As business attorneys we have been presented with many commercial disputes where one company claims it is owed money from another, yet there is no written contract to support the claim. Generally, this does not mean there is no claim to pursue. Oral contracts can be enforceable in Texas.
When prospective clients present us with a claim for an alleged breach of an oral contract, we discuss the elements of a valid contract with our prospective client. We ask: (1) was an offer (the promise to do something) made; (2) was the offer accepted; and (3) was consideration (for example, services) exchanged for the promise?
Next we consider the parties and the acts and circumstances surrounding the communications. These are important factors as courts focus on them.
If we are confident that;
- There is a valid contract,
- the plaintiff-company has performed its obligation,
- the defendant breached its obligation and
- the plaintiffs sustained damages from the breach, we advise the company that it has a claim.
Case in point. In October of 2015 we represented an investment company in an oil and gas fraud case. Even though there was not one single piece of paper in that commercial transaction to support our client’s claim, the jury awarded our client several hundred thousands of dollars in damages.
Clearly, oral contracts can be enforceable. However, Texas law requires that certain promises/agreements must be in writing to be enforceable, for example matters dealing with real estate, certain sales commissions, and a promise to pay the debt of another.
Be safe. Get it in writing. There are many simple, enforceable ways to codify an agreement. Got questions? We are here to help.
Mark A. Alexander
5080 Spectrum Suite 850
Addison, Texas 75001