Are Verbal Contracts Enforceable in Texas?

If you own or manage a business in Texas, it's important to understand the legal requirements for entering into binding contracts. Many business owners think a simple verbal agreement is all they need to create an enforceable contract. However, that's not always the case under Texas law. 

What Are the Requirements for a Valid Contract?

For any contract to be legally valid and enforceable in court, certain elements are required under Texas contract law. These essential elements include:

• Offer and acceptance: The parties must have a clear offer and acceptance.
• Consideration: The parties must exchange something of value. This can be a payment, goods, services, a promise, etc. 
• Competent parties: The people entering into the contract must have legal capacity to form binding contracts.
• Legal purpose: The contract cannot require illegal activities.

In general, a verbal agreement can potentially have these required elements. However, other laws impose additional requirements for some types of contracts.

Some Agreements Are Required in Writing 

While verbal contracts can be enforceable, Texas law requires certain types of agreements to be in writing. Key examples include:

• Real estate contracts
• Employment agreements beyond one year
• Service agreements that cannot be performed within one year
• Promissory notes for loans over $50,000

If the law requires a written contract, any oral or verbal agreements for those transactions are not enforceable. Failing to get it in writing means you won't have concrete legal protection.

The Problem with Verbal Contracts

If you enter into a verbal contract with another party, there are multiple risks involved, including: 

• No written record: it becomes a “he said, she said” situation if disputes arise over terms. 
• Unclear terms: Without documentation, the details of the agreement can easily be forgotten or remembered differently by the parties involved. 
• Harder to prove: The lack of written evidence makes verbal contracts more difficult to prove in court. 
• Changes and additions: Oral amendments to the original agreement can be alleged without documentation. 
• Longer statutes of limitations: Verbal agreements may have longer statutes of limitations of up to four years in Texas. 

Call Foster Massengill, PLLC Today to Speak with An Ennis, Texas Business Attorney

Relying solely on verbal contracts can be risky for Texas businesses. Call our Ennis business law firm before entering any major business deals, agreements, or partnerships without written documentation. We can advise you on the right steps to establish enforceable contracts for your situation. 

To schedule a consultation with our business attorneys, call Foster Massengill, PLLC, at (972) 937-1616 or contact us online. We provide legal services to clients across Ellis County.