Supreme Court Rules on Enforceability of Oral Representations

The Texas Supreme Court recently decided a case involving the enforceability of verbal representations. In the case of Roxo Energy Co. v. Baxsto, LLC, No. 23-0564, 2025 WL 134581 (Tex. May 9, 2025) (per curiam).

Baxsto and Roxo engaged in discussions regarding Baxsto’s leasing its minerals to Roxo. Later these discussions evolved into Baxsto selling its minerals in Howard and Borden Counties to Roxo. That sale was closed. Later, Baxsto claimed that Roxo made the following false representations in these negotiations: 1) that Roxo would give Baxsto the most favorable deal of any owner in the area if it would lease quickly; 2) that Roxo planned to make its money on the lease by drilling and developing the land itself and did not intend to resell the mineral interests and 3) that Roxo would not record the memorandum of lease before it paid Baxsto a $5,000 per acre bonus.

Roxo ended up selling the lease, paid another mineral owner an $11,000 per acre bonus, and recorded the memorandum before paying the bonus to Baxsto. Baxsto alleged that these representations were false, and because it relied on them, it was locked into an unproductive lease, and it received lower than market value for its mineral interests.

The lease expressly allowed Roxo to assign the lease and Baxsto received and accepted the agreed bonus of $5000 per acre. Therefore, as to the first two representations, the Supreme Court held that reliance on oral representations that are directly contradicted by the express, unambiguous terms of a written agreement between the parties is not justified as a matter of law. As to the third representation, the Court held that this representation was too far away in time from the sale to have been relied on by Baxsto in connection with the sale.

This case illustrates yet again the importance of having important contract provisions written into the agreement.