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Post-performance Written Contract Defines Prior Oral One

Saturday, October 01, 2011 08:56 am

 

Contracts

Audubon Indemnity Co., v. Custom Site-Prep, Inc., 2011 Tex. App. Lexis 5829 (July 28, 2011)

A written contract introduced terms not discussed in a prior oral agreement, but new consideration wasn't required.

Comanche Contractors, Inc. (Comanche) was the general contractor on an office building construction project. Subcontractor CSP Site-Prep, Inc. (CSP) performed the earthwork to prepare the slab building pad. Later, the project owner sued Comanche over construction problems and property damage that stemmed from the pad, which had not been built according to the plans and specifications. Comanche's insurance carrier, Audubon Indemnity Company (Audubon), paid out the damages and then sued CSP to recover them. A trial court favored CSP's defense that the Comanche-CSP written subcontract, which included an indemnity clause, lacked consideration. But the appellate court disagreed and reversed.

Comanche and CSP had worked together on many projects over the past 10 years and were accustomed to operating under an oral agreement and then signing a "form" subcontract after the work was complete. That's what they did here. The parties didn't discuss indemnity or specify a set price in their oral agreement, nor did they state whether their oral agreement was [...]

 
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