In Texas, a contract is more than just a handshake or a promise—it is a legally binding agreement enforceable in court. Whether you are entering into a real estate transaction, a construction agreement, or a business partnership, the terms of your contract can determine your rights, remedies, and obligations for years to come.

Below are some vital contractual clauses under Texas law and why they matter.

1. Choice of Law and Venue Clauses

• Purpose: To determine which state’s law governs disputes and where lawsuits must be filed.
• Texas Impact: Texas courts generally enforce these provisions if they are clear and not against public policy. For businesses operating across multiple states, a Texas choice-of-law clause ensures predictability.

2. Arbitration and Mediation Provisions

• Purpose: To resolve disputes outside of court.
• Texas Impact: Under the Texas Arbitration Act, these clauses are widely enforceable. They can save time and costs, though they limit the right to a jury trial.

3. Indemnification Clauses

• Purpose: To shift liability from one party to another, typically for losses caused by negligence or third-party claims.
• Texas Impact: Texas law imposes strict requirements, especially in construction contracts, where “express negligence” and “conspicuousness” rules must be met for indemnity to be enforceable.

4. Liquidated Damages Clauses

• Purpose: To pre-determine damages if one party breaches the contract.
• Texas Impact: Enforceable if the damages are difficult to measure and the amount is a reasonable forecast—not a penalty. Texas courts scrutinize these provisions closely.

5. Non-Compete and Non-Solicitation Clauses

• Purpose: To restrict competition or solicitation after termination of a business or employment relationship.
• Texas Impact: Governed by the Texas Covenants Not to Compete Act, these clauses must be reasonable in scope, duration, and geography to be enforceable.

6. Force Majeure Clauses

• Purpose: To excuse performance when extraordinary events occur (e.g., natural disasters, pandemics).
• Texas Impact: Courts interpret them based strictly on the contract’s language. Without such a clause, parties may be left without relief.

7. Attorney’s Fees Clauses

• Purpose: To specify whether the prevailing party can recover attorney’s fees in a dispute.
• Texas Impact: While Texas Civil Practice & Remedies Code § 38.001 provides statutory attorney’s fees in certain cases, a contractual clause can expand or limit those rights.

8. Merger and Integration Clauses

• Purpose: To ensure the written contract is the final and complete agreement between the parties.
• Texas Impact: Prevents reliance on prior oral statements or negotiations, which is critical under Texas’s parol evidence rule.

Conclusion

The strength of a contract lies not in its length but in the precision of its terms. In Texas, where courts are willing to enforce well-drafted agreements, having the right clauses can mean the difference between certainty and costly litigation.

If you are entering into a contract—or if you’re unsure whether your agreements contain the protections you need—consult with a Texas attorney experienced in drafting and reviewing contracts. An ounce of prevention at the drafting stage can save years of disputes down the road.

At David C. Barsalou, Attorney at Law, PLLC, we help clients navigate business, family, tax, estate planning, and real estate matters ranging from document drafting to litigation with clarity and confidence. If you’d like guidance on your situation, schedule a consultation today. Call us at (713) 397-4678, email barsalou.law@gmail.com, or reach us through our Contact Page. We’re here to help you take the next step.