Texas Construction Law Updates


Insurance claims can be denied completely unless the owner or contractor can show how much damage resulted from causes covered under the policy

Jason Cagle - Wednesday, October 17, 2018

An appeals court recently agreed with an insurance company that coverage was properly denied because its policyholder did not present enough evidence showing how much damage occurred during the period covered by its insurance policy. This opinion could have broader implications for project owners and contractors, who may need to make insurance claims for damage resulting from both covered and excluded causes. In the case, a hotel ow ... read more


Liquidated-damage provision enforced by Houston Court of Appeals

Jason Cagle - Wednesday, April 18, 2018

The First District Court of Appeals in Houston recently enforced a liquidated-damage provision. The opinion analyzes whether the liquidated damages constituted an unenforceable “penalty” under Texas law. A liquidated-damage provision permits a party enforcing a contract to recover damages based on an amount or formula agreed upon in advance. However, the breaching party may invalidate the liquidated-damage provision if it demonstrates ... read more


Texas Supreme Court refuses to look beyond the contract language to determine a party’s obligations

Jason Cagle - Tuesday, April 03, 2018

The Texas Supreme Court recently declined to look beyond an agreement’s clear language to trigger one party’s obligations. This was despite the other party’s insistence that pre-contract negotiations proved that the obligations had to be triggered. As a result, the other party did not get the performance that it thought was included in its bargain. In URI, Inc. v. Kleberg County, the parties entered into an agreement in which URI could ... read more


2017 Legislative Updates

Ian Fullington - Tuesday, January 23, 2018

In Texas, the 85th Legislature enacted several important pieces of legislation relevant to construction. Overall, only 18.3% or 1,211 total bills, passed the Texas Legislature and 50 bills were vetoed by Gov. Greg Abbott. Among other budgetary items, funding for schools was reduced by approximately $1.1 billion and about $2 billion was taken from highway projects. While high-profile reforms such as lien-law modernization and right-to-repa ... read more


Construction contracts can incorporate documents executed by the parties without describing them with specificity

Keith Heath - Wednesday, November 15, 2017

Construction contracts often “incorporate by reference” other documents that provide additional terms or further define a party’s obligations. However, the specificity required when describing the document differs depending on whether the document has been executed by the parties. As discussed in a recent case, if the parties execute the document to be incorporated, courts apply less-stringent standards on how the document must be identified  ... read more


Partial performance can overcome the absence of a written contract

Aaron Capps - Wednesday, November 15, 2017

In Thomas v. Miller, the lack of a written contract became the focal point of the dispute. Leorris Thomas verbally agreed to sell two acres of land to the Millers in exchange for payment of the amount remaining on Thomas’s mortgage. The Millers paid Thomas’s mortgage from 2004 to 2010 and made improvements to the property during that time. However, continual threats from Thomas caused the Millers to abandon the property in 2009. Thomas subseq ... read more


Arbitration agreement found unenforceable because employer could modify it without advance notice to the employee

JP Neyland - Tuesday, October 17, 2017

An employee had a dispute with his employer arising out of personal injuries on a worksite. The employer’s written Dispute Resolution Policy contained an arbitration provision. The employee asserted the arbitration provision was unenforceable because the employer was permitted to modify or terminate Dispute Resolution Policy at its sole discretion. As a result, the employee argued the arbitration provision was an illusory promise, that is, it ... read more


Challenges to overall enforceability of a contract can be determined by an arbitrator

JP Neyland - Tuesday, October 17, 2017

The parties to a dispute entered into an informal written settlement agreement, which contemplated execution of a more-formal settlement agreement later. The informal settlement agreement stated that “any disagreement result[ing] from negotiation and completion of this documentation” would be submitted to arbitration. One party argued the informal settlement agreement was wholly unenforceable because it was not approved by that party’s Board  ... read more


Failure to investigate contractor’s performance may prevent an owner from later recovering damages for latent defects

Ian Fullington - Tuesday, October 17, 2017

A construction project’s owner sued the general contractor for breach of contract after the four-year limitations period expired. The owner claimed that it had discovered issues with the contractor’s work, including improperly installed interior doors at exterior locations and the use of incorrect flooring materials. The owner argued that the “discovery rule” tolled the limitations period and allowed it to bring the claims as “latent defects. ... read more


Pay attention to the signature block and guaranty provisions when signing a contract

Nick Brooks - Wednesday, May 31, 2017

The president of a builder signed a contract, but (1) neglected to put the full legal name of his business in the signature block and (2) a provision of the contract stated that “the obligations under this agreement are also a personal obligation of the builder representative signing below.” After the builder defaulted, the owner sued the president of the builder as an individual. The Court ruled that the president was not individually li ... read more


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