Is Verbal Contract Binding in Texas

Are Verbal Contracts Binding in Texas?

Contracts are a crucial aspect of conducting business, but not all agreements are put in writing. Some agreements are oral or verbal, which may lead to uncertainty about their enforceability. In Texas, verbal contracts are generally binding, although there are some exceptions.

The Texas Business and Commerce Code states that verbal contracts are enforceable unless the law requires them to be in writing. This means that if you and another party agree to something verbally, it is legally binding and can be enforced in court. However, proving the terms of an oral contract can be complicated, as there may be no written evidence of the agreement.

To establish the terms of a verbal contract, a court will consider various factors, including the circumstances surrounding the agreement, the conduct of the parties, and any written or verbal communications that took place before or after the agreement was reached. This means that if you are involved in a dispute over a verbal contract, it is essential to collect as much evidence as possible to support your claim.

Despite the general enforceability of verbal contracts in Texas, there are some situations where they may not be binding. For instance, contracts for the sale of goods over $500 must be in writing to be enforceable under the Uniform Commercial Code. Additionally, contracts for the transfer of real estate or agreements that cannot be performed within one year must also be in writing.

It is also worth noting that some verbal contracts may be unenforceable if they violate Texas law or public policy. For example, a verbal contract to perform illegal activities would not be enforceable.

In conclusion, verbal contracts are generally binding in Texas, but there are exceptions. If you are involved in a dispute over a verbal contract, it is essential to consult with a lawyer to understand your legal rights and options. Additionally, it is always advisable to put any significant agreement in writing, regardless of whether it is legally required, to avoid any misunderstandings or disputes.