A Deal’s a Deal – Right?

Posted on Mar 2, 2020

“In Texas, a deal is, of course, a deal.” That’s how the Supreme Court of Texas started off its recent opinion in Chalker Energy Partners III, LLC et. al v. Le Norman Operating, LLC. But by the end of the opinion, the Court had determined—as it has many times before—that an alleged agreement between the parties was not a binding, enforceable contract.

In the Chalker Energy case, the parties had exchanged a series of e-mails and it seemed (at least to the buyers) that they had reached an agreement for the sale and purchase of working interests in approximately 70 oil and gas leases. But when the sellers opted to go with a different buyer, the original buyers sued to enforce the “contract” that they claimed had been agreed to in the e-mail exchanges. The court determined that an unambiguous “no obligations” clause sank the would-be contract because that clause anticipated the preparation of a more comprehensive agreement. The clause read that “unless and until a definitive agreement has been executed and delivered, no contract or agreement providing for a transaction between the Parties shall be deemed to exist and neither Party will be under any legal obligation of any kind whatsoever with respect to such transaction.” Because the e-mails did not constitute a definitive agreement, there was no contract.

There are several other situations in Texas where a deal is not necessarily a deal. While many Texans may be nostalgic for the days of the handshake agreement, the fact is that courts will not always enforce a purported agreement, even when one party believes that a deal has been made and has put key terms in writing.  Hiring a lawyer to provide advice about entering into an enforceable agreement, reviewing the desired terms of your agreement, negotiating those terms, drafting your agreement for or with you, or ultimately suing to enforce your agreement, can help ensure that you are not left holding a document worth nothing more than the paper itself.

For more information on how to protect yourself and ensure that you are entering into an enforceable agreement (or to confirm the enforceability of an agreement you have already entered into), contact Clint Buck in our litigation practice group or Aaron Barton in our real estate and business practice group at 210-598-5400.