Most verbal agreements are legally binding in Texas. A handshake can be legally binding in Texas if the agreement is otherwise a valid contract. However, certain agreements must be in writing by law before they become binding.
Texas’s verbal agreement law comes from Texas common law, the Uniform Commercial Code, and other Texas state statutes.
Suppose your neighbor offers you 50 of his home-grown watermelons for $50.00 on the 1st of next month. You accept, but when the 1st of the month arrives, your neighbor says he will not honor your agreement. He has decided to sell the watermelons to a major grocery store instead to make a larger profit. Can you sue him to bind him to your oral contract? How do you know when you should contact an attorney about your claim?
The answer depends on whether there was a valid verbal contract. Contract litigation can be complex, and lawsuits involving binding oral contracts can be more expensive because they are difficult to prove. If you object to an oral contract or need to enforce a verbal agreement in Texas, The Hunnicutt Law Group can help.
Does a Verbal Agreement Hold up in Court in Texas?
For any agreement to be enforceable in court, it must have all the elements of a valid contract. The law requires the parties to express mutual consent and exchange something of value (the “consideration”) to have an enforceable contract.
The parties must show mutual consent before a court will enforce either a formal, written contract or a handshake agreement. To have mutual consent, the parties must freely communicate their agreement and its terms to one another. It is as simple as an offer (“I offer to sell you 50 watermelons from my garden for $50 on the 1st of next month”) and acceptance (“I agree”).
For an agreement to hold up in court, there must be sufficient consideration.
Consideration requires an exchange of value. You can think of consideration as a requirement that each party to the deal give up something to get something else. The neighbor must give up the watermelons to get paid, and you must give up your $50.00 to get the watermelons. Therefore, there is sufficient consideration in your oral agreement.
What Agreements Must Be in Writing?
Texas laws require some agreements to be in writing before a court will enforce them. The subjects of these agreements are so important that Texas says they must be in writing to prevent fraud. Texas lists these agreements in the state’s “Statute of Frauds.” They include:
- Real estate agreements;
- Agreements for the sale of goods valued at more than $500;
- Agreements when a party cannot conceivably perform within one year;
- Loan agreements;
- Executory contracts (future obligations, like an equipment lease or development contract); and
- Agreements for oil or gas commissions.
Verbal agreements can cause disagreements about the contract’s terms. While the agreements specified by the law must be in writing, it is always a good idea to put your agreements in writing even if the Statute of Frauds doesn’t require it.
Was There a Breach of Contract?
When you delivered payment for your neighbor’s watermelons on the 1st of the month, you performed your contractual obligation. When your neighbor refused to sell you the watermelons, he broke his promise. A broken promise in an agreement is a breach of contract, and you may be able to recover damages.
- There was a valid contract (see above);
- You fulfilled your contractual obligations;
- The other party failed to perform; and
- You suffered damages or harm as a result of the other party’s breach.
If the court finds a breach of contract, the breaching party must compensate the injured party to put them in the same position as if they had performed. In the case of a denied sale, your neighbor would have to pay you for the loss of the bargain.
In conclusion, a verbal agreement is legally binding in Texas unless the agreement must be in writing under Texas’s Statute of Frauds. If not required, oral contracts are enforceable.
Hunnicutt Law Group Is Here to Answer Your Questions
If you have questions about verbal agreements in Texas or verbal contracts in Texas, do not hesitate to contact us at The Hunnicutt Law Group. We handle complex matters for local businesses, large companies, and individuals across the country. In addition, Mr. Hunicutt has over 25 years of experience with breach-of-contract claims in federal and state courts and arbitration. The Hunnicutt Law Group offers results-oriented and client-focused results and can help protect the viability of your business today.