Can a Letter Create a Binding Agreement ?
In RHS Interests, Inc. v. 2727 Kirby Ltd., 994 S.W.2d 895, 897-99 (Tex. App.--Houston [1st. Dist.] 1999, no pet.), the parties entered into an agreement that provided in part, "this offer is a summary of a transaction to be more fully described in an Earnest Money Contract the specifics of which will be negotiated in good faith. This letter serves only as an offer . . . and is not binding as an agreement unless and until a fully executed Earnest Money contract is signed." Id. at 897.
Another provision provided that the purchaser could inspect the property "prior to the execution of the binding Purchase and Sale Agreement . . ." RHS, 994 S.W.2d at 899.
On appeal, the appellant argued that the letter created a binding agreement. This Court disagreed, stating that the language of the agreement "shows that the parties did not yet have a deal.
A deal would be consummated only by 'the execution of the binding Purchase and Sale Agreement.'" Id.
We also held that Foreca was distinguishable because the document provided a "clearer intent not to be binding than did the document in Foreca v. GRD Development Co., Inc., 758 S.W.2d 744 (Tex. 1988)." Id.