Have you ever been about to sign a contract and stopped short when you noticed a particularly nasty term in the fine print? If you brought it up with the other party — an insurance company, a bank, a landlord — they probably did some hand-waving and told you not to worry about it.

“We never actually enforce that provision.”

“It’s just boilerplate.”

“That’s not our policy.”

Right?

Well, beware. According to Texas case law, you can’t rely on oral statements when you have a written contract that addresses the same point.

Take this case: 

Party A agreed to install an oil drill in exchange for some mineral rights from the owner, Party B. The parties heavily negotiated the contract, and one term involved whether or not the drill installer would have the right to resell the mineral rights he received. Initially, the contract said something like, Party A may not assign the mineral rights without the consent of Party B, which shall not be unreasonably withheld.” 

But then, Party B’s lawyers removed that last clause from the sentence, which turned into:

Party A may not assign the mineral rights without Party B’s consent, which shall not be unreasonably withheld.

Party A objected: How can you take that out? Doesn’t that mean you could just keep me from giving away those rights without any good reason? And isn’t that just as bad as saying I can’t assign at all? He wanted the contract changed back.

Party B was quick to reassure. No, no, no don’t worry! If you want to give away your rights, we won’t actually prevent you. We’ll give our consent. So party A signed the new draft.

Baaaaad decision. 

Later the owner prevented the drill installer from selling his mineral rights, the drill installer sued, and the court took the owner’s side. The way the court saw it, the terms of the deal were right there in black and white: you can’t assign without Party B’s consent. That’s what you agreed to. 

The moral of the story? Read your contracts.

Make sure all the terms of the agreement are in there. Push back until the draft says what you want it to say. Don’t take your business partner / vendor / service provider at their word. You just might come to regret it.