Contracts: Just Put It In Writing

You may already know that in many cases, “handshake” agreements between two or more parties are considered valid contracts in the State of Texas (1). So, why waste the paper to form a written contract? You will save time, money, and aggravation if there is a breach of contract.

While this may seem to make sense, self-employed contractors and small businesses continually enter into an agreement orally – usually with someone they perceive as trustworthy – and then spend a significant amount of time trying to prove exactly what was agreed to. This can lead to significant financial losses for you.

Texas state courts have clearly defined what is required to prove a breach of contract: (1) the existence of a valid contract; (2) that the plaintiff performed or tendered performance; (3) that the defendant breached the contract; and (4) that the plaintiff was damaged as a result of the breach (Frost Nat'l Bank v. Burge). What does this look like in practicum?

Let’s say you are a solo general contractor and agreed to paint the interior and exterior of your favorite local coffee shop after chatting with the owner one day. You tell her, “I can do it in two weeks for $3,000; $1,500 upfront and $1,500 when completed.” She feels that’s fair and you move forward after getting the details about colors. You finish on the 14th day and send her an invoice for the final $1,500. She said she will take a look to make sure she likes it. Another week goes by and she texts you she is unhappy with the work and will not pay until you fix the errors. Did the coffee shop owner breach the contract? Did you discuss a review period? Likely not because you have been painting for 20 years and know the quality you provide. A written contract could have protected you.

Whether you need help creating a contract, reviewing contracts, or believe a party has breached a contract, we are here to support you.

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1. https://statutes.capitol.texas.gov/Docs/BC/htm/BC.26.htm