James Contruction Group, LLC v. Westlake Chemical Corp.

On an issue of first impression, the Texas Supreme Court held that writing is required when a contract demands written notice as a condition precedent to a right to enforce an obligation under that contract.

Westlake Chemical Corporation hired James Construction Group – a contractor – to perform civil and mechanical work at one of Westlake’s plants. After many safety violations, Westlake sought to terminate James. To do so, the contract required that James be given: (1) written notice when Westlake determined there were serious safety violations, giving James 72 hours to begin remedying the violations, (2) written notice that Westlake was not satisfied with the remediation effort, and (3) written notice that Westlake was terminating the contract or parts of the work.

Though there were meetings and email conversations about the violations and proposed termination, James argued that “substantial compliance” should be used in evaluating the notice provisions. The Court agreed that “substantial compliance” meant writing was required. They stated that Texas law recognizes “substantial compliance” as the proper standard to evaluate the satisfaction of notice requirements, and such a standard prevents parties from using bad-faith tactics to avoid their obligations based on a technicality. While the dissent opined that two email conversations met the written notice requirement, the majority disagreed since the emails did not reference the notice provision in the contract.