Landman Defeated by the Statute of Frauds

Originally published by Charles Sartain.

Co-author Chance Decker  

Proving once again that gratitude is the rarest of human emotions, a contract between a landman and his client was deemed unenforceable, leaving the landman with nothing, even though he actually secured oil and gas leases for the client (at least he said that he did). In Moore v. Bearkat Energy Partners, LLC, independent landman Moore signed a contract with the purported agent of Lane.  Lane would pay Moore “$600 per mineral acre for each and every lease [Lane] enter[ed] with [Moore’s] assistance.”  Moore said he helped Lane secure numerous leases, but Lane refused to pay.

According to the trial court and court of appeal, Moore’s contract was unenforceable for failure to comply with the Statute of Frauds, which says:

“a promise or an agreement to pay a commission for the sale or purchase of an oil or gas mining lease, an oil or gas royalty, minerals or a mineral interest” is unenforceable unless it is: (i) in writing; (ii), signed by the person sought to be charged by the agreement, and (iii) reasonably identifies the property to which it applies, either within the agreement itself or by reference to some other existing writing.

The contract didn’t specify the properties it applied to, either within itself or by reference to some other identified writing in existence at the time the agreement was signed. Thus, it violated the Statute and was “void and unenforceable.”  Even though Moore gave the trial court the actual leases he helped Lane secure, both courts concluded that the Statute of Frauds prevented enforcement because the leases were not in existence at the time the contract was signed.

But there are exceptions!

The court dismissed Moore’s claims that partial performance and full performance excused this transaction from the Statute, ruling that the leases Moore obtained were not unequivocally referable to the contract and that there was not full performance.

How could Moore have done better?

To have enforceable contract, he could have:

• Included a more detailed description of the area where he would secure leases. What about stating he would be securing leases in Leon County or attaching a map as an exhibit to the contract, identifying the area where he would work (following roads, section lines, or other discernible boundaries).
• Or, structured the agreement as a finder’s fee contract rather than one requiring “assistance” in securing leases. Texas courts have held that finder’s fee contracts need not comply with the Statute of Frauds because a “finder’s fee” is not a “commission.”

We could add other alternatives having nothing to do with the Statute of Frauds:

• Be sure the contract describes the actual agreement of the parties. Seems like Moore was saying this one didn’t.
• Ascertain the trustworthiness of those with whom will you be doing business (This one might apply to either party. It’s hard to tell the good guy in this case).

Also having nothing to do with the Statute of Frauds is today’s musical interlude.

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

from Texas Bar Today http://ift.tt/2EM04Aw
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