Robert D. Hemphill, PLLC

The following is a short excerpt from Mr. Hemphill’s seminar presentation in August, 2001, Business Contracting in the State of Texas, which may be of interest. The entire article is available by e-mail upon request.

Practical pointers regarding contract documentation.

The party attempting to enforce a contract in a court of law bears the burden of proof as to all elements of the contract. Written contracts are therefore always preferable because they are easier to prove. However, contracts within the statutes of frauds [such as for the sale of real property] MUST be in writing or they are generally unenforceable even if they can be proven to have been entered into by the parties.

Oral contracts, although harder to prove, have resulted in liability even in large commercial transactions. Therefore, be careful with oral promises or representations in a business context. If misunderstood or perhaps intentionally misconstrued, your words could become the basis of a law suit against you or your company which, even if unsuccessful, involve substantial cost to defend.

Properly drafted documents are easier to enforce and therefore act as a deterrent to non-performance. Written documents can also avoid confusion as to oral statements made during negotiations which were not intended to be incorporated into the final agreement of the parties.

Once a party signs, he is bound by his contract even if the other party may have orally agreed to different terms or even if he never read the agreement. Consequently, a party must review a written agreement to insure it complies with his understanding. He cannot rely on what someone said is or would be in the contract.

Problems with incomplete or ambiguous documentation.

Contracts that leave out an essential term or provide that an issue will be determined later without a means to do so are unenforceable. Likewise, contracts which must be in writing require a complete written description of any property or other subject matter involved in order to be enforceable. Therefore, all documents must be reviewed carefully to be sure all issues are addressed. In particular, be certain any specifications or other material incorporated by reference is clearly identifiable or attached to the contract, preferably to be initialed by all parties.