7 Legal Clauses Every Business Contract in Texas Should Have (But Most Don’t)

A business contract isn’t just a formality—it’s your first line of defense against lawsuits, late payments, and broken promises. But most Texas small business owners are signing (or writing) contracts that miss key protections.

Whether you're dealing with clients, vendors, or partners, including the right legal clauses can save you from thousands in future losses. Here are the 7 must-have contract clauses every Texas entrepreneur needs.

1. Clear Scope of Work in a Business Contract

Define exactly what’s being delivered, who’s responsible for what, and what’s not included. Ambiguity leads to disputes.

Example: “Deliver social media graphics for Instagram only; excludes paid ad campaigns.”

2. Payment Terms + Late Fee Clause 

State the exact amount, due date, and penalties for late payment.

Tip: Texas allows reasonable late fees—often 1.5% per month (18% annually) unless otherwise stated.

3. Termination Clause 

This clause protects both parties if things go south. Specify:

• When either party can end the contract

• Any required notice period (e.g., 30 days)

• Whether payment is still due upon early termination

4. Dispute Resolution (Arbitration or Mediation) 

Prevent expensive court battles by agreeing upfront how disputes will be handled.

Best practice: Mediation → Arbitration → Court (if needed)

5. Choice of Law + Jurisdiction 

In Texas, your contract should say that Texas law applies and disputes will be resolved in your county. Avoid being dragged into another state’s court system.

6. Confidentiality + IP Ownership 

Especially critical for startups, creatives, and consultants. Clarify:

• Who owns the work

• What info is considered confidential

• How long secrecy must be maintained

7. Force Majeure Clause (Acts of God) 

Protects you from liability in case of events outside your control—pandemics, natural disasters, strikes, etc. This became very relevant after 2020.

Bonus Tip: Use Written Contracts Every Time 

Oral agreements are enforceable in Texas, but very hard to prove. Always document agreements in writing, even if it’s a short engagement.

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If you're unsure whether your contracts are legally sound, we can help. 

📞 Book your free contract review today with The Spencer Law Firm. Serving Houston businesses with clarity, protection, and experience.