Consideration as an element of a valid contract

A contract must be based upon a valid consideration, in other words, mutuality of obligation. Iacono v. Lyons, 16 S.W.3d 92, 94 (Tex. App.-Houston [1st Dist.] 2000, no pet.); see Texas Gas Util. Co. v. Barrett, 460 S.W.2d 409, 412 (Tex. 1970). Consideration is a bargained-for exchange of promises. ULICO Cas. Co. v. Allied Pilots Ass'n, 262 S.W.3d 773, 790 (Tex. 2008). Consideration consists of benefits and detriments to the contracting parties. Id. The detriments must induce the parties to make the promises and the promises must induce the parties to incur the detriments. Id. 

SOURCE: DALLAS COURT OF APPEALS - No. 05-16-00458-CV - 8/8/2017   
CASE STYLE: Chatelain v. GIDEON MATH & READING LLC, Tex: Court of Appeals, 5th Dist. 2017 (single issue appeal on enforceability of alleged contract, declaratory judgment claim vs breach of contract claim in the summary judgment context) 

SUSAN CHATELAIN, Appellant,
v.
GIDEON MATH & READING LLC, Appellee.

No. 05-16-00458-CV.

Court of Appeals of Texas, Fifth District, Dallas.

Opinion Filed August 8, 2017.

Affirmed in part, and Reverse and Remand in part.

Before Justices Bridges, Myers, and Brown.

MEMORANDUM OPINION

Opinion by Justice DAVID L. BRIDGES.

Susan Chatelain appeals the trial court's summary judgment in favor of Gideon Math & Reading LLC on Chatelain's claims under a licensing agreement. 

In a single issue, Chatelain argues the trial court erred in holding there was not an enforceable agreement between her and Gideon. 

We affirm the trial court's judgment in part, reverse in part, and remand for further proceedings.

Chatelain operates a business providing educational instruction in math and reading in McKinney, Texas. Gideon produces proprietary materials for use by its franchisees and licensees in providing educational instruction. Prior to the formation of Gideon, the business was a sole proprietorship. Gideon was formed on October 14, 2010 and, on June 13, 2011, Gideon Learning, LLC was formed, and the research and development, publication, and sales of Gideon's material was transferred to Gideon Learning. In the beginning, there were no agreements between Gideon and customers purchasing its materials for use in after-school learning centers. Prior to the formation of the Gideon entity, Gideon used a form agreement contract which provided parties would not copy material from Gideon's "Do Not Copy" list; would "pay $20,000 for new Gideon Center fee + materials for opening kit"; and would be available for three days of training in Dallas. In exchange, Gideon agreed to provide a current manual with the Do Not Copy list; send a Gideon representative to the center for training; provide three days' free training in Dallas and unlimited access by phone and email; give notice of changes to the curriculum and "give ability to re-order; and "Will not allow any new centers to open within ten minutes of your center."

As alleged in Chatelain's original petition, In January 2012, Gideon and Chatelain entered into a license agreement "for the purpose of granting to [Chatelain] the right to use Gideon Materials and display the Gideon Marks" at Chatelain's business. The agreement granted Chatelain "a non-exclusive, non-transferable, personal license" to use the Gideon materials and display the Gideon Marks at her place of business only. Gideon retained sole ownership of the materials and marks and Chatelain agreed she was "not entitled to copy, store electronically, print, or sell" the materials or marks except for certain specified materials listed in an exhibit. Chatelain further agreed to run her business "with adequate lighting, working and clean bathrooms, clean student workrooms, a clean waiting room, adequate and appropriate furniture, and in a safe manner." In return, Gideon agreed not to place another licensee "within a ten (10) minute driving time from your Location." Upon termination of the agreement, Chatelain agreed to stop using the marks and materials, immediately return the materials to Gideon or sell them to another licensee with Gideon's approval, and provide proof of any sale to Gideon. Chatelain retained no right to the materials or marks upon termination of the agreement. Gideon did not charge Chatelain any fees in connection with the signing of the agreement.

In 2013, Gideon opened a learning center which Chatelain claimed was within ten minutes of her location. Gideon responded that the ten minute restriction "is determined by reference to Google maps at the time the new center is introduced." Chatelain took no further action. Chatelain's petition alleged that, in April 2015, Gideon was opening another new location within ten minutes from her location. Chatelain sought declaratory judgment as to the "rights, status, or other legal relations under the License Agreement between the parties." Chatelain also alleged claims for breach of contract, injunctive relief, and attorney's fees.

In December 2015, Gideon filed a motion for summary judgment seeking traditional summary judgment on the grounds that there was no genuine issue of material fact precluding judgment in favor of Gideon because the license agreement is a unilateral contract and unenforceable. Gideon also moved for no-evidence summary judgment on the ground that there was no evidence of an enforceable contract, no consideration for the license agreement, and no damages proximately caused by the alleged breach. Gideon argued further that, without an enforceable contract, Chatelain had no claims for declaratory judgment, injunction, or attorney's fees.

As the specific grounds for no-evidence summary judgment, Gideon alleged Chatelain was not able to show: (1) a valid, enforceable contract exists; (2) any contract is supported by consideration; (3) [Gideon] breached the agreement; (4) [Chatelain] suffered any damage; or (5) any breach by [Gideon] was the proximate cause of any injury sustained. Gideon alleged certain "undisputed summary judgment facts" including the assertion nothing was requested in return for the license agreement and a 10% discount was offered for those that would sign and return the license agreement. This assertion was supported by a letter attached to the motion indicating that, in January 2012, Gideon was "moving into franchising all new centers" and requested that all current licensees sign the license agreement by January 31, 2012. In exchange, Gideon offered a 10% discount on online store purchases from the time the licensee signed the agreement until July 1, 2012.

In further support of its motion, Gideon asserted Chatelain did not pay anything of value to Gideon in exchange for the license agreement; Chatelain is free to terminate the license agreement at any time; Chatelain has no obligation to purchase any materials from Gideon under the license agreement; Chatelain did not have to change any aspect of the way she ran her business when she signed the license agreement; and Chatelain has no obligations under the license agreement that are not illusory because she can simply walk away from the relationship with Gideon without any cost or penalty. Based on these facts, Gideon asserted the license agreement is unilateral because Chatelain has no obligation that is not illusory.

Gideon also argued the license agreement is not supported by sufficient consideration because Chatelain paid nothing for the license, paid no royalties, and took on no obligations she did not already have under the license agreement. To the extent the license agreement contained a covenant not to compete, Gideon argued the license agreement did not meet the criteria required of an enforceable covenant not to compete. Regarding Gideon's use of Google maps to determine drive times, Gideon argued Chatelain had waived the issue by continuing her relationship with Gideon after learning in 2013 that Gideon used Google maps, and quasi-estoppel barred Chatelain from disputing the use of Google maps by accepting the use of Google maps in 2013. Finally, Gideon sought a declaratory judgment that the license agreement was not enforceable.

In January 2016, Chatelain filed a response to Gideon's motion for summary judgment arguing the licensing agreement was enforceable but, even if it were not, Gideon should be estopped from denying the enforceability of its own agreement. Chatelain argued she "purchased her materials from [Gideon] and exhibited [Gideon's] sign or trademark to generate business." Gideon sold educational materials to Chatelain and did not argue that the licensing agreement was unenforceable when Chatelain complained about the proximity of a new center. Instead, Gideon argued that the new center was in compliance with the terms of the agreement. Chatelain argued the licensing agreement "confers upon [Chatelain] the right to use materials developed and sold by [Gideon] as long as [Chatelain] complies with various terms and conditions, none of which [Chatelain] has been accused of violating." As long as she abides by the terms of the license agreement and buys Gideon's materials, Chatelain argued, she has the right to operate under the Gideon name, a name which has value. In support of her response, Chatelain attached the deposition testimony of Stephanie Coppedge, Gideon's managing member, who testified she believes "there is some value to the name Gideon Math & Reading and the instructional system" it employs, and she had "25 or 26 other people who agree with [her] and use [her] system and buy [her] materials to tutor and instruct people."

In May 2016, the trial court signed a final judgment granting Gideon's motion for summary judgment and declaring "that the License Agreement attached hereto is not enforceable as a matter of law on the grounds that the agreement is unilateral and [Chatelain's] promises are illusory, and because it is not supported by sufficient consideration." This appeal followed.

In a single issue, Chatelain argues the trial court erred in holding there was not an enforceable agreement between her and Gideon. As a result, she argues, the trial court erred in granting summary judgment in favor of Gideon.

[summary judgment standards omitted] 

A contract must be based upon a valid consideration, in other words, mutuality of obligation. Iacono v. Lyons, 16 S.W.3d 92, 94 (Tex. App.-Houston [1st Dist.] 2000, no pet.); see Texas Gas Util. Co. v. Barrett, 460 S.W.2d 409, 412 (Tex. 1970). Consideration is a bargained-for exchange of promises. ULICO Cas. Co. v. Allied Pilots Ass'n, 262 S.W.3d 773, 790 (Tex. 2008). Consideration consists of benefits and detriments to the contracting parties. Id. The detriments must induce the parties to make the promises and the promises must induce the parties to incur the detriments. Id.

Here, the summary judgment evidence showed Gideon essentially required all licensees, including Chatelain, to enter into the license agreement in 2012. As an incentive to sign the license agreement by a particular date, Gideon offered a discount on purchases from Gideon's online store. Under the license agreement, Chatelain could purchase educational materials from Gideon and use them within certain limitations, but the materials and Gideon's mark remained Gideon's property, and Chatelain was required to return all materials to Gideon if the license agreement was terminated. The agreement also required Chatelain to maintain her business in a certain way. In return, Gideon agreed not to place another licensee within a ten minute driving time from Chatelain's location. Gideon did not charge any fees in connection with the signing of the agreement, but the purpose of the agreement was to govern sales of Gideon's educational materials and use of Gideon's mark, which Gideon's managing member agreed had value. Under these circumstances, we conclude Chatelain produced more than a scintilla of probative evidence to raise a fact issue on the questions of whether a valid, enforceable contract existed between Gideon and Chatelain and whether the agreement was supported by consideration. King Ranch, 118 S.W.3d at 750. Because fact issues exist as to the agreement's validity and enforceability, we reject Gideon's argument that the agreement, to the extent it created a restraint on trade, was unenforceable because it was not ancillary to an otherwise enforceable contract.

Gideon argues the licensing agreement imposes on Chatelain no obligations that are not illusory because she can simply walk away from the relationship with Gideon without any cost or penalty. Even though a contract is terminable at will, until terminated, the contract is valid and subsisting. Sterner v. Marathon Oil Co., 767 S.W.2d 686, 689 (Tex. 1989). 

Further, if Chatelain walks away from her relationship with Gideon, she must return Gideon's educational materials and stop using Gideon's mark, both of which the evidence shows have value. 

We conclude fact issues preclude summary judgment on the issue of whether Chatelain's obligations under the agreement were illusory. See King Ranch, 118 S.W.3d at 750.

Chatelain sought a declaratory judgment regarding her "rights, status, or other legal relations" under the licensing agreement. Gideon argues Chatelain presented no evidence of damages. 

A declaratory judgment, by its nature, is forward looking; it is designed to resolve a controversy and prevent future damages. Intercontinental Grp. P'ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 660 (Tex. 2009). It affects a party's behavior or alters the parties' legal relationship on a going-forward basis. Id. An action to declare rights is not an action for money damages. Id. 

We sustain Chatelain's issue to the extent she argues summary judgment was improper on her declaratory judgment and injunctive relief claims.

Gideon argues Chatelain "produced no evidence at all to prove the elements of an enforceable agreement supported by sufficient consideration, a breach, damages or proximate cause with respect to her breach of contract claim." 

Gideon's no-evidence motion for summary judgment asserted Chatelain presented no evidence that she suffered any damage or that any breach by Gideon was the proximate cause of any injury sustained. 

The elements of a breach of contract claim are (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages to the plaintiff resulting from that breach. Woodhaven Partners, Ltd. v. Shamoun & Norman, L.L.P., 422 S.W.3d 821, 837 (Tex. App.-Dallas 2014, no pet.). Chatelain's petition alleged she had "suffered significant actual damages" and sought "compensatory damages" as a result of Gideon's alleged breach of contract. Chatelain's petition did not further address the damages issue. 

In her response to Gideon's motion for summary judgment, Chatelain presented no evidence to show what damages she incurred, if any, as a result of Gideon's alleged breach of contract. When presenting summary judgment proof in response to a no-evidence motion, a party must specifically identify the supporting proof on file that it seeks to have considered by the trial court. See Arredondo v. Rodriguez, 198 S.W.3d 236, 238 (Tex. App.-San Antonio 2006, no pet.); see also TEX. R. CIV. P. 166a(i) cmt. ("To defeat a motion made under paragraph (i), . . . [a nonmovant's] response need only point out evidence that raises a fact issue on the challenged elements."). Accordingly, we conclude the trial court did not err in granting no-evidence summary judgment on Chatelain's breach of contract claim. See King Ranch, 118 S.W.3d at 750. We overrule Chatelain's issue to the extent she challenges the trial court's summary judgment on her breach of contract claim.

We affirm the trial court's summary judgment on Chatelain's breach of contract claim for failure to show evidence of damages. In all other respects, we reverse the trial court's judgment and remand for further proceedings.

JUDGMENT

In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED in part and REVERSED in part. We REVERSE that portion of the trial court's summary judgment on the declaratory judgment claim, the claim for injunctive relief, and the claim for attorney's fees by appellant Susan Chatelain. In all other respects, the trial court's judgment is AFFIRMED. 

We REMAND this cause to the trial court for further proceedings consistent with this opinion.

It is ORDERED that each party bear its own costs of this appeal.

Rule 11 Agreement must be in writing and filed with the court

WHAT REQUIREMENTS DOES A RULE ELEVEN AGREEMENT 
HAVE TO SATISFY TO BE ENFORCEABLE?

A Rule 11 agreement must be in writing and signed and filed with the court unless it is made in open court. See TEX.R.CIV.P. 11. The filing requirement creates the imprimatur of a court record. ExxonMobil Corporation v. Valence Operating Company, 174 S.W.3d 303, 309 (Tex.App.-Houston [1st Dist.] 2005, pet. denied). A settlement agreement must comply with Rule 11 to be enforceable. Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995); Broderick v. Kaye Bassman International Corp., 333 S.W.3d 895, 904-05 (Tex.App.-Dallas 2011, no pet.).

Rule Eleven Agreements are named after Rule 11 of the
Texas Rules of Civil Procedure 

While Rule 11 requires the writing to be filed in the court record, it does not say when it must be filed. Padilla, 907 S.W.2d at 461.

WHEN A PARTY CHANGES ITS MIND AFTER SIGNING RULE 11 - REVOCATION OF CONSENT

A party has the right to revoke its consent to a Rule 11 agreement at any time before the rendition of judgment. Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442, 444 (Tex. 1983). Withdrawal of consent must be effectively communicated to the trial court. Baylor College of Medicine v. Camberg, 247 S.W.3d 342, 346-47 (Tex.App.-Houston [14th Dist.] 2008, pet. denied); First Heights Bank, FSB v. Marom, 934 S.W.2d 843, 845 (Tex.App.-Houston [14th Dist.] 1996, no writ). Ordinarily, when one party withdraws consent to a Rule 11 agreement, another party can still seek to enforce it as a contract through an amended pleading or a counterclaim. Ford Motor Company v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009); Padilla, 907 S.W.2d at 461; see Kanan v. Plantation Homeowner's Association Inc., 407 S.W.3d 320, 334 (Tex.App.-Corpus Christi 2013, no pet.h.)(Where consent to a Rule 11 agreement has been withdrawn, a court may enforce it through a separate breach of contract claim). Generally, these rules are applied in cases where the trial court rendered judgment pursuant to a Rule 11 agreement and one party is claiming that it withdrew its consent to the agreement.

ENFORCEMENT OF RULE 11 AGREEMENT

A trial court has a ministerial duty to enforce a valid Rule 11 agreement. Fortis Benefits v. Cantu, 234 S.W.3d 642, 651 (Tex. 2007); EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 91 (Tex. 1996); In re Guardianship of White, 329 S.W.3d 591, 592 (Tex.App.-El Paso 2010, no pet.).

Rule 11 agreements are contracts relating to litigation and are subject to general rules of contract construction. Trudy's Texas Star, Inc. v. City of Austin, 307 S.W.3d 894, 914 (Tex.App.-Austin 2010, no pet.). Our primary objective in construing a written contract is to ascertain and give effect to the intentions the parties have objectively manifested in the written instrument. Trudy's Texas Star, 307 S.W.3d at 914, citing Frost National Bank v. L & F Distributors, Ltd., 165 S.W.3d 310, 311-12 (Tex. 2005). Contract terms are given their plain, ordinary, and generally accepted meanings, and contracts are to be construed as a whole in an effort to harmonize and give effect to all provisions of the contract. Trudy's Texas Star, 307 S.W.3d at 914, citing Valence Operating Company v. Dorsett, 164 S.W.3d 656, 663 (Tex. 2005). If a contract can be given a certain or definite legal meaning or interpretation, it is not ambiguous and is construed as a matter of law. Trudy's Texas Star, 307 S.W.3d at 914, citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).

SOURCE: EL PASO COURT OF APPEALS -No. 08-13-00069-CV - 4/23/2014 

SIGNATURE REQUIRED - EITHER PARTY OR PARTY'S ATTORNEY, OR BOTH 

Rule 11 provides that "no agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record." TEX. R. CIV. P. 11. A Rule 11 agreement may be signed by attorneys for the parties, or the parties themselves. See TEX. R. CIV. P. 11; see also Ebner v. First State Bank of Smithville, 27 S.W.3d 287, 297 (Tex. App.-Austin 2000, pet. denied) (Rule 11 agreement may be signed by party or party's attorney). Thus, a settlement agreement satisfies the requirements of Rule 11 if it is (1) in writing, (2) signed by the parties or their attorneys, and (3) filed with the court or entered in open court prior to a party seeking enforcement. See TEX. R. CIV. P. 11. 

SOURCE: HOUSTON COURT OF APPEALS - No. 01-13-00176-CV -3/13/2014

Contract Modification must also be supported by consideration

Modification of contract terms also requires consideration, just as the original contract

CONTRACT MODIFICATION

"A modification must satisfy the elements of a contract: a meeting of the minds supported by consideration." Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 228 (Tex. 1986); see also Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303, 314 (Tex. App.-Houston [14th Dist.] 2003, pet. denied).

Consideration is defined as "either a benefit to the promisor or a loss or detriment to the promisee." N. Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 607 (Tex. 1998) (quoting Receiver for Citizen's Nat'l Assurance Co. v. Hatley, 852 S.W.2d 68, 71 (Tex. App.-Austin 1993, no writ)).

SOURCE: HOUSTON COURT OF APPEALS - No. 01-11-00800-CV – 2/28/2013
 

Lack of consideration vs. failure of consideration: important differences

     

THIS ISSUE OF CONSIDERATION IN THE CONTEXT OF A CONTRACT DISPUTE

  

A want or lack of consideration is different from a failure of consideration. A lack of consideration occurs when a contract, at its inception, does not impose obligations on both parties. See Burges v. Mosley, 304 S.W.3d 623, 628 (Tex. App.-Tyler 2010, no pet.). Without a mutuality of obligation, a contract is unenforceable. Id. In contrast, a failure of consideration occurs when, because of some supervening cause arising after the contract is formed, the promised performance fails. Id.

 

In this case, there is no dispute that the lease, as written, imposed obligations on both parties; Cheung-Loon was required to provide Primo's with use of the parking lot at 3321 McKinney Avenue and appellees were required to, among other things, pay rent for Primo's use of the lot. Appellees provided no evidence that the contract was unenforceable due to a lack of consideration at its inception.  Accordingly, the trial court erred in failing to grant Cheung-Loon a no-evidence summary judgment on the affirmative defense of want of consideration.

 

A failure of consideration occurring after a contract's inception constitutes a defense to an action on the written agreement. See McGraw v. Brown Realty Co., 195 S.W.3d 271, 276 (Tex. App.-Dallas 2006, no pet.). The affirmative defense defeats summary judgment if the nonmovant presents evidence that it did not receive the consideration set forth in the agreement. Id. 
  
A failure of consideration may be either partial or total. A total failure of consideration is ground for cancellation or recission of the contract. See Food Mach. Corp. v. Moon, 165 S.W.2d 773, 775 (Tex. Civ. App.-Amarillo 1942, no writ). 
  
A partial failure of consideration will not invalidate the contract and prevent recovery thereon, but is a defense pro tanto. See Huff v. Speer, 554 S.W.2d 259, 263 (Tex. Civ. App.-Houston [1st Dist.] 1977, writ ref'd n.r.e.).

 

The dispute here centers on whether Primo's was able to use the parking lot to the extent it bargained for. Appellees provided evidence that, one year into the lease term, Cheung-Loon's other tenants began using most, if not all, of the parking spaces in the lot Primo's leased for its own use. Even if Primo's was not entitled to exclusive use of the lot, which we do not decide, the lease clearly entitled it to use the lot for its customers' parking. Because appellees provided some evidence showing it was either totally or partially prevented from using the lot, we conclude appellees raised a fact issue on failure of consideration. Accordingly, the trial court correctly denied Cheung-Loon's motion for a no-evidence summary judgment on this affirmative defense. Furthermore, because appellees raised a fact issue on this affirmative defense, the trial court correctly denied Cheung- Loon's motion for summary judgment on its claim for breach of contract.

 

SOURCE: DALLAS COURT OF APPEALS - 05-10-01171-CV – 5/15/12

ADDITIONAL CASELAW SNIP ON CONSIDERATION AND FAILURE OF CONSIDERATION 

"Consideration is defined as `either a benefit to the promisor or a loss or detriment to the promisee.'" Northern Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 607 (Tex. 1998) (quoting Receiver for Citizen's Nat'l Assurance Co. v. Hatley, 852 S.W.2d 68, 71 (Tex. App.-Austin 1993, no writ)). A promissory note given "for value" is supported by adequate consideration and is therefore enforceable. Suttles v. Thomas Bearden Co., 152 S.W.3d 607, 615 (Tex. App.-Houston [1st Dist.] 2004, no pet.). 
  
A promissory note is issued for "value" if it is issued as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due. Id.; see also Ward v. Vaughn, 298 S.W.2d 862, 866-67 (Tex. Civ. App.-Galveston 1957, no writ) (explaining that forbearance of antecedent debt was sufficient consideration for note). 
  
Failure of consideration occurs when, "after an agreement has been reached, the promised performance fails." Bassett v. American Nat'l Bank, 145 S.W.3d 692, 696 (Tex. App.-Fort Worth 2004, no pet.) (holding that failure to pay amount promised by note constituted failure of consideration).  
  

Will courts enforce Rule 11 Agreements that don't have signatures? Does agreement have to be in writing?

  
Does an agreement under Rule 11 of the Texas Rules of Civil Procedure always have to be signed by both parties or their attorneys to become binding and enforceable?
  

ENFORCEABILITY OF RULE ELEVEN (TRCP 11) AGREEMENT

A Rule 11 agreement is an agreement between parties or attorneys "touching any pending suit" that, to be enforceable, must be either (1) in writing, signed, and filed as part of the record, or (2) made in open court and entered of record. Tex. R. Civ. P. 11. Whether a Rule 11 agreement is legally enforceable is a question of law. Ronin v. Lerner, 7 S.W.3d 883, 886 (Tex. App.--Houston [1st Dist.]  1999, no pet.).

RATIONALE FOR RULE 11 REQUIREMENTS
  

The purpose of Rule 11 is to avoid misunderstandings and controversies that often flow from oral agreements. Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995). Parties may enter into a binding settlement agreement even if they contemplate that a more formal document memorializing the agreement will be executed at a later date. See Ronin, 7 S.W.3d at 886; McLendon v. McLendon, 847 S.W.2d 601, 606-07 (Tex. App.--Dallas 1992, writ denied) ("[Party] understood that he was  obligated to execute documents to implement the agreement being submitted to the court.

SOURCE: AUSTIN COURT OF APPEALS - 03-11-00271-CV - 5/3/2012
  

There is no indication in the record that the parties contemplated that their agreement would not be binding until it was reduced to writing."). The exchange between Andrews, her attorney, Deutsche Bank's attorney, and the district court constitutes an enforceable Rule 11 agreement. Although the parties contemplated that the attorneys would later reduce the Rule 11 agreement to writing, the reporter's record reflects that the parties were aware that they were entering into a settlement agreement in court. See McLendon, 847 S.W.2d at 606-07. Specifically, both Andrews and her counsel agreed that she would release her lien and dismiss her appeal in exchange for receiving the money from the court registry.

Andrews does not dispute that she reached a settlement agreement in open court in compliance with Rule 11. Instead, she asserts that there is no evidence that she ever received any money from the court registry, the consideration for her dismissal of her appeal. To the contrary, however, the record contains an order commanding the district court clerk to withdraw the money from the court registry and pay it to Andrews's attorney.

Can contract be enforced if it contains an illegal provision?

   
SEVERABILITY OF ILLEGAL CONTRACT PROVISION

Dallas Court of Appeals has this to say in case involving attorney fee contract:  

  

We have held “that where an otherwise legal contract contains an illegal provision that is not an essential feature of the agreement, thus being clearly severable from other valid provisions, the other provisions of the agreement will not be deemed to be invalid simply because of the presence of the illegal provision.” Rogers v. Wolfson, 763 S.W.2d 922, 925 (Tex. App.-Dallas 1989, writ denied); see also Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 662 (Tex. App.-Dallas 1992, no writ) (“Where a contracting party agrees to perform separable acts, and one is void, the invalid provision may be severed from the valid provision and the valid provision enforced if the intent of the parties is not thereby frustrated.”); Mandril v. Kasishke, 620 S.W.2d 238, 247 (Tex. Civ. App.-Amarillo 1981, writ ref'd n.r.e.). 

SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12
 

[Father of client in criminal case] does not challenge the trial court's finding of fact that he signed the fee agreement. In another unchallenged finding, the trial court found that the fee agreement is “a valid contract and enforceable.” We conclude that the fee agreement is clearly severable from the irrevocable assignment and is valid regardless of the validity of the irrevocable assignment.

[Parent of client in criminal case]  agreed “to be responsible for my sons Atty Fees as set out in this Contract and Irrevocable Assignment” signed the same date. The fee is set out in both the fee agreement and the irrevocable assignment. But [Parent's] agreement to be responsible for those fees is not contingent of the validity of the irrevocable assignment. The irrevocable assignment was merely a means of payment of or security for the attorney's fees under the fee agreement. It was not an essential feature of the agreement to pay TWLF for its services in representing [son] in the federal criminal prosecution. The fee agreement is clearly enforceable without the irrevocable assignment. Nothing is illegal about a contract to pay an attorney for his services or an agreement by a parent to be responsible for the fees for representing his child in a criminal proceeding. 

Payment of commission in real estate transaction governed by statute of frauds in RELA

   

REAL Estate License Act requires commission agreement to be in writing and to contain specific items of essential information.

  

Written agreement compliant with statute of frauds provision of the Real Estate License Act (RELA) required for payment of commission for sale/purchase of real estate to be enforceable.
    
The statute of frauds provision of RELA provides,
 

A person may not maintain an action in this state to recover a commission for the sale or purchase of real estate unless the promise or agreement on which the action is based, or a memorandum, is in writing and signed by the party against whom the action is brought or by a person authorized by that party to sign the document.

 

Tex. Occ. Code Ann. § 1101.806(c) (West 2012).

 

To comply with this section, an agreement or memorandum must: (1) be in writing and must be signed by the person to be charged with the commission; (2) promise that a definite commission will be paid, or must refer to a written commission schedule; (3) state the name of the broker to whom the commission is to be paid; and (4) either itself or by reference to some other existing writing, identify with reasonable certainty the land to be conveyed. Lathem v. Kruse, 290 S.W.3d 922, 925 (Tex. App.-Dallas 2009, no pet.). Strict compliance with RELA is required; the agreement to pay a real estate commission must be in writing or it is not enforceable. Id. The essential elements of the agreement may not be supplied by parol evidence. Boyert v. Tauber, 834 S.W.2d 60, 62 (Tex. 1992).

   

SOURCE: DALLAS COURT OF APPEALS - 05-10-00675-CV – 4/26/12

  
None of the documents on which appellees rely contains a promise to pay a real estate commission or identifies appellees as brokers to whom a commission will be paid. Accordingly, there is no evidence of a written agreement complying with the statute of frauds provision of RELA. See Tex. Occ. Code Ann. § 1101.806(c); Lathem, 290 S.W.3d 925. We sustain Litton's third issue. Having sustained Litton's third issue, we need not consider its other issues. Tex. R. App. P. 47.1.

Domestication & Enforcement of Foreign Judgments [judgments entered by courts of other countries to which full-faith-and-credit clause of US constitution does not apply]

  
THE UNIFORM FOREIGN MONEY-JUDGMENTS RECOGNITION ACT   
  
When is recognition / nonrecognition proper? What are grounds for avoiding recognition?


Under the Uniform Foreign Money–Judgments Recognition Act (the “Act”), a judgment creditor may seek recognition of a foreign country judgment [6] in Texas by filing a final, authenticated copy of the foreign country judgment in the judgment debtor’s county of residence. Sanchez v. Palau, 317 S.W.3d 780, 785 (Tex. App.—Houston [1st Dist.] 2010, pet. denied) (citing TEX. CIV. PRAC. & REM. CODE ANN. §§ 36.0041–42 (Vernon 2008)).
  
The Act applies to a foreign country judgment that “is final and conclusive and enforceable where rendered, even though an appeal is pending or the judgment is subject to appeal.” TEX. CIV. PRAC. & REM. CODE ANN. § 36.002(a)(1) (Vernon 2008).
  
The Act further provides that when a qualifying foreign country judgment is filed in accord with the Act, notice of the filing is given as provided by the Act, and a foreign country judgment is not otherwise “refused recognition” under the Act, then the judgment is “is conclusive between the parties to the extent that it grants or denies recovery of a sum of money” and is “enforceable in the same manner as a judgment of a sister state that is entitled to full faith and credit.” See id. § 36.004 (Vernon 2008).
  
The Act sets forth the grounds for “nonrecognition” of a foreign country judgment. See id. § 36.005 (Vernon 2008). Relevant to the instant case, a foreign country judgment is “not conclusive” if it “was rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law.” See id. § 36.005(a)(1). And a foreign country judgment “need not be recognized” if “the proceeding in the foreign country court was contrary to an agreement between the parties under which the dispute in question was to be settled otherwise than by proceedings in that court.” See id. § 36.005(b)(5). A party contesting recognition of a foreign country judgment may file and serve a motion for nonrecognition no later than the 30th day after the date of service of the notice of filing of judgment is provided under the Act. See id. § 36.0044(a) (Vernon 2008). The party filing the motion for nonrecognition shall include with the motion all supporting affidavits, briefs, and other documentation; the party opposing the motion must file any response, including supporting affidavits, briefs, and other documentation not later than the 20th day after the date of service on that party of a copy of the motion for nonrecognition. See id. § 36.0044(b), (c).
  
The party seeking to avoid recognition has the burden of proving a ground for nonrecognition and, unless that party satisfies his burden of proof by establishing one or more of the specific grounds for nonrecognition, the court is required to recognize the foreign country judgment. Courage Co. v. Chemshare Corp., 93 S.W.3d 323, 331 (Tex. App.—Houston [14th Dist.] 2002, no pet.). By limiting the defenses available to a judgment debtor, the Act creates standards for recognizing foreign country judgments and prevents parties from relitigating issues that were conclusively settled by courts of foreign countries, unless such issues create an exception to recognition. Beluga Chartering, B.V. v. Timber S.A., 294 S.W.3d 300, 304 (Tex. App.—Houston [14th Dist.] 2009, no pet.); Dart v. Balaam, 953 S.W.2d 478, 480 (Tex. App.—Fort Worth 1997, no writ). A trial court’s enforcement of a foreign country judgment presents a question of law, and, thus, we review de novo a trial court’s recognition of a foreign country judgment. Sanchez, 317 S.W.3d at 785; Courage Co., 93 S.W.3d at 331.
  
Recognition of a foreign country judgment under the Act “does not require that the procedures used in the courts of a foreign country be identical to those used in the courts of the United States.” The Society of Lloyds v. Webb, 156 F.Supp.2d 632, 639–40 (N.D. Tex. 2001). Rather, the Act requires only that the foreign procedures are “compatible with the requirements of due process of law” and do “not offend against basic fairness.” Id. at 640 (internal quotations and citations omitted). To establish a prima facie case that conclusive effect should be given to a foreign country judgment, courts have explained that a party may demonstrate that “the rendering court had jurisdiction over the person and subject matter, that there was timely notice and an opportunity to present a defense, that no fraud was involved, that the proceedings were according to a civilized jurisprudence are the same for both favored and nonfavored systems.” Id. (citation omitted).
  
SOURCE: HOUSTON COURT OF APPEALS - 1ST DIST - 01-11-00636-CV - 4/26/12

The record reflects that Presley appeared in the Belgium court proceedings, and the Belgium courts considered and addressed Presley’s arguments that the entire matter should be submitted to arbitration pursuant to the joint venture agreement’s arbitration clause. The record further reflects that the Belgium courts ruled that Presley’s counterclaim for breach of the joint venture agreement against Masureel should be pursued in arbitration. Although Presley disputes the Belgium court’s determination that Masureel’s request for reimbursement under the loan agreements and the other disputes arising from the joint venture agreement are not “indivisible,” we conclude that the record does not support Presley’s assertions that the Belgium courts failed to provide her with an impartial tribunal and the procedures used by the Belgium courts were “incompatible” with due process of law. Presley has not cited any authority for the proposition that a ruling like that reached by the Belgium courts under the circumstance here, in which Presley was directed to pursue her affirmative claims in accord with an arbitration clause, renders the foreign country’s procedures fundamentally unfair. [7] In sum, we hold that the trial court did not err in recognizing the Belgium court’s judgment on the ground that it was rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law. See id. § 36.005(a)(1).

We overrule Presley’s first and second issues.

Enforceability of Forum Selection Clauses in Texas

   
CONTRACTUAL CHOICE OF TEXAS AS FORUM FOR LITIGATION
  

Forum selection clauses are enforceable in Texas if the parties have contractually consented to submit to the exclusive jurisdiction of Texas. See In re Cornerstone Healthcare Holding Group, Inc., 348 S.W.3d 538, 540 (Tex. App.-Dallas 2011, orig. proceeding); Falk & Fish, L.L.P. v. Pinkston's Lawnmower & Equipment., Inc., 317 S.W.3d 523, 525 (Tex. App.-Dallas 2010, no pet.); My Café-CCC, Ltd. v. Lunchstop, Inc., 107 S.W.3d 860, 864 (Tex. App.-Dallas 2003, no pet.). We review a trial court's ruling concerning the validity and enforceability of a forum selection clause for an abuse of discretion. See Cornerstone, 348 S.W.3d at 540; Falk, 317 S.W.3d at 526. A trial court does not abuse its discretion if it bases its decision on conflicting evidence. My Café, 107 S.W.3d at 864.

  

SOURCE: DALLAS COURT OF APPEALS - 05-10-01385-CV – 4/2/12

 
Read additional opinion excerpts ….

Enforceability of contractual forum selection in Texas

  
Contractual choice of forum for litigation 
   
FORUM SELECTION CLAUSES GENERALLY ENFORCEABLE  
   
Forum-selection clauses are generally enforceable and presumptively valid. In re Laibe Corp., 307 S.W.3d 314, 316 (Tex. 2010) (per curiam). A trial court abuses its discretion in refusing to enforce the clause unless the party opposing enforcement clearly shows (1) enforcement would be unreasonable or unjust, (2) the clause is invalid for reasons of fraud or overreaching, (3) enforcement would contravene a strong public policy of the forum where the suit was brought, or (4) the selected forum would be seriously inconvenient for trial. Id. The burden of proof is heavy for the party challenging enforcement. Id.
   
SOURCE: HOUSTON COURT OF APPEALS - 14-10-01077-CV - 10/20/11

RELATED LEGAL TERMS: venue, mandatory and permissive venue, motion to transfer venue

Elements of Duress Defense

    
AFFIRMATIVE DEFENSE OF DURESS
 
Essential elements to prove the applicability of this affirmative defense in bid to avoid contract
   
The elements of duress are: (1) a threat or action taken without legal justification; (2) the action or threat was of such a character as to destroy the other party’s free agency; (3) the threat or action overcame the opposing party’s free will and caused it to do that which it would not otherwise have done and that which it was not legally bound to do; (4) the restraint was imminent; and (5) the opposing party had no present means of protection. Chapman Children’s Trust v. Porter & Hedges, L.L.P., 32 S.W.3d 429, 443 (Tex. App.—Houston [14th Dist.] 2000, pet. denied).

SOURCE: Houston Court of Appeals - 01-08-01029-CV - 9/22/11

No enforceable contract when essential terms are missing

DEFINITIVENESS REQUIRED  

Breach of contract claim may fail if alleged contract does not include agreement on essential terms Whether an agreement has all the essential terms to be an enforceable agreement is a question of law. See America's Favorite Chicken Co. v. Samaras, 929 S.W.2d 617, 625 (Tex. App.-San Antonio 1996, writ denied). Each contract should be considered separately to determine its material terms. See T. O. Stanley Boot Co., 847 S.W.2d at 221 (citing Bridewell v. Pritchett, 562 S.W.2d 956, 958 (Tex. Civ. App.-Fort Worth 1978, writ ref'd n.r.e.)).
 
To be enforceable, a contract must be sufficiently definite in its terms that a court can understand what the promisor undertook. T. O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). The material terms of the contract must be agreed on before a court can enforce it. Id. If an alleged agreement is so indefinite as to make it impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract. University Nat'l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex. App.-San Antonio 1989, no writ).
 
A lack of definiteness in an agreement may concern various elements, including time of performance, price to be paid, work to be done, or service to be done. Gannon v. Baker, 830 S.W.2d 706, 709 (Tex. App.-Houston [1st Dist.] 1992, writ denied); Terrell v. Nelson Puett Mortgage Co., 511 S.W.2d 366, 369 (Tex. Civ. enApp.-Austin 1974, writ ref'd n.r.e.).
 
SOURCE: DKH Homes, LP v. Kilgo, No. 03-10-00656-CV - 5/11/11 (no contract formed, essential terms missing) ("We conclude that the Agreement at issue does not include terms essential to an agreement to construct a house.") 

RELATED LEGAL TERMS: enforceability of contract, challenge to contract validity, contention that there is no contract, lack of meeting of the minds on essential terms, contractual rights and duties of the parties not sufficiently defined 

OLDER CASELAW CLIPS ON SUFFICIENCY OF CONTRACTUAL TERMS

Mere Agreement to Agree on some terms yet to be specified is not enough 

It is established law that a writing need not have all the stipulations between the parties to be considered a contract. Osborn v. Moore, 247 S.W.2d 498 (Tex. 1923). Rather, a contract need only have the essential elements. Id. A contract can also exist even though there are terms on which the parties have not agreed and which they expect further negotiation. Scott v. Ingle Bros. Pacific Inc., 489 S.W.2d 554, 555 (Tex. 1972). Nevertheless, when an essential term is left open for future negotiation, there is no binding contract. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). An agreement to make a future agreement is enforceable only if it contains all essential terms. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). Thus, to decide whether the agreement is enforceable, the Court must first determine what the material elements of the contract are, and then whether those elements are included in the Letter Agreement. 

What terms are material may vary depending on the type of contract, subject matter 

 Contracts must be read separately to determine the necessary material terms. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992) (citing Bridewell v. Pritchett, 562 S.W.2d 956, 958 (Tex. Civ. App.Fort Worth 1978)). Material terms are those that the parties would reasonably regard as vitally important elements of their bargain. Potcinske v. McDonald Property Investments, Ltd., 245 S.W.3d 525, 531 (Tex. App.-Houston [1st Dist.] 2007) (citing Neeley v. Bankers Trust Co., 757 F.2d 621, 628 (5th Cir. 1985)). Additionally, a contract must define its essential terms with enough precision to enable the court to determine the obligations of the parties. Central Texas Micrographics v. Leal, 908 S.W.2d 292, 296-297 (Tex. App.-San Antonio 1995) (citing Weitzman v. Steinberg, 638 S.W.2d 171, 175 (Tex. App.-Dallas 1982)). It is well established that the terms of an oral contract must be clear, certain, and definite. Haden Co. v. Riggs, 84 S.W.2d 789, 798 (Tex.Civ.App.—Galveston 1935), affd, 127 Tex. 314, 94 S.W.2d 152 (1936). If an alleged agreement is so indefinite that it is impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract. Moore v. Dilworth, 142 Tex. 538, 179 S.W.2d 940, 942 (1944); University Nat'l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex.App.—San Antonio 1989, no writ). A lack of definiteness in an agreement may concern the time of performance, the price to be paid, the work to be done, the service to be rendered or the property to be transferred. University Nat'l Bank, 773 S.W.2d at 710 With respect to an oral agreement to transfer stock, terms must state the specific quantity of shares and the specific price in order to be considered "clear, certain, and definite." Consolidated Petroleum Indus, v. Jacobs, 648 S.W.2d 363, 366 (Tex.App.— Eastland 1983, writ ref'd n.r.e.). Courts are barred from rewriting a contract for the parties, but if a provision is too vague to be enforced, courts will not enforce it. See John Wood USA, Inc. v. ICO, Inc., 26 S.W.3d 12, 21 (Tex.App.-Houston [1st Dist.] 2000, pet. denied); University Nat'l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex.App.-San Antonio 1989, no writ) ("If an alleged agreement is so indefinite as to make it impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract.") If an alleged agreement is so indefinite as to make it impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract. Moore v. Dilworth, 142 Tex. 538, 179 S.W.2d 940, 942 (1944); Weitzman v. Steinberg, 638 S.W.2d 171, 175 (Tex.App. —Dallas 1982, no writ). A lack of definiteness in an agreement may concern the time of performance, the price to be paid, the work to be done, the service to be rendered or the property to be transferred. Terrell v. Nelson Puett Mortgage Co., 511 S.W.2d 366, 369 (Tex.Civ.App.—Austin 1974, writ ref'd n.r.e.). There is no authority to ask a jury to supply an essential term in the contract which the parties were unable to complete by mutual agreement. Weitzman, 638 S.W.2d at 175.

Liquidated Damages vs. Unenforceable Penalty

ARE LIQUIDATED DAMAGES CLAUSES ENFORCEABLE? – STIPULATED DAMAGES OR UNENFORCEABLE PENALTY?

“The term 'liquidated damages' ordinarily refers to an acceptable measure of damages that parties stipulate in advance will be assessed in the event of a contract breach.” Flores v. Millenium Interests, Ltd., 185 S.W.3d 427, 431 (Tex. 2005); see also Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 664 (Tex. 2005) (“[l]iquidated damages clauses fix in advance the compensation to a party accruing from the failure to perform specified contractual obligations”). Whether a contract term is a liquidated damages clause is a question of law for the court. Valence Operating Co., 164 S.W.3d at 664.

 

If a court determines that a contract term is a liquidated damages clause, the court may then determine whether the clause is enforceable, or whether it is an unenforceable penalty. The policy underlying the prohibition against penalties is to ensure that a party to a contract receives “just compensation,” that is, “neither more nor less than his actual damages.” Phillips, 820 S.W.2d at 788 (quoting Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484, 485-86 (1952)). In order to enforce a liquidated damages provision and determine the provision is not a penalty, “the court must find: (1) that the harm caused by the breach is incapable or difficult of estimation, and (2) that the amount of liquidated damages called for is a reasonable forecast of just compensation.” Phillips, 820 S.W.2d at 788 (quoting Rio Grande Valley Sugar Growers, Inc. v. Campesi, 592 S.W.2d 340, 342 n.2 (Tex. 1979)).

 

The party asserting that a liquidated damages clause is an unenforceable penalty bears the burden of proof. Urban Television Network Corp. v. Liquidity Solutions, Ltd., 277 S.W.3d 917, 919 (Tex. App.-Dallas 2009, no pet.) (citing Murphy v. Cintas Corp., 923 S.W.2d 663, 665-66 (Tex. App.-Tyler 1996, writ denied)).

CONTENTION MUST BE RAISED AND PLEADED AS AN AFFIRMATIVE DEFENSE
  
Whether a contractual provision is an unenforceable penalty and not a liquidated damage clause is an affirmative defense. See Tex. R. Civ. P. 94; Phillips v. Phillips, 820 S.W.2d 785, 789 (Tex. 1991) (“Although penalty is not among the affirmative defenses enumerated in Rule 94, Tex. R. Civ. P., the listing in that rule is not exclusive. Penalty is, in the language of the rule, a 'matter constituting an avoidance or affirmative defense' [citations omitted].”)
  
SOURCE: Dallas Court of Appeals - 05-09-00586-CV - 5/18/11

Settlement Agreement: Elements essential to enforceability

HOW DO COURTS DETERMINE WHETHER A SETTLEMENT AGREEMENT IS ENFORCEABLE?
 
The enforceability of a settlement agreement is determined in the same manner as any other written contract. Anderton v. Schindler, 154 S.W.3d 928, 932 (Tex. App.-Dallas 2005, no pet.). Whether an agreement is legally enforceable or binding is a question of law. Texaco, Inc. v. Penzoil Co., 729 S.W.2d 768, 814 (Tex. App.-Houston [1st Dist.] 1987, writ ref'd n.r.e.).
 
WHAT IS REQUIRED TO MAKE A SETTLEMENT AGREEMENT ENFORCEABLE?
 
In order for a court to enforce a contract, the parties must agree to the essential terms of the contract. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). An agreement is unenforceable if it is so indefinite that a court cannot fix the legal obligations and liabilities of the parties. Moore v. Dilworth, 179 S.W.2d 940, 942 (Tex. 1944).

WHAT ARE ESSENTIAL TERMS OF A SETTLEMENT?

 Our court has determined that essential terms for a settlement agreement are the amount of compensation and the liability to be released. Disney v. Gollan, 233 S.W.3d 591, 595 (Tex. App.-Dallas 2007, no pet.). See also Padilla v. LaFrance, 907 S.W.2d 454, 460-61 (Tex. 1995) (agreement was complete where terms included agreement to pay in exchange for settlement); CherCo Properties, Inc. v. Law, Snakard & Gambill, P.C., 985 S.W.2d 262, 266 (Tex. App.-Fort Worth 1999, no pet.) (holding a settlement agreement that includes the terms of payment, and a statement that the parties would execute releases, contained all material terms). When essential terms are open for future negotiation, there is not a binding contract. T.O. Stanley, 847 S.W.2d at 221.
 
SOURCE: 05-08-01042-CV (Dallas CoA) (9/29/09) (agreement lacked essential term because compensation under the agreement was not yet clear)