law-contact-essential-terms-indefiniteness | elements of contract formation | consideration as element of contract
| failure of consideration | contract ambiguity | contract interpretation |
CONTRACT MUST CLEARLY SET FORTH THE MATERIAL TERMS
A contract must be sufficiently definite in its terms so that a court can understand what the promissor
undertook. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). 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. Engelman Irrigation Dist. v. Shields Bros.,
960 S.W.2d 343, 352 (Tex. App.-Corpus Christi 1997), pet. denied per curiam, 989 S.W.2d 360 (Tex.
1998). In order for a court to enforce a contract, the parties must agree to the material terms of the
contract. T.O. Stanley Boot, 847 S.W.2d at 221.
Similarly, a contract providing for an agreement to be negotiated in the future is void. See Ski River
Dev., Inc. v. McCalla, 167 S.W.3d 121, 133-34 (Tex. App.-Waco 2005, pet. denied). The parties,
however, may agree on some terms sufficient to create a contract, leaving other provisions for later
negotiation so long as those terms are not material or essential. Id. at 134. However, those terms left for
future negotiation are not part of the enforceable portion of the contract. See Killion v. Lanehart, 154 S.
W.3d 183, 189 (Tex. App.-Amarillo 2004, pet. denied).
Essential or material terms have been defined as those terms that the parties would reasonably regard
as vitally important elements of their bargain. Neeley v. Bankers Trust Co., 757 F.2d 621, 628 (5th Cir.
1985) (construing Texas law). ―Each contract should be considered separately to determine its
material terms.‖ T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992).
ESSENTIAL TERMS IN CONTRACT FOR SALE-PURCHASE
The down payment and purchase price of property set forth in an agreement are considered essential
terms of that agreement. See Liberto v. D.F. Stauffer Biscuit Co., 441 F.3d 318, 324 (5th Cir. 2006)
(noting that Texas courts generally construe essential terms of contract to include price to be paid).
ESSENTIAL TERMS IN LOAN CONTRACT
A contract is not legally binding unless it is definite enough in its terms so 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); Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 678 (Tex. App.-Houston [1st. Dist.] 1996,
no writ). Where an essential term of an agreement is open for future negotiations, there is no binding
contract. Id. In a contract to loan money, the material terms are generally the amount to be loaned, the
maturity date of the loan, the interest rate, and the repayment terms. Id.
CONTRACT MUST CONTAIN DEFINITIVE TERMS - ESSENTIAL TERMS
CLEARLY SPELLED OUT
An alleged agreement is sufficiently definite if a court is able to determine the respective legal obligations of the
parties thereunder. Playoff Corp. v. Blackwell, 300 S.W.3d 451, 455 (Tex. App.—Fort Worth 2009, pet. denied)
(citing T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992)). Stated conversely, if an
alleged agreement is so indefinite as to make it impossible to fix the legal obligations and liabilities of the parties,
it cannot constitute an enforceable contract. Id. (citing Restatement (Second) of Contracts § 33(2) (1981)).
What terms are material or essential to a contract are determined on a contract-by-
contract basis, depending on the subject matter of the contract at issue.
 T.O. Stanley Boot Co., 847 S.W.2d at 221 (stating that "[e]ach contract should be considered separately to
determine its material terms" and that "[i]n a contract to loan money, the material terms will generally be: the
amount to be loaned, 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) (stating that "[i] n order
to be legally binding, a contract must be sufficiently definite in its terms so that a court
can understand what the promisor undertook" and that "[w]here an essential term is open
for future negotiation, there is no binding contract"); Sadeghi v. Gang, 270 S.W.3d 773, 776 (Tex.
App.-Dallas 2008, no pet.) ("If a contract is not clear and certain as to all essential terms, it will fail for
indefiniteness."); Miga v. Jensen, 25 S.W.3d 370, 376 (Tex. App.-Fort Worth 2000), aff'd in part and rev'd in part,
96 S.W.3d 207 (Tex. 2002).
Three essential elements of a contract for sale are "(1) the thing sold, which is the object
of the contract; (2) the consideration or price to be paid for the thing sold; and (3) the
consent of the parties to exchange the thing for the price."
 Kelly v. Rio Grande Computerland Group, 128 S.W.3d 759, 767 (Tex. App.-El Paso 2004, no pet.); John
Wood Group USA, Inc. v. ICO, Inc., 26 S.W.3d 12, 20 (Tex. App.-Houston [1st Dist.] 2000, pet. denied).
09-0575 BOBBY FERACHI v. SHAWN CADY; from Denton County;
2nd district (02-07-00355-CV, ___ SW3d ___, 05-28-09)(contract for purchase of interest in houseboat
unsuccessfully challenged as indefinite and unenforceable, indefiniteness of contract, meeting of the minds
Am.'s Favorite Chicken Co., 929 S.W.2d at 623; Miga, 25 S.W.3d at 376; see also Tex. Oil Co. v. Tenneco Inc.,
917 S.W.2d 826, 830 (Tex. App.-Houston [14th Dist.] 1994) ("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.") (citing Restatement (Second) of Contracts § 33(1) (1981)),
rev'd on other grounds, 958 S.W.2d 178 (Tex.1997).
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