§ 16.070.Contractual Limitations Period

A floor under freedom of contract, and one that is absolute below the threshold.

A person may not enter a stipulation, contract, or agreement purporting to limit the time to bring suit on it to a period shorter than two years. Such a term is void in this state.

Void, not voidable — no waiver, no consideration, and no sophistication of the parties saves it. Below the threshold the rule does not bend.

Note what the floor is and is not. Two years is the minimum, not the maximum. A contract may cut a four-year claim to two, and that is enforceable; it may not cut it to eighteen months.

The provision exists because limitations clauses are drafted by the party with the pen. An insurer, lender, or manufacturer can bury a ninety-day suit deadline in standard terms, and the other side discovers it only when the claim is already dead.

Subsection (b) carves out one class of agreement: a stipulation, contract, or agreement relating to the sale or purchase of a business entity, where a party pays, receives, or is obligated to pay or entitled to receive consideration of at least $500,000 in aggregate value.

That exception explains a familiar feature of acquisition agreements. Representation and warranty survival periods of twelve or eighteen months are standard in M&A practice, and without this carve-out every one of them would be void in Texas.

The threshold is doing the sorting: parties trading a business for half a million dollars or more are assumed to have negotiated the survival period, and are left to their bargain.

The neighbouring provision performs the same service for contractual notice requirements, which can defeat a claim just as effectively as a shortened deadline.