Friday, July 29, 2011


by Carrie E. Campbell, J.D.

The best insurance against a costly dispute is a well drafted contract. With the terms and provisions spelled out clearly in advance by the parties, the possibility of a misunderstanding (and litigation) is minimized.

There are primarily two types of contracts recognized under Texas law: (1) express contracts wherein the terms are agreed to either in writing or by handshake, or (2) implied contracts which can be inferred from the conduct of the parties. Whenever possible, contracts should be in writing to avoid unnecessary conflict. Furthermore, the more specific the contract, the better. To get the full benefit of a contract, agreements should identify the parties, clearly state the purpose of the contract, list the obligations of each of the parties, detail the deadlines and important logistics, and bear the signatures of the parties. It is also helpful to add language about what happens if one of the parties (or both) fail to meet his or her obligations.

Some contracts MUST be in writing in order to comply with Texas law. Contracts that are required to be in writing include those which relate to: land, leases, mortgages, guarantees of another person’s debt, agreements that cannot be performed within one year, or the sale of goods worth more than $500.

Competent legal assistance is strongly recommended in the drafting of any contracts to make sure that provisions are in accordance with current law. It is also significant to request legal advice before signing any contract drafted by another party to confirm you understand all your rights and duties under the agreement, especially since there are often severe financial consequences for noncompliance. For more information, contact an attorney of your choice.

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