practice areas
What is a contract?
In the simplest definition, a contract is a promise enforceable by law. The promise may be to do something or to refrain from doing something. The making of a contract requires the mutual assent of two or more persons, one of them ordinarily making an offer and another accepting. If one of the parties fails to keep the promise, the other is entitled to legal redress. The law of contracts considers such questions as whether a contract exists, what the meaning of it is, whether a contract has been broken, and what compensation is due the injured party.* A contract with a minor is not legally enforceable. Because of age and presumable lack of experience, the law considers a minor contractually incapableelements of a Contract
In Texas, the elements of a valid contract are: * An offer * Acceptance in strict compliance with the terms of the offer. * Consideration.* Mutual assent (meeting of the minds) regarding material terms.* Execution and delivery of the contract with the intent that it be mutual and binding. (Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007); Arshad v. Am. Express Bank, FSB, 580 S.W.3d 798, 804 (Tex. App.—Houston [14th Dist.] 2019, no pet.); 2001 Trinity Fund, LLC v. Carrizo Oil & Gas, Inc., 393 S.W.3d 442, 449 (Tex. App.—Houston [14th Dist.] 2012, pet. denied)offer
The first step to a contract is an offer. An offer is a written or spoken statement by a party of his or her intention to be held to a commitment upon acceptance of the offer. Many business owners have become involved in legal disputes because, during negotiations, a customer believed an offer had been made when the business person believed the parties only were discussing possible options. A business person should carefully consider whether his or her statements or the statements of other parties constitute offers. There are several factors to look at to determine whether a statement constitutes an offer.Acceptance in strict compliance with the terms of the offer.
The second requirement for a valid contract is acceptance of the offer. In order for an acceptance of an offer to be effective, it must be made while the offer is still open. In some situations, the company making the offer gives a definite time frame. There are two ways a person can accept an offer: by promising to do something, or by performing the desired act. In the first type, known as a bilateral contract, a customer accepts an offer to sell computer software by promising to pay $2000 for the software. In the second type, known as a unilateral contract, a business owner offers a contractor $1000 to replace ceiling tiles and the contractor replaces the tiles; the contractor accepted the offer by performing the act requested.consideration
Consideration is a legal concept that describes something of value given in exchange for a performance or a promise of performance. The presence of consideration distinguishes contracts from gifts. Consideration can be a promise to do something there is no legal obligation to do, or a promise to not do something there is a legal right to do. Promises to exchange money, goods, or services are forms of consideration. All parties in an agreement must give consideration in order to create a contract, but courts typically do not make a determination about the adequacy of the consideration unless there is evidence of some type of wrongdoing by the party benefiting most from the contract.Mutual assent (meeting of the minds) regarding material terms.
In order for a contract to be formed, there must be mutual assent, which is simply the agreement by both parties to enter into a contract. In deciding whether or not there is mutual assent, courts use an objective “reasonable man” test in which the court examines the exchange between the parties that led to the establishment of the contract and then determines what reasonable people in the place of the parties would have understood the exchange to mean. Please note that the court is not interested in what the parties actually thought. It is only interested in what a reasonable person in the same circumstances would have thought.Execution and delivery of the contract with the intent that it be mutual and binding.
Under Texas law, the parties form a binding contract by delivering it to the appropriate party. Delivery occurs when the party parts with possession or custody of an instrument with the intent that it become operative (Scaife v. Associated Air Ctr. Inc.,100 F.3d 406, 410-11 (5th Cir. 1996) (applying Texas law) (no contract was formed where the contract was never delivered or signed by the parties and work under the contract never began); Mid-Continent Cas. Co. v. Global Enercom Mgmt. Inc., 323 S.W.3d 151, 157 (Tex. 2010).)However, a contract need not be signed and delivered if the contract does not require it and the parties show intent by their conduct to be bound (Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007) (no mutual assent to form a contract where university never delivered signed draft of employment contract to plaintiff)).
