Contracts are essential to good business in Texas, and in a perfect world the parties abide by their obligations. In reality, however, contract disputes can arise over a number of issues and due to many different reasons. Although it is not always possible to avoid a lawsuit, there are ways to resolve contract issues in a manner that can avoid some of their worst consequences.

It starts with retaining exceptional legal counsel who appreciates what is at stake in your case. Find out why so many business law clients trust the guidance of Capstone Legal Strategies.

What Makes a Contract Enforceable in Texas?

Before one can understand the nature of contract disputes, it helps to know what makes a contract valid. In Texas, the necessary elements are:

  • Offer and acceptance: There must be an offer by one party to enter into a binding agreement, and a clear acceptance of that offer. If the party who receives the offer insists upon additional or different terms before accepting, then this is known as a counteroffer. Together, the offer and acceptance components are sometimes called a meeting of the minds.
  • Consideration: All parties to a contract must receive a benefit of the agreement while also having some duty imposed upon them. Both parties exchange something of value in this process (e.g. in an employment contract, one party exchanges the value of labor for the value of money), which is known as consideration.
  • Legal subject matter: The subject matter of the contract should be legal. An obvious example of an illegal contract is one that pays a hitman to kill someone. But there are less obvious examples, too, which are unenforceable as a matter of public policy or which involve activities which the parties may not realize are illegal.
  • The parties are legally competent: A minor (under the age of 18) cannot enter into a legally enforceable contract. Neither can someone who lacks the mental capacity to do so. The absence of legal competence may be raised as a defense against enforcement of the contract.
  • Certain contracts must be written: Oral contracts exist and are generally enforceable, but there are several agreements which categorically must be written to be enforceable. For instance, real estate sales contracts, leases that exceed one year, and sales of products totaling over $500 must be reduced to a writing.

Why Do Contract Disputes Arise?

Regardless of the type of Texas business contract you have, the reasons that disagreements emerge almost always fall into one of several categories. These include:

  • Lack of one of the above elements: A party may raise the argument that one of the above elements is not present and the contract is therefore unenforceable. The other party may contest this and insist the contract is valid.
  • Disagreement on the terms: Vague, ambiguous, poorly defined, overly broad, contradictory, and unclear terms are fertile grounds for disagreement. If the parties simply cannot come to an agreement on what essential terms mean, a dispute is inevitable.
  • Failure to perform: A party may neglect their obligation to perform under the contract, for instance by failing to provide agreed-upon services. This failure may be intentional or unintentional, but either way may spur a dispute.
  • Failure to pay: Conversely, the party obligated to pay for goods or services may fail or refuse to convey payment on time, or to pay in full. The parties may disagree on how much is owed or whether money is owed at all, especially if the quality of goods or services is in question.
  • Alleged fraud: A party could be accused of delivering fraudulent (e.g. counterfeit) goods or misrepresenting the nature of services provided under the contract. The other party might withhold payment by citing the alleged fraud.
  • Not meeting deadlines: Contracts are often subject to strict deadlines that help ensure businesses do not encounter unnecessary delays. A party may perform, but not do so on time, and this could cause a dispute.
  • Termination disputes: Contracts usually include terms that allow a party to terminate the agreement without facing legal repercussions. But this doesn’t mean that the other party will agree the termination met contractual requirements.

Why Good Contract Drafting Matters

Texas business contracts are only as strong as the care and precision that goes into writing them, and avoiding disputes starts with skilled drafting. We endeavor to avoid contract problems by ensuring agreements include:

  • Clear terms: There is no room for vague, ambiguous terms which lack sufficient definition and are subject to multiple interpretations. We use clear language so it’s much more difficult for a party to reasonably claim they do not understand the contract.
  • Sufficient details: Exactly how much are payments for goods and services, and when are they due? How is product quality to be measured to ensure performance obligations have been met? We address these and many more details in the contracts we write.
  • Reasonable time to consider the contract: We avoid pressuring parties to make hasty or ill-informed decisions, since these often lead to regrets that make contract disputes more probable. Our approach is to give the parties sufficient time to consider the contract and to allow the other parties to the agreement to consult their legal counsel.

Strategies for Resolving Texas Business Contract Disputes

Contract disputes can seriously threaten a company’s vitality by diverting significant resources to fending off lawsuits, decreasing productivity, compelling a party to pay major legal damages, and destroying critical business relationships. Fortunately, you have options for addressing these disagreements in a positive way:

  • Modification: If a party is unable to meet their obligations under a contract, they may request a modification. The terms may even require the parties to renegotiate the contract after a period of time, which is the perfect opportunity to correct whatever is causing problems.
  • Negotiation: Whether to modify a contract or to find some way to reach a mutually agreeable resolution to a dispute, the parties can always negotiate. These negotiations should be conducted with the assistance of an experienced Texas business lawyer.
  • Mediation: Mediation is more structured than negotiation and requires the assistance of a neutral third party, a mediator, to facilitate a settlement of the dispute. An attorney can assist by representing you during mediation and explaining the consequences of proposed modifications or settlement agreements.
  • Arbitration: Many contracts require the parties to submit a dispute to arbitration prior to filing a lawsuit. With arbitration, a third party arbitrator will consider the parties’ arguments about the disagreement and make a decision that is either binding or non-binding. An attorney can represent you during these proceedings, which are similar to a trial but less formal.
  • Litigation: Ultimately, if a dispute cannot be resolved through the above means, a lawsuit may be necessary. At any time before trial, however, the parties can choose to mediate or use other approaches to bring about an end to the matter.

How Capstone Legal Strategies Can Help

When you retain our seasoned Texas business lawyer to assist with your contract dispute, we get to work by:

  • Applying our considerable experience with Texas business laws
  • Investigating the underlying circumstances of the dispute to better understand it
  • Acquiring evidence (including, after a lawsuit is filed, through formal discovery procedures) to support your claims and refute those of the other parties
  • Representing clients during settlement negotiations, mediation, and arbitration
  • Explaining the benefits of settling out of court versus the risks of litigation
  • Referring you to litigation counsel, to the extent it has come to that

Contact Our Houston Contract Dispute Attorney

If the other party has threatened a lawsuit or has given an indication that a dispute may arise soon, or you are finding it difficult to perform as required under the agreement, don’t delay seeking qualified legal counsel. Reach out to the Texas business lawyers of Capstone Legal Strategies to learn more about how we can help. Connect with us today to get started.