As a general rule, oral agreements are binding and enforceable under Texas law as long as they include the required elements of a valid contract: an offer, acceptance, legal consideration, and a "meeting of the minds." However, Texas oral agreement law is complex. For example, an apparently enforceable verbal agreement may be void if it falls under the Texas Fraud Statute. And enforcing an oral contract can be challenging, as the injured party will need to produce sufficient evidence to show that the defendant breached the agreement.
Elements of oral agreements as defined by Texaslei
Those unfamiliar with Texas oral agreement law often ask, "What is an oral agreement?" An oral agreement is simply a contract with terms that have been specified and agreed upon through oral communication. Unlike a written agreement, an oral contract does not define the specifics of the parties' agreement in writing. This can make it more difficult to prove a breach of contract case. When one party breaks an oral agreement, the injured party's focus shifts to how to prove an oral agreement in court. Under Texas oral agreement law, to enforce an oral contract, it must have the following elements:
- meeting of minds
- legal consideration
An offer occurs when one of the parties promises to do or refrains from doing something. The other party must unequivocally accept the offer. This can be done verbally (i.e. "I agree") or through performance. A meeting of minds means that both parties understand the contract and agree to its terms. The parties must do so voluntarily and not as a result of coercion, undue influence ormisrepresentation🇧🇷 Consideration means that something of value is promised in return for performing the contract. The consideration must be legal tender, such as cash or services, to satisfy this requirement. Proving that each of these elements existed can be challenging. Generally, the plaintiff will need to show that the other party has fulfilled the verbal agreement. Relevant evidence may include witness statements, invoices or receipts and other supporting documents.
Contracts that must be in writing to be enforceable
While oral agreements are generally enforceable, certain types of transactions must be in writing. These transactions are governed by theTexas Fraud Statute🇧🇷 The Fraud Statute is an affirmative defense in case of breach of contract. If the respondent can prove that the disputed oral agreement should have been in writing, the contract may be declared void and unenforceable. Types of transactions that must be made in writing under the Fraud Statute include:
- Contracts that run more than one year after the conclusion of the agreement
- A promise to “answer for another person’s debt, default, or miscarriage”
- Promises by an executor to "answer in his own estate for any debt or damage owed by this testator or intestate"
- Contracts for the sale of real estate or lease contracts with a term of more than one year
- Certain payments related to mining interests
- certain medical arrangements
In this type of operations,Contracts must be in writing and signed🇧🇷 For example, a prenuptial agreement that is not signed by the spouses is generally unenforceable under Texas oral agreement law.
Are text messages legal in Texas?
Sending text messages has become an increasingly popular way to interact and do business. Their popularity and the fact that they are traceable forms of communication contribute to the frequent occurrence of text messages in cases of breach of contract. But are text message agreements legally binding in Texas? As long as the text messages satisfy the necessary conditions required for a contract, the agreement can be enforceable. This means that text messages must show that there was an offer that was accepted by the recipient, that legal consideration was exchanged, that the parties understood the terms and that they had the ability to enter into the agreement. Furthermore, under theelectronic signature law, which became law in 2000, electronically signed documents carry the same weight as traditional paper contracts.
Fraud Statute Limitations to Verbal Contracts
The Fraud Statute plays an important role in determining whether contracts are enforceable under Texas oral agreement law. The Fraud Statute aims to protect parties against fraud in certain types of transactions by requiring them to be in writing. The written contract must include a description of the object of the agreement, the terms of the agreement and the signatures of all parties. Again, some of the types of contracts that should be in writing include real estate sales contracts and rental contracts for more than one year, service contracts that take more than a year to complete, and contracts related to marriage. For example, suppose you hire a landscaping company to mow your lawn during the summer and early fall. You agree to pay $30 a week from May through the first week of November. You don't sign a contract, but confirm the terms via text message. As the settlement will take less than a year to complete, this is an enforceable settlement that is not subject to the Fraud Statute. But suppose you own an apartment building. You agree to rent a two-bedroom apartment to a tenant for two years, but you do not prepare or sign a written lease. As the lease is for more than one year, it must be in writing and signed to be enforceable under Texas law. There are some exceptions to the Fraud Statute. The promissory estoppel, meaning that a promise can be enforceable even without a contract, could be a counter-defense to the defendant's argument that a written but unsigned agreement is not enforceable under the Fraud Statute. The promissory estoppel may exceed the Fraud Statute if the promiser should have expected that his promise would cause definite and substantial harm, that the harm has occurred and that the promise entering into the contract must be performed to avoid the harm. The second exception is partial performance. The court may enforce a contract that does not comply with the Fraud Statute if there has been partial performance of the contract.
Violation of Oral Contracts
Texas oral agreement law becomes relevant when there has been a breach of contract. The injured party may file a breach of contract claim seeking damages for their injuries. The problem then becomes: how to prove a verbal agreement in court. In order to compensate damages, the plaintiff must prove by preponderance of evidence that:
- There was a valid contract;
- Fulfilled all contractual obligations;
- The other party has not fulfilled its contractual obligations; y
- They suffered harm as a result of the other party's breach.
If the court determines that there has been a breach of a valid oral agreement, the party that breached the agreement must pay damages to the aggrieved party. This usually means that the injured party will receive compensation sufficient to put them in the same position they would have been in had the party acted fully.
Execution of Verbal Contracts in Texas
When it comes to enforcing an oral contract under Texas oral agreement law, the injured party will generally find it more difficult than enforcing a written agreement. Again, the plaintiff will need to show that there was a valid contract, that they complied with the agreement, that the defendant did not, and that the plaintiff was harmed as a result. In breach of contract cases involving oral agreements, it can be difficult for the court to determine what the terms of the parties' agreements were. Unlike a written agreement where the terms are specified, the court's interpretation will largely focus on the available evidence and the credibility of the parties. Relevant evidence may include witness statements, any correspondence, invoices and receipts and other supporting documents.
Oral agreements can be binding under Texas oral agreement law. For an oral agreement to be enforceable, it must satisfy all the elements of a valid contract. Also, you must not include a transaction that falls under the Texas Fraud Statute. Proving a breach of an oral contract can be challenging as the aggrieved party will need to provide evidence, and the outcome is largely left to the court's interpretation, which may not have been the original intent of the parties. If you need help preparing or enforcing a contract,Contactour experiencedcorporate and commercial lawyerstoday for a free consultation.