You’ve decided to buy property, sell a business, acquire services, or enter into any number of other transactions. Now what? Here are some tips from Curnutt & Hafer business and real estate attorneys, Paul Johnson and Cheyenne Haddad.
A contract is a legally enforceable agreement. Generally, whatever you promise to do in a contract, the law will require that you do it. There are exceptions to this general rule, but you should never enter into an agreement expecting to avoid the enforcement of any of its provisions. Often there will be substantial liability if you do not do what you agree to do.
2. The law imposes a duty to read contracts. If you sign a contract, you are assumed to know what is in it and to have agreed to it. Not reading a contract is no defense to its enforcement. While there can be defenses to enforcement available to those who sign a contract under unfair pressure (such as defenses based on adhesion, fraudulent inducement, and the like), such defenses are rarely successful and the burden on the person seeking these defenses is heavy.
3. Contracts do not have to be in writing: Generally, an oral contract is just as enforceable as a written contract. There are, however, some oral contracts that are not enforceable under a rule of evidence commonly called “the Statute of Frauds.” Such unenforceable oral contracts include contracts for the sale of real estate, leases of real estate for a term longer than one year, agreements that cannot be performed within one year, among others. However, be warned. Just as you should not plan to sign a contract and then avoid it later, you should not orally agree to something planning to avoid it later.
4. A contract must contain a mutual exchange. This means both parties must make some type of promise or give something of value in the contract. This is called “consideration” and is the primary reason why a mere gratuitous promise is generally not enforceable.
Be aware, however, that when the person to whom a mere gratuitous promise is made then changes their position in reliance on that promise, under the principle of “promissory estoppel,” even that gratuitous promise may become enforceable.
5. A contract does not have to be all in one document. Sometimes, multiple letters, emails, notes, and other writings can be combined to form a binding contract, even when the parties intend to cover the transaction in a more comprehensive single document later. Be careful what you write.
6. Beware of Indemnity Obligations. The party drafting the contract generally is trying to protect its own interests and not the other party’s interests. Frequently, in drafting the contract a party will provide for the other party to indemnify and defend the drafting party with respect to potential claims and other risks. Simply stated, the obligation to indemnify is an obligation to pay the other party’s losses and damages from the potential claims and risks and the obligation to defend is the obligation to provide legal defense against such matters. Indemnity provisions should be carefully considered and negotiated.
7. Contracts against public policy are not enforceable: You cannot make a contract to do something illegal and expect the court to enforce it. For example, a contract to buy and sell illicit drugs is likely against public policy and thus not enforced by the court.
8. Some contracts remove your right to sue in court. If a contract contains an arbitration clause, you generally will be bound to settle your dispute before an arbitrator instead of before a judge or jury. The arbitrator’s decision will be legally binding on you, and you will have very limited rights to appeal the decision.
9. Contracts can change which law applies and where you can sue and be sued. Some contracts contain something called a “forum selection” clause and a “choice of law” clause. These provisions choose which body of law will apply and which court or “forum” will decide any dispute. Often, you can be bound to the law of another state and to litigate or arbitrate disputes in another state. For example, if a Texas business buys materials from a business in California and the contract for the purchase contains a provision that California law will apply and any disputes will be determined California, the Texas business likely will be required to sue and be sued in California if a dispute arises over the materials purchased.
10. Failure to fulfill your promises in a contract can result in financial damages. It may be stating the obvious, but if you enter into a contract agreeing to do something and you don’t do it, the other party can sue you and recover their damages from you.
Need help drafting, reviewing, or interpreting a contract or other business document?
For the fourth consecutive year, Curnutt & Hafer has been recognized as a Fort Worth Inc. Magazine’s “Best Companies to Work For”, this year placing #1 out of 22 companies.
We believe that culture and mission-driven leadership create a thriving workplace. After 25 years of impact, our firm isn’t just growing – it’s raising the bar for what a law firm can be.
Thank you to our incredible team and Fort Worth Inc. Magazine for making this possible! With a positive company culture, we can better serve our clients.
If you ask Attorney Larry Fowler what type of cases he handles, he’ll describe his work representing individuals, businesses, developers, and government entities in a wide variety of land use and commercial real estate issues. He tackles water and land easement disputes, title issues, as well as eminent domain and condemnation, where land valuation issues often arise, in Tarrant County and well beyond.
“With commercial real estate projects, developers often encounter zoning and platting issues, and we’re one of the few area law firms that handle these,” says Larry. With years of experience not only in business litigation, but also as a Planning & Zone Board Commissioner, attending City Council meetings, and Arlington Chamber of Commerce service, he is ready to take on your commercial real estate issues.
We are pleased to announce that attorneys Paul Johnson and Larry Fowler have joined our team, along with their long-time paralegals, Timi Hazle and Sharon Brown. Having worked together in the legal field for over 30 years, this dynamic group brings a depth of experience to our firm, thereby enabling us to expand our legal services.
Paul Johnson is a seasoned business and transactional lawyer, Board Certified by the Texas Board of Legal Specialization in both Commercial Real Estate Law and Residential Real Estate Law. With a focus on real estate development, mergers and acquisitions, startups, and general company representation, he also counsels emerging companies experiencing the challenges of a growing business.
Larry Fowler has extensive knowledge in the areas of commercial and real estate litigation. His cases typically involve helping clients resolve issues related to governmental regulations, contract lease interpretation, lender/borrower disputes, zoning and land use matters, landlord/tenant issues, condemnation, and enforcement of agreements. He has represented clients in numerous state and federal courts and is licensed to practice before the U.S. District Courts for the Northern, Southern, Eastern, and Western Districts of Texas. Paul, Larry, Timi, and Sharon work in our 311 W. Abram Street location in downtown Arlington, one block west of our main office.
Kelly’s presentation, “10 Ways to Avoid a Lawsuit (or Win it Before it Happens) – A Business Trial Lawyer’s Perspective” offers information and insights into preventing legal issues before they can even arise. He draws on his experience in business formation and disputes, oil & gas, serious personal injury, family law, and appeals. These tips can apply not only to individuals, but small and large business owners, and public and private entities.
When it comes to contracts, a handshake is nice, but probably not enough. It’s always a good idea to memorialize the terms of your agreement to writing, whether it’s a formal contract or even a written email. Memories fade, the entities involved may change ownership, and the person you know and trust that you worked with on the deal may retire, move or even pass away. In some cases, such as a real estate transaction, a written contract is required to be enforceable. Although it’s possible to find a form contract online, it may not include all the nuances that you really should cover to protect your interests. Having an attorney review or even draft your agreement could prevent misunderstandings or even a lawsuit.
Collecting fees and invoices for services rendered is not always as simple as we’d like. The more time that passes from the time the service is provided, the harder it can be to collect. To avoid misunderstanding and delay, have a written, clear collections policy in place and follow it consistently to avoid having to hire an attorney to collect a stale debt.
In the area of employment, it’s prudent to determine the nature of the employment right from the start. An independent contractor is not an employee, and more likely is hired for a project with a finite time frame and scope. However, if someone is working part-time, but on a regular schedule and you control the details of how they do their duties, chances are they should be categorized as a part-time employee. This is important for a number of reasons, including whether you should be paying payroll taxes on them, or whether they are handling their own tax filing as an independent contractor.
Although Texas is an “at will” state, meaning an employee can be terminated or resign “at will”, there are still things to consider. You aren’t permitted to fire someone for an illegal reason, such as based on their race, gender, or age, as examples. It’s always wise, if an employee isn’t performing up to expectations, to provide feedback and counseling, and write out a performance improvement place so that everyone is clear on expectations. That way, if you do need to part ways, it doesn’t come as a total surprise. With some issues, if you’d just not sure how to proceed or you have a gut feeling that something isn’t right, it’s never a bad idea to consult with an attorney to make sure you’re on track. One hour of counseling or planning with a lawyer you trust may ultimately help you prevent a long and expensive lawsuit down the road.
For more information feel free to contact Kelly at 817-548-1000.
