What to Include in a Solid Business Contract in Texas

The Foundation of Every Texas Business Relationship

In Texas, a well-drafted business contract is more than a piece of paper — it’s a shield that protects both parties from misunderstandings, disputes, and costly lawsuits. Whether you’re hiring employees, engaging vendors, or signing a partnership deal, your contract should be clear, comprehensive, and enforceable.

Why Written Contracts Matter Under Texas Law

While verbal agreements can be valid in certain circumstances, they’re notoriously hard to prove in court. Under the Texas Business and Commerce Code, some contracts — such as those involving services over $500 or lasting more than a year — must be in writing to be enforceable.

A written contract:

• Clarifies expectations

• Defines rights and obligations

• Serves as evidence in case of disputes

Essential Elements of a Legally Binding Contract

To be enforceable in Texas, a contract must include four basic elements:

1. Offer and Acceptance: One party makes an offer, and the other accepts under the same terms.

2. Consideration: Both sides exchange something of value — money, services, or goods.

3. Legal Purpose: The contract must not involve illegal activities.

4. Capacity: Both parties must be mentally competent and of legal age.

10 Must-Have Clauses in Every Texas Business Contract

1. Identification of Parties

   Clearly list the legal names, business addresses, and titles of all involved parties.

2. Scope of Work or Services

   Specify what is being done, delivered, or provided — vague language can void a contract.

3. Payment Terms and Conditions

   Outline payment amount, due dates, late fees, and acceptable methods.

4. Confidentiality and Non-Disclosure

   This clause ensures that sensitive information stays private — especially in competitive industries.

5. Dispute Resolution and Governing Law

   Always state that the contract is governed by Texas law and define how disputes will be resolved (e.g., mediation or court).

6. Termination Clause

   Explain how either party can end the agreement and under what conditions.

7. Indemnification and Liability

   Assign responsibility for damages, losses, or third-party claims.

8. Force Majeure (Acts of God)

   Protects both parties from liability if unforeseen events (natural disasters, strikes) prevent performance.

9. Intellectual Property Ownership

   Clarify who owns content, software, or inventions created under the contract.

10. Signatures and Execution Dates

    Without signatures, even the best contract can be unenforceable.

Common Mistakes in Texas Business Contracts

Many business owners make these avoidable errors:

• Copying generic templates that lack Texas-specific language

• Forgetting to define jurisdiction or venue

• Leaving out key clauses like indemnity or dispute resolution

⚠️ Tip: Every contract should reference Texas law to avoid confusion if disputes arise across state lines.

How to Draft a Contract That Holds Up in Texas Courts

• Use clear, simple language

• Define terms consistently

• Avoid contradictions or blank sections

• Have it reviewed by a licensed Texas business lawyer before signing

• Store copies securely (digitally and physically)

When to Have an Attorney Review Your Contract

Always seek legal review when:

• Entering long-term or high-value deals

• Working with unfamiliar partners

• Modifying existing agreements

For official guidance, visit the Texas Business and Commerce Code.

Frequently Asked Questions (FAQs)

1. Are verbal contracts valid in Texas?

   Yes, but they’re hard to enforce without written evidence.

2. Should both parties have lawyers?

   Yes, especially for significant or long-term contracts.

3. What happens if a contract doesn’t specify governing law?

   Courts may apply general contract principles, which could be unpredictable.

4. Can I use templates from the internet?

   You can, but they often miss key Texas-specific clauses.

5. How often should contracts be updated?

   Review them annually or whenever business laws change.

6. Do contracts need to be notarized?

Not always, but notarization adds legal credibility.

Building Trust and Legal Security Through Strong Contracts

A solid business contract protects you, builds trust, and prevents costly disputes. In Texas, where handshake deals are still common, having everything in writing gives your business credibility and peace of mind.

Consulting a Texas business lawyer ensures your contracts are airtight, compliant, and tailored to your unique needs.

About the Author

Ashley M. Spencer, Esq. is a Partner at The Spencer Law Firm in Houston, Texas.

She represents clients in securities litigation, oil & gas disputes, intellectual property, and business law. Known for her strategic and assertive approach, Ashley recently secured a $3 million judgment in an oil and gas investment fraud case. She continues to build on the firm’s legacy by blending modern innovation with trusted legal excellence for Houston’s business community.

💼 15+ Years of Experience

Connect on LinkedIn

Know About Ashley Spencer

Reviewed by: Bonnie E. Spencer, Esq. is the Principal Attorney at The Spencer Law Firm in Houston, Texas. 

💼 With over 40 years of experience in business, securities, and complex litigation, she was the first woman in Texas to lead a securities class-action lawsuit. Bonnie combines deep financial insight with a client-focused approach, helping Texas businesses and investors protect their interests through strategic legal representation.

Know About Bonnie

Disclaimer