law-contract-definiteness-of-terms | meeting of the minds on all essential material terms | contract formation |
existence of alleged contract | enforceability of contract | void and voidable contracts | public policy grounds |
illegal contract unenforceable | contract construction, interpretation | Interpreting contractual language |
Whether an alleged agreement constitutes an enforceable contract is generally a question of law. Searcy
v. DDA, Inc., 201 S.W.3d 319, 322 (Tex. App.-Dallas 2006, no pet). To be legally enforceable, an agreement
must be sufficiently definite to allow a court to understand what the promisor undertook. See T.O. Stanley Boot
Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992).
The rules requiring definiteness in a contract's material terms are based on the concept that a party
cannot accept an offer unless the terms of that offer are reasonably certain. See Fort Worth Indep. Sch. Dist.
v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). Accordingly, all essential terms of the agreement
must be agreed upon before a contract may be enforced by the courts. Stanley Boot Co., 847 S.W.2d
at 221. If the agreement is so indefinite as to make it impossible for the court to determine the legal
obligations of the parties, it is not an enforceable contract. Searcy, 201 S.W.3d at 322. Each agreement
should be examined separately to determine its material terms. Stanley Boot Co., 847 S.W.2d at 221.
In a contract to loan money, the material terms also include the amount to be loaned, the maturity date of
the loan, the interest rate, and the repayment terms. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.
2d 218, 221 (Tex.1992).
TERMS OF CONTRACT MUST BE DEFINITE TO ASSURE ENFORCEABILITY
A contract is legally binding only if its terms are sufficiently definite to enable a court to understand the parties’
obligations. Fort Worth ISD v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). “The rules regarding
indefiniteness of material terms of a contract are based on the concept that a party cannot accept an offer so
as to form a contract unless the terms of that contract are reasonably certain.” Id.
A contract is sufficiently definite if a court is able to determine the respective legal obligations of the parties. T.
O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). Contract terms are reasonably
certain “if they provide a basis for determining the existence of a breach and for giving an appropriate
remedy.” Restatement (Second) of Contracts § 33(2) (1981). 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. See id.
An agreement to make a future contract is enforceable only if it is ‘specific as to all essential terms, and no
terms of the proposed agreement may be left to future negotiations.’ Fort Worth ISD, 22 S.W.3d at 846
(quoting Foster v. Wagner, 343 S.W.2d 914, 920-21 (Tex. Civ. App.-El Paso 1961, writ ref’d n.r.e.)). “It is well
settled law that when an agreement leaves material matters open for future adjustment and agreement that
never occur, it is not binding upon the parties and merely constitutes an agreement to agree.” Id.
Whether an agreement fails for indefiniteness is a question of law to be determined by the court. COC
Servs., Ltd. v. CompUSA, Inc., 150 S.W.3d 654, 664 (Tex. App.-Dallas 2004, pet. denied); see also T.O.
Stanley Boot Co., 847 S.W.2d at 222.
HOUSTON CASE LAW ON THIS LEGAL CONCEPT
Ton's Remodeling v. Tot Hoi Fund d/b/a Fung's Kitchen (Tex.App.- Houston [1st Dist.] Jun. 21, 2007, pet
denied)(Hanks)(construction dispute, commerical, BoC, sworn account, failure to prove terms of alleged
contract)
AFFIRM TC JUDGMENT IN PART, REVERSE TC JUDGMENT IN PART, AND REMAND CASE TO TC FOR
FURTHER PROCEEDINGS: Opinion by Justice Hanks
Before Justices Nuchia, Hanks and Bland
01-05-01077-CV Ton's Remodeling v. Tot Hoi Fund d/b/a Fung's Kitchen
Appeal from County Civil Court at Law No 2 of Harris County (Hon. Gary Michael Block)
The elements of Ton's breach of contract claim are: (1) the existence of a valid contract, (2) performance by
the plaintiff, (3) breach of the contract by the defendant, and (4) damages sustained by the plaintiff as a result
of the breach. Wright, 950 S.W.2d at 412. A valid contract exists where there is an offer, acceptance in strict
compliance with the terms of the offer, a meeting of the minds, consent by each party to the terms, and
execution and delivery of the contract with the intent that it be mutual and binding. Beverick v. Koch Power,
Inc., 186 S.W.3d 145, 150 (Tex. App.-Houston [1st Dist.] 2005, pet. denied).
To be legally binding, a contract must be sufficiently definite in its terms. T.O. Stanley Boot Co. v. Bank of El
Paso, 847 S.W.2d 218, 221 (Tex. 1992). If an agreement is so indefinite that a court cannot determine the
legal obligations and liabilities of the parties, it is not an enforceable agreement. See id.
In his affidavit, Kien Man Ton alleged that "Tat agreed to allow Ton's to provide construction services for Tat
and further agreed that Ton's would be paid as the charges for the construction services were invoiced. Ton's
agreed to provide construction services for Tat and did provide construction services for Tat as requested by
Tat." The allegations in the affidavit fail to make clear the legal obligations and liabilities of the parties. For
example, the affidavit lacks any indication of the duration of the agreement to provide services, the type of
construction services to be provided, the terms under which the services were to be provided, the fees to be
charged, or any other information that would allow us to discern the legal obligations and liabilities of Ton's
and Tat. See T.O. Stanley Boot Co., 847 S.W.2d at 221. Because the legal obligations and liabilities of the
parties cannot be ascertained from the summary judgment evidence in the record, Ton's has failed to raise a
fact issue as to the existence of a definite and enforceable agreement to provide construction services to Tat.
See id. In the absence of any evidence of an enforceable agreement, the trial did not err in granting summary
judgment on Ton's breach of contract claim.
Because summary judgment was proper as to both Ton's sworn account claim and breach of contract claim,
we overrule Ton's first issue.
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