Business Contracts in the U.S.: A Practical Guide for Owners

What makes a contract enforceable

U.S. contract law is mostly state law, but the basic elements are similar across states. There must be an offer, an acceptance of that offer, consideration (something of value given by each side) and an intent to be bound. The parties need legal capacity, and the purpose must be lawful.

A contract can be express, with stated terms, or implied from conduct, such as a supplier who keeps shipping and a buyer who keeps paying. It can be bilateral (a promise for a promise) or unilateral (a promise that is paid only when someone performs, such as a reward). The label matters less than proof of what was agreed.

When Texas law requires a signed writing

Texas's statute of frauds makes certain promises unenforceable unless they, or a memorandum of them, are in writing and signed by the person to be charged (Tex. Bus. & Com. Code §26.01). The list includes:

• a contract for the sale of real estate, and a real-estate lease for more than one year;
• an agreement that is not to be performed within one year from the date it is made;
• a promise to answer for another person's debt, such as an owner's personal promise to pay a company's debts;
• a sale of goods for a price of $500 or more (§2.201), with exceptions for specially manufactured goods, admissions in court, and goods already paid for or received.

Confirmations and e-signatures

Between merchants, a written confirmation sent within a reasonable time binds the recipient unless they object in writing within 10 days of receiving it (§2.201(b)).

Electronic records and signatures satisfy writing and signature requirements, and a contract cannot be denied effect only because it was formed electronically (Tex. Bus. & Com. Code §322.007).

The clauses that carry the risk

Most disputes turn on a handful of clauses. Draft each one with the failure case in mind.

1. Parties: full legal names, entity type, registration numbers and addresses. A Turkish company should appear with its trade registry (ticaret sicili) details.
2. Scope: the goods or services, specifications, quantities, acceptance criteria and delivery terms, for example an Incoterms rule.
3. Price and payment: currency, schedule, invoicing, late-payment interest, and who bears bank and transfer costs.
4. Intellectual property: who owns what is created, and what licence each side receives.
5. Confidentiality: what is confidential, for how long, and the exceptions.
6. Warranties and representations: the facts each side promises are true, and the remedy if they are not.
7. Limitation of liability and indemnity: caps, exclusions, and who covers third-party claims.
8. Term, renewal and termination: notice periods, termination for convenience, and cure periods for breach.
9. Force majeure: which events excuse performance, the notice required, and what happens if the event lasts.
10. Governing law and forum: which law applies, and which courts or arbitral body decide disputes.
11. Dispute resolution: negotiation steps, mediation, arbitration rules and seat, and the language of the proceedings.

Limits Texas puts on some clauses

A clause that shortens the time to sue on the contract to less than two years is void in Texas (Civ. Prac. & Rem. Code §16.070). The exception is a contract for the sale or purchase of a business entity worth at least $500,000.

A clause that requires notice of a damages claim within less than 90 days is void (§16.071).

Restrictive covenants: non-compete, non-solicitation, non-disclosure

Some clauses restrain a party instead of requiring it to act. The common forms are non-compete, non-solicitation and non-disclosure clauses.

In Texas, a covenant not to compete is enforceable only if it is ancillary to an otherwise enforceable agreement and its limits on time, geographic area and scope of activity are reasonable and no broader than needed to protect goodwill or another business interest (Tex. Bus. & Com. Code §15.50). Other states apply their own rules.

At the federal level, the FTC's Non-Compete Clause Rule never took effect. The FTC removed it from the Code of Federal Regulations effective 12 February 2026 (91 FR 6507), so state law governs.

Non-disclosure clauses protect confidential information and trade secrets. Define the information, the permitted uses, the duration, and what happens to documents when the relationship ends.

How contracts end

• Performance: both sides do everything the contract requires.
• Agreement: the parties agree to end it, ideally in a signed termination and release.
• Under its own terms: expiry, termination for convenience with notice, or termination for breach after a cure period.
• Material breach: a serious failure by one side can allow the other to end the contract and claim damages.
• Impossibility or frustration: an unforeseen event, such as a new law or the destruction of the subject matter, makes performance impossible or pointless. Courts apply this narrowly, which is why a force majeure clause matters.
• Operation of law: for example, the death of a party to a personal-services contract, or bankruptcy, which brings its own rules.

Before you end a contract, check the notice clause: the method (email, courier, registered mail), the address and the timing. A termination sent the wrong way may not be effective.

Fraud and misrepresentation

Fraud is a false statement of a material fact, made knowingly or recklessly to induce the other side to act, which the other side relies on and is harmed by. A misrepresentation made without that intent can be negligent or innocent, and the remedies differ.

Fraud can let the injured party rescind the contract or claim damages, and serious fraud is also a crime. In Texas, a suit for fraud must be brought within 4 years (Civ. Prac. & Rem. Code §16.004).

Practical protection: write key facts into the contract as representations and warranties, keep the documents you relied on, and verify the counterparty's registration, signatory authority and sanctions status before signing.

Cross-border contracts between U.S. and Turkish companies

• Sale of goods: the United States (since 1 January 1988) and Turkey (since 1 August 2011) are both parties to the UN Convention on Contracts for the International Sale of Goods (CISG). It applies to sales of goods between businesses in the two countries unless the contract excludes it, so state your choice explicitly.
• Arbitration: both countries are parties to the 1958 New York Convention on foreign arbitral awards (the U.S. since 29 December 1970, Turkey since 30 September 1992). An award made in one can be enforced in the other under that framework.
• Court judgments: a Turkish court enforces a foreign judgment only if the conditions in Article 54 of Law No. 5718 (MÖHUK) are met, including reciprocity between Turkey and the state where the judgment was given. Weigh this when choosing between a court and arbitration.
• Choice of law and forum: Turkish law lets the parties choose the law governing their contract (MÖHUK Art. 24) and, for disputes with a foreign element, agree on a foreign court if the agreement is proved by written evidence (Art. 47). Exclusive Turkish jurisdiction rules still apply.
• Limitation periods differ: under the Turkish Code of Obligations the general period is 10 years (Art. 146), 5 years for listed claims such as rent and partnership claims (Art. 147), and the parties cannot change them by contract (Art. 148).
• Language: if you sign in two languages, say which version controls.

Turkish-law questions on these contracts are reviewed by Merit's lawyers licensed in Turkey (Istanbul Bar); U.S.-law questions by its U.S.-licensed attorneys.

Before you sign: a short checklist

• Confirm the counterparty's legal name, registration and the signatory's authority.
• Read the payment, termination, liability, governing-law and dispute clauses twice.
• Check that every promise made in negotiations is in the document; many contracts say earlier statements do not count.
• Keep the signed copies, amendments and key emails in one place.
• Put notice deadlines, renewal dates and limitation periods in your calendar.