Under Texas law, a “contract” generally refers to an agreement between two or more persons that creates an obligation to do or not do a particular thing. Frady v. May, 23 S.W.3d 558, 565 (Tex.App. – Fort Worth, 2000, pet. denied). There are many types of contractual agreements. These different types will be discussed in future blog posts. However, all contracts must have three key elements: an offer, acceptance, and consideration.
The Offer
A contract must have a valid offer. The prove a valid offer, a party to a contract must show that (1) the offeror intended to make an offer, (2) the terms of the offer were clear and definite, and (3) the offeror communicated the essential terms of the offer to the offeree. Domingo v. Mitchell, 257 S.W.3d 34, 39 (Tex.App. – Amarillo 2008, pet. denied).
Intent to make an offer
The offeror’s conduct and language must show with reasonable certainty an intent to enter into a binding agreement. Dunn v. Price, 28 S.W. 681, 682 (Tex. 1894). An invitation to engage in negotiations, such as inquiring whether a person is interested in buying something, does not show an intent to make an offer. Edmunds v. Houston Lighting & Power Co., 472 S.W.2d 797, 799-800 (Tex.App. – Houston [14th Dist.] 1971, writ ref’d n.r.e.).
Clear and definite terms
An offeree cannot accept an offer unless the terms are reasonably certain. Fort Worth ISD v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). If the terms are so vague that the court cannot determine what the parties intended or what to enforce, the contract is unenforceable. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992).
Offeror communicated terms to offeree
The offeror must communicate the essential terms of the offer to the offeree. Engelman Irrigation Dist. v. Shields Bros., 960 S.W.2d 343, 352 (Tex.App. – Corpus Christi 1997), pet. denied, 9989 S.W.2d 360 (Tex. 1998). The offer can be made orally or in writing. The offer becomes effective when it is communicated to the offeree. Broadnax v. Ledbetter, 99S.W. 1111, 1111-12 (Tex. 1907). An offer cannot be inferred from the offeror’s silence. Beverick v. Koch Power, Inc., 186 S.W.3d 145, 151-52 (Tex.App. – Houston [1st Dist.] 2005, pet. denied).
Acceptance
An offeree can accept or reject a valid offer. To prove acceptance, a party must show the following: (1) the acceptance was made before the offer lapsed or was revoked by the offeror, (2) the manner in which the acceptance was made strictly complied with the terms of the offer or was implicitly authorized under the circumstances, (3) the acceptance was communicated to the offeror, and (4) the form of the acceptance was clear and definite. See Engelman Irrigation Dist. v. Shields Bros., 960 S.W.2d 343, 352 (Tex.App. – Corpus Christi 1997), pet. denied, 989 S.W.2d 360 (Tex. 1998); Dempsey v. King, 662 S.W.2d 725, 726-27 (Tex.App. – Austin 1983, writ dism’d); Ducc Realty Co. v. Cox, 356 S.W.2d 807, 809 (Tex.App. – Waco 1962, no writ); Texas Pipe Line Co. v. Miller, 84 S.W.2d 550, 551 (Tex.App. – Eastland 1935, no writ).
Timing of Acceptance
An offer will lapse if it is not accepted within the specified time limit. Advantage Physical Therapy v. Cruse, 165 S.W.3d 21, 26 (Tex.App. – Houston [14th Dist.] 2005, no pet.). If there is no specific time limit, the offer will lapse after a reasonable time. Advantage Physical Therapy, 165 S.W.3d at 26. What constitutes a reasonable time depends on the circumstances, including the nature of the contract, the purposes of the parties, and the course of dealing between them. Valencia v. Garza, 765 S.W.2d 893, 897 (Tex.App. – San Antonio 1989, no writ). An offer may be revoked ay time before acceptance. Bowles v. Fickas, 167 S.W.2d 741, 743 (Tex. 1943).
Manner of Acceptance
Unless an offeror specifies the manner of acceptance, the offeree can accept by any reasonable means. Horton v. DaimlerChrysler Fin. Servs., 262 S.W.3d 1, 6 (Tex.App. – Texarkana 2008, no pet.).
Communication of Acceptance
Acceptance is effective if it is communicated to the offeror or its agent. American Nat’l Ins. V. Warnock, 114 S.W.2d 1161, 1164 (Tex. 1938). An acceptance that the offeree does not attempt to transmit does not bind the parties to a contract. Jatoi v. Park Ctr., Inc., 616 S.W.2d 399, 401 (Tex.App. – Fort Worth 1981, writ ref’d n.r.e.).
Form of Acceptance
The acceptance must be clear and definite. Engelman Irrigation Dist. v. v. Shields Bros., 960 S.W.2d 343, 352 (Tex.App. – Corpus Christi 1997), pet. denied, 989 S.W.2d 360 (Tex. 1998). Acceptance must be identical to the offer to make a binding contract. Gasmark, Ltd. v. Kimball Energy Corp., 868 S.W.2d 925, 928 (Tex.App. – Fort Worth 1994, no writ).
Consideration
To be enforceable, a contract must be based on consideration. Texas Gas Utils. Co. v. Barrett, 460 S.W.2d 409, 412 (Tex. 1970). A contract without consideration is unenforceable. Federal Sign v. Texas S. Univ., 951 S.W.2d 401, 409 (Tex. 1997). Consideration must be sufficient. Gulf Liquid Fertilizer Co. v. Titus, 354 S.W.2d 378, 385 (Tex. 1962). Past consideration is not sufficient to support a contract. Stone v. Morrison & Powers, 298 S.W. 538, 539 (Tex.Comm’n App. 1927, holding approved). Nor is a promise to fulfill a preexisting duty sufficient consideration. Martens v. Prairie Prod’g Co., 668 S.W.2d 889, 891 (Tex.App. – Houston [14th Dist.] 1984, no writ).