When is an oil and gas lease binding?

Must payment be made before a lease becomes binding?

Dear Mr. Harrison,

Consideration is an element of contract, therefore without consideration, there can be no contract.

Look up the posts R. W. Kennedy on this website. His posts will tell you all you want to hear about Lessees not paying for leases.

Also, go to


for a blog post on bank drafts.

Payment must be tendered in order for a contract to valid. Tendering payment may be in many forms and there is presently litigation about exactly what constitutes a lawful tender. If you are in Texas and you have been tendered a draft for payment for a lease, which you have fully executed, technically you have prior notice of a lease being in existence, whether or not a lease has been filed of record. Texas is a “{race notice” state. If the land is in Louisiana and you have fully executed a lease that is not filed of record, it is possible to execute another lease that is recorded prior to the first lease, providing you return or do not accept the bonus from the company with whom you first executed a lease. Louisiana is a": race" state, meaning whoever records the first lease has the lease of record.