Contract Law

A contract should do more than sound formal. It should identify the parties, define the obligations, set deadlines, state payment terms, allocate risk, address default, provide remedies, and explain how disputes will be handled.

Many contract disputes arise because the parties agreed on the broad idea but never clearly addressed the details that later mattered: scope of work, completion dates, change orders, payment triggers, warranties, termination rights, ownership of materials or intellectual property, confidentiality, attorney’s fees, interest, venue, governing law, or what happens if one party cannot perform.

Our office reviews and prepares contracts with the practical dispute in mind. The goal is to make the agreement usable before a lawsuit exists and enforceable if one becomes necessary.

A contract generally requires mutual agreement, competent parties, consideration, reasonably definite terms, and mutual obligations. The parties must agree to the material terms, and the agreement must be definite enough for a court to determine what was promised and what remedy is available if the promise is breached.

Not every promise is an enforceable contract. Some statements are preliminary negotiations, estimates, proposals, or expressions of intent. Other agreements may fail because essential terms were left open, the parties never reached mutual assent, the promise lacked consideration, or the alleged agreement is barred by a statute requiring a writing.

In contract disputes, the first question is often not whether someone behaved unfairly. The first question is whether there was an enforceable agreement and what its terms were.

Arkansas law requires certain agreements to be in writing and signed by the party to be charged. Under Ark. Code Ann. § 4-59-101, the statute of frauds applies to several categories of agreements, including certain promises by executors or administrators, promises to answer for the debt or default of another person, agreements made in consideration of marriage, contracts for the sale of land or interests in land, and leases longer than one year.

The Uniform Commercial Code contains its own writing requirement for many sales of goods. Under Ark. Code Ann. § 4-2-201, a contract for the sale of goods for the price of $500.00 or more generally is not enforceable unless there is a writing sufficient to indicate that a contract for sale has been made and signed by the party against whom enforcement is sought, subject to statutory exceptions.

Writing requirements matter in real estate transactions, business sales, guaranties, leases, financing arrangements, and sale-of-goods disputes. A handshake agreement may be morally important, but a court must apply the governing law.

A breach-of-contract claim generally requires proof of a valid and enforceable contract, performance or excuse for nonperformance by the plaintiff, breach by the defendant, and resulting damages. Arkansas Model Jury Instruction 2401 identifies the basic propositions a plaintiff must prove in a breach-of-contract case.

A breach may involve nonpayment, incomplete work, defective work, missed deadlines, failure to deliver goods, refusal to close, failure to perform services, violation of exclusivity terms, misuse of confidential information, failure to indemnify, breach of a settlement agreement, or failure to comply with a lease or purchase agreement.

Not every failure is treated the same. A material breach is a failure to perform an essential term or condition that substantially defeats the purpose of the contract for the other party. A minor or immaterial breach may support damages but may not excuse the other party’s performance. Whether a breach is material often depends on the contract, the purpose of the deal, the nature of the default, and the practical effect of the failure.

Many contract cases turn on interpretation. A court may need to decide whether the contract is ambiguous, whether the words have a plain meaning, whether multiple documents should be read together, whether a party’s conduct shows how the agreement was understood, or whether industry usage helps explain a term.

The safest contract is one that does not require a judge to guess what the parties meant. The safest lawsuit is one that identifies the controlling language early and ties the facts directly to that language.

Contract interpretation issues commonly arise in leases, settlement agreements, buy-sell agreements, construction or repair contracts, service agreements, employment-related contracts, real estate purchase agreements, indemnity provisions, and payment disputes.

Payment disputes may involve unpaid invoices, open accounts, promissory notes, oral agreements, written contracts, business loans, personal guarantees, rent, services, repairs, materials, or goods sold and delivered.

Arkansas law allows attorney’s fees in many contract-related civil actions. Under Ark. Code Ann. § 16-22-308, the prevailing party may be allowed a reasonable attorney’s fee in actions to recover on an open account, statement of account, account stated, promissory note, bill, negotiable instrument, contract relating to goods, labor, or services, or breach of contract, unless otherwise provided by law or the contract.

Payment cases should be built with documents: invoices, contracts, estimates, text messages, emails, ledgers, delivery records, payment histories, change orders, account statements, demand letters, and proof of acceptance or use of the goods or services.

Contracts for the sale of goods are governed in many situations by Article 2 of the Uniform Commercial Code, codified in Arkansas at Ark. Code Ann. § 4-2-101 et seq. These rules may affect formation, performance, delivery, acceptance, rejection, revocation of acceptance, warranties, disclaimers, damages, and the statute of limitations.

A sale-of-goods contract may include express warranties created by affirmations of fact, promises, descriptions, samples, or models. See Ark. Code Ann. § 4-2-313. Implied warranties may also apply, including the implied warranty of merchantability under Ark. Code Ann. § 4-2-314 and the implied warranty of fitness for a particular purpose under Ark. Code Ann. § 4-2-315, unless properly excluded or modified.

UCC cases often involve machinery, vehicles, building materials, equipment, farm goods, manufactured products, inventory, or other commercial goods. These cases require careful attention to the documents, inspection history, notice of defects, warranty language, disclaimers, repair attempts, and whether the buyer accepted, rejected, or revoked acceptance of the goods.

Under Ark. Code Ann. § 4-2-725, an action for breach of a contract for sale generally must be commenced within four years after the cause of action accrues, although the parties may reduce the limitations period to not less than one year by original agreement.

Service, repair, and construction disputes often involve disagreements about scope, quality, payment, delays, change orders, materials, completion, and whether the work substantially complied with the agreement.

These cases are fact-heavy. The important evidence may include written contracts, estimates, invoices, photos, videos, expert opinions, permits, inspection reports, text messages, emails, receipts, subcontractor records, and proof of what was actually done at the property.

Some disputes are governed mainly by ordinary contract principles. Others may involve UCC rules if the transaction is predominantly for goods, or real-estate and construction-specific rules if the work involved improvements to land. The legal classification matters because it can affect warranties, limitations periods, remedies, and proof requirements.

Arkansas law treats different restrictive covenants differently. Employment noncompete agreements are governed by Ark. Code Ann. § 4-75-101 when the statute applies. A covenant not to compete may be enforceable if it is ancillary to an employment relationship or otherwise enforceable employment agreement, the employer has a protectable business interest, and the covenant is limited in time and scope in a manner not greater than necessary to protect that interest.

The statute identifies protectable business interests that may include trade secrets, intellectual property, customer lists, goodwill with customers, confidential business information, training, and other valuable employer data. A two-year post-termination restriction is presumptively reasonable as to length of time unless the facts show otherwise. Courts may reform unreasonable employment noncompetes to make them reasonable and enforce them as reformed.

Arkansas law also distinguishes noncompete agreements from nonsolicitation, no-recruit, confidentiality, and nondisclosure agreements. Those agreements may be governed by common-law standards or other statutes, depending on the claim. In addition, Act 232 of 2025 amended Ark. Code Ann. § 4-75-101 to provide that a covenant not to compete agreement restricting the right of a physician to practice within the physician’s scope of practice is void.

These agreements should be drafted carefully. A restriction that is too broad may be challenged. A restriction that is too vague may be hard to enforce. A business should protect legitimate interests without creating unnecessary enforceability problems.

Settlement agreements are contracts. They should identify the parties, claims being resolved, payment terms, deadlines, release language, confidentiality obligations, dismissal requirements, default remedies, tax treatment if applicable, and whether attorney’s fees or liquidated damages are available if the agreement is breached.

Vague settlement terms can create a second dispute over the first. The agreement should state each obligation clearly enough to enforce and close the matter.

Our office drafts, reviews, negotiates, enforces, and defends settlement agreements in civil, business, family, real estate, probate, and contract matters.

The usual goal of contract damages is to place the injured party in the position he or she would have occupied if the contract had been performed, to the extent Arkansas law allows and the evidence proves. Contract remedies may include expectation damages, unpaid amounts, repair costs, replacement costs, lost profits in appropriate cases, consequential damages, liquidated damages, specific performance, rescission, restitution, injunctions, declaratory relief, interest, costs, and attorney’s fees.

Damages must be proven with reasonable certainty. Lost profits, consequential damages, and future damages often require stronger proof than simple unpaid invoices.

Liquidated-damages provisions can be useful when actual damages would be difficult to calculate, but they must be drafted as reasonable compensation, not as an unenforceable penalty. In sale-of-goods cases, Ark. Code Ann. § 4-2-718 provides that liquidated damages must be reasonable in light of the anticipated or actual harm, the difficulties of proof, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy.

A contract claim may fail or be limited by defenses. Common defenses include lack of mutual assent, lack of consideration, ambiguity, prior material breach, waiver, estoppel, failure of a condition precedent, impossibility, impracticability, frustration of purpose, fraud, misrepresentation, mistake, duress, unconscionability, illegality, statute of frauds, statute of limitations, accord and satisfaction, release, payment, or failure to mitigate damages.

The statute of limitations depends on the type of contract and claim. Written contract claims generally fall under the five-year limitations period in Ark. Code Ann. § 16-56-111. Oral contract claims and certain implied-contract claims may fall under the three-year limitations period in Ark. Code Ann. § 16-56-105. Sale-of-goods claims under the UCC generally have a four-year limitations period under Ark. Code Ann. § 4-2-725.

Contract cases should be evaluated early because delay can affect evidence, leverage, damages, and limitations defenses.