Implied and Oral Contracts

Texas is an “at-will” employment state, which means that an employer can terminate an employee at any time and for any reason. Many jobs are provided on the basis of an oral or implied agreement. Implied and oral contracts tend to result in more insecure jobs, particularly since the employer usually has more power in the employment relationship. However, in Texas, courts do recognize and enforce implied and oral contracts in an employment context. If you are affected by a breach of an implied or oral contract, or you are concerned about the terms of an oral contract, the Austin employment attorneys at Wiley Walsh, P.C. may be able to help.

In Texas, a contract is a promise that entails legal consequences. It exists when an offer is made and accepted, and an exchange of valuable consideration occurs under the agreement. The promise can be written or oral, and it may address such matters as your job duties, work schedule, compensation, lunch and rest breaks, vacation time, benefits, and bonuses. The valuable consideration could be money or services.

You should be aware that general or vague verbal comments that you will not be discharged as long as your work is satisfactory or that you will only be discharged for a good reason do not show an intent to modify your at-will status in Texas. For an oral contract related to termination for good cause to exist, the employer needs to unequivocally show an intent to be bound not to terminate the employee except under certain circumstances.

The promise must be sufficiently definite to be considered an oral contract, and consideration is required. Additionally, it needs to be made by someone with apparent authority to bind the company. Apparent authority is determined by looking at whether a reasonably prudent employee using discretion and diligence would believe that the employer's agent had authority to act on behalf of the principal, based on the acts of the principal. The principal must have held the agent out as having the authority, or the principal must have knowingly and voluntarily allowed the agent to act in an unauthorized way.

An oral agreement must be performed or be able to be completed within one year from the date of making the agreement. Otherwise, it will be barred by the statute of frauds, which applies to any agreement not to be performed within a year. If an agreement is subject to the statute of frauds, the agreement will not be enforceable unless it is in writing and signed by the person who allegedly breached it. The court will look at the date of making the contract and the date by when performance was to be completed in deciding whether an oral agreement survives the statute of frauds. For example, if you claim that you had a five-year oral contract to perform services for your employer, you will be barred from enforcing its terms against your employer.

You can establish that there was a breach of an oral or implied contract if you can show that there was a valid contract, you performed your obligations under the contract, your employer violated a term or condition of the oral or implied contract, and you sustained damages due to the breach. It can be challenging to establish an oral or implied contract. The employer may provide testimony from its principals to counter your claims about what the terms of an oral contract were. However, it may be possible to establish a valid oral or implied contract with the help of an experienced litigator.

When deciding whether a valid oral or implied contract exists, the court will look at the communications between the employer and the employee, as well as the circumstances surrounding the communications.

If you are harmed by an employer's breach of an implied or oral contract, you should consult our Austin attorneys. The remedies and damages available depend on the situation. You may be able to recover monetary damages, which are based on factors such as the nature and extent of the breach, provisions related to damages in the contract, and the nature of the losses that you suffered. Wiley Walsh, P.C. represents people in Austin, Georgetown, Round Rock, Cedar Park, Pflugerville, Leander, Del Valle, Kyle, San Marcos, San Antonio, New Braunfels, and Fredericksburg, among other cities. Call us at (512) 271-5527 or use our online form to set up an appointment. We are also available to assist you if you need a discrimination lawyer or representation in another type of employment dispute.