Texas Business Law Glossary

A short certified or verified summary of a money judgment, recorded in the real property records of a Texas county. Once recorded and indexed, it creates a judgment lien on the debtor's nonexempt real property in that county, including land the debtor acquires later. Governed by Chapter 52 of the Texas Property Code.

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 a spouse or spousal equivalent) in each of the 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.

Acquiring title to another person's real property by holding it openly, under a hostile claim of right, for a period fixed by statute. Texas sets those periods in Civil Practice and Remedies Code Chapter 16, from three years to twenty-five, and when one runs the possessor holds full title.

A sworn instrument recorded by the owner of a Texas construction project stating the date the original contractor completed the work. It was historically used to shorten the deadline for certain retainage lien claims, an effect HB 2237 (effective January 1, 2022) eliminated for original contracts entered into on or 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 most of Chapter 541 applies. A small business is still bound by the sensitive-data sale consent rule in § 541.107.

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. The interactive process is central. In the Fifth Circuit, an employer's failure to engage in it in good faith violates the ADA when it leads to a failure to reasonably accommodate.

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. Sections 25A.004(b) and (d) require 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 Texas for-profit corporations by statute, although shareholders may act by written consent instead and some registered investment companies may skip it in certain years.

The defendant's responsive pleading to a petition or complaint, addressing each allegation and asserting affirmative defenses or counterclaims. Establishes the issues for litigation; some defenses are waived if not raised in the required order, and an affirmative defense that is never pleaded is generally waived.

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 when the contract involves interstate commerce and by the Texas General Arbitration Act, which can apply alongside the FAA where the two do not conflict.

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. The exceptions are narrow and come from statutes, express agreements, and one common-law exception for refusing to perform an illegal act.

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. The Texas Supreme Court calls it an affirmative defense, and whether it protects against suit itself or only against liability remains debated. 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). An individual injured by a willful violation can recover actual damages and attorney's fees, and punitive damages in appropriate circumstances.

The foundational U.S. anti-money-laundering statute; requires financial institutions, including money transmitters and, under the GENIUS Act once effective, 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). Under FinCEN's final rule effective August 14, 2026, 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., and only as to their non-U.S. beneficial owners.

The Texas statute governing corporations, limited liability companies, partnerships, professional entities and most other business 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.

A Texas tort for false, disparaging statements about a business's products, services or commercial activity that cause economic loss. Also called injurious falsehood or trade libel. The plaintiff must prove malice, lack of privilege and special damages, a heavier burden than a private-figure defamation claim carries.

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 developed in Texas corporate cases, 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 $3,424,000 for cases filed on or after April 1, 2025, after the temporary $7.5M limit expired June 21, 2024; Congress passed a bill restoring $7.5M (H.R. 7730) in September 2026, and it had not become law as of early October 2026).

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 separate debt limits (for cases filed on or after April 1, 2025, unsecured debts under $526,700 and secured debts under $1,580,125). 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. Business entities receive no discharge and typically stop operating. Any formal dissolution happens under state law. The most common form of business bankruptcy for entities without viable reorganization path. The § 707(b) means test applies to individuals whose debts are primarily consumer debts.

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. Courts applying Texas law and federal courts generally treat it as the most reliably enforceable online contract type.

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.

Eviction by conduct rather than by lawsuit: a landlord's act interferes so seriously with the leased use that the tenant leaves. Texas courts of appeals require landlord intent, a material interference, permanent deprivation and departure within a reasonable time. For residential repair disputes, the Property Code's remedies largely displace the common law.

A seller-financed sale in which the buyer takes possession and pays in installments while the seller keeps legal title until the price is paid. Texas statutes call it an executory contract for conveyance and, for residential property, regulate it closely in Property Code Chapter 5, Subchapter D.

A TBOC-authorized transaction in which a 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).

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 generally a prerequisite to suing for infringement of a U.S. work. The rights arise under federal law, though licenses are often governed by state contract 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 usually an event of default, after any grace or cure period the agreement allows, and opens the lender's 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 sensitive data is processed (a known child's data is handled under COPPA instead), 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 commercial contracts most often disclaim.

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. This is the Chapter 11 default unless the court appoints a trustee under § 1104(a), either for cause (such as fraud, dishonesty, incompetence or gross mismanagement) or because appointment serves the interests of creditors, equity holders and the estate. 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 and up to three times economic damages (knowing violations), up to three times economic and mental anguish damages (intentional violations), and mandatory attorney's fees. SB 140 (eff. September 1, 2025) extended Texas telephone-solicitation law to text messages and made no-call and telemarketing violations enforceable through the DTPA.

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 whether or not further relief is or could be claimed. 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 three 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 be in writing, signed and delivered (Property Code § 5.021). Recording is not needed between the parties but protects the grantee against later buyers and creditors (§ 13.001).

The principal instrument used in Texas to grant a security interest in real property for the benefit of a lender. In form, the borrower (grantor) conveys the property to a third-party trustee in trust to secure the borrower's obligations to the lender (beneficiary), but Texas follows the lien theory, so the instrument creates a lien and title stays with the borrower. Its power of sale is what permits nonjudicial foreclosure in Texas.

A false statement of fact, published to someone other than the person it concerns, that injures that person's reputation. Texas calls the written form libel and the spoken form slander. Suit must be filed within one year, and if no written request for correction has been made, the defendant can have the suit paused until one is served.

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 judgment entered against a defendant who was served with citation and still has no answer on file after the answer deadline. In Texas district and county courts the plaintiff may take it once the return of service has been on file for ten days (Tex. R. Civ. P. 239, 107(h)). Justice courts follow a separate rule (Rule 503.1).

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 generally must have been an owner at the time of the conduct complained of, or have taken the interest by operation of law from someone who was, and courts also require ownership when the suit is filed. Losing the interest before filing 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 (a remedy the Delaware Supreme Court reversed in December 2025), 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 amount 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. Commonly serves as a liquidated-damages pool in the event of buyer default. Whether it is refunded when a deal ends depends on the contract's termination and default terms.

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 easements are either appurtenant (benefiting a dominant estate) or in gross (benefiting a person or entity, not a parcel). 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, the Pregnant Workers Fairness Act, EPA). Generally required as an administrative prerequisite before filing federal-court suit on Title VII and similar claims, but not for Equal Pay Act claims, which may be filed directly in court. Filing deadline: 180 days from the discriminatory act where no state or local agency enforces a comparable law; 300 days where one does (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.

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, among other situations, 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. Since Delaware's 2025 amendments to DGCL § 144 (SB 21), upheld in Rutledge v. Clearway Energy Group (Del. 2026), a controller transaction that follows the statutory safe-harbor process avoids that review. 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.

In M&A, an arrangement under which a portion of the 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).

The procedural framework for identifying expert witnesses in Texas civil litigation, governed principally by Tex. R. Civ. P. 195. Rule 195 requires fuller disclosure for an expert retained by, employed by, or otherwise subject to the control of a party than for other testifying experts. Rule 192.3(e) separately protects consulting experts whose work a testifying expert has not reviewed. Unless the court orders otherwise, Rule 195.2 requires designation 90 days before the end of the discovery period for a party seeking affirmative relief and 60 days before the end of the discovery period for other parties.

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) governs written arbitration agreements generally, subject to the exclusions in § 171.002 and to the FAA where the FAA applies. The Supreme Court reaffirmed the FAA's preemptive scope in AT&T Mobility v. Concepcion (2011). Smith v. Spizzirri (2024) is a procedural decision holding that, when a party requests it, a federal court must stay an arbitrable suit rather than dismiss it.

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, which governs when agreed wages must be paid, what may be deducted from them, and wage claims filed with the Texas Workforce Commission.

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: private employers with 50+ employees in 20 or more workweeks in the current or preceding calendar year, and all public agencies and schools. Eligibility: 12 months service, 1,250 hours worked, and a worksite where the employer has 50+ employees within 75 miles. 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, to the extent Texas courts recognize them and the company agreement does not modify them, by LLC managers and members.

Wages owed to an employee at the conclusion of employment, including earned wages, overtime, accrued vacation pay (if owed under a written agreement or written 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. Filing perfects an attached security interest in most types of collateral and generally fixes the secured party's 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. Foreign corporations, LLCs, limited partnerships and similar entities must register with the Texas Secretary of State to transact business in Texas.

The IRS information return used to report nonemployee compensation paid to independent contractors during a calendar year, required for payments of $2,000 or more made after December 31, 2025 ($600 for earlier years), with inflation indexing beginning in 2027. 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 for I-9 violations range from $288 to $28,619 per violation for penalties assessed after July 3, 2025. 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 collection device, available before or after judgment, by which a creditor reaches the 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. 657-679b and Tex. Civ. Prac. & Rem. Code Ch. 63. Tex. Const. art. XVI, § 28 bars garnishment of current wages except to enforce court-ordered child support or spousal maintenance. Federal law separately allows some wage collection, such as IRS levies and administrative garnishment for federal 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. Guaranties are fundamental to commercial credit: landlords require lease guarantees, banks require personal guarantees from business owners, vendors require parent-company guarantees of subsidiaries.

Two separate Texas protections share this name: the residence homestead exemption, which removes part of an owner-occupied home's value from property taxation under Tax Code Section 11.13, and the constitutional protection of a homestead from forced sale by most creditors under Article XVI, Section 50 and Property Code Chapter 41.

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. It figured in the attorney general's first lawsuit under the TDPSA.

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 so that the scope of the obligation does not turn on which verb was used. Clauses covering the indemnitee's own negligence are subject to the express negligence rule and the conspicuousness requirement.

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 waiting period, generally 30 days, 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 specific terms within the contract; Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993), adds that it must also be conspicuous. 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. Indicators include the worker's control over the manner and means of performance, services offered to multiple clients, economic risk borne by the worker, and freedom from direct supervision. No single factor decides. 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 the same categories of orders when entered by the Texas Business Court, whose appeals go to the Fifteenth Court of Appeals. Permissive interlocutory appeals under § 51.014(d) require trial-court certification and discretionary acceptance by the court of appeals.

Written questions one party serves on another during discovery, answered in writing and, for most answers, under oath. In Texas they are governed by Tex. R. Civ. P. 197, answers are due 30 days after service, and the number allowed depends on the case's discovery level under Rule 190.

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 and signed. Recording with the relevant federal agency is not required for validity, but it protects the assignee against later purchasers.

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.

In Texas, a lien on a judgment debtor's nonexempt real property that arises when an abstract of judgment is recorded and indexed in the county where the land lies. It secures the money judgment for 10 years, reaches land the debtor acquires later in that county, and does not attach to a homestead.

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), which also reaches other domestic entities. LLCs and partnerships are also 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.

The precinct-level Texas trial court presided over by an elected justice of the peace. Hears civil claims of $20,000 or less, debt claims, residential repair and remedy suits, and eviction suits, under simplified rules of its own. Appeals go to county court, where the case is tried again from the beginning.