Texas Contract Drafting, Review & Negotiation

Handshake deals are risky. If a dispute arises, you’ll have no written proof of the terms, payment schedule, or obligations. In Texas, some contracts must be in writing to be enforceable including contracts for the sale of real estate, contracts that can’t be performed within one year, and contracts for the sale of goods over $500. Even when a verbal agreement is technically enforceable, proving what was agreed to becomes difficult and expensive. Written contracts eliminate ambiguity and provide legal remedies if someone breaches.

You can, but templates are generic and rarely account for Texas-specific legal requirements or your unique business situation. Templates often include vague language, missing clauses, or terms that favor the other party. We’ve seen template contracts fail in court because key provisions were incomplete or unenforceable. A customized contract costs more upfront but saves you money and risk in the long run.

If someone breaches a contract, you may be entitled to damages, specific performance, or termination of the agreement. Your remedies depend on the contract terms and the nature of the breach. Well-drafted contracts include clear breach provisions, notice requirements, and dispute resolution procedures. We help clients enforce contracts through negotiation, mediation, or litigation when necessary.

In Texas, non-compete agreements are enforceable if they are reasonable in scope, duration, and geographic area, and if they protect a legitimate business interest. Non-disclosure agreements (NDAs) protect confidential information, trade secrets, and proprietary processes. We draft enforceable non-compete and NDA provisions tailored to your business and compliant with Texas law. Overly broad or unreasonable restrictions can be unenforceable.

Look for liability and indemnification clauses, payment terms, termination rights, dispute resolution procedures, and governing law provisions. Pay attention to automatic renewal clauses, exclusivity requirements, and confidentiality obligations. We review contracts to identify unfavorable terms, missing protections, and legal risks you may not notice on your own.

Yes, but any modification must be agreed to by all parties and documented in writing. Verbal modifications are difficult to prove and may not be enforceable. We prepare amendment agreements that clearly state what terms are being changed and ensure all parties sign and date the modification.

In Texas, the statute of limitations for most contract disputes is four years. However, we recommend keeping contracts for at least seven years, and indefinitely for contracts involving real estate, business ownership, or ongoing obligations. Proper recordkeeping protects you if a dispute arises years after the contract was signed.

An independent contractor agreement establishes a relationship where the contractor controls how the work is performed. An employment agreement creates an employer-employee relationship with greater control, benefits, and tax withholding obligations. Misclassifying employees as contractors can result in tax penalties, wage claims, and legal liability. We help you structure agreements that accurately reflect the relationship and comply with IRS and Texas Workforce Commission rules.

This question has a more complicated answer than it did a few years ago, and the answer depends on both Texas state law and recent federal developments.

Under Texas law, non-compete agreements are enforceable, but only if they meet specific requirements established by the Texas Covenants Not to Compete Act. A non-compete must be ancillary to or part of an otherwise enforceable agreement, must be supported by consideration beyond continued employment alone in most circumstances, and must contain reasonable limitations on geographic scope, duration, and the scope of prohibited activity. Texas courts have discretion to reform, meaning rewrite, a non-compete that is overbroad rather than simply void it, which is a distinction from how many other states handle the same issue.

What counts as reasonable depends heavily on context. A non-compete for a senior executive with access to proprietary client relationships and trade secrets will be evaluated differently than one for an entry-level employee with no specialized knowledge. Courts look at the specific facts, the nature of the business interest being protected, and whether the limitations are proportionate to that interest.

On the federal level, the Federal Trade Commission issued a rule in 2024 that would have banned most non-compete agreements nationwide. That rule faced immediate legal challenges and was blocked by federal courts before taking effect. As of the current date, the FTC non-compete rule is not in effect, and Texas state law continues to govern enforceability for most private-sector employees and contractors. This is an area of law that has been actively litigated and may continue to develop, so existing non-compete agreements whether you’re the employer or the employee are worth reviewing with current legal standards in mind.

Under Texas law, a legally binding contract requires four foundational elements.

The first is offer: one party proposes specific terms.

The second is acceptance: the other party agrees to those terms without material modification. A response that changes the terms is generally treated as a counteroffer rather than an acceptance, which restarts the negotiation rather than completing it.

The third element is consideration: something of value exchanged by each party. Consideration doesn’t have to be money. It can be a promise to perform, a service, the transfer of property, or the relinquishment of a legal right. What it cannot be is illusory, a promise to do something only if the party feels like it, or a promise that one party can revoke at will without consequence, typically doesn’t constitute valid consideration.

The fourth element is mutual assent: sometimes called a meeting of the minds. Both parties need to genuinely agree to the same terms. Misunderstanding about a fundamental term of the agreement can undermine this element.

Beyond these four elements, some contracts in Texas are required by the Statute of Frauds to be in writing to be enforceable. Contracts for the sale of real estate, contracts that cannot be performed within one year, contracts for goods over $500 under the Texas Uniform Commercial Code, and certain other categories must be memorialized in writing and signed by the party against whom enforcement is sought.

A contract can meet all four foundational requirements and still be unenforceable if it involves an illegal subject matter, was entered into under duress, or is found to be unconscionable, meaning so one-sided that enforcement would be fundamentally unjust.

Yes, with important limitations.

Texas law does not require most contracts to be in writing to be enforceable. A verbal agreement that contains offer, acceptance, consideration, and mutual assent is generally a valid contract under Texas law. The challenge with verbal contracts is evidentiary, not legal. Proving what the parties actually agreed to when there is no written record.

When a verbal contract dispute ends up in litigation, the outcome often depends on whose account of the agreement a court finds more credible, what circumstantial evidence supports each version, and whether either party’s conduct after the agreement is consistent with the terms they’re asserting. Emails, text messages, invoices, and payment records frequently become the primary evidence in verbal contract disputes because they document what actually happened even when no formal agreement exists.

The Statute of Frauds creates categorical exceptions where verbal agreements are not enforceable regardless of the evidence. In Texas, a verbal agreement to sell or transfer real estate is not enforceable. A verbal agreement for a transaction that by its terms cannot be completed within one year is generally not enforceable. A verbal guarantee of another person’s debt is not enforceable. These categories exist because the legislature determined the risks of fraud and misremembering in these contexts outweigh the flexibility of allowing verbal agreements.

For business purposes, the practical implication is straightforward: a verbal agreement may be legally valid, but the moment a dispute arises, the absence of written documentation transforms a contractual question into a credibility contest. The cost of that contest almost always exceeds the cost of putting the agreement in writing at the outset.

An indemnification clause is a contractual provision in which one party agrees to compensate the other for certain losses, damages, or legal costs that arise from specified events. In practical terms, it shifts financial risk. One party agrees to hold the other harmless if something goes wrong in a defined category of circumstances.

Indemnification clauses appear in almost every commercial contract. Service agreements, vendor contracts, construction contracts, lease agreements, and partnership documents all commonly include them. The question isn’t whether you’ll encounter one, it’s whether the scope of what you’re agreeing to is proportionate to the relationship and the risk.

Several features of an indemnification clause determine how significant it is in practice. The trigger, what events activate the indemnification obligation, defines the circumstances in which you’re financially responsible. A narrow trigger limited to your own negligence or breach is very different from a broad trigger that extends to any claim arising out of the contract regardless of fault. The scope of covered losses matters as well. Some indemnification provisions cover only direct damages, while others extend to consequential damages, attorney’s fees, and costs of defense. Mutual versus one-sided indemnification is also worth noting a clause that requires only one party to indemnify the other allocates risk asymmetrically, which may or may not reflect the actual risk distribution of the relationship.

Indemnification clauses are negotiable. Whether to accept one as written, propose modifications, or insist on mutuality depends on the nature of the transaction, the relative bargaining positions of the parties, and what risks are actually being allocated. Understanding what a specific clause covers before signing is more useful than a categorical approach to accepting or refusing them.

Texas law recognizes several legal doctrines that can affect the enforceability of a contract signed under problematic circumstances, though the standards for each are specific and the outcome of any particular situation depends on the facts.

Duress in the legal sense means more than feeling pressured or stressed. Economic duress, sometimes called business compulsion, requires showing that one party made a wrongful threat that left the other party with no reasonable alternative but to agree. Courts look at whether the threat was improper, whether it actually overcame the free will of the party claiming duress, and whether a reasonable alternative existed. The threshold is higher than most people expect. Competitive pressure, tight deadlines, and hard negotiating tactics generally don’t constitute legal duress even when they feel coercive.

Signing a contract without fully understanding it is a more complicated situation. Texas courts generally hold parties to the contracts they sign, operating under the principle that a party who signs a document is presumed to have read and understood it. Lack of understanding alone, absent fraud, misrepresentation, or a condition that prevented meaningful assent, typically doesn’t void a contract.

However, several related doctrines may be relevant depending on the circumstances. Fraudulent inducement, where one party made a false representation of material fact that caused the other party to sign, can render a contract voidable. Mutual mistake, where both parties shared a fundamental misunderstanding about a material fact at the time of contracting, can also provide grounds to rescind in some circumstances. Unconscionability where the terms are so one-sided and the circumstances of formation so procedurally unfair that enforcement would be unjust is recognized under Texas law though courts apply it narrowly.

The practical implication is that defenses to contract enforcement exist but are not easily established. The stronger position is always to understand what you’re signing before you sign it and to raise concerns about specific terms during negotiation rather than after a dispute arises.

A force majeure claus,e the term comes from French and means “superior force,” is a contract provision that excuses one or both parties from performance obligations when extraordinary events outside their control make performance impossible, impractical, or illegal.

Before 2020, force majeure clauses were standard boilerplate in commercial contracts that most parties signed without much attention. The COVID-19 pandemic changed that. Courts around the country, including in Texas, were asked to interpret force majeure clauses in the context of government-mandated shutdowns, supply chain failures, and economic disruptions, producing a significant body of case law on what these provisions actually cover and how they’re construed.

Several features of a force majeure clause determine whether it will actually function as intended when invoked. The list of triggering events, whether it’s specific and enumerated or broad and general, shapes what circumstances qualify. Courts in Texas have generally held that parties are bound by the specific language of their clause rather than a broad concept of unforeseeable hardship. Whether the clause requires impossibility or merely impracticability is another meaningful distinction. Notice requirements, how quickly a party must notify the other that a force majeure event has occurred, are also commonly included and, if not followed, can waive the right to invoke the clause.

For businesses entering into contracts with extended performance periods, supply chain dependencies, international counterparties, or significant financial exposure to non-performance, a force majeure clause that is carefully drafted for the specific transaction is worth including. A generic clause copied from a template may not cover the events most relevant to a particular business relationship and may not hold up if it’s ever tested.

When one party to a contract fails to perform as agreed, Texas law provides several potential remedies but the path to those remedies, and which ones are available, depends on the nature of the breach, the terms of the contract, and what the non-breaching party is actually trying to accomplish.

The first step in most contract disputes is establishing that a valid contract existed, that the non-performing party had an obligation under it, that the obligation was not performed, and that the non-performing party’s failure caused actual harm. These are the elements of a breach of contract claim in Texas.

The most common remedy is monetary damages compensation for the losses caused by the breach. In Texas, contract damages are generally limited to the amount that would put the non-breaching party in the position they would have been in had the contract been performed. Consequential damages, losses beyond the direct value of the contract, are recoverable in some circumstances but not all, and whether a contract limits or excludes consequential damages is a provision worth paying attention to when reviewing any significant agreement.

In some circumstances, a court can order specific performance, requiring the breaching party to actually do what they agreed to do rather than simply pay damages. Specific performance is most commonly available in real estate transactions, where the subject matter is unique and money damages are considered an inadequate substitute.

Before litigation, several practical steps are worth considering. A demand letter, a formal written notice that identifies the breach, states what performance or compensation is being demanded, and sets a deadline, sometimes resolves disputes without court involvement. Mediation is another option that Texas courts frequently require before trial in any case. Many commercial contracts also include mandatory dispute resolution provisions, arbitration clauses, for example, that determine where and how disputes must be resolved regardless of what either party might prefer.

Attorney’s fees in Texas contract disputes are recoverable by the prevailing party under the Texas Civil Practice and Remedies Code in many circumstances, which changes the economics of litigation in ways that affect how both sides approach resolution.