The Nacol Law Firm PC

Law Office of Dallas area trial lawyer, Mark Nacol

The Environmental Whistleblower

leave a comment »

Environmental employees may file a complaint if their employer retaliates against them with unfavorable personnel action because they report environmental violations.  The following is a list of statutes that protect environmental whistleblowers.

The Asbestos Hazard Emergency Response Act (AHERA) provides protections for individuals who report potential violations of environmental laws relating to asbestos in elementary and secondary schools.

The Clean Air Act (CAA) provides protection for employees who report potential violations regarding air emissions from area, stationary and mobile sources into the air. 

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) provides protections for employees who report potential violations regarding clean-up of uncontrolled or abandoned hazardous waste sites as well as accidents, spills, and other emergency releases of pollutants and contaminants into the environment.

The Federal Water Pollution Control Act (FWPCA) provides protections for employees who report potential violations regarding discharges of pollutants into the waters of the United States.

The Safe Drinking Water Act (SDWA) provides protection for employees who report potential violations regarding all waters actually and potentially designed for drinking use, whether from above ground or underground sources.

The Solid Waste Disposal Act (SWDA) provides protections for employees who report potential violations regarding the disposal of solid and hazardous waste at active and future facilities.

The Toxic Substances Control Act (TSCA) provides protections for employees who report potential violations regarding industrial chemicals currently produced or imported into the United States.

If your employer is covered under one of these statutes, it may not discharge or in any manner retaliate against you because you reported potential violations of environmental laws and regulations.  Your employer may not discharge or in any manner retaliate against you because you filed, caused to be filed, participated in or assisted in a proceeding under one of these laws or regulations.

Your employer may be found to have violated one of these statutes if your protected activity was a motivating factor in its decision to take an unfavorable personnel action against you, such as:

  • Firing or laying off
  • Blacklisting
  • Demoting
  • Denying overtime or promotion
  • Disciplining
  • Denying benefits
  • Failing to hire or rehire
  • Intimidation
  • Reassignment affecting promotion prospects
  • Reducing pay or hours

 Depending on the statute, complaints must be filed within 30 days under CAA, CERCLA, FWPCA, SDWA, SWDA, TSCA or 90 days for AHERA after the alleged unfavorable personnel action occurs.

Prenuptial Agreements

leave a comment »

A prenuptial agreement is a contract entered into by the parties prior to a marriage or civil union. The content of a prenuptial agreement can vary widely, but commonly includes provisions for division of property and spousal support in the event of divorce or breakup of the marriage. They may also include terms for guardianship and the forfeiture of assets as a result of divorce on the grounds of adultery, cruelty or legal abandonment. Laws vary between states and countries on how to draft prenuptial agreements.  In the United States prenuptial agreements are recognized in all fifty states, but must be drafted and executed properly.

More and more couples are signing prenuptial marriage agreements. The spouses are not just couples dealing with financial inequality or couples of great wealth. They are couples who want to put all their financial cards and related issues on the table before they walk down the aisle, often to avoid great expense and prolonged painful litigation should the marriage fail.  The following is a partial list of pros regarding prenuptial agreements:

1.  A premarital agreement can protect the inheritance rights of children and grandchildren from a previous marriage.
2.  If you have your own business or professional practice, a premarital agreement can protect that interest so that the business or practice is not arbitrarily divided or unreasonably convoluted or subject to the control or involvement of your former spouse upon divorce.
3.  If one spouse has significantly more debt than the other, a premarital agreement can protect the debt-free spouse from having to assume or be liable for the obligations of the other.
4.  If you plan to give up a lucrative career after the marriage, a premarital agreement can ensure that you will be compensated for that sacrifice if the marriage does not last.
5.  A premarital agreement can address more than the financial aspects of marriage, and can cover any of the details of decision-making and responsibility sharing to which the parties agree in advance.
6.  A premarital agreement may limit or pre-structure, subject to court scrutiny, the amount of spousal support that one spouse will have to pay the other upon divorce.
7.  A premarital agreement can protect the financial interests of older persons, persons who are entering into second or subsequent marriages, and persons with substantial wealth.

Prenuptial agreements are, at best, a partial solution to obviating some of the risks of marital property disputes in times of divorce.  The following is a list of the possible pitfalls of a prenuptial agreement:

1.  The agreement may require you to give up your right to inherit from your spouse’s estate when he or she dies. Under the law, you are entitled to a portion of the estate even if your spouse does not include such a provision in his or her will.
2.  If you contribute to the continuing success and growth of your spouse’s business or professional practice by entertaining clients and taking care of the home, etc., thus allowing him or her to focus on professional endeavors, you may not be entitled to claim a share of the increase in value if you agree otherwise in a premarital agreement. Under the laws of many states, this increase in value would be considered divisible marital property.
3.  Starting a relationship with a contract that sets forth the particulars of what will happen upon death or divorce can undermine the sense of trust one wishes for upon marriage.
4.  As mentioned above, a contract can take the wind out of your emotional sails.
5.  It can be difficult to accurately project into the future which potential issues should be addressed, and what may seem like an inconsequential compromise in the romantic premarital period may seem more monumental and burdensome in reality.
6.  A low- or non-wage-earning spouse may not be able to sustain the lifestyle to which he or she has become accustomed during the marriage if the agreement substantially limits property division by the court or the amount of spousal support to which that spouse is entitled.
7.  In the “honeymoon” stage of a relationship, one spouse may agree to terms that are not in his or her best interests because he or she is “too in love” to be concerned about the financial aspects and can’t imagine the union coming to an untimely end.

Preventive Legal Care – Relatively Simple Things Make Large Differences in Legal Costs

leave a comment »

A commentary by Dallas Attorney Mark Nacol,
of the Nacol Law Firm PC.


During the last 37 years of general practice in a number of civil law areas, I have had the opportunity to observe repetitive mistakes and decisions made by clients in regard to whether or not preventive legal care is cost-worthy.

Most prudent people do not think twice about having their teeth cleaned, becoming vaccinated for the flu or other childhood illnesses, going to their doctor if they are dizzy, having speech problems or other symptoms of stroke diagnosed or changing the oil in their automobile.

The average person clearly acknowledges the flu shot is definitely preferable to two weeks in bed.  Basic dental hygiene trumps a root canal every time.  A blood thinner medication is far preferable to paralysis or brain damage, and early detection of cancer or other invasive diseases, may significantly improve prognosis for recovery.

On the other hand, when it comes to the ordinary individual’s legal needs, I have noted throughout the years and continue to note a juvenile and somewhat cavalier attitude.  The result is denial and refusal to consider relatively small fees required to bring preventive legal care into play.

Depending on the size and nature of a man, woman or a couple’s estate, probate planning in the form of wills, durable powers of attorney, medical directives, medical authorizations, medical powers of attorney, testamentary and/or intervivos (living) trusts can avoid future attorney’s fees from 50 to 100 times the amount required for preventive care.  Probate and/or litigation without a will in a large estate, disability, dementia, Alzheimer disease or other medical issues requiring guardianship and/or extraordinary legal procedures vastly exceed the basic costs of preventive care.  The cost of fixing the legal problem after the event is extraordinary versus the simple matter of preventive legal care in the first place.  Fees ranging from $500 to $5,000, depending on the complexity of the estate or matter, at first blush might appear large but may frequently be increased by 2 to 3 zeros in complicated, complex litigation that can last for years.

Marital prenuptial agreements are emotionally delicate, but may be a useful and significant tool to provide creditor protection throughout a marriage and reduce the cost of dissolving a marriage, an unfortunate circumstance, by thousands and thousands of dollars.

A properly prepared and executed contract for the purchase and sale of land or for the purchase and sale of a business when accomplished before the transaction is essential in fixing the rights of the parties, establishing enforceability of their promises and the cost necessary to force compliance with those promises.  Time after time, I find a client who comes into my office and looks at me with dog eyes and says, “Can you help me in this business transaction?  I’ve already signed the contract.”  My response, of course, is “Yes, it is my pleasure.  But, it is going to be far more expensive now than if you had simply prophylactically entered into an enforceable agreement prior to the conduct you allege is fraudulent or the subject of a breach at this time.”

The examples above may be extended into almost every area of the law.  Why in the world would anyone want to market an invention, a well known mark of their business or trade, a manuscript or other written document without first having protected those items through trademarks, patents, copyrights or, at the very least, non-disclosure agreements?  A common complaint echoed throughout the years has been the significant cost of the judicial system and the financial burden of enforcing ones right in the courts of law of the state or federal government.  With a bit of foresight and ingenuity and the help of an ethical, competent attorney, and the willingness to spend a smaller sum of money, many of the problems, disappointments and disenfranchisements with the judicial system may be bypassed altogether.

In closing, I am reminded of the classical advertisement by Mr. Goodwrench.  “Pay me now or pay me later.”  Preventative maintenance of the most important legal aspects of your life are as important as preventive maintenance of your car.  Have you priced a new engine versus a can of oil lately?

Supervised Visitation in Texas – Part 1

leave a comment »

Former spouses often use informal visitation arrangements as an opportunity to assault, harass, stalk, and emotional abuse their children and former partners.  In addition, some parents will use their children as a means to hurt the other parent by denying access to the child(ren) even though such access has been ordered by the court, i.e. failing to be at home during scheduled visitation periods, failing to bring the child(ren) to a scheduled location for the other parent to exercise their court ordered visitation, faking illness, etc.

Supervised visitation takes place between the non-custodial parent and his or her child(ren) in the presence of a third party who observes the visit to ensure the child’s physical and emotional safety.  Though sometimes reasonably and successfully ordered, visits voluntarily supervised by friends and family in their homes can be fraught with danger for the child and parent, as well as the monitor, especially in cases of domestic violence.  Family members may trust the parent whose visits are being supervised and therefore may not take proper or sufficient measures to assure the child(ren) are watched or monitored at all times during the visit. 

Consequently, when supervision is indicated, possession/visitation supervised by a neutral third party with the capacity to enforce effective safety measures is normally ordered and enforced by the courts.  The expenses of such supervision are often excessive and may in themselves create a detriment to possession by a parent.  Such agencies may also provide reports and recommendations to the court based on the success or failure of the supervised visits.  Such recommendations assist the courts in making informed decisions regarding supervision and whether continued supervision in the best interest of the child(ren).

If supervised visitation is requested, some type of compelling reason and evidence, based on the circumstances surrounding the child(ren) must normally be established.  Such evidence may include denial of access, drug addiction, mental or physical abuse, neglect, or severe mental illness of a parent.  The following is a potential list of acts and/or circumstances that may be considered contrary to a child’s best interest.

• Violence or physical endangerment – A noncustodial parent may be denied visitation rights if the parent has abused the child or threatened physical violence.
• Emotional harm – Where sufficient proof is offered of potential emotional harm or that standard visitation has detrimentally affected a child’s welfare, supervised visitation may be ordered.
• Child’s wishes – A court may consider the child’s wishes as to visitation.  The weight given to a child’s preference is dependent on the child’s age, emotional stability, maturity and motives.
• Abduction – There must be a showing that there is a strong imminent probability of abduction to limit visitation on this basis.
• Substance abuse – A parent who abuses drugs or alcohol may be ordered to supervised visitation restrictions if the conduct endangers the child or if the parent uses abusive language and/or mistreats the child.
• Mental illness –Mental incapacity may be a reason for supervised visitation only if it is determined by the court that there is a reasonable potential for harm to the child due to such mental illness.
• Sexual behavior – Courts rarely deny visitation solely on the basis of a non-marital heterosexual relationship.  Courts will, however, cancel overnight visitation by a child with a parent because of the parent’s cohabitation on a showing of an adverse and material negative impact on the child.
• Incarceration – Visitations due to incarceration may be suspended only on a showing that such visits are detrimental to the child.

To have more of your questions answered on supervised visitation in Texas, or for answers to any other Texas child custody concerns you may have, call  Dallas Divorce attorney Mark Nacol of the Nacol Law Firm P.C.

Texas and Federal Confidentiality Laws – Use Caution with Your Texas Divorce

leave a comment »

There are many legal and proper ways to obtain proof of a spouse’s infidelity.  Take care to avoid tactics used to obtain private information that may violate federal and Texas confidentiality laws and a spouse’s right to privacy.  You may be tempted by others to obtain proof of a partner’s infidelity by various inappropriate and/or illegal methods.  Reading emails, recording telephone calls, installing spyware or geographical tracking devices or even setting up hidden cameras are just a few methods a spouse may be offered when entertaining the thought of catching a cheating spouse.  However, such actions may expose both parties and their attorney to civil liability and possible criminal penalties.  Under Texas law, it is a crime to install a geographical tracking device on a vehicle owned by another person.  When emotions are running high, it is imperative that you seek proper counsel as to the proper legal action to be taken when establishing facts.

Both federal and state wiretapping laws apply to divorcing spouses.  A spouse may sue the other spouse or their agents for invasion of privacy.  Federal law regulates electronic surveillance of conversations and access to emails, faxes and voicemail.  The law imposes civil and criminal sanctions for intentional interceptions of electronic communications.  However, accessing email after it has been transmitted, i.e. downloading a text from your telephone or email from the hard drive of a family computer, is not an offense under the Federal Act.  Texas has laws that also prohibit the interception of communications.  Under such laws, counsel may also be held liable if they disclose information received from the intercepted communications provided by their clients.

Federal and Texas laws both allow recording of telephone calls and other electronic communications with the consent of at least one party to the communication.  Under the one-party consent statutes, a spouse may record conversations in which he or she is participating.  This has been extended to include parental recording of a child’s conversations with a third party, including the other parent.  The parent can consent to the recording on behalf of the child so long as the parent has a good faith objective and a reasonable belief that it is in the best interest of the child, even if the child is unaware of the recording.

It is important that a spouse take great care in their means and methods of gathering information.  Information obtained by illegal means can expose one, even if he or she is a spouse, to civil liabilities and possible criminal prosecution.  Texas recognizes that every person has a certain right to privacy.  Such right is violated if a person intentionally intrudes upon the private affairs of another by offensive means.  Accessing stored email or secretly recording a spouse can be a violation of a spouse’s right to privacy.  If a suit is filed, the damaged spouse may recover monetary damages, including punitive damages.

For answers to your questions on gathering information for your Texas Divorce, contact Dallas Divorce attorney Mark Nacol with the Nacol Law Firm, P.C.

Forming a Texas Business Corporation

leave a comment »

A corporation is a legal entity that is granted a charter recognizing it as a separate legal entity having its own privileges, and liabilities distinct from those of its shareholders.  When it is formed it becomes a separate entity from the people who own the stock of the corporation.  For this reason, a corporation’s actions are made by the corporation and not by an individual person.  This legal distinction is what separates the liability of the Texas corporation from the individual and is a major consideration in deciding to form a corporation.

Anyone can form a corporation in Texas.  A corporation can form another corporation.  Once the corporation is formed, the entity formed is responsible for all actions done in the corporate name.  The new entity is required to file state and federal taxes and acquire any licenses to do business in the name of the corporation.  The corporation can purchase insurance, own real estate and cars and other assets or personal property as if were a natural person.  It is responsible for actions both good and bad done in its name.  If a corporation fails, shareholders normally only stand to lose their investment, and employees will lose their jobs, but neither will be further liable for debts that remain owing to the corporation’s creditors.

Corporations can exercise human rights against real individuals and the state, and they may be responsible for human rights violations.  There are five core characteristics of a business corporation:

•Legal personality
•Limited liability
•Transferable shares
•Centralized management under a board structure
•Shared ownership by contributors of capital

Generally, the corporation files articles of incorporation with the government, laying out the general nature of the corporation, the amount of stock it is authorized to issue, and the names and addresses of directors.  Once the articles are approved, the corporation’s directors meet to create bylaws that govern the internal functions of the corporation, such as meeting the procedures and officer positions. 

•Some of the advantages of a corporation are as follows:

•Shareholders have limited liability for the corporation’s debts or judgments against the corporation.

•Generally, shareholders can only be held accountable for their investment in stock of the company.

•A Texas corporation may deduct the cost of benefits it provides to officers and employees. 

•A corporation pays 15% federal income tax on taxable income up to $50,000; 25% tax on income from $50,001 – $75,000; 34% tax on income from $57,001 – $100,000; 39% tax on income from $100,001 – $335,000; and 34$ tax on income over $335,001

There are some disadvantages to a corporation.  The process of incorporating a business in Texas may require more time and money than other forms of organizations and the corporation may be monitored by federal, state and some local agencies and as a result require have more paperwork to properly comply with regulations.  Incorporating may also result in higher overall taxes in some circumstances. 

For answers to your questions on forming a business corporation in Texas, contact Dallas business attorney Mark Nacol with the Nacol Law Firm, P.C.

Tax Year 2009- Divorce and Dependent Exemption Tax Deduction Changes

leave a comment »

2009 tax year and forward, the Child Dependent Exemption Tax Deduction rules related to divorce have been amended by the Internal Revenue Service.

The changes to the 2009 tax code are as follows:

1. The custodial parent, for 2009 & forward, is the one with whom the child resides the greater number of nights during the year, regardless of the divorce decree terms.

2. You must obtain IRS Form 8332 (Release of Claim to Exemption for Child of Divorce or Divorced Parents) to claim the exemption if you are the non-custodial parent. The divorce agreement or court order will not be used to substitute for IRS Form 8332.

3. The custodial parent can unilaterally revoke the release of a child exemption for calendar years 2009 & forward, even if the release was made prior to 2009.

The parent claiming a dependency exemption on the child/children is the only parent eligible for the following tax benefits:

  • Dependent Exemption Deduction
  • Child Tax Credit
  • Child and Dependent Care Credit
  • Education Credit or Education Expense Deductions
  • Earned Income Credit
  • Head of Household Filing Status

With all the new changes, all non-custodial parents who plan to take a dependency exemption should obtain IRS Form 8332 for 2009 & forward tax years. A divorce agreement or court order cannot be substituted!

In any future settlement agreements that include a provision for a non- custodial parent to take a dependency deduction for one or more children in one or more future tax years, have the custodial parent complete IRS Form 8332 when executing the settlement agreement. Sometimes it is very difficult to get ex-spouses to sign off on papers at a later date!

Texas Contract Interpretation

leave a comment »

The most basic principal of contract interpretation is that a contract is interpreted objectively and not subjectively.  This idea originated at Harvard Law School, but still holds true in Texas today. 

The formal view of contract interpretation ignores what the contracting parties thought the bargain to be and instead asks what a reasonable third party would interpret the words of the contract to mean.  This approach is reflected in the following quotation from Federal District Judge Learned Hand:

A contract has, strictly speaking, nothing to do with the personal or individual intent of the parties.  A contract is an obligation attached by the mere force of law to certain act of the parties, usually words, which ordinarily accompany and represent a known intent.

A contract requires a meeting of the minds.  A determination of whether there was a meeting of the minds is based on objective standards of what the parties said and did, not on their alleged subjective states of mind. In re Hudgins, 188 BR. 938, 942 (E.D. Tex. Bankr. 1995), cited in Spectrum Creations L.P. v. Carolyn Kinder Int’l LLC, 2008 WL 416246, *45 (W.D. Tex. 2008).

An integrated agreement may be either fully integrated or only partially integrated.  A fully integrated contracted is a final and complete expression of all terms agreed upon between or among the parties.  A partially integrated contract is a final and complete expression of the terms regarding an agreement, but not a final and complete expression of all terms agreed upon between the parties.  Some of the terms agreed upon are not contained in the written agreement.

Under the Parole Evidence Rule, if the parties have integrated their agreement into a single written contract, all prior negotiations and agreements with regard to the same subject matter are excluded from consideration, whether written or oral.  Parole evidence is admissible to supplement or explain a partially integrated contract, but is not admissible to contradict it.

The primary duty of a court when considering the validity of a contract is to ascertain the intent of the parties from the contract as a whole, known as the “four corners rule,” not from isolated parts of the contract.  This rule requires the court to look at the words of the contract, not prior drafts or exchanges of letters or other documents or testimony to determine the intent of the parties.  To achieve this goal, the court must examine the entire document and consider each part with every other part so that the effect and meaning of one part on any other part may be determined.  No one phrase, sentence or section of a contract should be isolated and considered apart from the other provisions.

Terms of a contract are given their plain, ordinary and general meaning unless the instrument shows that the parties used them in a technical or different sense.  Words should be taken in their immediate context. 

The expression of one thing is the exclusion of another.  This is used to control, limit or restrain the otherwise implied effect of an instrument, and not to annex incidents to written contracts in matters with respect to which they are silent. 

When words of a general nature are used in connection with the designation of particular objects or classes of persons or things, the meaning of the general words will be restricted to the particular designation.  In some cases a list of consistent terms will include an overly-broad term that seems to reach beyond the scope of the other things listed.  Ejusdem generis will limit an overly-broad term to be consistent with the list.  However, the doctrine is not limited to lists.  It can also apply to sentences in a paragraph.

When a contract is unambiguous, the court should apply the pertinent rules of construction, apply the plain meaning of the contract language, and enforce the contract as written.

It is a generally accepted rule of contracts that where several contracts are executed contemporaneously or at different times and pertain to the same transaction, they will be read together although they do not expressly refer to each other. 

There are other general rules such as:  Specific terms will prevail over general terms.  Earlier terms will prevail over later terms, except in the instance of a Will.  Handwritten terms will prevail over typed terms and typed terms will prevail over preprinted terms.  Words prevail over number or symbols.  Courts are required to follow elemental rules of grammar for a reasonable application of the legal rules of construction. 

It is also a rule universally recognized that if an instrument admits of two constructions, one of which would make it valid and the other invalid, the former must prevail. 

There is a presumption against illegality.  When a contract by its terms, construed as a whole, is doubtful, or even susceptible of more than one reasonable construction, a court will adopt the construction which comports with legality.  It is presumed that in constructing contracts the parties intend to observe and obey the law.

Finally, when agreements between parties are reduced to writing, the written instrument is presumed to embody their entire agreement, and the court should not read into the instrument additional provisions unless this is necessary to effectuate the intention of the parties as disclosed by the contract as a whole.  Danciger Oil & Ref. Co. v. Powell, 154 S.W.2d 632, 635 (Tex. 1941).

Mental Illness and the Child Custody Case

leave a comment »

According to the National Institute of Mental Health, an estimated 26.2 percent of Americans age 18 and older – about one in four adults – suffer from a diagnosable mental disorder in a given year.  This figure translates to 57.7 million people.  Many people suffer from more than one mental disorder at a given time.  Nearly half (45 percent) of those with mental disorder meet criteria for two or more disorders, with severity strongly related to co-morbidity.  Mental illnesses are biologically based brain disorders.  A diagnosed mental illness in a custody case may not only affect the eventual outcome of the case, but may also determine how counsel prepares his or her particular case strategy. 

There are degrees of severity and levels of functioning with all mental disorders, and in the context of a contested custody case an extreme position can be easier for an attorney to handle.  The fact finder is evaluating each parent’s ability to meet the child’s needs and the parties’ particular parenting abilities.  A psychiatric diagnosis is not in and of itself a measuring tool.  The specific acts of each parent must be examined in detail.

One important factor to consider is a request for psychological testing or the appointment of a counselor or psychiatrist to evaluate the parties.  If the party with the mental illness has not admitted they have an illness, the results of court-ordered evaluations may force the issue and may also provide additional evidence to support a modification of temporary orders. 

Counsel may want to recommend to the court that the child attend therapy.  You may suggest the use of the therapist, psychiatrist, or psychologist of the person with the mental disorder for recommendations to the court of the parent’s visitation with the child. 

Counsel may also want to consider a temporary injunction in addition to the standard temporary injunction for the preservation of property and protection of the parties and the children.  Some issues to consider are preventing the use of alcohol within 24 hours of possession of the children; preventing the mentally ill party from operating a motor vehicle while taking medications, and preventing the parties from making disparaging remarks regarding the other party. 

It is important that counsel identify and define the particular drugs the mentally ill patient is taking.  Counsel should request a HIPPA Release (specifically related to mental health disclosures) allowing access to medical and prescription drug records of the mentally ill party.  Research should then be performed as to the effects of each drug on the mentally ill person. 

It may be necessary to have an Amicus Attorney appointed to represent the interests of the children.  The Amicus Attorney has a powerful role in the contested custody case and can assist in gaining information on the mentally ill party.  All parties should cooperate fully with the Amicus Attorney for the best interest of the children.  It is important to make yourself available to the Amicus Attorney and to be pro-active in setting up appointments.  It is important that counsel instruct you as to what to say and what not to say to the Amicus Attorney.  It is also critical that counsel respond to any discovery propounded by an Amicus Attorney timely.

Be sure to educate yourself about the particular mental disorder you are dealing with.  Make sure your experts have experience in handling the particular mental disorder in questions.  Counsel should use the testimony of experts to offer aid and/or educate the judge and/or jury so they have a clear understanding of the mental illness and its foreseeable consequences to the spouse and/or family members.

Contracts in Texas

leave a comment »

A contract is defined as a promise or set of promises with legal consequences.  Normally, contractual promises are enforceable in a court of law.  The law gives official recognition of the written contractual promises and offers remedies when the promises are not fulfilled.

The Supreme Court of Texas has noted that every contract includes an element of confidence and trust that the parties will faithfully perform their obligations.  There is no duty of good faith and fair dealing unless the duty is created by express language in the contract or a special relationship of trust and confidence exists between the parties to the contract.

In Texas, the requirements for a valid written contract are:  1) an offer; 2) an acceptance in strict compliance with the terms of the offer; 3) a meeting of the minds (which is actually a subpart of the accepted elements, not an independent element; 4) each party’s consent to the terms; 5) consideration; and 6) execution and delivery of the contract with the intent that it be mutual and binding.

A basic element of the contract is the promise, which may be an express or implied promise made by one party for the purpose of assuring another person that a particular action or restraint from a particular action will occur.  This is objectively determinable from the parties’ words or actions and not from either party’s subjective intentions. 

Contracts may be unilateral or bilateral.  A unilateral contract has only one promisor; the promisee makes no commitment.  Mutuality of obligation is not essential for a unilateral contract to be formed.  A unilateral contract is completed by the promisee’s performance of the act or acts called for by the promisor, not by the promisee’s making of any reciprocal promises.  The promisor becomes bound to provide the promised benefit when the promisee delivers the bargained-for performance.  There is no binding unilateral contract unless the promisee performs, or at least partly performs the acts requested by the promisor.  Until such time, the promisor may revoke its offer.  An option agreement is a common unilateral contract.  An option agreement is a promise, or offer, by the optionor that the optionee may accept or reject.  Until the option is exercised in accordance with the offer, the contract remains unilateral.  The contract becomes binding when the option is properly exercised.

A bilateral contract is one in which there are mutual and/or bilateral promises made between the parties.  If the parties have entered into a bilateral contract in which their promises are the only consideration for the agreement, their obligations must be mutual and binding for the contract to be valid.  A common example of a bilateral contract is one in which one party promises to deliver goods to the other, and the other party promises to pay the specified purchase price.

There must be an offer, an acceptance and consideration for a contract to be recognized and enforceable.  To prove a valid offer a party must show 1) the offeror intended to make an offer, 2) the terms of the offer were clear and definite, and 3) the offeror communicated the essential terms of the offer to the offeree. 

The offer may dictate the manner, time and place of acceptance of the offer.  Under such circumstances, an offer not accepted in a timely or proper manner lapses.  When an offeree rejects an offer, the offer is terminated.

An acceptance must be identical to the offer or there is no binding contract.  Generally, an acceptance must not change or qualify the terms of the offer or the offer is rejected.  When an offer prescribes the manner of acceptance, its terms must be followed in such manner of acceptance in order to create a contract.  If an offeree fails to accept in the prescribed manner and attempts to accept in some other manner, a contract is formed only if the offeror waives strict compliance with provisions concerning the manner of acceptance. 

An oral offer may be accepted by execution of a written instrument that embodies the terms of the agreement.  Further, a written offer may, in some circumstances, be accepted orally.  Acceptance may also be shown by conduct. 

An acceptance is valid only if made before an offer is revoked or lapsed.  An acceptance takes effect and creates a contract when it is communicated to the offeror.  Acceptance is not effective when some abstract conduct other than communication to the offeror occurs.  The accepting party may change his or her mind until the act of acceptance is actually communicated to the offeror. 

Although an acceptance is effective only when communicated to the offeror, when an offer may be validly accepted by mail, the “mailbox” rule provides that the communication has been made and the contract is binding when the offeree deposits a properly addressed letter of acceptance in the mail, regardless of whether it is actually received by the offerror. 

Mutual assent is often described as a “meeting of the minds.”  Evidence of mutual assent in written contracts generally consists of the parties’ signing the contract and delivery of the contract with the intent to bind.  To determine whether a meeting of the minds existed, a court reviews what the parties actually said and did.  The parties’ failure to agree on a material term precludes a meeting of the minds necessary for a valid contract. 

In some cases, what appears to be a valid offer and acceptance results in only a voidable contract because one party’s consent was, in fact, procured by fraud, undue influence, duress, or mistake. 

Under Texas law, a party must protect personal interests by reading a contract before signing it.  Absent fraud, the person is not excused from the consequences of failing to meet this obligation.  If a person signs a contract without knowledge of its contents, they are presumed to have consented to the terms of the contract.  Claims of belief that provisions differed from those plainly set out in the written contract are not generally admissible.

 

Follow

Get every new post delivered to your Inbox.