Texas Business Law Glossary

A provision in a promissory note, deed of trust, or credit agreement that allows the lender, upon the occurrence of a specified event of default, to declare the entire outstanding balance immediately due and payable. In Texas, acceleration of a real-property-secured loan generally requires both notice of intent to accelerate and notice of acceleration, and is subject to a four-year statute of limitations on subsequent enforcement.

An investor meeting specific SEC criteria permitting purchase of unregistered securities under Regulation D. Individuals qualify by (i) net worth >$1M (excluding primary residence), (ii) income >$200K (or $300K with spouse) for last two years with reasonable expectation to continue, or (iii) holding specified professional certifications (Series 7, 65, 82). Entities qualify if they meet specific asset, ownership, or status thresholds. Defined in 17 C.F.R. § 230.501(a).

A procedure by which shareholders or directors take formal corporate action without holding a meeting, by signing a written consent that specifies the action taken. The consent has the same effect as a vote at a duly-called meeting.

A party, typically not the named insured, who is added to a liability insurance policy by endorsement and entitled to coverage for liability arising from the named insured's operations or specified activities. Common in construction, real estate, vendor-vendee, and landlord-tenant relationships. Standard ISO endorsements (CG 20 10, CG 20 26, CG 20 33, CG 20 37) define scope. Coverage typically extends only to liability "caused, in whole or in part, by" the named insured's acts or omissions, not the additional insured's independent negligence.

A sworn instrument recorded by the owner of a Texas construction project stating the date the original contractor completed the work. Historically used to shorten the lien-filing window, the affidavit's power to truncate lien deadlines was eliminated by HB 2237 (effective January 1, 2022) for prime contracts entered after that date.

Two affiliate rules matter under the TDPSA and they run in opposite directions. Chapter 541 excludes transfers to an affiliate from the definition of sale and excludes affiliates from third-party status. Separately, SBA affiliation rules aggregate the receipts and employees of a business and all its affiliates when testing small business size, which decides whether Chapter 541 applies at all.

Federal statute (29 U.S.C. §§ 621-634) prohibiting employment discrimination against individuals 40 and older. Applies to employers with 20+ employees. Covers hiring, firing, promotions, layoffs, compensation, benefits. Damages: back pay, front pay, reinstatement, liquidated (double) damages for willful violations, attorney's fees, but no compensatory or punitive damages. The Older Workers Benefit Protection Act (OWBPA) imposes specific waiver requirements for severance agreements covering ADEA claims.

Federal statute (42 U.S.C. § 12101 et seq.) prohibiting discrimination against qualified individuals with disabilities. Title I covers employment, applies to employers with 15+ employees. Requires reasonable accommodation of qualified individuals' disabilities unless undue hardship. The ADA Amendments Act of 2008 substantially broadened the disability definition. Interactive-process requirement is central, failure to engage in good-faith dialogue independently supports liability.

The amount in controversy is the money genuinely at stake when the suit is filed, and it is the gatekeeper for the Texas Business Court. Section 25A.004(b) requires more than $5,000,000, excluding interest, statutory and exemplary damages, penalties, attorney's fees and court costs. Section 25A.004(i), added in 2025, totals the claims of all joined parties.

The regular yearly gathering at which shareholders of a Texas corporation elect directors and conduct other business properly brought before the meeting. Required of every Texas for-profit corporation.

The defendant's responsive pleading to a petition or complaint, addressing each allegation and asserting affirmative defenses or counterclaims. Establishes the issues for litigation; failure to raise certain defenses by the deadline waives them.

A private dispute-resolution process in which the parties submit their dispute to neutral arbitrators whose decision is binding. Substitutes for traditional court litigation. Governed by the FAA (interstate) and Texas General Arbitration Act (intrastate).

A transaction structure in which the buyer acquires specified assets (and typically assumes specified liabilities) of a target business, rather than acquiring the target's equity. The selling entity continues to exist after closing, holding unsold assets, retained liabilities, and the purchase price.

The Texas default rule that, absent a contract specifying a fixed term or limiting termination rights, either party may terminate employment at any time, for any reason or no reason, with or without notice. Among the strictest at-will doctrines in the country, with only narrow common-law and statutory exceptions.

The point at which a security interest becomes enforceable against the debtor as to the collateral. Under Tex. Bus. & Com. Code § 9.203, attachment requires three elements: value given by the secured party, the debtor having rights in the collateral, and (typically) authentication of a security agreement describing the collateral. Distinct from perfection, which establishes priority against third parties.

Attorney immunity bars claims by non-clients against a lawyer for conduct within the scope of representing a client. It is an immunity from suit rather than a defense to liability, and it turns on the kind of conduct at issue rather than on whether that conduct was wrongful. Texas applies it outside litigation as well as within it.

The conditions and procedures under which a Texas litigant may recover its attorney's fees from the opposing party. Texas follows the American Rule (each side pays its own fees) absent a statutory or contractual exception. The principal statutory exception is Tex. Civ. Prac. & Rem. Code § 38.001, which allows fee recovery on enumerated claim types; HB 1578 (effective September 1, 2021) expanded the statute to permit recovery against LLCs, partnerships, and other organizations.

An immediate, self-executing injunction triggered by the filing of a bankruptcy petition under 11 U.S.C. § 362. Halts virtually all creditor collection actions against the debtor or property of the bankruptcy estate, lawsuits, foreclosures, repossessions, garnishments, and informal collection. Provides the debtor breathing space and ensures orderly bankruptcy administration. Specific exceptions exist (criminal proceedings, certain tax matters, domestic support obligations). Violations can carry actual damages, punitive damages, and attorney's fees.

The foundational U.S. anti-money-laundering statute; requires financial institutions, including money transmitters and, since the GENIUS Act, payment-stablecoin issuers, to maintain AML programs and report suspicious activity to FinCEN.

A contractual threshold below which a buyer cannot recover indemnification for breaches of seller's representations and warranties. The basket aligns indemnification with material rather than trivial breaches.

A federal reporting regime under the Corporate Transparency Act requiring disclosure of beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Following FinCEN's March 2025 interim final rule, all entities formed in the United States are exempt from BOI reporting; the obligation now applies only to foreign-formed entities registered to do business in the U.S.

The single Texas statute governing corporations, limited liability companies, partnerships, professional entities and other filing entities. Enacted in 2003, effective January 1, 2006, and mandatory for every Texas entity since January 1, 2010. It replaced eleven separate article-based acts and is organized in Titles, with Title 1 carrying the provisions that apply across all entity types.

Corporate documents, accounts, and communications a Texas corporation must maintain and that shareholders may inspect on written demand. Scope substantially narrowed by SB 29 effective May 14, 2025.

A person or entity engaged in the business of buying or selling securities for the account of others (broker) or for their own account (dealer); registration with the SEC and FINRA is generally required.

The negotiated, mediated, or litigated separation of co-owners of a closely-held Texas business, covering contractual, statutory, fiduciary, and judicial mechanisms by which co-owners exit a relationship that has become untenable.

A Texas substantive doctrine protecting corporate officers and directors from liability for decisions made in good faith and within the honest exercise of business judgment. As of May 14, 2025, Texas operates two parallel regimes: a common-law version applicable to all entities by default, and a codified version under TBOC § 21.419 for publicly-traded and opt-in corporations.

A contract among owners of a closely-held business establishing terms for transfer of ownership interests upon specified triggering events, death, disability, retirement, termination of employment, divorce, bankruptcy, or voluntary transfer. Typically structured as cross-purchase (owners buy each other's interests), redemption (entity buys back interest), or hybrid. Includes valuation methodology and funding mechanism (often life insurance for death triggers). Foundational governance document for closely-held businesses.

Internal governance rules of a Texas corporation establishing how the corporation operates, board and shareholder meetings, officer duties, voting and quorum, indemnification, and other internal management matters.

A for-profit corporation taxed as a separate entity under Subchapter C of the Internal Revenue Code; the default federal tax treatment for corporations and the entity type required for Qualified Small Business Stock under IRC § 1202.

The default federal tax treatment of a corporation under Subchapter C of the Internal Revenue Code. The corporation pays entity-level income tax at the 21% federal rate; shareholders pay a second tax on dividends and capital gains. The "double taxation" structure that S-corp election or LLC pass-through treatment is designed to avoid.

A document or spreadsheet showing the equity ownership of a company, including founders, employees, investors, option holders, and SAFE/note holders. Modern cap tables typically show: outstanding common shares, outstanding preferred (by series), outstanding options, available option pool, outstanding warrants, outstanding SAFEs and notes (with conversion analysis), fully-diluted ownership percentages. Foundational document for any equity transaction, fundraising, or M&A.

Cash, property, services, or promise transferred by a member to a Texas LLC in exchange for a membership interest, or by an existing member in connection with their existing interest. Includes initial contributions at formation and subsequent capital calls.

The public document filed with the Texas Secretary of State to bring a domestic filing entity into legal existence under Texas law. The Texas equivalent of "articles of organization" (LLCs) or "articles of incorporation" (corporations) used in other states.

Bankruptcy proceeding under 11 U.S.C. §§ 1101-1195 in which a business (or individual) reorganizes its debts and operations under court supervision while continuing to operate. The debtor typically remains in possession (DIP) and proposes a Plan of Reorganization for creditor and court approval. Common for businesses with viable operations facing financial distress. The 2019 Small Business Reorganization Act added Subchapter V, streamlined Chapter 11 for small businesses (debt limit $7.5M post-CARES, with periodic adjustments).

Bankruptcy proceeding under 11 U.S.C. §§ 1301-1330 available to individuals with regular income, providing for repayment of debts over 3-5 years through court-approved plan. Allows debtor to retain assets (including non-exempt property) by paying value over plan term. Subject to debt limits (currently approximately $2.75M total per debtor). Common in mortgage cure situations, tax debts, and where Chapter 7 not available (means test failure) or undesirable.

Bankruptcy proceeding under 11 U.S.C. §§ 701-784 in which a court-appointed trustee liquidates the debtor's non-exempt assets and distributes proceeds to creditors. Available to individuals (subject to means test) and business entities. For individuals, typically results in discharge of qualifying debts. For business entities, typically results in dissolution. The most common form of business bankruptcy for entities without viable reorganization path. Means test under § 707(b) limits individual eligibility.

A court order entitling a judgment creditor to receive any distributions that would otherwise be paid to a debtor-member of an LLC, partner of a limited partnership, or partner of a general partnership. The exclusive remedy under Texas law for satisfying a personal judgment out of the debtor's interest in the entity.

Choice of law clauses specify which jurisdiction's substantive law governs a contract. Choice of forum (forum selection) clauses specify the courts authorized to hear disputes. Both are foundational for commercial contracts involving multi-state parties or transactions.

A theory of vicarious liability in tort under which two or more persons who agree to accomplish an unlawful purpose, or a lawful purpose by unlawful means, become jointly and severally liable for the resulting harm. Texas treats civil conspiracy as a derivative tort, there must be an underlying tort that one of the conspirators committed; conspiracy alone is insufficient. The Texas Supreme Court reaffirmed this framework in Agar Corp. v. Electro Circuits International, LLC, 580 S.W.3d 136 (Tex. 2019).

The requirement that holders of a particular class or series of shares vote separately, as a class, on a specified matter. Substantially modified by SB 29 effective May 14, 2025, permitting Texas corporations to waive class and series voting in their certificates of formation.

An online contract formation method in which the user manifests assent by clicking an "I agree" button or checkbox after being presented with the contract terms. The most enforceable of the online contract types under both Texas and federal law.

A Texas for-profit corporation defined by TBOC § 21.563(a) as having fewer than 35 shareholders and no public market for its shares. Triggers significant procedural advantages for shareholders pursuing derivative claims.

The events, deliveries, and circumstances that must be satisfied (or waived by the benefited party) before either party is obligated to close an M&A transaction. Allocates signing-to-closing risk and provides termination rights when conditions fail.

Federal statute (29 U.S.C. § 1161 et seq.) requiring group health plans to offer continuation coverage to qualified beneficiaries who lose coverage due to specified qualifying events. Applies to private employers with 20+ employees and group health plans. Standard continuation: 18 months for termination/reduction in hours; 36 months for divorce, dependent aging out, death, Medicare entitlement. Beneficiary pays full premium plus 2% admin fee (102% of plan cost).

The property subject to a security interest. UCC Article 9 categorizes collateral by type, with different attachment, perfection, priority, and enforcement rules applicable to each category.

The standard liability insurance policy for businesses, providing coverage for bodily injury, property damage, personal and advertising injury, and medical payments arising from business operations, premises, and products. Standard ISO form includes Coverage A (bodily injury and property damage), Coverage B (personal and advertising injury), and Coverage C (medical payments). Subject to numerous exclusions including expected/intended injury, contractual liability (with insured-contract exceptions), pollution, employer's liability, and many others.

A contract by which a property owner grants a tenant the right to use specified real property for commercial purposes for a defined term in exchange for rent. Governed by Texas common law and specific statutory provisions, distinct from the more heavily-regulated residential framework.

The principal contract governing the sale of commercial real property in Texas. Distinct from residential transactions in that it is typically heavily negotiated rather than form-driven, with bespoke provisions on due diligence, financing contingencies, environmental representations, title objections, and closing conditions. Statute of frauds requires writing.

The principal governance document of a Texas LLC, the contract among members (and managers, if applicable) that establishes the LLC's internal rules. The TBOC equivalent of "operating agreement" or "limited liability company agreement" used in other states.

A contractual obligation by one or more parties to maintain the secrecy of specified information, prohibiting unauthorized disclosure or use beyond defined permitted purposes. Operates as the primary contractual layer of trade secret protection and as a foundation for noncompete enforceability.

The bargained-for exchange that supports a contract, something of value (a promise, act, forbearance, or property) given by each party in exchange for the other's promise. Texas requires consideration for contract formation; "naked promises" without consideration are generally unenforceable.

A contract governing the construction, alteration, repair, or improvement of real property. Texas construction contracts are subject to the Anti-Indemnity Act (Tex. Ins. Code Ch. 151), the mechanic's lien statute (Tex. Prop. Code Ch. 53), the Prompt Payment Act (Tex. Prop. Code Ch. 28), and a substantial body of project-delivery case law.

A TBOC-authorized transaction in which a Texas business entity changes its form (e.g., LLC to corporation) or jurisdiction of formation (e.g., Delaware corporation to Texas corporation) without dissolving and reforming. Contracts, debts, and liabilities continue uninterrupted.

A debt instrument that converts to equity (typically preferred stock) upon a qualified equity financing, with a valuation cap, discount, or both. Convertible notes accrue interest (typically 4-8% annually) and have a maturity date (typically 18-24 months) at which they must be repaid or converted. Largely displaced by SAFEs in U.S. seed-stage financing but remain common in some contexts (later-stage bridges, more-investor-friendly markets, §1202 QSBS holding-period optimization).

A federal grant of exclusive rights in original works of authorship fixed in a tangible medium of expression. Protection arises automatically upon fixation; registration is a prerequisite to filing an infringement suit. Governed entirely by federal law.

A Texas for-profit corporation under TBOC Title 2, Chapter 21, a separate legal entity owned by shareholders, governed by a board of directors, and managed day-to-day by officers appointed by the board.

A contractual obligation in a credit agreement requiring the borrower to maintain specified financial conditions or refrain from specified actions during the loan term. Affirmative covenants require the borrower to do something (deliver financial statements, maintain insurance); negative covenants restrict actions (additional debt, distributions); financial covenants impose ratio tests (leverage, debt service coverage, fixed charge coverage). Breach is a default subject to lender remedies.

A method of voting in director elections that gives each shareholder votes equal to shares held multiplied by directors to be elected, with all votes castable for a single candidate or distributed. Enables minority shareholders to elect at least one director when their stake is sufficient.

A specialized insurance product covering risks associated with cyber events, data breaches, ransomware, business interruption from cyber incidents, regulatory investigations, and third-party liability for cyber-related harm. Typically includes both first-party coverage (the insured's own losses, forensics, notification, business interruption, ransom payments) and third-party coverage (claims by others, customers, regulators, payment networks). Market has matured significantly; underwriting now requires substantial security controls.

A clear affirmative act signifying a consumer's freely given, specific, informed and unambiguous agreement to process personal data. The TDPSA requires it before any sensitive data is processed, before processing outside disclosed purposes, and before a small business sells sensitive data. Accepting a general terms of use document does not count. Neither does anything obtained through a dark pattern.

Consequential damages compensate losses that flow from a breach but do not follow necessarily from it, so they are recoverable only if they were within the parties' contemplation when the contract was made. Texas requires foreseeability at contracting and proof of amount with reasonable certainty. They are the damages most contracts disclaim, and the disclaimer usually holds.

A constructive trust is not a trust anyone created. It is a remedy: a court declares that a defendant holds identified property for the plaintiff's benefit and orders it turned over. Texas requires wrongdoing such as breach of a fiduciary or special relationship or actual fraud, unjust enrichment of the wrongdoer, and property that can be traced.

A request from a Texas resident asking a controller to confirm, access, correct, delete or port personal data, or to opt out of targeted advertising, sale of personal data, or certain profiling. The controller must respond within 45 days, extendable once by another 45. Two responses per consumer each year must be free, and a refusal must be appealable.

The party that decides why and how personal data gets processed. Under the TDPSA a controller determines the purpose and means of processing, alone or jointly with others, and carries nearly every substantive duty in Chapter 541: privacy notice, data minimization, security, consumer response, sensitive data consent, and processor contracts. The label follows function, not what an agreement calls you.

An owner whose voting power or practical influence lets it direct the corporation, either generally or as to a single transaction. The label matters because it can trigger heightened review of transactions and duties running to minority owners. Delaware now defines the term by statute. Texas reaches the same problem through fiduciary duty and a narrow statutory oppression remedy.

The 30-day window a business gets after the Texas Attorney General sends written notice of an alleged TDPSA violation. Cure the identified violation inside 30 days and deliver the written statement the statute requires, and the attorney general may not bring the action. The Texas cure right has no sunset. Enforcement is exclusively the attorney general's, with no private right of action.

The Texas framework for judicial gatekeeping of expert witness reliability. The Texas Supreme Court adopted the Daubert framework in E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549 (Tex. 1995), articulating six non-exclusive factors for evaluating the reliability of scientific expert testimony. Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713 (Tex. 1998), extended reliability gatekeeping to all expert testimony, including non-scientific opinion, through the "analytical gap" test.

The debtor in a Chapter 11 case who remains in possession and management of assets and operations rather than having a trustee appointed. DIP exercises the rights, powers, and duties of a trustee under 11 U.S.C. § 1107, operating the business as fiduciary for creditors. Default status in Chapter 11 absent cause for trustee appointment (fraud, dishonesty, gross mismanagement). Also commonly refers to DIP financing, post-petition lending with super-priority status.

Texas's principal consumer-protection statute, codified at Tex. Bus. & Com. Code §§ 17.41-17.63. Provides four causes of action, false/deceptive practice (the "laundry list"), breach of express or implied warranty, unconscionable action, and Insurance Code Chapter 541 violation. Available to "consumers" (with a $25M business-consumer exclusion). Remedies include economic damages, mental anguish (knowing violations), treble damages (intentional violations), and mandatory attorney's fees. SB 140 (eff. September 1, 2025) expanded the DTPA to cover text-message marketing violations.

A judicial determination of the rights, duties, or legal relations of parties without an order for any specific action or remedy. Allows judicial resolution of legal disputes without first incurring damage or breach. Texas Uniform Declaratory Judgments Act (Tex. Civ. Prac. & Rem. Code Ch. 37).

The Texas statute (Tex. Civ. Prac. & Rem. Code Ch. 37) and federal counterpart (28 U.S.C. § 2201) authorizing courts to declare the rights, status, and legal relations of parties without granting coercive relief. Used to obtain advance judicial determination of a question, contract interpretation, statutory rights, insurance coverage, without waiting for a breach or other crystallizing event. Discretionary fee-shifting available under § 37.009.

A written instrument transferring ownership of real property from grantor to grantee. Texas recognizes principal categories: general warranty deed (full title warranty), special warranty deed (warranty limited to grantor's ownership period), and quitclaim deed (no warranty; transfers only what the grantor has). Must satisfy statute of frauds and recordation rules.

The principal instrument used in Texas to grant a security interest in real property for the benefit of a lender. The borrower (grantor) conveys legal title to a third-party trustee, who holds it in trust to secure the borrower's obligations to the lender (beneficiary). Distinct from a mortgage in mortgage-state jurisdictions; the deed of trust enables the nonjudicial foreclosure framework available in Texas.

The occurrence of an event specified in a credit agreement that entitles the lender to exercise contractual remedies, including acceleration, foreclosure, and assessment of default-rate interest. Two principal categories: payment defaults (failure to pay when due) and covenant defaults (breach of an affirmative, negative, or financial covenant). Many credit agreements distinguish "events of default" from defaults capable of cure within a grace period.

A money judgment for the difference between the debt outstanding and the proceeds of foreclosure sale, when those proceeds are insufficient to satisfy the debt. Texas Property Code § 51.003 provides specific procedures and timing for deficiency suits after nonjudicial foreclosure of real property, including a fair-market-value offset right available to the borrower as a defense.

The oral examination of a witness under oath, conducted out of court but on the record. Principal mechanism for obtaining detailed witness testimony before trial and for preserving testimony of witnesses unavailable at trial.

A lawsuit filed by a shareholder, member, or other equity holder on behalf of the entity itself, asserting a claim that belongs to the entity but that management has refused or failed to pursue. The principal procedural vehicle for challenging breaches of fiduciary duty.

Derivative standing is the right to sue on behalf of an entity for a wrong done to it. In Texas the plaintiff must have been an owner at the time of the conduct complained of, must be an owner when the suit is filed, and must remain one. Losing the interest during the case can end the claim outright.

Derived judicial immunity extends a judge's absolute immunity to non-judges who act as an arm of the court. Texas applies a functional test, asking whether the person exercised discretion comparable to a judge's in performing an assigned judicial function. Court-appointed receivers, guardians ad litem and similar appointees are the usual claimants. Purely ministerial work does not qualify.

Market shorthand for companies reincorporating out of Delaware, mostly to Texas or Nevada, beginning in 2024. It is commentary rather than a legal term and appears in no statute or rule. Tesla's move to Texas, after the Court of Chancery rescinded Elon Musk's pay package, is the event that named the trend.

Delaware's corporate statute, codified at title 8 of the Delaware Code. It governs the internal affairs of a Delaware corporation wherever that corporation operates, which is why a Texas owner with a Delaware holding company answers to it. Its interpretive gloss comes from the Court of Chancery, a non-jury court of equity, and the Delaware Supreme Court.

An individual elected by shareholders to serve on the board of directors of a Texas corporation, with statutory and common-law authority to manage or direct the management of the corporation's business and affairs.

Liability insurance protecting directors, officers, and the company itself from claims arising from acts in their corporate capacities. Standard structure: Side A covers individual directors and officers when the company cannot indemnify (insolvency, statutory bar); Side B reimburses the company for permitted indemnification; Side C covers the entity directly for securities claims. Critical for attracting board talent, raising capital, and protecting against shareholder litigation, regulatory investigations, and bankruptcy.

The document in which the seller in an M&A transaction identifies specific facts, contracts, and circumstances that qualify or carve out exceptions to the seller's representations and warranties. Delivered with the purchase agreement.

The pretrial process by which parties obtain information from each other and from non-parties relevant to the case. Texas operates a three-tier discovery framework that adjusts the scope and duration of discovery based on case type.

The discovery rule defers the start of limitations until the claimant knew or should have known of the injury. Texas applies it narrowly. It reaches only injuries that are inherently undiscoverable and objectively verifiable, and the question is asked category by category, so what matters is whether that type of injury is typically discoverable.

A transfer of cash or other assets from a Texas LLC to its members in their capacity as members. Distributions are how members receive the economic benefit of their investment, separate from compensation paid to a member-employee or amounts paid as repayment on a member loan.

The buyer's investigation of a target business before committing to a transaction, examining financials, operations, contracts, IP, regulatory compliance, litigation, employment, tax, and other material risk and valuation elements.

A cash deposit made by the buyer at signing of a real estate purchase agreement, held in escrow by the title company or other escrow agent. Functions as both consideration for the contract and a liquidated-damages pool in the event of buyer default. Typically 1%-3% of purchase price in commercial transactions; refundable during due diligence, non-refundable thereafter.

A deferred component of M&A purchase price, payable to the seller after closing only if the target business achieves specified financial or operational milestones during a post-closing earnout period. Bridges valuation gaps between buyer and seller.

A non-possessory right to use another's real property for a defined purpose. Texas recognizes principal types: appurtenant easements (benefiting an adjacent dominant estate), easements in gross (benefiting an individual or entity, not a parcel), and prescriptive easements (acquired by adverse use). Created by express grant, reservation, implication, necessity, or prescription.

A formal complaint filed with the U.S. Equal Employment Opportunity Commission (EEOC) alleging employment discrimination under federal law (Title VII, ADA, ADEA, GINA, EPA). Generally required as administrative prerequisite before filing federal-court suit on Title VII and similar claims. Filing deadline: 180 days from discriminatory act in most states; 300 days in deferral states (including Texas through TWC-CRD work-share). Triggers EEOC investigation, conciliation, and right-to-sue letter.

A nine-digit federal tax identification number assigned by the IRS to identify business entities for tax filing, employment, and banking purposes. Required for any entity with employees, partnerships, corporations, multi-member LLCs, and most fiduciary arrangements. Obtained by filing IRS Form SS-4 or applying through the IRS online portal.

A written contract between an employer and employee specifying the terms and conditions of employment, duration, compensation, duties, benefits, restrictive covenants, and termination rights. Principal mechanism for modifying the at-will default and incorporating noncompete and confidentiality obligations.

Liability insurance covering employment-related claims by current, former, and prospective employees, including wrongful termination, discrimination, harassment, retaliation, wage and hour, and similar claims. Typically includes defense costs and indemnification subject to retentions, sublimits, and exclusions. Essential for any employer; small employers especially benefit because employment claims are increasingly common and defense costs alone routinely exceed $50,000 even for non-meritorious claims.

A form license agreement governing the rights of an end user to install, access, and use a software product. Typically a non-negotiated take-it-or-leave-it contract delivered through click-wrap, shrink-wrap, or in-application acceptance. Distinct from the negotiated software license agreement used in commercial transactions.

Delaware's most demanding standard of review. It applies where a controller stands on both sides of a transaction or takes a benefit the other stockholders do not share, and it puts the burden on the defendants to prove both fair dealing and fair price. Texas has no general equivalent, and SB 29 moved Texas further in the opposite direction.

The Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1001 et seq.), the principal federal statute governing private-sector employee benefit plans, including retirement plans (401(k), pension) and welfare benefit plans (health, disability, life). Imposes fiduciary duties, vesting requirements, reporting obligations, claims procedures, and a comprehensive enforcement scheme. ERISA preempts most state laws "relating to" covered plans, among the broadest preemption doctrines in federal law.

Liability insurance protecting professional service providers against claims arising from errors, omissions, or negligent acts in the rendering of professional services. Also called Professional Liability Insurance. Covers attorneys, accountants, consultants, technology providers, real estate professionals, insurance agents, and other service-based businesses. Distinct from CGL, E&O covers economic loss from professional services; CGL covers bodily injury and property damage from operations. Typically claims-made.

An arrangement under which a portion of the M&A purchase price is held by a neutral third-party escrow agent for a specified period after closing, to fund post-closing indemnification claims by the buyer against the seller.

Quarterly federal income tax payments made by individuals, partners, S-corp shareholders, and corporations whose tax liability is not fully covered by withholding. Required when the taxpayer expects to owe at least $1,000 (individuals) or $500 (corporations) at year-end. Underpayment triggers an interest-rate penalty under IRC § 6654 (individuals) or § 6655 (corporations).

Insurance that responds only after primary coverage is exhausted, providing additional limits above the primary layer. Two principal types: (1) following-form excess, adopts the terms of the underlying primary policy with limited modifications; (2) umbrella, broader coverage that may respond to losses not covered by primary policies (filling gaps). Critical for managing liability exposure beyond primary policy limits. Common in commercial programs at $5M, $10M, $25M, and higher attachment points.

Under FLSA, the classification distinguishing employees entitled to overtime and full wage-and-hour protections (non-exempt) from those excluded from one or more such protections (exempt). Misclassification of non-exempt employees as exempt is the most frequent FLSA violation.

The procedural framework for identifying expert witnesses in Texas civil litigation, governed principally by Tex. R. Civ. P. 195. Distinguishes retained or specially employed experts (subject to detailed report requirements) from non-retained experts and consulting experts (whose work is generally protected from discovery). Disclosure deadlines are typically 90 days before trial for the party with the burden, 60 days before trial for the responding party.

The doctrine that the Federal Arbitration Act (9 U.S.C. § 1 et seq.) preempts state laws that single out arbitration agreements for unfavorable treatment or burden their enforcement. The FAA applies to arbitration agreements involving interstate commerce; the Texas General Arbitration Act (TGAA) applies to intrastate arbitration agreements. The Supreme Court reaffirmed the broad preemptive scope of the FAA in cases including AT&T Mobility v. Concepcion (2011) and most recently Smith v. Spizzirri (2024) on the mandatory-stay rule.

A financing arrangement in which a business sells its accounts receivable to a third party (the factor) at a discount in exchange for immediate cash. Distinct from a loan secured by receivables, the factor purchases ownership of the receivables. Under Texas UCC Article 9, sale of accounts is treated as a secured transaction for filing purposes. May be recourse (seller bears collection risk) or non-recourse (factor bears collection risk).

The federal wage-and-hour statute establishing minimum wage, overtime pay, recordkeeping, and child labor standards for covered employees. Operates alongside the Texas Payday Law, FLSA governs the amount of wages owed; the Payday Law governs the timing.

Federal statute (29 U.S.C. § 2601 et seq.) requiring covered employers to provide eligible employees up to 12 workweeks of unpaid, job-protected leave per 12-month period for specified family and medical reasons. Coverage: employers with 50+ employees within 75 miles. Eligibility: 12 months service, 1,250 hours worked. Job restoration and benefits continuation required. Up to 26 weeks for military caregiver leave.

The obligation of one party (the fiduciary) to act in the best interests of another (the beneficiary) when entrusted with property, authority, or confidence. In Texas business law, fiduciary duties are owed by corporate officers and directors, by general partners, and (subject to the company agreement) by LLC members and managers.

Wages owed to an employee at the conclusion of employment, including earned wages, overtime, accrued vacation pay (if owed by company policy), commissions, and bonuses. Texas law specifies firm timing requirements: 6 days for involuntary termination, next regular payday for voluntary resignation.

The public record filed by a secured party to give notice of a security interest in the debtor's personal property. Perfects the security interest against third parties and establishes priority date. Texas SOS no longer accepts paper filings as of August 29, 2025.

A contractual provision excusing one or both parties from performance when extraordinary events outside the parties' control prevent performance. Force majeure is a creature of contract, Texas does not recognize a general common-law force majeure doctrine.

Any entity formed under the laws of a jurisdiction other than Texas. A foreign entity must register with the Texas Secretary of State before "transacting business" in Texas.

The IRS information return used to report nonemployee compensation of $600 or more paid to independent contractors during a calendar year. Required from any business making qualifying payments to a non-corporate service provider. Due January 31 for both copy to recipient and copy to the IRS. Backup withholding obligations apply when the payee fails to provide a valid Taxpayer Identification Number.

An SEC notice filing required under Regulation D. Issuers must file Form D within 15 days of the first sale of securities in a Reg D offering. Form D provides basic information about the offering: issuer, exemption claimed, amount sold, types of investors, related persons. Filed electronically through EDGAR. Most states also require parallel notice filings ("blue sky" notices) with similar timing. Failure to file timely does not by itself void the exemption but signals non-compliance.

The federal employment eligibility verification form required by the Immigration Reform and Control Act of 1986 (IRCA, 8 U.S.C. § 1324a). All U.S. employers must verify identity and work authorization of every new hire, regardless of citizenship status, by completing Form I-9 and examining acceptable documentation. Civil penalties, 2025 inflation-adjusted and still current through 2026, run $288 to $2,861 per Form I-9 for paperwork violations and $716 to $28,619 per worker for knowingly hiring an unauthorized worker, scaling with repeat offenses. In March 2026, ICE reclassified more than ten categories of paperwork error from technical to substantive, eliminating the ten-day good-faith correction period for those categories. E-Verify is a parallel federal electronic verification program, voluntary in most contexts, mandatory for federal contractors.

A forum selection clause fixes in advance where disputes will be litigated. Texas treats these clauses as presumptively valid and enforces them by mandamus; the party resisting carries a heavy burden. Section 25A.004(d)(2) lets contracting parties agree that the Texas Business Court has jurisdiction over claims above the threshold, with an express carve-out for insurance contracts.

A post-judgment collection device by which a judgment creditor reaches the judgment debtor's property held by a third party (the garnishee), most commonly bank accounts and accounts receivable. Texas garnishment is governed by Tex. R. Civ. P. 657-679 and Tex. Civ. Prac. & Rem. Code Ch. 63. Wage garnishment for ordinary debts is unconstitutional under Texas law (Tex. Const. art. XVI § 28), with narrow exceptions for child support, taxes, and student loans.

The chief legal officer of a corporation or other business entity, responsible for managing the entity's legal affairs and serving as the senior legal advisor to the board and management.

Content produced by a generative artificial intelligence system. Under current U.S. copyright doctrine, AI-generated content lacking sufficient human creative input is not copyrightable. Works combining AI assistance with substantial human authorship remain protectable for the human-authored portions only.

A contract by which a guarantor agrees to be secondarily liable for the obligation of a primary obligor to a third party. Fundamental to commercial credit, landlords require lease guarantees, banks require personal guarantees from business owners, vendors require parent-company guarantees of subsidiaries.

Location information precise enough to identify where a person is within a radius of 1,750 feet. The TDPSA classifies it as sensitive data, so a Texas controller needs consent before processing it. The definition excludes the content of communications and data from advanced utility metering equipment. This is the provision behind the state's first privacy enforcement action.

A contractual provision under which one party agrees to bear the responsibility for specified liabilities of another, often paired with an indemnification obligation. Texas authorities historically have not always sharply distinguished hold-harmless from indemnification, but modern commercial practice typically uses combined "indemnify, defend, and hold harmless" language to cover three distinct obligations: reimbursement (indemnify), defense management (defend), and primary responsibility (hold harmless). Subject to express-negligence rule for clauses covering the holder's own negligence.

The Supreme Court test for whether an arrangement is an “investment contract,” and therefore a security: an investment of money in a common enterprise with an expectation of profit derived from the efforts of others.

The federal antitrust premerger notification regime under the Hart-Scott-Rodino Act (15 U.S.C. § 18a). Parties to certain mergers and acquisitions must notify the FTC and DOJ Antitrust Division and observe a 30-day waiting period before closing. The 2026 "size of transaction" threshold is $133.9 million (effective February 17, 2026), with a "size of person" test for transactions under $535.5 million. Failure to file properly carries civil penalties up to $53,088 per day.

The maximum aggregate amount a seller may be obligated to pay under the indemnification provisions of an M&A agreement. Limits seller exposure for breach of representations and warranties.

A contractual provision under which one party agrees to compensate another for specified losses, typically losses arising from third-party claims. Distinct from but often paired with hold-harmless provisions. Texas applies the "express negligence rule" (Ethyl Corp. v. Daniel Construction Co., 725 S.W.2d 705 (Tex. 1987)) requiring that an indemnity covering the indemnitee's own negligence be expressed in the contract clearly and conspicuously. Subject to several statutory limitations including the Texas Construction Anti-Indemnity Act.

The legal mechanism by which a Texas business entity protects its directors, officers, and other agents from financial loss arising from claims related to their service. Operates on a two-tier framework: mandatory indemnification (statutorily required) and permissive indemnification (subject to standards of conduct).

In M&A, the contractual obligation of one party (typically the seller) to compensate the other (typically the buyer) for losses arising from breaches of representations, warranties, or covenants, or from specifically identified risks.

A person or entity engaged to perform services but not as an employee, retaining control over manner and means of performance, providing services to multiple clients, bearing economic risk, and not subject to direct supervision. Classification has substantial tax, employment-law, and benefits consequences.

A court order directing a party to do or refrain from doing a specific act. Texas recognizes three principal forms based on duration: temporary restraining orders, temporary injunctions (preserving status quo through trial), and permanent injunctions (final relief on the merits).

A contract between two or more creditors of the same borrower governing their respective rights, priorities, and remedies vis-à-vis each other. Most common in capital structures with a senior secured lender and a junior or mezzanine lender. Addresses lien priority, payment subordination, enforcement standstills, voting rights in workouts, bankruptcy cooperation, and DIP financing rights.

An appeal taken from an order that does not finally dispose of the case. Texas allows interlocutory appeal only where specifically authorized by statute, principally Tex. Civ. Prac. & Rem. Code § 51.014. Authorized categories include orders on class certification, special appearance, temporary injunction, summary judgment in certain contexts, and (since September 2024) certain Texas Business Court orders. Permissive interlocutory appeals under § 51.014(d) require trial-court certification and discretionary acceptance by the court of appeals.

A written instrument transferring all right, title, and interest in identified intellectual property from the assignor to the assignee. Distinct from a license, which merely grants permission to use. Generally must be in writing, signed, and (for federal IP) recorded with the relevant agency.

A post-verdict motion asking the trial court to enter judgment for the moving party despite an adverse jury verdict, on the ground that the verdict is unsupported by legally sufficient evidence. Governed by Tex. R. Civ. P. 301. The Texas legal-sufficiency standard requires evidence rising to a level that would enable reasonable and fair-minded people to differ; mere conjecture or speculation does not. City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005), is the foundational case.

A court-ordered termination of a Texas business entity's existence. The Texas regime is bifurcated: corporations are subject to TBOC § 11.404 (rehabilitative receivership); LLCs and partnerships are subject to TBOC § 11.314, which is substantially broader.

The set of questions, definitions, and instructions submitted to the jury in a Texas civil case. Governed by Tex. R. Civ. P. 271-279. Texas favors broad-form submission, single questions encompassing all theories of liability, but Crown Life Insurance Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000), restricts broad-form submission where the question commingles valid and invalid theories. The charge conference is the procedural moment at which charge issues must be preserved for appellate review.

A jury waiver is a contractual agreement to try disputes to the bench. Texas enforces pre-dispute waivers, and a conspicuous waiver is prima facie evidence that it was knowing and voluntary, shifting the burden to the party resisting it. Since 2025, a Texas entity may also place a jury waiver for internal entity claims in its governing documents.

A formal undertaking by an issuer (typically a bank) to honor presentations made under specified terms, paying the beneficiary upon presentation of conforming documents. Two principal types: commercial letters of credit (payment in international and domestic sale of goods) and standby letters of credit (secondary payment guarantee for performance or payment obligations). Governed by Tex. Bus. & Com. Code Ch. 5 (UCC Article 5), often supplemented by UCP 600 or ISP98.

A preliminary written document outlining the proposed terms of a transaction, purchase price, structure, key conditions, exclusivity, timeline, before parties negotiate definitive agreements. Typically the first formal step after parties identify a deal.

A contract by which the owner of intellectual property (the licensor) grants another party (the licensee) permission to use the IP under specified terms, while ownership remains with the licensor. Structured by exclusivity, scope, territory, field of use, and royalty.

A contractual provision limiting one or both parties' exposure for damages arising from the contract, typically capping liability at a stated dollar amount, excluding consequential or punitive damages, or both. Generally enforceable in Texas commercial contracts between sophisticated parties, subject to limitations including statutory restrictions (e.g., DTPA waiver bar), public-policy limits (gross negligence and intentional torts), and the express-negligence rule for liability for the indemnitee's own negligence.

A statutory business entity formed under TBOC Title 3 that combines limited liability for owners (members) with substantial flexibility in management, taxation, and internal governance. The default Texas business entity for new closely-held formations.

A contractual provision specifying the amount of damages payable on breach, fixed in advance by the parties' agreement. Replaces common-law actual-damages calculation with a predetermined amount, providing certainty and avoiding the cost of proving actual damages.

A recorded notice that litigation is pending concerning specific real property, providing constructive notice to subsequent purchasers and lenders of the dispute. Permitted only in actions involving title to property, establishment of an interest in property, or enforcement of a lien on property. Subject to expungement on motion if the underlying claim lacks evidentiary support.

A person designated in a Texas LLC's certificate of formation or company agreement to manage the business and affairs of the LLC. Managers exist only in manager-managed LLCs and need not be members.

An extraordinary writ by which an appellate court compels a lower court or other government official to perform a non-discretionary duty. In Texas civil practice, mandamus is the principal vehicle for obtaining immediate appellate review of a trial-court order that is not subject to interlocutory appeal. Under In re Prudential Ins. Co. of America, 148 S.W.3d 124 (Tex. 2004), mandamus requires (1) abuse of discretion by the trial court and (2) lack of an adequate remedy by appeal.

A framework contract under which parties agree on general terms governing multiple future service engagements, with specific engagements documented through individual Statements of Work (SOWs) that incorporate the MSA's terms. Foundational to ongoing vendor relationships.

A contractual provision permitting one party (typically the buyer) to walk away from a transaction or refuse to close if specified categories of adverse events occur to the target business between signing and closing. Allocates signing-to-closing risk.

A statutory lien securing payment for labor or materials furnished to improve real property. Texas recognizes both a constitutional lien (self-executing for those in direct contract with the owner) and a statutory lien under Tex. Prop. Code Ch. 53 (available to subcontractors, suppliers, and design professionals through specified notice and filing procedures). HB 2237 substantially reformed the framework for prime contracts entered after January 1, 2022.

A non-binding, confidential dispute-resolution process in which a neutral third party facilitates negotiation between the parties to reach a voluntary settlement. The mediator does not decide the dispute, only the parties can resolve it. Texas courts routinely order mediation before trial.

An owner of a Texas LLC, the LLC equivalent of a shareholder of a corporation or partner of a partnership. Members hold "membership interests" representing economic rights and (in member-managed LLCs) governance rights.

The ownership interest of a member in a Texas LLC, comprised of two analytically separate components: economic rights (rights to distributions and allocations) and governance rights (rights to vote, inspect records, and participate in management).

A TBOC-authorized transaction in which two or more entities combine, with one entity surviving and the others merging into the survivor. The surviving entity acquires all rights, property, debts, and liabilities of the merging entities by operation of law.

Subordinated debt financing typically positioned between senior secured debt and equity in the capital stack. Bears higher interest rates than senior debt (often 12%-18%) plus equity-like features such as warrants, conversion rights, or PIK (paid-in-kind) interest. Subordinated to senior debt by intercreditor agreement and typically secured (if at all) by a second lien or pledge of equity in the operating company.

A 1991 arrangement between US and Canadian securities regulators that lets eligible Canadian issuers register and report in the United States using documents prepared under Canadian rules. It cuts the cost and time of a US offering substantially. Registration runs on Form F-10 and its relatives, annual reporting on Form 40-F, and interim disclosure on Form 6-K.

A person or entity engaged in the business of receiving money from one party for transmission to another; subject to federal registration as a money services business and to state-by-state licensing.

A pretrial motion seeking the trial court's preliminary ruling on the admissibility of specified evidence, typically to exclude evidence that is irrelevant, unduly prejudicial, or otherwise objectionable. A granted limine motion does not finally exclude the evidence, it requires the proponent to approach the bench before mentioning the evidence in front of the jury, allowing the court to revisit admissibility in context.

A request to terminate a case (or specific claims) before merits discovery and trial, on grounds that the pleading fails to state a viable claim or that some other procedural defect bars the action. Texas TRCP 91a (no basis in law or fact) and federal Rule 12(b) provide overlapping but distinct mechanisms.

The federal industry classification code that determines whether a business is small under Small Business Administration size standards, and therefore whether the TDPSA applies to it at all. Section 541.002(a)(3) exempts a small business as the SBA defines one. SBA size standards are published by NAICS code, some in average annual receipts and some in employee counts.

A contractual provision prohibiting the seller (or one party) from soliciting, encouraging, or accepting competing offers during a defined period, typically while a transaction is being negotiated and documented. Standard in M&A letters of intent, definitive agreements, and venture term sheets. Public-company no-shops typically include "fiduciary out" provisions allowing acceptance of superior unsolicited offers consistent with directors' fiduciary duties. Private-company no-shops are typically absolute.

A contractual restriction prohibiting an employee, after employment ends, from competing with the former employer within a specified geographic area, time period, and scope of activity. SB 1318 (eff. Sept. 1, 2025) added new restrictions for healthcare practitioners.

A foreclosure conducted under a deed of trust's power-of-sale provision without court involvement. The trustee sells the property at public auction on the first Tuesday of the month between 10 a.m. and 4 p.m. on the courthouse steps in the county where the property is located. Texas Property Code § 51.002 governs notice requirements: 20-day notice of default and intent to accelerate, then notice of sale at least 21 days before the sale date.

A contractual restriction prohibiting a former employee from soliciting the employer's customers, employees, or both for a specified period after employment ends. Texas treats nonsolicitation agreements as a category of restraint on trade subject to the same statutory framework as noncompete agreements.

An individual elected or appointed by the board of directors to manage the day-to-day affairs of a Texas corporation under the board's supervision. Common officers include president, secretary, treasurer, and CEO. Officers act as agents of the corporation.

A copyright license that grants users the right to access, modify, and redistribute the source code of software, subject to specified obligations. Divided between permissive licenses (MIT, Apache, BSD) imposing minimal conditions, and copyleft licenses (GPL, AGPL, LGPL) requiring derivative works to be released under the same license.

A reserved block of common stock authorized for issuance as equity compensation to employees, advisors, directors, and consultants. Typically structured under a Stock Incentive Plan or Equity Incentive Plan. Standard pool size: 10-20% of fully-diluted post-money capitalization for VC-backed companies. Includes Incentive Stock Options (ISOs, tax-advantaged for employees), Non-Qualified Stock Options (NSOs), Restricted Stock Awards (RSAs), and Restricted Stock Units (RSUs).

A business entity that does not pay federal income tax at the entity level. Income, deductions, gains, losses, and credits "pass through" to the owners, who report their distributive shares on their individual tax returns. Includes partnerships, LLCs taxed as partnerships, S-corporations, and disregarded single-member LLCs.

A federal grant of the right to exclude others from making, using, selling, offering for sale, or importing a claimed invention for a limited term. Three principal types: utility patents (functional inventions), design patents (ornamental designs), and plant patents (asexually reproduced plants). Issued by the USPTO; litigated in federal district court and the Federal Circuit.

Two contingent-payment provisions in construction subcontracts. A "pay-when-paid" clause is a timing provision, the subcontractor will be paid within a reasonable time after the prime contractor receives payment. A "pay-if-paid" clause is a condition precedent, the subcontractor receives nothing unless the prime contractor receives payment. Both are subject to the Texas Prompt Payment Act's mandatory 7-day downstream payment rule when funds flow.

A digital asset designed to maintain a stable value for use as a means of payment or settlement; under the GENIUS Act (2025), it may be issued only by permitted issuers holding one-to-one reserves.

The legal status by which a security interest becomes enforceable against third parties, competing creditors, transferees, and the debtor's bankruptcy trustee. Perfection establishes the secured party's place in the priority queue.

A court's authority over the parties to a lawsuit. Without personal jurisdiction over a defendant, a court cannot enter a binding judgment. Two-step analysis: does the long-arm statute authorize jurisdiction, and does exercising jurisdiction comport with constitutional due process?

The initial pleading filed by a plaintiff to commence a lawsuit. The petition (Texas) or complaint (federal) states the parties, the court's jurisdiction, the factual and legal basis for the claim, and the relief sought. Texas pleading standards differ meaningfully from federal Twombly/Iqbal plausibility.

Taxable income allocated to a pass-through entity owner that exceeds the cash distributed to that owner, creating tax liability without corresponding cash to pay the tax. Most commonly arises in partnerships, LLCs, and S-corporations with retained earnings, debt-financed operations, or owner-level business expenses paid by the entity.

The central document in a Chapter 11 bankruptcy case, proposing how the debtor will reorganize debts, restructure operations, and emerge from bankruptcy. Classifies claims and equity interests, specifies treatment of each class, and provides for ongoing operations. Subject to creditor voting (impaired classes) and court confirmation under 11 U.S.C. § 1129. Includes disclosure statement (§ 1125) describing plan in adequate detail for creditor vote. Confirmation discharges pre-petition debts to extent provided.

Interest that accrues on a money judgment from the date of entry until the judgment is fully satisfied. Texas post-judgment interest is governed by Tex. Fin. Code Ch. 304. The current rate is the lesser of (a) prime rate as published by the Federal Reserve, with a 5% floor and 15% ceiling, or (b) any rate specified in the underlying contract. The Texas Office of Consumer Credit Commissioner publishes the applicable rate.

An equity class with rights and preferences senior to common stock, typically including liquidation preference, dividend preferences, anti-dilution protection, voting rights, conversion rights, and protective provisions. The standard security type for venture capital and growth equity investments. Each "series" (Seed, Series A, B, C) typically has its own preferred class with negotiated terms reflecting investor leverage at that stage.

The relative ranking of competing claims to the same collateral or asset, determining the order in which creditors are paid from proceeds. Under Tex. Bus. & Com. Code § 9.322, priority among perfected security interests is generally first-to-file or first-to-perfect, with substantial exceptions for purchase-money security interests, special collateral types, and statutory liens.

A disclosure document used in private securities offerings, providing investors with information about the issuer, securities offered, business, financial condition, risk factors, management, and use of proceeds. Required when non-accredited investors participate in Rule 506(b) offerings. Best practice for all private offerings to support anti-fraud defenses under Rule 10b-5 even when not strictly required. Typical length: 30-100+ pages.

An equitable doctrine that enforces a promise, even one not supported by traditional consideration, where the promisee has reasonably relied on the promise to its detriment. Texas requires (1) a promise; (2) the promisee's reasonable reliance; (3) substantial detrimental change in position; and (4) injustice avoidable only by enforcement. Traditionally a sword for plaintiffs and a shield against statute-of-frauds defenses, promissory estoppel is narrower than full contract enforcement.

A written instrument by which one party (the maker) unconditionally promises to pay a sum of money to another party at a specified time or on demand. Negotiable instruments under UCC Article 3.

The authority granted by a shareholder to another person (the proxy holder) to vote the shareholder's shares at a shareholder meeting. The term also refers to the document evidencing that authority.

A plea to the jurisdiction is the motion that asks a court to dismiss because it lacks power over the subject matter, decided before the merits and without regard to who is right. In the Texas Business Court it is the standard vehicle for challenging the amount in controversy or the existence of a qualified transaction. Evidence is allowed.

A person that processes personal data on behalf of a controller. Processors act on the controller's instructions and owe duties that flow from a written contract Chapter 541 requires before processing begins. A processor that starts determining purposes for itself becomes a controller as to that processing, whatever the agreement says. Role is a fact question under the statute.

Stock that qualifies for the capital gains exclusion under Internal Revenue Code § 1202; substantially expanded by the One Big Beautiful Bill Act of 2025 to include tiered exclusions for shorter holding periods.

An equitable doctrine permitting recovery of the reasonable value of services rendered or benefits conferred, where there is no enforceable contract covering the services. Texas requires (1) valuable services or materials furnished, (2) for the person sought to be charged, (3) accepted by that person, (4) under circumstances reasonably notifying the recipient that the provider expected to be paid. Heldenfels Bros. v. City of Corpus Christi, 832 S.W.2d 39 (Tex. 1992), is the controlling case.

A qualified transaction is the deal-size trigger that pulls a contract dispute into the Texas Business Court. Section 25A.001(14) defines it as a transaction, or a series of related transactions, under which a party pays or receives, or lends or borrows, at least $5,000,000 in the aggregate. Loans from banks, credit unions and savings and loans are excluded.

The minimum number of shares entitled to vote that must be represented at a shareholder meeting for the meeting to validly transact business. Default: a majority of shares entitled to vote.

The act by which a corporation, through its board of directors, shareholders, or both, retroactively approves a defective or unauthorized corporate act, curing the defect and giving the act binding effect. Texas codified a comprehensive ratification regime in 2014.

The IRS doctrine requiring S-corporation shareholder-employees to receive reasonable wages for services performed before taking distributions. Designed to prevent S-corp owners from avoiding employment taxes by characterizing compensation as distributions. Underpayment exposes the corporation and shareholder to reclassification, back payroll taxes, penalties, and interest.

Changing the state under whose law an entity exists, without dissolving the old company or forming a new one. Texas accomplishes this through conversion under Chapter 10 of the Business Organizations Code. The entity keeps its assets, contracts, debts and continuous existence, and only the governing state law changes. Texas does not use the word domestication for this.

Reformation is a court's rewriting of an overbroad non-compete so that it becomes enforceable. Under section 15.51(c) a Texas court that finds the time, geographic or activity limitations unreasonable shall reform them; the verb is shall, not may. The covenant is narrowed rather than struck, but the employer loses damages for any breach before reformation.

The person or organization designated by a Texas filing entity to receive service of process and other official communications on the entity's behalf. Every Texas filing entity must designate and continuously maintain a registered agent and registered office.

SEC rules under Title IV of the JOBS Act creating two tiers of "mini-IPO" offerings. Tier 1: up to $20 million annually with state-level registration. Tier 2: up to $75 million annually with SEC qualification, audited financial statements, ongoing reporting, and state-law preemption. Securities are freely tradable post-offering (subject to investor type limits in Tier 2). Form 1-A offering circular required. Useful intermediate path between Reg D private placements and full Form S-1 IPO.

SEC rules under Title III of the JOBS Act of 2012 permitting crowdfunding offerings to non-accredited investors through registered funding portals or broker-dealers. Annual offering limit $5 million (raised from $1.07M in 2021). Per-investor limits based on income/net worth. Requires Form C disclosure, financial statements, and ongoing reporting. Most-used framework for online retail-investor capital raising. Codified at 17 C.F.R. § 227.100 et seq.

SEC rules (17 C.F.R. §§ 230.500-230.508) providing safe-harbor exemptions from securities registration for private offerings. Three principal exemptions: Rule 504 (limited offerings up to $10M), Rule 506(b) (unlimited amount; up to 35 non-accredited investors plus unlimited accredited; no general solicitation), Rule 506(c) (unlimited amount; accredited investors only with verification; general solicitation permitted). Most U.S. private capital raising relies on Rule 506.

A contractual or unilateral relinquishment of a known claim against another party. Releases bar future claims within their scope; the scope is determined by the release language. Texas applies general contract-interpretation principles, with sophisticated parties presumed to understand release terms. Schlumberger Technology Corp. v. Swanson, 959 S.W.2d 171 (Tex. 1997), addresses the validity of releases despite mistake and fraud allegations. Releases of unknown claims must be expressly stated.

Remand sends a removed case back to the district court or county court at law where it started. In the Texas Business Court it is mandatory: section 25A.006(d) requires remand whenever the court determines it lacks jurisdiction. The order is effectively unreviewable, because no statute authorizes an interlocutory appeal from it and a remand is not a final judgment.

The procedural mechanism by which a defendant moves a case from state court to federal court. Available only for cases that originally could have been filed in federal court. Texas Business Court removal is governed by Tex. Gov't Code § 25A.006.

Statements of fact made by one party (typically the seller) to another (typically the buyer) in a transaction agreement, covering the condition of the target business. The central risk-allocation mechanism in any M&A transaction.

An insurance product covering breaches of representations and warranties in M&A transactions, transferring risk from seller (escrow/holdback) or buyer (direct claims) to an insurer. Buy-side RWI (most common) protects the buyer against losses from breach of seller's reps. Reduces or eliminates traditional escrows and survival periods, smoothing transactions and providing cleaner exits for sellers. Standard in middle-market and larger M&A; available in lower-mid-market through specialized programs.

An insurer's notice to its insured that, while the insurer is providing defense, it reserves the right to deny indemnification (or specific coverage positions) based on policy provisions, exclusions, or factual developments. Common in cases involving partial coverage, allocation issues, or developing facts. The reservation preserves the insurer's coverage defenses while still defending under the policy. Triggers specific procedural rights for the insured under Texas law, including potentially the right to independent counsel.

A privately-imposed limitation on the use of real property, typically arising from a deed restriction or recorded declaration governing a subdivision, planned community, or condominium. Texas restrictive covenants are interpreted under common-law principles supplemented by the Texas Property Owners' Association Act and related statutes. Distinct from employment-context restrictive covenants (noncompete, nonsolicit) covered separately.

A portion of each construction payment withheld by the owner (or upper-tier contractor) until project completion to ensure performance and provide a fund for subcontractor lien claims. Texas requires owners to reserve 10% of payments to original contractors for 30 days after final completion under Tex. Prop. Code § 53.101. Post-HB 2237, the term "retainage" applies only to contractual retainage; owner-withheld funds are now "reserved funds."

A merger structure (most commonly "reverse triangular") in which the target entity survives and the acquirer's subsidiary is the disappearing entity. Economically equivalent to a stock purchase but provides specific tax, contractual, and regulatory advantages.

A contractual right giving the holder the option to purchase property or interests at the same terms offered by a third party, before the seller can complete the third-party transaction. Standard in stockholder agreements, real estate, and partnership contexts to control who can become an owner. Distinguishable from Right of First Offer (ROFO), ROFO requires seller to offer to holder first; ROFR requires holder to match third-party offer.

A payment from a licensee to a licensor in consideration for the use of intellectual property. Common structures include running royalties (percentage of revenue or per-unit), lump-sum or paid-up royalties, minimum annual royalties, and milestone payments. Royalty base, deductions, audit rights, and reporting cadence are heavily negotiated.

SEC rule (17 C.F.R. § 240.10b-5) implementing Section 10(b) of the Securities Exchange Act of 1934. Prohibits material misrepresentations and omissions in connection with the purchase or sale of any security. The principal federal anti-fraud provision; applicable to public and private securities transactions. Foundational basis for securities fraud class actions, SEC enforcement, and private rescission claims. Six required elements: material misrepresentation/omission, scienter, connection with security purchase/sale, reliance, economic loss, loss causation.

An agreement between parties or attorneys in pending litigation regarding any matter touching the suit, made enforceable under Tex. R. Civ. P. 11. To be enforceable, the agreement must be (a) in writing, signed, and filed with the court papers; or (b) made in open court and entered of record. Rule 11 agreements are routinely used to memorialize settlements, scheduling agreements, discovery agreements, and other procedural arrangements. Padilla v. LaFrance, 907 S.W.2d 454 (Tex. 1995), is the controlling enforcement case.

A federal tax election under Subchapter S of the Internal Revenue Code that allows a qualifying entity to be taxed as a pass-through rather than as a C-corporation. Made on IRS Form 2553. Subject to strict eligibility rules: 100-shareholder cap, single class of stock, only U.S. individuals and certain trusts as shareholders.

A subscription agreement under which a customer accesses software hosted by the vendor on a recurring-fee basis, rather than installing software locally. Distinct from a software license in that the customer receives a service, not a license to a copy. Typical issues include uptime SLAs, data processing addenda, exit and data-portability provisions, and regulatory compliance.

A narrow Texas common-law exception to the at-will employment doctrine, recognized in Sabine Pilot Service, Inc. v. Hauck, 687 S.W.2d 733 (Tex. 1985). An employee may sue for wrongful discharge if the sole reason for termination was the employee's refusal to perform an illegal act that carries criminal penalties. The doctrine is narrowly construed, the act must be criminally illegal, the refusal must be the sole reason for discharge. One of few common-law inroads on Texas at-will employment.

An investment instrument developed by Y Combinator in 2013, providing rights to future equity in exchange for a current capital contribution. SAFEs convert to preferred stock upon a qualified equity financing, acquisition, or dissolution event, typically with a valuation cap, discount, or both. Distinguishable from convertible notes: SAFEs are not debt, do not accrue interest, and have no maturity date. Most-used early-stage investment instrument for U.S. startups.

The transfer of title to tangible movable property in exchange for consideration. Governed by UCC Article 2 (Tex. Bus. & Com. Code Ch. 2). UCC Article 2 supplements general Texas contract law with specific rules tailored to commercial sales.

Court-imposed penalties for litigation misconduct, including frivolous pleadings, discovery abuse, and violation of court orders. Texas authorizes sanctions under Tex. R. Civ. P. 13, Tex. R. Civ. P. 215 (discovery), and Tex. Civ. Prac. & Rem. Code Chapters 9 (frivolous claims) and 10 (sanctions for false pleadings). The constitutional due-process framework for sanctions is established by TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d 913 (Tex. 1991).

A buyer's practice of closing a transaction despite knowing of a breach of seller's representations or warranties, then bringing an indemnification claim post-closing for that known breach. Whether sandbagging is permissible depends on the agreement's express provisions and the governing state's default rule.

The IRS information schedule used by partnerships, LLCs taxed as partnerships, and S-corporations to report each owner's distributive share of the entity's income, deductions, gains, losses, and credits. Generated annually as part of Forms 1065 and 1120-S; furnished to each owner for use in preparing individual returns.

A tax-deferred exchange of real property held for productive use in trade or business or investment under Internal Revenue Code Section 1031. Defers recognition of capital gain by exchanging into like-kind property. Post-2017 Tax Cuts and Jobs Act, available only for real property (personal property exchanges eliminated). Strict timing requirements: 45 days to identify replacement property, 180 days to close. Typically structured through Qualified Intermediary (QI) holding sale proceeds.

Internal Revenue Code Section 1202 provides an exclusion of up to 100% of capital gains on the sale of qualified small business stock (QSBS) held for at least 5 years. Maximum exclusion: greater of $10 million or 10x basis. Requirements: (i) C corporation issuer with assets ≤$50M (since 2026 amendments) at issuance, (ii) active business in qualified industry, (iii) original issuance, (iv) 5-year holding period. Among the most powerful tax provisions for U.S. startups and early-stage investors.

A sale of property of the bankruptcy estate under 11 U.S.C. § 363, typically conducted under court supervision in Chapter 11 cases. Property is sold "free and clear" of liens, claims, and interests under § 363(f), with liens attaching to sale proceeds. Common in distressed M&A; provides certainty of clean title and quick sale process. Often conducted through stalking-horse bidder establishing minimum bid, followed by auction process. Standard mechanism for selling distressed businesses without full Chapter 11 plan confirmation.

An election to recognize income on the receipt of restricted property (typically founder or employee equity subject to vesting) at the time of grant rather than at vesting. Made by filing a written election with the IRS within 30 days of receipt. The election fixes the taxable amount at the grant-date value and starts the capital gains holding period.

A contingent property right held by a creditor in personal property of a debtor that secures payment or performance of an obligation. Foundation of secured commercial lending, equipment financing, working-capital lines, asset-based lending. Governed by UCC Article 9.

An amount the insured must pay before insurance coverage applies, distinct from a deductible in operation. With a deductible, the insurer typically defends from dollar one and is reimbursed; with an SIR, the insured retains responsibility for defense and indemnity within the SIR amount, with insurance attaching only above the SIR. SIRs are common in higher-risk industries, large commercial accounts, and as a cost-management tool. Triggers important questions about defense provider, coordination with insurance, and Stowers obligations.

A Texas LLC that has established one or more designated series within itself. Each series may have separate members, managers, assets, and limitation of liability, properly maintained, the assets of one series are protected from the creditors of another series.

A word, name, symbol, or device used to identify and distinguish the services of one person from those of others. The services-equivalent of a trademark, governed by the same Lanham Act provisions and Texas trademark statute. Most "trademark" rights protecting brand names for services are technically service marks.

A contract resolving a dispute, typically (though not exclusively) in connection with pending or threatened litigation. Standard terms include (1) consideration (typically a payment or other performance); (2) releases of claims; (3) confidentiality; (4) non-disparagement; (5) choice of law and forum; (6) representations about authority; (7) indemnification for breach. Settlement agreements are enforceable as contracts; in pending litigation, often coupled with a Rule 11 Agreement for procedural enforceability.

A contract between an employer and a departing employee under which the employer provides specified compensation, benefits continuation, or other consideration in exchange for the employee's release of legal claims and other negotiated obligations.

The owner of one or more shares of stock in a Texas corporation. Shareholders elect the board of directors, vote on certain fundamental corporate transactions, and receive dividends when declared. Shareholders generally do not manage the corporation directly.

In Texas, selling personal data means sharing, disclosing or transferring it to a third party for monetary or other valuable consideration. The other-valuable-consideration language is broader than the monetary-only definitions some states use, so data exchanges, advertising pixels and cooperative arrangements can qualify. Selling triggers opt-out rights, a conspicuous disclosure, and a documented data protection assessment.

Texas legislation effective May 14, 2025 that reworked the Business Organizations Code's governance and shareholder litigation rules. It created statutory presumptions protecting directors and officers, allowed jury trial waivers in governing documents, let a corporation set a derivative standing threshold of up to three percent, and narrowed books and records inspection. Most of it reaches only exchange-listed entities or those that opt in.

A defined class of personal data a Texas controller may not process at all without prior consent. The categories are data revealing racial or ethnic origin, religious beliefs, mental or physical health diagnosis, sexuality, or citizenship or immigration status; genetic or biometric data processed to uniquely identify an individual; personal data collected from a known child; and precise geolocation data.

A contract among shareholders of a corporation that supplements the certificate of formation and bylaws by addressing matters such as voting, transfers, buy-sell rights, and dispute resolution.

A historical Texas common-law doctrine recognized from 1988 through 2014 under which a minority shareholder could pursue a direct cause of action for harsh or wrongful conduct by majority shareholders. After Ritchie v. Rupe (2014), Texas no longer recognizes the common-law action; the term now refers narrowly to a statutory ground for rehabilitative receivership.

A negotiated commercial license under which the licensor grants the licensee specified rights to install, access, and use software, typically on the licensee's own infrastructure. Distinct from a SaaS agreement (services-based, vendor-hosted) and a consumer EULA (form, non-negotiated). Key terms: scope of license, seats/users, deployment environment, support and maintenance, source-code escrow, warranty, indemnification, and limitation of liability.

A meeting of shareholders other than the annual meeting, called for a specific purpose stated in the meeting notice. Business at a special meeting is limited to the purposes stated in the notice.

The intentional or negligent destruction, alteration, or failure to preserve evidence relevant to litigation. Texas spoliation framework was substantially clarified in Brookshire Bros., Ltd. v. Aldridge, 438 S.W.3d 9 (Tex. 2014), which held that a spoliation jury instruction generally requires intentional spoliation, with a narrow exception for negligent spoliation that irreparably deprives a party of meaningful ability to present a claim or defense. The duty to preserve evidence arises when litigation is reasonably anticipated.

The doctrine that certain categories of contracts are unenforceable unless evidenced by a writing signed by the party to be charged. Texas codifies the statute of frauds for general contracts at Tex. Bus. & Com. Code Ch. 26 and for sales of goods at § 2.201.

A statute that bars a cause of action after a specified period from accrual. Texas limitations periods are codified principally in Tex. Civ. Prac. & Rem. Code Ch. 16: 2 years (most torts, DTPA, wrongful death), 4 years (contracts, fraud, real property), 5 years (specific actions). The discovery rule may toll accrual in specific contexts. Distinct from statutes of repose (fixed external event regardless of accrual). Multiple tolling and exception doctrines apply.

A statutory bar that extinguishes a cause of action after a specified period from a defined event, typically completion of work, sale of a product, or another fixed reference point, regardless of when the injury occurs or is discovered. Distinct from a statute of limitations, which runs from accrual. Texas has statutes of repose for architects, engineers, and surveyors (10 years), contractors (10 years), and products liability (15 years).

A transaction structure in which the buyer acquires the equity (shares of a corporation, membership interests of an LLC, or partnership interests) of the target entity from the target's owners. The target continues as a going concern under new ownership.

A Texas common-law doctrine imposing on a liability insurer a duty to settle third-party claims against its insured when settlement would be reasonably prudent. Originating in G.A. Stowers Furniture Co. v. American Indemnity Co., 15 S.W.2d 544 (Tex. Comm'n App. 1929), the doctrine penalizes insurers that unreasonably refuse settlement offers within policy limits, making them liable for the entire excess judgment if the case results in a judgment exceeding limits. The three-prong Garcia test governs when the duty is triggered.

A court's authority to hear a particular type of case. Unlike personal jurisdiction, subject matter jurisdiction cannot be waived, a court without it lacks power to act, and any judgment it enters is void. Federal: 28 U.S.C. § 1331 (federal question), § 1332 (diversity).

A contract under which a creditor agrees to subordinate its claim or lien to that of another creditor, reordering the priority that would otherwise apply by operation of law. Texas UCC § 9.339 expressly authorizes subordination of priority by agreement; bankruptcy enforces subordination under 11 U.S.C. § 510(a). Distinct from intercreditor agreements (broader, comprehensive), though subordination provisions are typically a component of intercreditor agreements.

An equitable doctrine and contractual right under which an insurer that has paid an insured's claim assumes the insured's rights against responsible third parties. After payment, the insurer can pursue the third party for reimbursement to the extent of the payment. Common in property, auto, and workers' compensation contexts. Many commercial contracts include "waiver of subrogation" provisions in which the insured (or its insurer) waives subrogation rights against contractual counterparties, coordinating with insurance to allocate risk between the contracting parties.

A contract between an issuer and an investor in a private securities offering, documenting the investor's commitment to purchase securities and providing investor representations regarding accredited status, sophistication, suitability, and other matters relevant to securities exemption compliance. Standard component of private offerings alongside PPM. Includes investor questionnaire, representations, signature pages, and payment instructions.

A procedure by which a court resolves a case (or specific claims) without trial, on grounds that there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Texas TRCP 166a provides two distinct procedures, traditional and no-evidence, with materially different burdens.

A bond posted by a judgment debtor to suspend (supersede) execution of the judgment during the pendency of appeal. Texas supersedeas is governed by Tex. R. App. P. 24 and Tex. Civ. Prac. & Rem. Code § 52.006. The bond amount typically equals the judgment plus interest and costs, capped under § 52.006 at the lesser of (a) 50% of the judgment debtor's net worth or (b) $25 million. Constitutional and statutory net-worth caps protect against confiscatory bonds.

Specific performance is a court order compelling a party to do what it promised rather than pay for not doing it. Texas treats it as an equitable remedy available where damages are inadequate, most often for land and for interests in closely held entities. The plaintiff must show it was ready, willing and able to perform its own side.

Supplemental jurisdiction lets the Texas Business Court hear a related claim it could not have taken on its own, but only if every party agrees and the judge permits it. Section 25A.004(f) imposes both conditions. There is no federal-style pendent jurisdiction here, and section 25A.004(h) puts several categories of claim out of reach entirely.

Two complementary rights in stockholder agreements: (1) Tag-Along Rights protect minority stockholders by allowing them to participate in ("tag along") sales by majority on same terms; (2) Drag-Along Rights protect majority by allowing them to compel minority to sell ("drag along") in qualifying transactions. Standard provisions in venture-backed company stockholder agreements and PE-portfolio company governance. Together they manage minority and majority interests in liquidity events.

An operating agreement or partnership agreement clause requiring the entity to distribute cash to owners in amounts sufficient to cover their estimated tax liability on allocated income. The principal structural remedy for phantom income, taxable income allocated without corresponding cash distribution. Calculated at an assumed tax rate applied to each owner's K-1 allocated income.

A signed statement by a tenant confirming key terms of a lease, rent amount, term, security deposit, lease modifications, claimed defaults, and other material facts, for the benefit of a prospective lender, purchaser, or other third party. Used in commercial property acquisitions and refinancings to confirm the lease cash flow underlying the transaction. The tenant is "estopped" from later disputing the facts certified.

A non-binding (with limited binding provisions) preliminary agreement outlining the principal economic and governance terms of a proposed financing or transaction. Term sheets in VC financings typically include valuation, investment amount, security type, liquidation preference, anti-dilution, voting and protective provisions, board composition, and key closing conditions. While generally non-binding as to deal completion, term sheets typically have binding exclusivity, confidentiality, and expense provisions.

Codified at Tex. Civ. Prac. & Rem. Code Ch. 171, the Texas General Arbitration Act (TGAA) governs arbitration agreements involving intrastate commerce in Texas, those that fall outside the FAA's interstate-commerce reach. Procedurally similar to the FAA but with a different statutory framework. The TGAA is the default state-law backstop where the FAA does not apply; in interstate-commerce cases, the FAA preempts inconsistent TGAA provisions.

A specialized statewide trial court created in 2023 to hear complex commercial disputes involving corporate governance, fiduciary duties, derivative actions, securities law, and qualified transactions. Began accepting cases September 1, 2024. Appeals go exclusively to the Fifteenth Court of Appeals.

The unified Texas statute that governs the formation, governance, internal operations, and termination of Texas business entities including for-profit corporations, LLCs, partnerships, and other domestic filing entities. Often abbreviated "TBOC."

Texas's principal employment discrimination statute, codified at Tex. Lab. Code Chapter 21. Prohibits discrimination in employment based on race, color, sex, national origin, religion, age, and disability. Generally tracks Title VII, ADA, and ADEA frameworks but with Texas-specific procedural elements. Administered by the Texas Workforce Commission Civil Rights Division (TWC-CRD); requires administrative exhaustion before suit. Filing deadline: 180 days. Damages caps parallel federal Civil Rights Act of 1991.

Subchapter C of Chapter 151 of the Texas Insurance Code, effective January 1, 2012, voiding broad-form indemnity provisions in construction contracts that purport to indemnify a party for its own fault. Also voids related additional-insured insurance procurement to the same extent. Cannot be waived. Limited residential and employee-injury exceptions apply.

Texas's comprehensive consumer data privacy law, effective July 1, 2024 (with universal opt-out provisions effective January 1, 2025). Imposes transparency, purpose-limitation, security, and consumer-rights obligations on controllers processing the personal data of Texas residents. Enforced exclusively by the Texas Attorney General; no private right of action.

A privilege tax imposed by Texas on most taxable entities formed in or doing business in the state. Calculated as a percentage of taxable margin under Tex. Tax Code Ch. 171, the lowest of four computation methods. The 2026 no-tax-due threshold is $2.65 million in annualized total revenue. Standard rate 0.75% (0.375% for retail/wholesale); EZ Computation rate 0.331%. Reports due May 15.

Texas Insurance Code Chapter 541 (formerly Article 21.21) prohibits unfair methods of competition and unfair or deceptive acts or practices in the business of insurance, including unfair settlement practices. Section 541.060 lists specific prohibited acts (failing to settle when liability is reasonably clear, misrepresenting material facts, failing to provide reasonable explanations). Section 541.151 creates a private cause of action with damages including actual damages, treble damages for knowing violations, and mandatory attorney's fees.

The primary Texas state statute (Tex. Lab. Code Chapter 61) governing the timing, frequency, and method of wage payment by Texas employers. Establishes pay-frequency requirements, regulates deductions, sets final-paycheck timing, and provides a TWC wage-claim mechanism with treble-damages liability for willful nonpayment.

Two parallel Texas statutes mandating timely payment on construction projects: Tex. Prop. Code Ch. 28 (private projects) and Tex. Gov't Code Ch. 2251 (public projects). On private projects, owner must pay prime within 35 days of invoice; prime must pay subs within 7 days of receiving owner payment. Late payments accrue 1.5%/month interest, with attorney's fees recoverable in litigation.

Texas Insurance Code Chapter 542, Subchapter B, imposes deadlines on insurers for acknowledging, investigating, and paying claims. Violations carry statutory interest (18% per annum) and mandatory attorney's fees. Chapter 542A (added in 2017) modifies the framework for property damage claims arising from forces of nature, reduced 5% interest rate, 61-day pre-suit notice with specific requirements, attorney's fee formula, and insurer election rights. The Texas Supreme Court's 2024 Rodriguez v. Safeco decision clarified attorney's fee limits under 542A.

Tex. Bus. & Com. Code §§ 15.50-15.52, the exclusive Texas statutory framework for enforcement of covenants not to compete. Section 15.50 sets enforceability criteria (ancillary to enforceable agreement; reasonable in time, geography, scope). Section 15.51 governs procedures, requires reformation of overly broad covenants, and provides fee shifting in some cases. Section 15.52 preempts common-law alternatives. Marsh USA v. Cook (Tex. 2011) substantially relaxed the framework; post-Marsh covenants are increasingly enforceable.

The procedural rules governing civil litigation in Texas state courts. Promulgated by the Texas Supreme Court, the TRCP cover pleadings, motions, discovery, trial procedure, and post-trial remedies. Distinct from the Federal Rules of Civil Procedure, which govern federal-court practice.

Texas's principal transaction-based tax, 6.25% state rate plus up to 2% local tax (combined cap 8.25%) on retail sales of tangible personal property and certain services. Post-Wayfair economic nexus threshold for remote sellers: $500,000 in Texas gross receipts in the preceding twelve months. Permits issued by the Texas Comptroller; reports filed monthly, quarterly, or annually depending on tax liability.

Codified at Tex. Gov't Code §§ 4001-4008 (recodified from former Vernon's Ann. Civ. St. art. 581-1), the Texas Securities Act governs securities offerings and sales involving Texas. The Act requires registration of securities offered in Texas unless an exemption applies, regulates dealers and agents, and provides anti-fraud enforcement authority for the Texas State Securities Board. Largely preempted for federal "covered securities" under NSMIA, but state notice filings and anti-fraud enforcement remain.

The Texas state agency administering employment-related programs including unemployment insurance, the Civil Rights Division (TCHRA enforcement), workforce development, child labor enforcement, and wage claims under the Texas Payday Law. Established in 1995, the TWC consolidates functions previously distributed across multiple state agencies. Most Texas employer interactions with state employment regulation involve TWC.

An indemnity contract under which a title insurer agrees to defend the insured against title defects existing as of the policy date and to pay losses up to the policy amount. Texas title insurance is heavily regulated, premium rates and policy forms are promulgated by the Texas Department of Insurance. Two principal forms: T-1 owner's policy (protects buyer); T-2 loan policy (protects lender). One-time premium paid at closing.

The principal federal employment discrimination statute, codified at 42 U.S.C. § 2000e et seq. Prohibits employment discrimination based on race, color, religion, sex (including pregnancy and, post-Bostock, sexual orientation/gender identity), and national origin. Applies to employers with 15+ employees. Damages include back pay, compensatory and punitive damages capped by employer size ($50K-$300K), and attorney's fees. Texas state-law parallel: TCHRA (Tex. Lab. Code Ch. 21).

A tort claim arising from a third party's wrongful interference with the plaintiff's contractual or prospective business relationships. Texas recognizes two distinct claims: tortious interference with existing contracts (ACS Investors v. McLaughlin, 943 S.W.2d 426 (Tex. 1997)) and tortious interference with prospective business relations (Wal-Mart Stores v. Sturges, 52 S.W.3d 711 (Tex. 2001)). Each has specific elements; the prospective-relations tort is narrower, requiring independent tortious or unlawful conduct.

The total visual image and overall appearance of a product or its packaging that identifies the source of goods to consumers. Protectable under federal and Texas law where it is non-functional and either inherently distinctive or has acquired secondary meaning. Distinct from the underlying utility of the product; protects appearance, not function.

Information, including formulas, methods, processes, customer lists, financial data, that derives independent economic value from not being generally known and is the subject of reasonable efforts to maintain secrecy. A primary alternative to noncompete agreements for protecting employer competitive interests.

A word, name, symbol, or device used to identify and distinguish goods of one source from those of others. Protected under the federal Lanham Act and the Texas Trademark Act, plus common-law rights from actual use. Strength turns on distinctiveness; protection scope on likelihood of confusion.

Texas's comprehensive consumer privacy statute, in force since July 1, 2024. It governs businesses that handle personal data about Texas residents. There is no revenue threshold and no minimum consumer count anywhere in the chapter. Coverage turns instead on whether the business qualifies as a small business under United States Small Business Administration size standards. The attorney general enforces it alone.

A third-party beneficiary is a non-signatory the contracting parties clearly intended to benefit and to give an enforceable right. Texas presumes the opposite. Unless the contract itself shows that intent in unmistakable terms, a stranger to the agreement cannot sue on it, and every doubt is resolved against conferring the status.

The doctrine determining which party in a bank–nonbank lending partnership is the actual lender, based on which holds the predominant economic interest; it decides whether state usury caps and licensing apply.

A post-judgment court order compelling the judgment debtor to turn over non-exempt property to a sheriff, constable, or receiver for application against the judgment. Texas turnover is governed by Tex. Civ. Prac. & Rem. Code § 31.002 and is the principal remedy for reaching property that cannot be reached by ordinary execution, closely-held business interests, intangible assets, foreign-located assets, and accounts not in the debtor's possession.

Ultra vires means beyond the powers. In Texas corporate law the concept is nearly dead: section 20.002 provides that lack of corporate capacity may not be the basis of any claim or defense, and acts beyond a corporation's stated purposes remain valid. In public law the term means something different and remains very much alive.

Federally-coordinated state-administered insurance program providing partial wage replacement to workers who are unemployed through no fault of their own and able and available for work. Texas program codified at Tex. Lab. Code § 201.001 et seq.; administered by Texas Workforce Commission. Eligibility: monetary qualification; not disqualified by misconduct, voluntary quit without good cause, etc.; able, available, actively seeking work. Standard duration up to 26 weeks plus federal extensions in recessions.

The browser or device signal a Texas consumer can use to opt out of targeted advertising and the sale of personal data without contacting each business separately. Section 541.055(e) frames it as designating an authorized agent through a technology such as a browser setting, an extension, or a global setting on a device. That obligation took effect January 1, 2025.

Charging interest in excess of the maximum rate authorized by law. Texas usury law applies to commercial AND consumer loans (unlike many states). The Texas Constitution sets a 10% default ceiling; Texas Finance Code Chapter 303 authorizes ceilings up to 18% for commercial loans that comply with stated requirements. Penalties for violation include forfeiture of all interest, refund of overcharges, and in some cases treble damages.

The equitable doctrine under which Texas courts disregard the limited-liability shield of a corporation or LLC and hold individual shareholders, members, or affiliates personally liable for the entity's obligations. Substantially narrowed by TBOC §§ 21.223–21.226; one of the most difficult-to-establish theories in Texas business litigation.

The geographic location within a court system where a case may properly be heard. Subject matter jurisdiction determines whether a court system can hear a case; venue determines which specific court within that system. Texas venue rules: Tex. Civ. Prac. & Rem. Code Ch. 15.

The mechanism by which shareholders or directors of a Texas corporation make decisions binding on the corporation. Shareholder voting governs election of directors and certain fundamental transactions; director voting governs ordinary management decisions.