluations, including the date of the evaluation, any diagnosis, and a summary of any findings;
(9)  any criminal conviction records relating to a misdemeanor or felony classified as an offense against the person or family or public indecency or a felony violation of a statute intended to control the possession or distribution of a substance included in Chapter 481, Health and Safety Code; and
(10) any information necessary to determine whether the child is entitled to or otherwise eligible for state or federal financial, medical, or other assistance.

Filing of Health, Social, Educational, and Genetic History Report
(a)  This section does not apply to an adoption by the child’s:

(1)  grandparent;
(2)  aunt or uncle by birth, marriage, or prior adoption; or
(3)  stepparent.

(b)  A petition for adoption may not be granted until the following documents have been filed:

          (1)  a copy of the health, social, educational, and genetic history report signed by the child’s adoptive
           parents; and
          (2)  if the report is required to be submitted to the bureau of vital statistics under Section 162.006(e), a
           certificate from the bureau acknowledging receipt of the report.

(c)  A court having jurisdiction of a suit affecting the parent-child relationship may by order waive the making and filing of a report under this section if the child’s biological parents cannot be located and their absence results in insufficient information being available to compile the report.

Criminal History Report Required
(a)  In a suit affecting the parent-child relationship in which an adoption is sought, the court shall order each person seeking to adopt the child to obtain that person’s own criminal history record information. The court shall accept under this section a person’s criminal history record information that is provided by the Department of Protective and Regulatory Services or by a licensed child-placing agency that received the information from the department if the information was obtained not more than one year before the date the court ordered the history to be obtained.

(b)  A person required to obtain information under Subsection (a) shall obtain the information in the manner provided by Section 411.128, Government Code.

Residence with Petitioner.
(a)  The court may not grant an adoption until the child has resided with the petitioner for not less than six months.
(b)  On request of the petitioner, the court may waive the residence requirement if the waiver is in the best interest of the child.
Consent Required
(a)  Unless the managing conservator is the petitioner, the written consent of a managing conservator to the adoption must be filed. The court may waive the requirement of consent by the managing conservator if the court finds that the consent is being refused or has been revoked without good cause. A hearing on the issue of consent shall be conducted by the court without a jury.
(b)  If a parent of the child is presently the spouse of the petitioner, that parent must join in the petition for adoption and further consent of that parent is not required.
(c)  A child 12 years of age or older must consent to the adoption in writing or in court. The court may waive this requirement if it would serve the child’s best interest.
Revocation of Consent
At any time before an order granting the adoption of the child is rendered, a consent required by Section 162.010 may be revoked by filing a signed revocation.
Attendance at Hearing Required
(a)  If the joint petitioners are husband and wife and it would be unduly difficult for one of the petitioners to appear at the hearing, the court may waive the attendance of that petitioner if the other spouse is present.
(b)  A child to be adopted who is 12 years of age or older shall attend the hearing. The court may waive this requirement in the best interest of the child.
Sec. 162.015.  RACE OR ETHNICITY. 
(a)  In determining the best interest of the child, the court may not deny or delay the adoption or otherwise discriminate on the basis of race or ethnicity of the child or the prospective adoptive parents.
(b)  This section does not apply to a person, entity, tribe, organization, or child custody proceeding subject to the Indian Child Welfare Act of 1978
Adoption Order
(a)  If a petition requesting termination has been joined with a petition requesting adoption, the court shall also terminate the parent-child relationship at the same time the adoption order is rendered. The court must make separate findings that the termination is in the best interest of the child and that the adoption is in the best interest of the child.
(b)  If the court finds that the requirements for adoption have been met and the adoption is in the best interest of the child, the court shall grant the adoption.
(c)  The name of the child may be changed in the order if requested.
Effect of Adoption
(a)  An order of adoption creates the parent-child relationship between the adoptive parent and the child for all purposes.
(b)  An adopted child is entitled to inherit from and through the child’s adoptive parents as though the child were the biological child of the parents.
(c)  The terms “child,” “descendant,” “issue,” and other terms indicating the relationship of parent and child include an adopted child unless the context or express language clearly indicates otherwise.
(d)  Nothing in this chapter precludes or affects the rights of a biological or adoptive maternal or paternal grandparent to reasonable possession of or access to a grandchild, as provided in Chapter 153.

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Texas Spousal Support - Post Divorce Maintenance

November 2nd, 2009

Under Section 8.051 of the Texas Family Code, a court shall order maintenance for either spouse only if:

1. the spouse for whom maintenance is requested was convicted of or received deferred adjudication for a criminal offense that also constitutes an act of family violence under Title 4 and the offense occurred:
a. within two years before the date on which a suit for dissolution of marriage is filed; or
b. while the suit is pending; or
2. the duration of the marriage was 10 years or longer, the spouse seeking maintenance lacks sufficient property, including property distributed to the spouse under this code, to provide for the spouse’s minimum reasonable needs, as limited by Section 8.054, and the spouse seeking maintenance:
a. is unable to support himself or herself through appropriate employment because of an incapacitating physical or mental disability;
b. is the custodian of a child of the marriage of any age who requires substantial care and personal supervision because a physical or mental disability makes it necessary, taking into consideration the needs of the child, that the spouse not be employed outside the home; or
c. clearly lacks earning ability in the labor market adequate to provide support for the spouse’s minimum reasonable needs, as limited by Section 8.054.

Section 8.052 of the Texas Family Code states that a court shall determine the nature, amount, duration, and manner of periodic spousal maintenance payments by considering all relevant factors, including the following:

1. the financial resources of the spouse seeking maintenance, including the community and separate property and liabilities apportioned to that spouse in the dissolution proceeding, and that spouse’s ability to meet the spouse’s needs independently;
2. the educational and employment skills of the spouses, the time necessary to acquire sufficient education or training to enable the spouse seeking maintenance to find appropriate employment, the availability of that education or training, and the feasibility of that education or training;
3. the duration of the marriage;
4. the age, employment history, earning ability, and physical and emotional condition of the spouse seeking maintenance;
5. the ability of the spouse from whom maintenance is requested to meet that spouse’s personal needs and to provide periodic child support payments, if applicable, while meeting the personal needs of the spouse seeking maintenance;
6. acts by either spouse resulting in excessive or abnormal expenditures or destruction, concealment, or fraudulent disposition of community property, joint tenancy, or other property held in common;
7. the comparative financial resources of the spouse, including medical, retirement, insurance, or other benefits, and the separate property of each spouse;
8. the contribution by one spouse to the education, training, or increased earning power of the other spouse;
9. the property brought to the marriage by either spouse;
10. the contribution of a spouse as homemaker;
11. marital misconduct of the spouse seeking maintenance; and
12. the efforts of the spouse seeking maintenance to pursue available employment counseling as provided by Chapter 304, Labor Code.

Section 8.053 states that except as provided by Subsection (b), it is presumed that maintenance under Section 8.051(2) is not warranted unless the spouse seeking maintenance has exercised diligence in:

1. seeking suitable employment; or
2. developing the necessary skills to become self-supporting during a period of separation and during the time the suit for dissolution of the marriage is pending.

This section does not apply to a spouse who is not able to satisfy the presumption in Subsection (a) because the spouse:

1. has an incapacitating physical or mental disability;
2. is the custodian of a child of the marriage of any age who requires substantial care and personal supervision because a physical or mental disability makes it necessary, taking into consideration the needs of the child, that the spouse not be employed outside the home.

Except as provided in subsection (b), a court:

1. may not order maintenance that remains in effect for more than three years after the date of the order; and
2. shall limit the duration of a maintenance order to the shortest reasonable period that allows the spouse seeking maintenance to meet the spouse’s minimum reasonable needs by obtaining appropriate employment or developing an appropriate skill, unless the ability of the spouse to provide for the spouse’s minimum reasonable needs through employment is substantially or totally diminished because of:
a. physical or mental disability;
b. duties as the custodian of an infant or young child; or
c. another compelling impediment to gainful employment.

If a spouse seeking maintenance is unable to support himself or herself through appropriate employment because the spouse has an incapacitating physical or mental disability or because the spouse is the Custodian of a child of the marriage of any age who has a physical or mental disability, the court may order maintenance for as long as the disability continues. 

A court may not order maintenance that requires an obligor to pay monthly more than the lesser of:

1. $2,500; or
2. 20 percent of the spouse’s average monthly gross income.

The court shall set the amount that an obligor is required to pay in a maintenance order to provide for the minimum reasonable needs of the oblige, considering employment or property received in the dissolution of the marriage or otherwise owned by the oblige that contributes to the minimum reasonable needs of the oblige. 

Department of Veterans Affairs service-connected disability compensation, social security benefits and disability benefits, and workers’ compensation benefits are excluded from maintenance.

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Texas Child Support Guidelines

October 28th, 2009

Under the Texas Family Code §154.125 the guidelines for child support are as follows:

 

(a) The guidelines for the support of a child in this section are specifically designed to apply to situations in which the obligor’s monthly net resources are not greater than $7,500 or the adjusted amount determined under Subsection (a-1), whichever is greater.

 

(a-1)  The dollar amount prescribed by Subsection (a) above is adjusted every six years as necessary to reflect inflation.  The Title IV-D agency shall compute the adjusted amount, to take effect beginning September 1 of the year of the adjustment, based on the percentage change in the consumer price index during the 72-month period preceding March 1 of the year of the adjustment, as rounded to the nearest $50 increment.  The Title IV-D agency shall publish the adjusted amount in the Texas Register before September 1 of the year in which the adjustment takes effect.  For purposes of this subsection, “consumer price index” has the meaning assigned by Section 341.201, Finance Code.

 

(a-2)  The initial adjustment required by Subsection (a-1) shall take effect September 1, 2013.  This subsection expires September 1, 2014.

 

(b)        if the obligor’s monthly net resources are not greater than the amount provided by Subsection (a), the court shall presumptively apply the following schedule in rendering the child support order: 

 

CHILD SUPPORT GUIDELINES

BASED ON THE MONTHLY NET RESOURCES OF THE OBLIGOR

 

1 child              20% of Obligor’s Net Resources

2 children          25% of Obligor’s Net Resources

3 children          30% of Obligor’s Net Resources

4 children          35% of Obligor’s Net Resources

5 children          40% of Obligor’s Net Resources

         6+ children        Not less than the amount for 5 children

 

Depending on the number of other children an obligor has a duty to support, the percentage of child support may be lower.  For example, if the obligor was previously married and has 1 child to support in the previous marriage, the amount of support paid for one child before the court decreases to 17.50 percent.  See the chart below.

 

Multiple Family Adjusted Guidelines

(% of Net Resources)

Net Monthly Resources X Percentage Below = Monthly Child Support Obligation

 

 

Number of other children for whom the obligor has a duty of support

Number of Children Before the Court

 

1

2

3

4

5

6

7

0

20.00

25.00

30.00

35.00

40.00

40.00

40.00

1

17.50

22.50

27.38

32.20

37.33

37.71

38.00

2

16.00

20.63

25.20

30.33

35.43

36.00

36.44

3

14.75

19.00

24.00

29.00

34.00

34.67

35.20

4

13.60

18.33

23.14

28.00

32.89

33.60

34.18

5

13.33

17.86

22.50

27.22

32.00

32.73

33.33

6

13.14

17.50

22.00

26.60

31.27

32.00

32.62

7

13.00

17.22

21.60

26.09

30.67

31.38

32.00

 

Net resources are determined by deducting the following from the obligor’s income:

 

1.             Social Security Taxes;

2.             Federal Income Tax based on the tax rate for a single person claiming one personal exemption and the standard deductions;

3.             State Income Tax;

4.             Union Dues (if such deductions are being withheld); and

5.             Expenses for Health Insurance Coverage for Obligor’s Child(ren) (if such deductions are being withheld).

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Sealing the Deal - Contracts (A Smart Investment) - Part II

October 25th, 2009

There are two primary types of contracts:  express contract and implied contract.  The express contract is formal, and stated either verbally or in writing.  The implied contract is one that is not written down, but considered to be understood between the parties.  It is a matter of inference and deduction. 

 

Though most oral contracts are not legally binding, they are undertaken on ethical principles.  In the United States every contract for that sale of goods that involves an amount that exceeds $500.00 must be written to be legally enforceable.  The courts generally recognize any defined meeting of the minds of competent persons with a like purpose and intent to undertake some common task as a contract.  The Statute of Frauds mandates for some contracts to be enforceable they must be in writing.

 

There are three ways a term may be implied into a contract:

 

1.             By custom – A contract may incorporate as an implied term any relevant custom.  The custom must be well known within a particular trade and business and be generally accepted within such trade or business.

2.             By statute – The most common terms implied by statute are those relating to the sale and supply of goods and services.  The Sale of Goods Act of 1979 provides for implied terms in respect of:  1) that the seller has the right to sell the goods 2) that goods sold are of satisfactory quality; 4) that goods sold are reasonably fit for the purpose they were bought; and 5) that goods sold by sample correspond with the sample.  The Supply of Goods and Services Act of 1982 states with regard to implied terms in a contract that the service will be carried out with reasonable care and skill, within a reasonable time and for a reasonable price.

3.             By the Court – Courts do not like to interfere in the construction of contracts. They will only imply terms into a contract under certain circumstances and with certain pre-conditions.  Terms can be implied in fact or in law.   

  1. A contract implied in fact is one in which the circumstances imply the parties have reached an agreement even though they have not done so expressly. 
  2. A contract implied in law (the quasi-contract) is not an actual contract, but a means for the courts to remedy situations in which one party would be unjustly enriched were he or she not required to compensate the other.  If one party has agreed to a term, but the other party has not, it will not be implied into a contract.  Further, terms will not be implied into a rigorous contract with detailed written terms where any omission would be deemed to be deliberate.

 

Express terms of a contract outline the primary obligations of the parties.  Distinction has been made among the various types of express terms.  This distinction is important as it sets apart the remedies available to the innocent party in the event of a breach.  Such terms fall into three categories:

 

1.             Conditions – the major terms of the contract.

2.             Warranties – the minor terms of the contract.

3.             Miscellaneous terms – neither conditions or warranties.

 

An implied term cannot contradict an express term.  However, it may widen or narrow an express term when necessary if the express term is flexible.

The basic rule is that parties to contracts must perform as specified in the contract unless (1) the parties agree to the change in the contract’s terms, or (2) the actions of the party who deviates from the terms of the contract are implicitly accepted (”ratified”) by the action or non-action of the other party.

If there is no acceptance of deviation from the terms of the contract, and the deviation is serious enough to make any real difference in the intended result of the contract, then the deviating party is said to have breached the contract.  His justified prevention or interference with the performance of the other party is also a breach.

Of course if one party fails more or less entirely to perform the contract, or totally prevents the performance of the contract by the other party, the situation is straightforward.  The situation becomes more complex where the argument is over specific terms such as the quality of materials or the timing of work.

Breach of contract leaves the non-performing or improperly performing party open to a claim for damages by the other party.  If the breach is a material breach, the non-breaching party is relieved of his obligations under the contract by the other party’s breach.

There are many possible ways for performance of a contract to give rise to dissatisfaction.  The courts have been forced to analyze the matter in much more subtle terms than “breached” or “not breached.”

The doctrine of “substantial performance” saves a party who has largely fulfilled his obligations under a contract from suffering major loss merely because he has unintentionally fallen short in some particular manner which does not affect the essence of the contract.

A breach is not defined as promises laid out explicitly in a contract, rather a breach of contract is defined as any violation of law, principal or obligation.  It is this definition of breach that leaves room for parties to file suits involving breaches of implied contracts.

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THE ORAL CONTRACT

October 20th, 2009

A ”contract” is a promise or set of promises with legal consequences.  The Texas Supreme Court has noted that every contract includes an element of confidence and trust that the parties will faithfully perform their obligations under the contract.

 

You may hear that an oral agreement is just as valid as a written agreement.  However, in a court of law, a written contract ordinarily trumps an oral contract.  This means that in disputes, should there be a disagreement on a provision of the contract, the Court will use the written provisions of the contract to interpret the meaning before it will consider the oral arguments.  Further, typewritten provisions control over printed provisions.  Under Texas law, the requirements for a valid contract are: (1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds ”meeting of the minds” is actually subpart of offer and accepted elements, not an independent element; (4) each party’s consent to the terms; (5) consideration; and (6) execution and delivery of the contract with the intent that it be mutual and binding. The elements of written and oral contracts are the same, and they all must be present in order for the contract to be binding.

 

In determining whether an oral contract exists, the court looks to the communications between the parties and to the acts and circumstances surrounding those communications. The terms of an oral contract may be established by direct or circumstantial evidence Although delivery is generally essential to the validity of a contract, when the parties manifest an intent through their actions and words that the contract is effective, delivery is shown.

 

It is important when making an oral contract that a party keep any and all documentation regarding the agreement.  Should a party end up in litigation, notes regarding the agreements between the parties, the times such agreements were made, the witnesses to such agreements and any emails or written correspondence between the parties can be important to proving that a valid contract existed. Even hand written sticky notes become important when trying to prove the existence of an oral contract.  Place all information pertaining to your agreement in one place. 

 

A basic element of any contract is a promise. A ”contractual promise” is an express or implied declaration made by one person, the promisor, for the purpose of assuring another person, the promisee, that a particular action or restraint from action will occur. A contractual promise is what is objectively determinable from the parties’ words or actions. It is different from either party’s subjective intentions. ”Intentions” are the purposes formed in one person’s mind, which may begin and end with that person. Similarly, a party’s subjective ”expectations” that the other party will act or refrain from acting are also irrelevant to objectively determinable, contractual promises.

 

To prove a valid offer, a party must show (1) the offeror intended to make an offer, (2) the terms of the offer were clear and definite, and (3) the offeror communicated the essential terms of the offer to the offeree.  An ”offer” is a clear and definite proposal to enter into a contract immediately once the offer is accepted. A proposal qualifies as an offer when it is sufficiently definite so that, if accepted, it clearly and definitely establishes the promises and performances to be rendered by each party certainty of terms as element of valid contract analyzed. Thus, an offer that may ripen into a contract differs from a mere expression of desire or hope that the parties may, at some time in the future, come to an agreement. An offer that may ripen into a contract also differs from mere preliminary negotiations.

 

To determine whether there was a meeting of the minds, a court reviews in an objective fashion, without considering subjective intent, what the parties actually said and did. One party’s uncommunicated reservations concerning the contract are insufficient to prevent a meeting of the minds. The parties’ failure to agree on a material term precludes a meeting of the minds necessary to form a valid contract.  If evidence of the parties’ mutual agreement consists of their conduct and course of dealing, their mutual agreement may be inferred from the circumstances, in which case their contract is an ”implied contract’.’

 

In some cases, what objectively appears to have been a valid offer and acceptance results in only a voidable contract because one party’s consent was, in fact, procured by fraud, undue influence, duress, or mistake.

 

Some contracts cannot be made orally.  Contracts that must be in writing and must be signed are the following:

 

  • A promise by an executor or administrator to answer out of the executor or administrator’s own estate for any debt or damage due from the testator or intestate.
  • A promise by one person to answer for the debt, default, or miscarriage of another.  For example, an alleged oral agreement between current and former partners in a joint venture, that the current partner would take over the former partner’s obligation on the venture’s debt in exchange for the former partner’s assignment of his interest in the venture, was subject to the statute of frauds as an agreement to assume the debt of another.
  • An agreement made on consideration of marriage or on consideration of nonmarital conjugal cohabitation.
  • A contract for sale of real estate.  An agreement to pay a certain sum of money out of the proceeds of a future sale of real estate in return for personal services rendered does not fall within this provision of the statute of frauds.  However, the Texas Supreme Court has indicated that the conveyance of an overriding royalty interest in future production from unleased land may be subject to the statute of frauds.
  • A lease of real estate for a term longer than one year.
  • An agreement that is not to be performed within one year from the date of making the agreement.  If the agreement may be conceivably be performed in one year, the statute of frauds does not apply, no matter how improbable performance within one year may be.  For the purpose of the one-year rule, there is a technical distinction between the termination of a contract and the performance of a contract.
  • A promise or agreement to pay a commission for the sale or purchase of an oil or gas lease or royalty, minerals, or mineral interest.
  • An agreement, promise, contract, or warranty of cure relating to medical care or results made by a physician or health care provider other than a pharmacist.
  • Loan agreements in excess of $50,000 made by financial institutions are also required to be in writing in order to be enforceable.  [Dorsoneo Litigation Guide].

 

A written contract that is not required by law to be in writing may be modified by the parties’ subsequent oral agreement, even if the written contract provides that it can be modified only by a written agreement.  Courts have allowed oral modification, reasoning that a written agreement is of no higher legal degree than an oral agreement, and either may vary or discharge the other.

 

Not every oral modification to a contract is barred.  The critical inquiry is whether the modification materially affects the obligation of the contract.  An oral modification is enforceable if the character or value of the contract is unaltered.

 

The fundamental problem with the oral contract is that it can be difficult to prove.  If a party chooses not to honor the bargain they will most likely claim that no agreement was ever reached. Thus, the case may be decided on the evidence available. 

Do you have an oral contracts with business vendors or employees that you would like to discuss with a Dallas contract attorney? Call Dallas contract attorney Mark Nacol to dicusss any questions you may have on oral contracts in the  Dallas,  Texas area.

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