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The Nacol Law Firm PC
The Nacol Law Firm PC

Posts Tagged ‘business contract attorney’

Contracts in Texas

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

Sunday, 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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