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Texas Statute of Frauds Renders Land man Commission Contract Unenforceable

A recent case from the Texas Court of Appeals in Waco held that the Texas Statute of Frauds — Tex. Bus. & Com. Code, § 26.01 — rendered a land man’s commission contract unenforceable. The Court also upheld the trial court’s determination that none of the exceptions to the Statute of Frauds applied. The case is Moore v. Bearkat Energy Partners, LLC, 2018 WL 6837542018 (Tex.Civ. App.- Waco, no writ). Land man Moore had an agreement where he was supposed to be paid $600.00 per mineral acre for each and every lease he helped obtain for Bearkat Energy. Moore claims he performed and sued when he did not get paid. He claimed $1 million in damages and asked for $10 million in punitive damages. As noted, Moore lost on summary judgment at the trial level and received nothing. The Court of Appeals affirmed. Although the result may sound harsh, Moore could not meet any of the exceptions to the Statute of Frauds such as the partial or full-performance exceptions.

Texas Statute of Frauds and Exceptions

In general, Texas law requires that certain types of contracts be in writing. Examples include:

  • Contracts for the purchase or sale of real estate
  • Loan contracts exceeding $50,000
  • Contracts under the Uniform Commercial Code where the value of the goods exceeds $500
  • Contracts that cannot be performed within one year
  • Contracts to pay off someone else’s debts
  • Contracts like Mr. Moore’s related to landman commissions with respect to oil, gas, and mineral leases
  • And more

In addition to the contract being in writing, contracts must be signed by the person against whom they are enforced and the contract must be complete — at the time of signing — providing sufficient detail and containing all of the essential elements of the agreement so that the terms of the contract can be ascertained by the courts from the writing without resorting to oral testimony. With respect to contract involving land, this includes the requirement that the writing identify the property involved. Generally, identifying the property is done with a legal description, but other identifiers can be used if a person familiar with the locality would be able identify the specific parcel or tract of land. Note that the “writing” can be in multiple parts: it does not have to be one neatly stapled document.

Moore’s land man contract with Bearkat failed to identify, in any manner, the specific properties, tracts or parcels of land to which his contract was applicable. Moore argued that the oil and gas leases identified the specific properties. However, those were not signed at the same time as his land man commission contract. Thus, the leases did not overcome the Statute of Frauds problem.

In addition, Moore could not meet any of the exceptions to the Statute of Frauds. Among the exceptions are these:

  • Partial performance
  • Full performance
  • Unjust enrichment
  • Constructive trust

These exceptions make sense because otherwise the application of the Statute of Frauds  could result in harsh and unjust results. In Moore’s case, he claimed that he obtained several leases, but Bearkat Energy (and the other defendants) provided evidence showing that the leases were obtained by other land men and third parties. Moore did not have any evidence that showed otherwise. For example, Moore’s name was not on any of the leases, none of the leases mentioned or referred to his compensation agreement and Moore did not have any testimony from the landowners about his obtaining the leases. As a result, Moore could not satisfy any of the exceptions to the Statute of Frauds.

The lesson again: as with oil and gas leases and real estate contracts, make sure it’s in writing and that the written document contain all necessary contract terms.

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