A highly important part of business is entering into contracts with other businesses for goods or services. Whether you are providing or receiving the goods or services, it is essential to ensure that your contract meets all the necessary legal requirements to be legally enforceable. One requirement that may exist under certain circumstances is that the contract must be in writing.
Many businesses with long-standing relationships may feel comfortable entering into verbal contracts, especially if the contract is based on prior business dealings. As your relationship builds, formal invoicing and ordering may become less and less if you trust the other business owners. However, there is always a chance for a misunderstanding or another conflict regarding obligations and expectations under the agreement. For clarity purposes, it is always best to memorialize a contract in writing to avoid later confusion.
In addition, a law referred to as the “statute of frauds” requires that contracts with certain terms always be in writing in order to be enforceable. Texas has its own version of the state of frauds in the state Business and Commerce Code. The law states that contracts must be written and signed under the following circumstances:
- Any agreement that will not be completed within one year
- A promise to cover the debts of another person or business
- The sale or purchase of real property or a lease lasting more than one year
- Certain healthcare agreements
- Agreements regarding payment of commissions for oil, gas, or mineral leases, royalties, or interests
- Loan agreements over $50,000.
If your business contract involves any of the above, it must be in writing. However, it is always a good idea to have written contracts regardless of the subject matter of the agreement.
Discuss Your Situation with a Houston Business Contracts Attorney
Knowing whether a contract complies with the law and is enforceable is complicated. It is always best to have a highly skilled business contracts lawyer draft your contracts, negotiate terms, and review any contracts presented to you. At the Weisblatt Law Firm, attorney Andrew Weisblatt has extensive experience handling all types of business contracts, so please call our office today at 713-666-1981 for more information.