Court Opinion

ID: 4412791
Source: CourtListenerOpinion
Date Created: 2019-07-01 08:45:14.700205+00
Date Added: 2024-06-11T14:51:57.185139
License: Public Domain

IN THE SUPREME COURT OF TEXAS
                                         444444444444
                                           NO. 17-0332
                                         444444444444

                BARROW-SHAVER RESOURCES COMPANY, PETITIONER,
                                                 v.

                         CARRIZO OIL & GAS, INC., RESPONDENT
            4444444444444444444444444444444444444444444444444444
                             ON PETITION FOR REVIEW FROM THE
                    COURT OF APPEALS FOR THE TWELFTH DISTRICT OF TEXAS
            4444444444444444444444444444444444444444444444444444

                                    Argued December 4, 2018

      JUSTICE GREEN delivered the opinion of the Court, in which JUSTICE LEHRMANN, JUSTICE
DEVINE, JUSTICE BLACKLOCK, and JUSTICE BROWN joined.

       JUSTICE GUZMAN filed a concurring and dissenting opinion, in which CHIEF JUSTICE HECHT
and JUSTICE BUSBY joined.

       JUSTICE BOYD filed a dissenting opinion.

       In this case, we must determine whether the court of appeals erred in: (1) holding that the

plaintiff could not prevail on its breach of contract claim as a matter of law because the contract’s

consent-to-assignment provision unambiguously gave the defendant an unqualified right to refuse

to consent; and (2) holding that the plaintiff cannot prevail on its fraud claim as a matter of law

because it could not justifiably rely on an oral promise to do something that was addressed in the

written contract. We hold that: (1) the plain language of the contract unambiguously entitled the

defendant to withhold its consent to a proposed assignment, and therefore the defendant could not
have breached the contract as a matter of law; and (2) the plaintiff could not justifiably rely on an

oral statement where the written terms of the contract controlled. Accordingly, we affirm the

judgment of the court of appeals.

                                          I. Background

       Barrow-Shaver Resources Co., formed in 1989, is an oil and gas exploration and drilling

company. Scott Shaver, a co-owner of Barrow-Shaver, has been involved in developing, buying,

and selling oil and gas prospects for thirty years. Barrow-Shaver operates approximately a hundred

oil and gas wells and often sells its oil and gas interests to third parties. Chip Johnson founded

Carrizo Oil & Gas, Inc. in 1993 as its president and chief executive officer. Carrizo became a

publicly traded oil and gas company in 1997 and now has 248 employees.

       Barrow-Shaver was prospecting in four counties in North-central Texas to put together one

large drilling prospect. Carrizo had an interest as a lessee in the 22,000-acre Parkey lease, which

was set to expire on April 23, 2011, if a producing well was not established in accordance with the

lease agreement. Carrizo entered into a farmout agreement with Barrow-Shaver, in which Barrow-

Shaver would earn a partial assignment of Carrizo’s interest in the Parkey lease in exchange for its

services in drilling a producing well. To memorialize this farmout, Carrizo and Barrow-Shaver

executed a letter agreement in March 2011. Stewart Laufer, Carrizo’s Southern United States Land

Manager, and Harold Bertram, Barrow-Shaver’s Vice President of Land and Marketing, negotiated

the farmout. Both representatives had extensive experience in the oil and gas industry—Laufer had

twenty-five years of experience, while Bertram had thirty-three. As negotiations ensued, the parties

focused on the consent-to-assign provision, addressing Barrow-Shaver’s ability to assign its rights

                                                 2
in the future. Bertram submitted the first proposal for the letter agreement, which did not address

consent to assign. Laufer then sent a revised draft containing a consent-to-assign provision that

provided:

           The rights provided to [Barrow-Shaver] under this Letter Agreement may not be
           assigned, subleased or otherwise transferred in whole or in part, without the express
           written consent of Carrizo which consent shall not be unreasonably withheld.

Laufer later revised the draft, deleting the “shall not be unreasonably withheld” language. Barrow-

Shaver fervently objected to the deletion of this language, insisting that Barrow-Shaver now wanted

a consent-to-assign provision providing that Carrizo could not unreasonably withhold its consent.

But Laufer assured Barrow-Shaver, on more than one occasion, that Carrizo would provide its

consent to assign. Bertram specifically recalled three instances in which Laufer represented to him

that Carrizo would give Barrow-Shaver consent to assign if Barrow-Shaver chose to assign its rights

in the future. In executing the farmout, the parties ultimately agreed to a consent-to-assign provision

stating:

           The rights provided to [Barrow-Shaver] under this Letter Agreement may not be
           assigned, subleased or otherwise transferred in whole or in part, without the express
           written consent of Carrizo.

           After entering into the farmout, Carrizo’s interest in the 22,000 acres was an overriding

royalty interest and a future interest (a possibility of reverter) in the tract if Barrow-Shaver failed

to drill a producing well in accordance with the farmout. If Barrow-Shaver’s interest reverted back

to Carrizo, it would require Carrizo to drill a well according to the terms of the Parkey lease or

extend the lease; otherwise, its interest in the Parkey lease would terminate. Shortly after entering

                                                    3
into the farmout, and before the Parkey lease expired, Barrow-Shaver drilled a well. Barrow-Shaver

spent $22 million drilling the well yet had unsuccessful results.

       Raptor Petroleum II, LLC approached Barrow-Shaver about assignment of the farmout and

offered approximately $27 million for Barrow-Shaver to assign its rights. Carrizo would retain its

interest provided for in the farmout under this proposed assignment. To assign its rights under the

farmout, Barrow-Shaver would have to obtain Carrizo’s consent, as well as the consent of other

interest holders. All parties consented, except Carrizo. Instead, Carrizo proposed selling its interest

in the Parkey lease to Barrow-Shaver for $5 million. Barrow-Shaver did not respond to that offer,

in effect rejecting it. Carrizo ultimately refused to consent to Barrow-Shaver’s proposed assignment

to Raptor. As a result, Raptor’s offer to purchase an assignment of the farmout from Barrow-Shaver

fell through.

       Barrow-Shaver sued Carrizo for breach of contract, fraud, and tortious interference with

contract.1 Carrizo asserted at trial that the farmout letter agreement is clear and unambiguous. In

fact, both parties agreed that the consent-to-assign provision is unambiguous. Carrizo also argued

that the prior drafts of the agreement should be admitted to inform the jury of the surrounding

circumstances of the consent-to-assign provision. The trial court did not allow the jury to hear

evidence of Barrow-Shaver’s and Carrizo’s negotiations of the farmout agreement. However, the

jury did hear that there were prior drafts of the agreement that had different consent provisions. The

court instructed the jury: “[T]he court and only the court may interpret the farmout agreement. Any

evidence of prior drafts or versions of the farmout may not be used by you as to what the farmout

       1
           The tortious interference with contract claim is not at issue in this Court.

                                                            4
means. These may be used only to impeach the believability of a witness that testifies in regards

to those.”2

         Barrow-Shaver asserted that although the consent-to-assign provision was unambiguous, it

was silent as to the basis on which Carrizo could withhold its consent. Barrow-Shaver, therefore,

argued that the jury must hear evidence of industry custom and usage to determine whether Carrizo

breached the contract. Carrizo disagreed, contending that the consent-to-assign provision is not

silent, rather it clearly imposes a hard consent obligation on Barrow-Shaver such that Carrizo could

withhold its consent for any reason. The trial court allowed testimony as to industry custom and

usage in relation to the breach of contract claim. Professor Bruce Kramer provided expert testimony

as to industry custom and usage on behalf of Barrow-Shaver, and K. Ray Campbell provided the

expert testimony for Carrizo. Professor Kramer told the jury that although the farmout agreement

was unambiguous, industry custom played a role in understanding the circumstances under which

Carrizo could have withheld its consent under the consent-to-assign provision. Kramer stated that,

in his opinion, charging for consent to assign is inconsistent with the custom and usage of the

industry—opining that refusing consent based on something which is outside the industry custom

and usage constituted a breach of the farmout agreement. Campbell testified that, in his opinion, it

is not industry custom for a consent-to-assign provision in a farmout agreement to set out the

conditions for when a party may or may not consent. In fact, Campbell stated that the consent-to-

         2
            The trial court had granted a motion in limine to keep the jury from hearing any evidence of the parties’
negotiations of the consent-to-assign provision; however, when the parties’ prior agreements were accidentally admitted
into evidence due to a clerical error, the trial court allowed the parties to agree to a curative jury instruction to avoid a
mistrial. The jury was only shown the prior drafts with differing consent-to-assign provisions and did not hear testimony
about the underlying negotiations.

                                                             5
assign provision at issue is the most common found in farmout agreements, and it affords the farmor

discretion to provide or withhold consent under any circumstances.

        The trial court, finding the farmout agreement unambiguous, interpreted the agreement as

a matter of law. According to the jury charge, the trial court found the farmout agreement silent as

to the reasons under which Carrizo could refuse consent to Barrow-Shaver’s assignment of the

farmout. Therefore, the trial court submitted the breach of contract question to the jury, explaining

that it may consider evidence of industry custom in deciding whether Carrizo breached the

agreement.3 The jury reached a unanimous verdict in favor of Barrow-Shaver on all three of its

claims, awarding $27,690,466.86 in total damages, in addition to pre-judgment interest and

attorneys’ fees.

        The court of appeals reversed the trial court’s judgment. 516 S.W.3d 89, 92 (Tex.

App.—Tyler 2017, pet. granted). In addressing the breach of contract issue, the court of appeals

agreed with Carrizo that the evidence of the prior drafts of the farmout agreement and the parties’

negotiations conclusively established that Carrizo could withhold its consent to assign for any reason

or no reason—that is, that the purposeful deletion of the qualifying language “which consent shall

        3
            Question one of the jury charge provided:

        Did Carrizo fail to comply with the Farmout Agreement?

        You are instructed that the Farmout Agreement is silent about the reasons under which Carrizo could
        refuse consent to [Barrow-Shaver]’s assignment of the Farmout Agreement to Raptor. Therefore, you
        may consider evidence of industry custom and expectations in deciding whether Carrizo breached its
        agreement with [Barrow-Shaver]. [Barrow-Shaver] contends that there was a custom and usage in the
        oil and gas industry that a consent to assignment not be unreasonably withheld. Custom and usage
        refers to a practice that is so general and universal that the parties are charged with knowledge of its
        existence to such an extent as to raise a presumption that they dealt with reference to it.

The jury answered: “Yes.”

                                                           6
not be unreasonably withheld” showed that Carrizo bargained for hard consent. Id. at 96.

Reasoning that “[n]egotiations of a contract can matter in determining whether it is silent on a

material term,” the court of appeals concluded that the trial court abused its discretion in refusing

to admit evidence of the parties’ negotiations. Id. (citation omitted). The court used the parties’

negotiations as surrounding circumstances and held that the contract was not silent as to when

consent could be withheld. Id. at 97. The court then held that because the provision was

unambiguous, it should have been construed as a matter of law and therefore the breach of contract

issue should not have been submitted to the jury. Id. As to the fraud issue, the court of appeals

explained that “[a] written contract vitiates any reliance on oral promises” and therefore held that

no evidence supported the justifiable reliance element of Barrow-Shaver’s fraud claim. Id. at 98

(citation omitted). Lastly, because the court of appeals construed the consent-to-assign provision

to permit Carrizo to withhold consent for any reason, it held that there could be no claim for tortious

inference with contract. Id.

                                      II. Breach of Contract

       We first consider whether the court of appeals erred in construing the farmout agreement’s

consent-to-assign provision to “mean that [Carrizo] had an unqualified right to refuse consent for

Barrow-Shaver to assign the farmout to Raptor.” Id. at 94. Barrow-Shaver contends that the

consent-to-assign provision must be construed to mean that consent cannot be unreasonably or

arbitrarily withheld, arguing that Carrizo’s refusal to consent was for an “illegitimate” reason and

                                                  7
is inconsistent with industry custom.4 Barrow-Shaver essentially takes the position that it should

be able to benefit from its desired assignment despite the consent-to-assign provision’s clear

language preventing it from assigning its rights without Carrizo’s “express written consent.”

         This case involves two sophisticated, experienced energy companies who negotiated a

farmout agreement, which is a contract between a working-interest owner (the farmor) and the

drilling operator (the farmee) that has no interest in the minerals until it completes its services under

the farmout. See Farmout Agreement, WILLIAMS & MEYERS MANUAL OF OIL AND GAS TERMS (16th

ed. 2015). A farmout agreement is

         [a] very common form of agreement between operators, whereby a lease owner not
         desirous of drilling at the time agrees to assign the lease, or some portion of it . . . to
         another operator who is desirous of drilling the tract . . . . The primary characteristic
         of the farmout is the obligation of the assignee to drill one or more wells on the
         assigned acreage as a prerequisite to completion of the transfer to him.

Id. The parties specifically characterized their farmout as a drill-to-earn farmout.5

         4
            We note at the outset that Carrizo disputes Barrow-Shaver’s characterization of Carrizo’s denial of consent
as presenting a cash-for-consent demand bordering on extortion. Barrow-Shaver’s counsel began oral argument by
articulating the issue as whether, when an “oil and gas contract gives you a right to consent to assignment of the lease,
can you demand cash for the consent.” And then he claimed that Carrizo “blew up the deal” with Raptor “by saying,
‘we will consent only if you pay us $5 million.’” In reality, Carrizo says, it offered to sell its interest under the lease to
Barrow-Shaver for $5 million, which it considered a fair price, thereby seeking to transfer all of its future rights in the
Parkey lease (or its farmout) in exchange for the $5 million. Although that would have eliminated the need for Carrizo
to consent, allowing Barrow-Shaver to freely assign its rights to Raptor for $27 million, Barrow-Shaver did not respond
to the offer, in effect refusing it. Ultimately, Carrizo did not consent to Barrow-Shaver’s assignment to Raptor, but it
offered no reason for its refusal.
         5
             Kramer testified that:

         A lease presently transfers the right to develop and possess to the lessee. A farmout, and the kind of
         farmout that they’re doing here, normally will require the farmee—in this case, Barrow-Shaver
         Resources—to do something which would, in this case, be [to] explore for and produce hydrocarbons,
         at which time . . . they will be transferred the legal ownership of the minerals.

                                                              8
                                    A. Contract Construction

       In contract construction cases, we are tasked with finding the meaning of a provision to

which the parties have agreed. See, e.g., Murphy Expl. & Prod. Co.–USA v. Adams, 560 S.W.3d
105, 110 (Tex. 2018) (interpreting the contract to ascertain its meaning before determining whether

the party breached the contract); Sun Oil Co. (Del.) v. Madeley, 626 S.W.2d 726, 731 (Tex. 1981)

(explaining that we are to settle the meaning of the contract when there is a question relating to its

construction (citation omitted)). Both Barrow-Shaver’s claims of breach of contract and fraud turn

on the meaning of the consent-to-assign provision. Therefore, before determining whether the court

of appeals erred in holding that Barrow-Shaver cannot prevail as a matter of law on either its

contract or its fraud claim, we must ascertain the meaning of the farmout agreement’s consent-to-

assign provision.

       In construing a contract, we must look to the language of the parties’ agreement. See, e.g.,

Murphy Expl., 560 S.W.3d at 108 (explaining that in construing an oil and gas contract, we

“ascertain the true intentions of the parties as expressed in the writing,” beginning with the

contract’s express language (citation omitted)). We construe contracts under a de novo standard of

review. See, e.g., Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011) (citations omitted). We must

give effect to the parties’ intentions, as expressed in their agreement. See, e.g., Murphy Expl., 560
S.W.3d at 108 (citation omitted). We will give a contract language its plain, grammatical meaning

unless it “would clearly defeat the parties’ intentions.” See, e.g., Anadarko Petroleum Corp. v.

Thompson, 94 S.W.3d 550, 554 (Tex. 2002) (citation omitted).

                                                  9
       “If we determine that the contract’s language can be given a certain or definite legal meaning

or interpretation, then the contract is not ambiguous and we will construe it as a matter of law.”

El Paso Field Servs., L.P. v. Mastec N. Am., Inc., 389 S.W.3d 802, 806 (Tex. 2012) (citation

omitted). But if the contract contains two or more reasonable interpretations, the contract is

ambiguous, creating a fact issue as to the parties’ intent. See id. (citation omitted).

       The parties here both contend that the farmout agreement is unambiguous, and the trial court

and court of appeals agreed. See 516 S.W.3d at 94, 96–97. But see URI, Inc. v. Kleberg Cty., 543
S.W.3d 755, 763 (Tex. 2018) (explaining that a contract “may be ambiguous even though the parties

agree it is not” (citations omitted)). When a court determines that a contract is ambiguous, the

meaning becomes a fact issue for the jury and extraneous evidence may be admitted to help

determine the language’s meaning. Italian Cowboy Partners, Ltd. v. Prudential Ins. of Am., 341
S.W.3d 323, 333–34 (Tex. 2011) (citation omitted). But a trial court errs when it submits an

unambiguous contract to the jury rather than construing it as a matter of law. See Grohman v.

Kahlig, 318 S.W.3d 882, 887 (Tex. 2010) (per curiam) (citation omitted). The error is harmless,

however, if the jury found as the trial court should have found. See id. (citing TEX. R. APP. P.

44.1(a)(1); Spencer v. Eagle Star Ins. of Am., 876 S.W.2d 154, 157 (Tex. 1994)). “Judgment without

or against a jury verdict is proper at any course of the proceedings only when the law does not allow

reasonable jurors to decide otherwise.” See JPMorgan Chase Bank, N.A. v. Orca Assets G.P.,

L.L.C., 546 S.W.3d 648, 653 (Tex. 2018) (quoting City of Keller v. Wilson, 168 S.W.3d 802, 823

(Tex. 2005)).

                                                 10
         The parties agree the farmout agreement, which provides that “[t]he rights provided to

Barrow-Shaver under this Letter Agreement may not be assigned, subleased or otherwise transferred

in whole or in part, without the express written consent of Carrizo,” does not define consent. And

they agree that the agreement gives Carrizo a right to withhold consent to a proposed assignment.6

The question before us is whether, as the court of appeals held, Carrizo’s right to refuse consent to

an assignment is unqualified, or whether, as Barrow-Shaver contends, that right is qualified by a

reasonableness standard.

         We begin with Barrow-Shaver’s contention that the agreement’s use of the term “consent”

qualifies Carrizo’s right to withhold consent to an assignment. Nothing in the agreement suggests

that the parties intended to use the term in a technical sense; rather, the term can easily be

understood according to its plain, ordinary, and generally accepted meaning—approval. See Murphy

Expl., 560 S.W.3d at 108; see also Consent, WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY

(2002) (defining it as “to express a willingness,” “give assent or approval,” “compliance or approval

. . . of what is done or proposed by another,” or “capable, deliberate, and voluntary agreement to or

concurrence in some act or purpose implying physical and mental power and free action”); Consent,

BLACK’S LAW DICTIONARY (11th ed. 2019) (“A voluntary yielding to what another proposes or

desires.”). Indeed, Barrow-Shaver has never argued that under some definition of “consent,” Carrizo

         6
          Barrow-Shaver does not use the word “right” in describing Carrizo’s authority under the farmout agreement.
However, Barrow-Shaver acknowledges that Carrizo could withhold consent without breaching the contract. Barrow-
Shaver simply takes the position that Carrizo’s right to withhold consent is restricted, or qualified as we refer to it here,
by a reasonableness standard.

                                                            11
actually consented. Thus, our analysis here does not turn on what “consent” is, but on what the

farmout agreement requires as to the giving or withholding of consent.

       The farmout agreement indicates that the parties agreed to how consent must be given:

consent must be express, and it must be in writing. The contract contains no other consent

requirements—it does not impose a deadline for consent to be given, it does not require that it be

notarized or signed by a particular individual, nor does it prescribe a specific format for the consent,

except that it be written and express. To the extent that the farmout agreement does not reflect any

additional requirements as to Carrizo’s consent, the absence of such language indicates there are no

other qualifiers, and “[l]ack of clarity does not create an ambiguity.” See Universal Health Servs.

Inc. v. Renaissance Women’s Grp., P.A., 121 S.W.3d 742, 746 (Tex. 2003) (citation omitted). We

agree with the parties and the courts below that the express language of the agreement here is

unambiguous.

       The consent-to-assign provision plainly states that Barrow-Shaver cannot assign its rights

unless it obtains Carrizo’s consent, which must be express and in writing. In other words, Carrizo

has a right to consent to a proposed assignment, or not. The plain language of the provision imposes

no obligation on Carrizo—it does not require Carrizo to consent when certain conditions are

satisfied, require Carrizo to provide a reason for withholding consent, or subject Carrizo to any

particular standard for withholding consent. The crux of this contract construction issue is whether

the agreement’s silence as to refusal or withholding of consent should nevertheless be interpreted

to qualify Carrizo’s right to withhold consent to an assignment of Barrow-Shaver’s rights as farmee.

                                                  12
        Silence as to a material term differs from silence as to an immaterial or non-essential term.

See generally Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 240 (Tex. 2016) (holding that a contract

clause was enforceable because it was “sufficiently definite to enable a court to determine [the

party’s] obligations and to provide a remedy for its breach”). In Fischer v. CTMI, we explained that

“a contract must address all of its essential and material terms with ‘a reasonable degree of certainty

and definiteness’” to be enforceable. Id. at 237 (citation omitted). An agreement’s terms must be

“sufficiently definite to enable a court to understand the parties’ obligations.” Id. (citation &

internal quotations omitted). But we explained that the terms need be definite and certain only as

to the terms that are “material and essential” to the agreement. See id. (citations omitted); T.O.

Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992) (“The material terms of the

contract must be agreed upon before a court can enforce the contract.”). Material and essential terms

are those that the parties would consider “vitally important ingredients” to their agreement and are

determined on a case-by-case basis. See Fischer, 479 S.W.3d at 237 (citations & alteration omitted).

A material term that appears to be indefinite or uncertain may be supplemented or given further

precision. See id. at 239–40 (citation omitted). Because only material and essential terms need be

sufficiently definite and certain, and we refrain from rewriting or adding to parties’ contracts, it

follows that a term that is immaterial or non-essential may not be supplemented or given further

precision. See id.

        We next consider the parties’ farmout agreement to determine whether additional

terms—especially those as to withholding consent—are material and essential, or whether the

agreement’s terms are sufficiently definite to understand the parties’ obligations. See id. at 237; T.O.

                                                  13
Stanley Boot Co., 847 S.W.2d at 221 (“Each contract should be considered separately to determine

its material terms.” (citation omitted)). In considering what terms are material, we must be mindful

of the nature of the contract. For example, in a contract to loan money, the amount to be loaned, the

loan’s maturity date, its interest rate, and its repayment terms are generally considered the material

terms. See T.O. Stanley Boot Co, 847 S.W.2d at 221 (citations omitted). In a farmout situation, we

observe that the farmee is obligated to drill on the land, and no mineral interest transfers to the

farmee until it satisfies its drilling obligation under the farmout agreement. See Farmout Agreement,

WILLIAMS & MEYERS MANUAL OF OIL AND GAS TERMS (16th ed. 2015). Because the primary

purpose of a farmout agreement is the farmee’s obligation to drill on the land to complete the

transfer of an interest, a consent-to-assign provision is not material to the farmout. Here, the farmout

agreement specifies, among other terms, the manner in which Barrow-Shaver must drill the well in

order to earn an interest under the agreement, what Barrow-Shaver will earn upon successful

completion of a well, and what happens in the event that Barrow-Shaver fails to complete the well

timely. These terms establish the essential obligations of the parties and remedies for when the

obligations are breached. See generally Fischer, 479 S.W.3d at 237, 240. Thus, the farmout

agreement contains all the terms necessary for the contract’s enforcement even without the consent-

to-assign provision. See McCalla v. Baker’s Campground, Inc., 416 S.W.3d 416, 418 (Tex. 2013)

(per curiam) (explaining that a contract containing all the terms necessary to make the contract

binding and enforceable contains all material terms).

       Likewise, within a consent-to-assign provision, additional terms are not material when the

agreement is sufficiently definite to understand the parties’ obligations. See Fischer, 479 S.W.3d
14
at 237, 240. For example, the consent-to-assign provision here contains no terms as to whether the

written consent must be notarized, signed in blue ink, provided within a certain time after a request,

or given by Carrizo’s president. Such terms are not material to the parties’ obligations under the

agreement, as the parties can understand, comply with, and enforce their obligations under the

consent provision without implying any such terms. And when, as here, a consent provision can be

enforced on the basis of the contract’s terms relating to giving consent, additional terms relating to

withholding consent are not material or essential to the contract. In this consent-to-assign provision,

“consent” and “may not be assigned without express written consent” are sufficiently definite to

determine Barrow-Shaver’s and Carrizo’s rights and obligations as to assignment under the farmout

agreement. See generally id. The farmout agreement makes clear that Barrow-Shaver has the right

to assign its rights under the farmout agreement, but Barrow-Shaver must first satisfy its obligation

to obtain Carrizo’s express and written consent; Carrizo has no obligation. Where the obligations

are clear and enforceable based on the agreement’s terms, we will not imply a term relating to the

withholding of consent. See generally Centex Homes v. Buecher, 95 S.W.3d 266, 273 (Tex. 2002)

(providing that courts will only imply a warranty of good workmanship as a “gap-filler” or “default

warranty” if the parties have not expressed a contrary intention (citation omitted)). We hold that

terms relating to the withholding of consent are immaterial to the farmout agreement, and the

agreement’s purported silence as to when consent may be withheld is of no legal consequence and

needs no supplement to aid its interpretation.

       Asserting that this farmout agreement warrants the use of extrinsic evidence to inform the

meaning as to the parties’ obligations, JUSTICE GUZMAN assumes that a qualifier is necessary to

                                                  15
understand the parties’ agreement as to consent. See post at ___. As explained above, however, the

consent-to-assign provision is unambiguous—it imposes an obligation on Barrow-Shaver and none

on Carrizo. We decline to read a qualifier into the consent-to-assign provision when the terms of

the agreement make clear that Carrizo has no obligation and its right to withhold consent is thus

unrestricted. See N. Nat. Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 606–07 (Tex. 1998) (declining

to impose a duty of reasonableness in the parties’ contract because the contract did not provide an

underlying obligation or duty). We conclude that the express language of the consent-to-assign

provision can be construed with only one certain and definite interpretation—a consent obligation

only as to Barrow-Shaver and no qualifications as to Carrizo’s right to withhold consent.

                                       1. Extrinsic Evidence

        Although we hold that Carrizo’s right to withhold consent is unqualified under the consent-

to-assign provision, we next address the trial court’s use of extrinsic evidence as an aid in construing

the provision. At trial, Carrizo argued that the prior drafts of the farmout agreement and evidence

of the parties’ substantive negotiations of the consent-to-assign provision should be admitted to

show that the parties specifically bargained for Carrizo to have an unqualified right to refuse consent

to a proposed assignment. Even if a contract is unambiguous as a matter of law, a court “may still

consider the surrounding ‘facts and circumstances’” as an “aid in the construction of the contract’s

language.” First Bank v. Brumitt, 519 S.W.3d 95, 110 (Tex. 2017) (quoting Sun Oil Co., 626
S.W.2d at 731).

        The parol evidence rule bars consideration of evidence that contradicts, varies, or adds to the

terms of an unambiguous written agreement. See, e.g., Gannon v. Baker, 818 S.W.2d 754, 755–56

                                                  16
(Tex. 1991) (per curiam). Evidence of prior or contemporaneous agreements is inadmissible as

parol evidence when the contract is unambiguous. See, e.g., ERI Consulting Eng’rs, Inc. v. Swinnea,

318 S.W.3d 867, 875 (Tex. 2010) (citation omitted). The parol evidence rule applies to writings that

evidence the creation, modification, termination, or securing of a right or obligation under the

contract. See Gannon, 818 S.W.2d at 755–56 (citation omitted). While “evidence of circumstances

can be used to ‘inform the contract text and render it capable of only one meaning,’ extrinsic

evidence can be considered only to interpret an ambiguous writing, not to create ambiguity.”

Kachina Pipeline Co. v. Lillis, 471 S.W.3d 445, 450 (Tex. 2015) (emphasis added) (citations

omitted). Here, evidence of the parties’ substantive negotiations directly relates to the creation of

the parties’ unambiguous agreement. Therefore, the parol evidence rule bars consideration of

evidence of the parties’ substantive negotiations of the consent-to-assign provision.

       We can consider the surrounding circumstances, however, including the fact that negotiations

took place between sophisticated parties in this commercial oil and gas context. See, e.g., id.

(recognizing that a court may consider objective factors of the facts and circumstances surrounding

the context of the parties’ contract, such as the setting in which the contract was negotiated,

commercial or otherwise (citation omitted)). In URI, Inc. v. Kleberg County, we explained that:

       the “facts and circumstances” extant at the time a contract is executed may be
       consulted only to inform the meaning of the language the parties chose to effectuate
       their accord. In construing an unambiguous contract or in determining whether an
       ambiguity exists, courts may not seek the parties’ intent beyond the meaning the
       contract language reasonably yields when construed in context.
543 S.W.3d at 763. “[S]urrounding facts and circumstances cannot be employed to ‘make the

language say what it unambiguously does not say’ or ‘to show that the parties probably meant, or

                                                 17
could have meant, something other than what their agreement stated.’” Id. at 757 (citations omitted).

Further, we believe that National Union Fire Insurance of Pittsburgh v. CBI Industries, Inc., 907
S.W.2d 517 (Tex. 1995) (per curiam) is informative here. In that case, the Court acknowledged that

extrinsic evidence—such as prior negotiations, prior dealings, and trade usage—may be admissible

“to give the words of a contract a meaning consistent with that to which they are reasonably

susceptible”—that is, “to ‘interpret’ contractual terms.” Id. at 521 & n.6. “If the contract language

is not fairly susceptible [to] more than one legal meaning or construction, however, extrinsic

evidence is inadmissible to contradict or vary the meaning of the explicit language of the parties’

written agreement.” Id. at 521 (citations omitted). Agreeing with other courts that held the

exclusion in the contract “is just what it purports to be—absolute,” and rejecting the argument that

limiting language should be read into the policies, the Court concluded that the language is “clear

and susceptible of only one possible interpretation”—the policies unequivocally deny coverage. Id.

at 522 (citation omitted). Because the contracts were unambiguous, the Court held there were no

fact issues. Id. Thus, the unambiguous contract language controlled, and we would not consider

extrinsic evidence to vary the meaning of the contract. See id.

       Here, the consent-to-assign provision is likewise unambiguous, as explained above. The

parties are sophisticated oil and gas entities that had representatives with extensive experience in

the oil and gas industry. Each party was represented by counsel in this arm’s-length transaction.

The parties’ experienced representatives considered and edited drafts of the agreement before

coming to a final agreement. Accordingly, the surrounding circumstances establish that the consent-

to-assign provision was a bargained-for exchange between the parties. See Lillis, 471. S.W.3d at

                                                 18
450. But those are the only facts and circumstances we can consider without delving into the

parties’ intent beyond what their agreement plainly yields. See Murphy Expl., 560 S.W.3d at 109

(explaining that we may not consider surrounding circumstances to alter an unambiguous contract

(citing URI, Inc., 543 S.W.3d at 758)). And just as in National Union Fire Insurance, the

unambiguous provision that purports to be absolute or unqualified controls, and therefore we may

not consider extrinsic evidence that varies the agreement. See 907 S.W.2d at 521.

       Barrow-Shaver asserts that despite the contract being unambiguous, its silence as to the

circumstances under which Carrizo may withhold its consent to assign makes evidence of industry

custom and usage admissible to construe the provision. Kramer, Barrow-Shaver’s expert, testified

that he believed industry custom played a role in illuminating the meaning of the consent-to-assign

provision. Kramer stated that there are certain factors in the industry that oil and gas entities would

consider before providing consent to assign. If those factors were unfavorable to the farmor, they

would be reasons to deny consent. The factors ordinarily include the farmor “looking at the

financial, technical expertise of the party to whom the assignment is being made” and “looking at

[the potential assignee’s] reputation within the oil and gas industry, both in terms of financial and

technical and reputation for honesty.” And he explained that “[i]n the context of this kind of

farmout agreement, which entails multiple well development, where it could extend over an

extensive period of time in order to develop the 22,000-acre Parkey lease, you want to know

[whether] the [potential assignee] can be in there for the long haul.” In his opinion, Carrizo’s denial

of consent based on Barrow-Shaver’s refusal to pay Carrizo $5 million was a departure from

industry custom. Kramer admitted, however, that his extensive treatise on oil and gas, Williams and

                                                  19
Meyers Manual of Oil and Gas Terms, does not mention the industry custom and usage he

understood to be so common.

         On the other hand, Campbell, Carrizo’s expert, explained that in his opinion, industry custom

does not demand that the farmor provide a reason for refusing consent under such a consent-to-

assign provision. Campbell testified that the industry custom here would allow Carrizo to withhold

its consent without specifying a reason because a farmor has the right to refuse to take the risk of

dealing with a particular farmee-assignee.

         Five amici curiae in this Court assert that consent requirements are a common feature in oil

and gas leases, farmouts, and assignments, but that, in their experience, it is not customary for a

consent holder to have the right to demand money for granting consent.7 Four amici curiae assert

that because not all oil and gas operators exercise the same diligence in their oil and gas operations,

it is important for the consent holder to have a say in assignment of the operator’s rights to another

operator, and therefore consent holders do not need a reason to deny consent under consent-to-assign

provisions such as the one at issue here.8 Specifically, Professors Ernest Smith and Owen Anderson

explained that, in their professional opinions, established industry custom and usage does not require

         7
            These include: (1) Robert B. Rowling; (2) Roosth Production Company; Basa Resources, Inc.; Enrich Oil
Corp.; Covey Park Energy, LLC; Van Operating, Ltd.; Tanos Exploration II, LLC; Cholla Petroleum, Inc.; Rippy Oil
Co.; John H. Young, Inc.; and Joy Resources, Inc., collectively; (3) U.S. Operating, Inc.; (4) Middleton Oil Co.; and
(5) Rockcliff Energy, LLC. Lake Ronel Oil Co. filed an amicus letter urging the Court to grant the case because this
issue is of vital importance to the oil and gas industry, but it did not take a position on the issue. Additionally, Carrizo
asserts that two of these five amici curiae maintain a financial interest in the outcome of this appeal.
         8
         Those amici curiae are: (1) The Texas Land and Mineral Owners Association; (2) Professors Ernest E. Smith
and Owen L. Anderson; (3) NARO-TX; and (4) Blackstone Minerals, L.P.

                                                            20
that denial of consent be reasonable and that if parties desire a reasonableness standard in a consent-

to-assign provision, they negotiate and insert language to that effect.

        As we have explained, evidence of surrounding facts and circumstances, including evidence

of industry custom and usage, cannot be used to add, alter, or change the contract’s agreed-to terms.

See, e.g., URI, Inc., 543 S.W.3d at 758; Nat’l Union Fire Ins., 907 S.W.2d at 521. When

consideration of evidence as to industry custom and usage is appropriate, it is a question of fact for

the jury, and it is the province of the jury to weigh witness credibility. See Monarch Marking Sys.

Co. v. Reed’s Photo Mart, Inc., 485 S.W.2d 905, 906 (Tex. 1972) (submitting industry custom and

usage to the jury in determining the meaning of “MM” as “million”); see also Jelinek v. Casas, 328
S.W.3d 526, 538 (Tex. 2010) (“Courts should not usurp the jury’s role as fact finder, nor should they

question the jury’s right to believe one witness over another.”). Industry custom and usage may

inform the meaning of words that may carry their plain meaning in some contexts, but may also

carry a special meaning in the context of a particular industry. See Monarch Marking Sys. Co., 485
S.W.2d at 906; Dwyer v. City of Brenham, 7 S.W. 598, 599 (Tex. 1888); Hellenic Inv., Inc. v. Kroger

Co., 766 S.W.2d 861, 866 (Tex. App.—Houston [1st Dist.] 1989, no writ) (“As a general rule,

parties are presumed to contract in reference to the usage or custom prevailing in the particular trade

or business to which the contract relates, and evidence of custom or usage . . . is generally

admissible to assist the factfinder in ascertaining the parties’ true intent.” (citations omitted)).

        Industry custom and usage is often invoked to shed light on the meaning of oil and gas

related contract provisions, such as those found in leases, farmouts, and operating agreements. See

RESTATEMENT (SECOND) OF CONTRACTS § 222(3) (AM. LAW INST. 1981) (“[A] usage of trade in the

                                                  21
vocation or trade in which the parties are engaged . . . gives meaning to or supplements or qualifies

their agreement.”). Indefinite terms may be given precision by usage of trade or course of dealing

between the parties in the absence of an agreement to the contrary. See Fischer, 479 S.W.3d at

239–40 (citing RESTATEMENT (SECOND) OF CONTRACTS § 33 cmt. a (AM. LAW INST. 1981). As

explained above, when a contract is unambiguous, we do not consider outside evidence, including

industry custom and usage, to alter or contradict the terms. See, e.g., URI, Inc., 543 S.W.3d at

757–58; Nat’l Union Fire Ins., 907 S.W.2d at 520–21. The meaning of “express written consent”

within a contract is clear, is not susceptible to more than one meaning, and is not industry or

vocation specific. See Nat’l Union Fire Ins., 543 S.W.3d at 521 n.6. Likewise, when a contract is

unambiguous yet silent as to an immaterial, non-essential term, it requires no further

supplementation. See Fischer, 479 S.W.3d at 238–40; see also RESTATEMENT (SECOND)                                      OF

CONTRACTS § 221 (AM. LAW INST. 1981) (supporting that courts cannot rely on evidence of industry

custom to add a term that is not essential to an otherwise enforceable agreement); RESTATEMENT

(SECOND) OF CONTRACTS § 204 (AM. LAW INST. 1981) (explaining that when parties have not

agreed to an essential term in a contract, courts will supply a reasonable term). To supplement so

clear and easily understood a provision containing “express written consent” with extrinsic evidence,

as Barrow-Shaver would have us do, would make almost every term, word, or phrase in every

agreement, and any obligation not in an agreement, susceptible to litigation and ultimately a jury

determination based on competing expert testimony, regardless of clarity.9

         9
           For example, if a consent-to-assign provision stated that a farmee cannot assign its rights without the express
written consent of the farmor and the farmor’s consent cannot be unreasonably withheld, then a fact issue may arise as
to the meaning of “unreasonably withheld.” It that case, evidence of industry custom and testimony would likely be
appropriate. But when the provision states that a party may not assign its interest without another party’s express written

                                                           22
         Further, allowing evidence of industry custom and usage here would give the jury an

opportunity to create an ambiguity where none exists, or to alter the terms of the contract’s clear and

unequivocal language as to the parties’ obligations. See URI, Inc., 543 S.W.3d at 766 (noting that

“discovery was unnecessary to interpret the policies’ unequivocal language, because such discovery

could only lead to improper parol evidence of subjective intentions” in trying to assert a latent

ambiguity (discussing Nat’l Union Fire Ins., 907 S.W.2d at 521–22)). We decline to allow evidence

of industry custom to import an obligation that does not exist in the contract—evidence introduced

for the sole purpose of inviting the jury to qualify Carrizo’s right to withhold consent when Carrizo

bears no consent obligation under the farmout agreement. Were we to allow such evidence for such

a purpose, we would vitiate the parties’ express agreement that Barrow-Shaver cannot assign its

rights without Carrizo’s consent, and we would rewrite the parties’ agreement to say that Barrow-

Shaver is entitled to assign its rights, or reap the benefit of a proposed assignment, even without

Carrizo’s consent. See Conoco, Inc., 986 S.W.2d at 606–07 (refusing to imply a duty of good faith

into the parties’ contract because their contract did not provide the underlying obligation or duty

concerning the obligation to which the duty of good faith would attach). We will not do so. It is

not the province of the jury to decide whether a contract is ambiguous or to interpret a bargained-for

provision in an unambiguous contract, and the jury may not imply an obligation into an

unambiguous contract. See generally J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.

2003). Nor is it our province to change the terms of the parties’ unambiguous agreement. See, e.g.,

consent, the meaning of “express written consent” is generally understood. Without an indication in the contract that
the parties intended to apply some sort of technical meaning to the term, evidence of industry custom and usage should
not be considered.

                                                         23
Am. Mfrs. Mut. Ins. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003) (“[W]e may neither rewrite the

parties’ contract nor add to its language.” (citation omitted)).

       In addition to our precedent, the Restatement also supports that courts cannot rely on

evidence of industry custom or usage to add a term that is not essential to an otherwise enforceable

agreement. See RESTATEMENT (SECOND)          OF   CONTRACTS § 221 (AM. LAW INST. 1981). “An

agreement is supplemented or qualified by a reasonable usage with respect to agreements of the

same type if each party knows or has reason to know of the usage and neither party knows or has

reason to know that the other party has an intention inconsistent with the usage.” Id. A court may

only rely on industry custom or usage when “in the absence of usage,” it would “supply a reasonable

term.” Id. § 221 cmt. a. A court may only “supply a reasonable term” when it is essential to

enforcing an otherwise unenforceable agreement. Id. § 204 (“When the parties to a bargain

sufficiently defined to be a contract have not agreed with respect to a term which is essential to a

determination of their rights and duties, a term which is reasonable in the circumstances is supplied

by the court.”); see also 12 WILLISTON ON CONTRACTS § 34:3 (4th ed. 2019) (“[T]rade usages and

customs can be incorporated into a contract in order to remedy a deficiency in the agreement when

the agreement obviously omits an essential provision.”). In other words, if a contract omits a term,

yet includes all the necessary terms to make the agreement enforceable, courts may not imply a

reasonable term. RESTATEMENT (SECOND) OF CONTRACTS §§ 204, 221 (AM. LAW INST. 1981); see

also Centex Homes, 95 S.W.3d at 273–74 (providing that courts will not imply a warranty of good

                                                  24
workmanship if the parties express a contrary intention).10 As explained above, the Court need not

supplement the consent-to-assign provision because the agreement may be enforced as written.

         JUSTICE GUZMAN’s use of industry custom to imply a reasonableness obligation into the

consent-to-assign provision, see post at ___, is a veiled attempt to use industry custom and usage

to create a covenant of reasonableness and good faith applicable, at a minimum, to farmout

agreements and probably to every contract with a consent provision, if not every contract of any

type. Using industry custom in the manner JUSTICE GUZMAN proposes would open the door to

litigating the meaning of every term in every contract and any obligation not in a contract, creating

lucrative business opportunities for so-called experts in every industry and allowing juries to imply

obligations to which parties did not agree.

         Moreover, it defies reason to use the evidence of industry custom and usage and yet

disregard other extrinsic evidence, such as the parties’ underlying negotiations, as JUSTICE GUZMAN

would do. See post at ___. Although we hold that the parol evidence rule bars consideration of the

negotiation evidence, if, as JUSTICE GUZMAN contends, evidence of industry custom and usage were

appropriate to give precision to the meaning of “consent” in this context, then evidence of the

parties’ underlying negotiations would also be necessary to understand the parties’ intent as to that

custom and usage. See URI, 543 S.W.3d at 764–65 (explaining that facts and circumstances at the

time of the contract’s formation may be used only to inform the meaning of the language the parties

         10
            For example, when a contract requires goods to be delivered to “the green house on Pecan Street” but there
are two green houses on Pecan Street, the question of which green house is essential to the contract’s enforcement, and
the court may imply a reasonableness term in accordance with the parties’ intent. See URI, 543 S.W.3d at 765–66. So
too may a court use industry custom or usage to supply a reasonable term, but only when it is essential to the contract’s
enforcement and does not transform the meaning of the contract by adding to, altering, or contradicting the terms of the
agreement itself. See id. at 768–69.

                                                           25
chose); Nat’l Union Fire Ins., 907 S.W.2d at 521–22 (stating that extrinsic evidence of prior

negotiations, prior dealings, and trade usage may be admissible to give the words of a contract

meaning consistent with generally accepted meaning, but cannot be used to vary or contradict the

agreement (citations omitted)); see also RESTATEMENT (SECOND) OF CONTRACTS § 222 (AM. LAW

INST. 1981) (suggesting that evidence showing that parties agreed not to follow the trade usage will

override trade custom and usage evidence, indicating that evidence of a clear intent to contract

around industry custom and usage would be admissible). But not only does JUSTICE GUZMAN

advocate using industry custom to alter the agreement—implying an obligation that does not

exist—she also would not allow use of evidence of the parties’ underlying negotiations, even when

it clearly shows that the parties intended for the consent-to-assign provision not to contain any

reasonableness requirement or obligation on Carrizo’s part.

       Further, under Texas’s strong policy favoring the freedom to contract, parties are free to

contract around established industry custom and usage. See, e.g., Coyote Lake Ranch, LLC v. City

of Lubbock, 498 S.W.3d 53, 59 (Tex. 2016); Phila. Indem. Ins. v. White, 490 S.W.3d 468, 471 (Tex.

2016). Because parties may agree to contract terms that are consistent or inconsistent with industry

custom and usage, evidence of industry custom and usage is not dispositive as to the parties’ intent

or the meaning of the parties’ agreement. Such evidence can be informative as to the parties’ intent

only when the plain language of their agreement is ambiguous. In Kachina Pipeline Co. v. Lillis,

we explained:

       Amici have made it clear that downstream centralization of compression is both
       common and critical to the efficient transportation of gas to market. We do not
       doubt that, and we do not doubt that producers often contract to share in such costs.
       But the agreement does not express an objective intent that [the party] would do so,

                                                26
       and industry custom cannot impose obligations beyond those within the written
       agreement.
471 S.W.3d at 453–54 (emphasis added) (citation omitted); see also Murphy Expl., 560 S.W.3d at

109, 113 (acknowledging that we will not impose more stringent obligations unless the parties

clearly intended to do so); Nat’l Union Fire Ins., 907 S.W.2d at 521–22 (declining to consider

industry custom because the contract language was clear and unambiguous on its face and in

application). While we do not doubt that farmees generally expect farmors not to withhold consent

unreasonably, and we do not doubt that farmors generally will not condition consent on the payment

of millions of dollars, this does not inform our understanding of what the parties agreed to here,

which is expressed in their written agreement. We hold that evidence of industry custom and usage

cannot be considered here, and there was no issue for the jury to decide as to construction of the

consent-to-assign provision.

                                  2. Implied Duty or Covenant

       In relying on industry custom and usage to argue that Carrizo can withhold consent only

when it is reasonable to do so, Barrow-Shaver essentially advocates for an implied obligation that

Carrizo justify a decision not to consent and an implied obligation that Carrizo not withhold consent

unreasonably, arbitrarily, or “illegitimately.” As explained above, any such implied obligations are

not based on the meaning of “express written consent,” as there is no indication in the contract that

the parties intended a meaning other than the ordinary, non-technical meaning of the term. Rather,

any such reasonableness obligation must be based on the consent-to-assign provision’s language

providing that Barrow-Shaver’s rights under the farmout agreement “may not be assigned . . .

without express written consent of Carrizo.”

                                                 27
       As we have discussed, that language imposes an obligation only on Barrow-Shaver—if

Barrow-Shaver wants to assign its rights, it must obtain Carrizo’s express written consent. The

provision imposes no obligation on Carrizo. The provision does not require Carrizo to explain its

reasons for withholding consent, nor does the provision impose any constraints on withholding

consent or qualify the consent requirement in any way other than requiring it to be written and

express. Barrow-Shaver’s reading of the contract, however, would obligate Carrizo to provide a

reason for its denial of consent and would require that the denial satisfy some standard—specifically,

that denial of consent not be unreasonable, arbitrary, or illegitimate. And under Barrow-Shaver’s

interpretation, Carrizo’s failure to meet the standard could result in either Barrow-Shaver’s

assignment over Carrizo’s objection or in Barrow-Shaver otherwise benefitting from a lost

assignment opportunity.

       We are hesitant to imply terms into contracts. See, e.g., Murphy Expl., 560 S.W.3d at

111–13 (declining to read any implied proximity requirement concerning an offset well into a lease

provision); URI, Inc., 543 S.W.3d at 771 n.81 (explaining that we will not imply restraints for which

the parties have not bargained); Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 646 (Tex. 1996)

(recognizing that courts have long refused to imply restraints that are absent from the agreement).

“Accompanying every contract is a common-law duty to perform with care, skill, reasonable

expedience and faithfulness the thing agreed to be done.” See Montgomery Ward & Co. v.

Scharrenbeck, 204 S.W.2d 508, 510 (Tex. 1947). The Texas Business and Commerce Code

provides that “[e]very contract or duty within this title imposes an obligation of good faith in its

performance and enforcement.” TEX. BUS. & COM. CODE § 1.304 (applying to all contracts, not just

                                                 28
sale of goods); see also Conoco, Inc., 986 S.W.2d at 606–07; U.C.C. § 1-304 (AM. LAW. INST. &

UNIF. LAW COMM’N 2018). But this Business and Commerce Code provision is not applicable

where no specific obligation exists. See generally Conoco, Inc., 986 S.W.2d at 606–07.

       We examined the Business and Commerce Code’s good faith requirement in Northern

Natural Gas Co. v. Conoco, Inc., in which Conoco argued that a duty of good faith should be

imposed upon Northern Natural Gas in canceling a gas purchase contract. See id. at 606–07. The

Court declined to imply a duty of good faith into the parties’ contract because their contract did not

provide the underlying duty or obligation at issue, explaining that nowhere did the contract impose

a duty upon Northern Natural Gas to maintain the contracts, and “[i]n the absence of a specific duty

or obligation to which the good-faith standard could be tied, section [1.304 could] not support

Conoco’s claim for damages.” See id. (citing TEX. BUS. & COM. CODE § 1.203 (current version at

§ 1.304)); Dynegy Midstream Servs., Ltd. P’ship v. Apache Corp., 294 S.W.3d 164, 170 (Tex. 2009)

(“Because the contracts unambiguously do not impose an obligation . . . contract damages . . . are

not recoverable.”). Similarly, here the consent-to-assign provision imposes no duty or obligation

on Carrizo—the obligation is on Barrow-Shaver to obtain Carrizo’s consent to assign. Therefore,

there is no consent duty or obligation to which a good faith or reasonableness standard could attach.

       A duty of good faith and fair dealing may arise when the contract governs or creates a special

relationship. See Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 225 (Tex.

2002) (citation omitted). Contracts that give rise to the duty in the oil and gas context include

contracts between executive-right holders and non-participating royalty-interest owners, as well as

contracts between working-interest owners and royalty owners. See Manges v. Guerra, 673 S.W.2d
29
180, 183 (Tex. 1984); Amoco Prod. Co. v. First Baptist Church of Pyote, 611 S.W.2d 610, 610 (Tex.

1980) (per curiam). The duty of good faith and fair dealing stems from the relationship of the parties

and not from the contract. See Manges, 673 S.W.2d at 183 (citing English v. Fischer, 660 S.W.2d
521, 524–25 (Tex. 1983) (Spears, J., concurring)). However, this Court has been clear that absent

a special relationship, parties to a contract have no duty to act in good faith. See El Paso Nat. Gas

Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 312–313 (Tex. 1999) (citation omitted).

       Barrow-Shaver points to our imposition of a duty of good faith and fair dealing in the

insurance context as support for implying such a duty into consent-to-assign provisions in farmout

agreements. In the insurance context, we have held that the insurer owes a duty of good faith to the

insured because a special relationship arises out of the parties’ inherently unequal bargaining

positions and because the nature of insurance contracts would allow unscrupulous insurers to take

advantage of the insured. See, e.g., Arnold v. Nat’l Cty. Mut. Fire Ins., 725 S.W.2d 165, 167 (Tex.

1987). In the contexts in which we have recognized special relationships, these relationships were

predicated upon an imbalance in bargaining power between the parties and the unequal opportunity

for one party to take advantage of the other. See, e.g., id. We have not extended the duty of good

faith and fair dealing to farmout agreements between sophisticated parties, and we decline to do so

here. A farmout agreement does not create inherently unequal bargaining power or give one of the

parties an opportunity to take advantage of the other, especially when both parties are highly

sophisticated oil and gas entities. And here, those sophisticated parties specifically negotiated the

farmout agreement—a specialized oil and gas agreement between a lessee and an entity who has the

                                                 30
resources to drill on the prospect—in an arm’s-length transaction. We conclude that there is no

special relationship in the farmout context to give rise to a duty of good faith and fair dealing.

       Additionally, we have long held that there is not an implied covenant of good faith and fair

dealing in every contract. See Zachry Constr. Corp. v. Port of Hous. Auth. of Harris Cty., 449
S.W.3d 98, 116–17 (Tex. 2014) (acknowledging that Texas does not recognize a duty of good faith

and fair dealing imposed in contractual obligations) (citing English, 660 S.W.2d at 522); Winters

v. Hous. Chronicle Publ’g Co., 795 S.W.2d 723, 724 n.2 (Tex. 1990) (pointing out that we have

declined to imply a duty of good faith and fair dealing into employment contracts (citation omitted));

see also Hux v. S. Methodist Univ., 819 F.3d 776, 781 (5th Cir. 2016) (recognizing that “Texas law

does not impose a generalized contractual duty of good faith and fair dealing and, in fact, rejects it

in almost all circumstances” (citing English, 660 S.W.2d at 522)). We have rejected the argument

that we should imply into contracts a covenant that would require the parties not to do anything that

injures the right of another party to receive the benefits of the agreement. See Zachry, 449 S.W.3d

at 116–17.

       In English v. Fischer, we explained that to imply into every contract a covenant of good faith

and fair dealing that “there is an implied covenant that neither party will do anything which injures

the right of the other party to receive the benefits of the agreement” would be “contrary to our well-

reasoned and long-established adversary system which has served us ably in Texas for almost 150

years.” 660 S.W.2d at 522. Adoption of this covenant in every contract would “abolish our system

of government according to settled rules of law and let each case be decided upon what might seem

‘fair and in good faith,’ by each fact finder.” Id. Likewise, to impose a covenant here that Carrizo

                                                 31
could not unreasonably withhold its consent would be contrary to our long-standing principles of

contract law that parties are free to contract for their own duties and obligations. See, e.g., id.;

Coyote Lake Ranch, LLC, 498 S.W.3d at 59; White, 490 S.W.3d at 471. The farmout agreement

reflects that Barrow-Shaver and Carrizo contracted for Barrow-Shaver to have the obligation to

obtain consent before it can assign its rights. And the language “without express written consent”

indicates that the parties bargained to prohibit any implied consent at all. See Express, WEBSTER’S

THIRD NEW INTERNATIONAL DICTIONARY (2002) (“[T]o give a full and explicit statement.”); see

also Express, BLACK’S LAW DICTIONARY (11th ed. 2019) (“Clearly and unmistakably

communicated; stated with directness and clarity.”); Express Consent, BLACK’S LAW DICTIONARY

(11th ed. 2019) (“Consent that is clearly and unmistakably stated.”). We refuse to rewrite

agreements between experienced and sophisticated parties, such as Barrow-Shaver and Carrizo, and

implying an obligation of good faith or reasonableness into this contract would do just that. See,

e.g., Fischer, 479 S.W.3d at 239 (“[W]e may neither rewrite the parties’ contract nor add to its

language.” (quoting Schaefer, 124 S.W.3d at 162).

       Moreover, Texas courts have declined to read a reasonableness standard into consent

provisions that failed to articulate a standard by which consent could be withheld. See, e.g., Trinity

Prof’l Plaza Assocs. v. Metrocrest Hosp. Auth., 987 S.W.2d 621, 625 (Tex. App.—Eastland 1999,

pet. denied); Reynolds v. McCullough, 739 S.W.2d 424, 429 (Tex. App.—San Antonio 1987, writ

denied); Mitchell’s, Inc. v. Nelms, 454 S.W.2d 809, 813 (Tex. App.—Dallas 1970, writ ref’d n.r.e.).

In these situations, Texas courts have held that the lessor has the absolute right to withhold consent.

See, e.g., Trinity Prof’l Plaza Assocs., 987 S.W.2d at 625 (holding that a lease agreement contained

                                                  32
no requirement to act reasonably in withholding consent to transfer); Reynolds, 739 S.W.2d at 429

(explaining that absent the promise not to unreasonably withhold consent to assign, there is no

implied covenant by the lessor to act reasonably in withholding consent); Mitchell’s, Inc., 454
S.W.2d at 813 (concluding that a breach may occur which gives rise to damages when the lease

expressly states that a lessor will not unreasonably withhold its consent and then unreasonably

withholds its consent); Robertson et al., CONSENT TO ASSIGNMENT PROVISIONS IN TEXAS OIL AND

GAS LEASES: DRAFTING SOLUTIONS TO NEGOTIATION IMPASSE, 48 TEX. TECH. L. REV. 335, 340

(2016) (explaining that it is “extremely important for a lessee that some standard be articulated,

whether it is a reasonableness standard . . . or a specifically enumerated objective standard”). The

Fourth Court of Appeals explained, in the lease context:

       The limitation on the transfer of a leasehold estate is for the lessor’s sole benefit. A
       lessor may contract, by provision in the lease, not to unreasonably withhold his
       consent to an assignment or sublease of the premises. This type of provision is in the
       nature of a promise or covenant which, if breached, could be grounds for an action
       for damages. Absent this promise, we hold that there is no implied covenant by the
       lessor to act reasonably in withholding his consent.

Reynolds, 739 S.W.2d at 429 (citation omitted). Another court of appeals noted similarly that an

interest holder “may contract, by provision in the [agreement], not to unreasonably withhold his

consent to an assignment . . . . This type of provision is in the nature of a promise or covenant

which, if breached, could be grounds for an action for damages.” Trinity Prof’l Plaza Assocs. 987
S.W.2d at 625 (quoting Reynolds, 739 S.W.2d at 429). Absent this promise, the court held, “there

is no implied covenant by the lessor to act reasonably in withholding his consent.” Id. (quoting

Reynolds, 739 S.W.2d at 429).

                                                 33
        We find the reasoning of those courts of appeals persuasive and consistent with our contract

law, and we decline to imply a reasonableness standard into the consent-to-assign provision here.

The parties’ agreement establishes one obligation—Barrow-Shaver must obtain Carrizo’s express

written consent before it can assign its rights—and it imposes no obligation upon Carrizo. We will

not impose a duty upon Carrizo for which the parties did not contract. See Murphy Expl., 560
S.W.3d at 113.

        Further, in the context of oil and gas leases that expressly define a duty, “we will not impose

a more stringent obligation unless it is clear that the parties intended to [do so].” Id. at 108–09

(quoting Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 215 (Tex. 2011)). While this is

a farmout agreement and not a lease, we see no reason why the same principle should not apply. As

in the lease context, we decline to read into a farmout agreement more stringent obligations than the

parties intended, as expressed by the negotiated, agreed-to language. See generally id.

        We also decline to read a reasonableness requirement into the consent-to-assign provision

as a way to avoid any impermissible restraint on alienation. “A servitude that imposes a direct

restraint on alienation of the burdened estate is invalid if the restraint is unreasonable.

Reasonableness is determined by weighing the utility of the restraint against the injurious

consequences of enforcing the restraint.” RESTATEMENT (THIRD) OF PROPERTY: SERVITUDES § 3.4

(AM. LAW INST. 2000). “Determining [the] reasonableness of a restraint on alienation requires

balancing the utility of the purpose served by the restraint against the harm that is likely to flow from

its enforcement.” See id. cmt. c.

                                                   34
       In a farmout, the mineral interest is conveyed to the farmee after the farmee’s services are

rendered and obligations satisfied, and not just after consideration is paid; therefore, the farmor has

an interest in monitoring the manner in which and by whom the services are rendered. See Farmout

Agreement, WILLIAMS & MEYERS MANUAL OF OIL AND GAS TERMS (16th ed. 2015). As mentioned

above, Barrow-Shaver’s expert testified about factors a farmor may consider in deciding whether

to consent to the farmee’s assignment to a particular entity. While we express no opinion on any

such reasons Carrizo may have had for refusing consent, we note that our contract law allows for

risk allocation by agreement. See El Paso Field Servs., 389 S.W.3d at 810 (declining to disallow

parties to define requirements by contract and allocate risk by agreement, “a result that runs counter

to the freedom to contract,” and refusing “to amend the contract judicially to substitute an

unsupported standard for the contracted-for requirement” (citation omitted)). The provision to

which the parties agreed would allow Carrizo to assess the risk of assigning the farmout and decline

to consent if it deemed the risk too high. And a reasonable party with Barrow-Shaver’s experience

and sophistication would have assessed the risk of entering into a farmout agreement that does not

qualify Carrizo’s right to withhold consent—an agreement that could make Barrow-Shaver’s rights

un-assignable—and signed only if it deemed that risk acceptably low. We decline to disturb the risk

allocation to which the parties agreed. Considering the interests in the parties’ farmout, we will not

imply a reasonableness standard here. See Hurd Enters., Ltd. v. Bruni, 828 S.W.2d 101, 107–12

(Tex. App.—San Antonio 1992, writ denied) (declining to impose a duty of good faith and fair

dealing arising from the marketing obligation of the lessee and from the unequal bargaining position

of the parties in a lessor–lessee situation); Texstart N. Am., Inc. v. Ladd Petroleum Corp., 809

                                                  35
S.W.2d 672, 677–78 (Tex. App.—Corpus Christi–Edinburg 1991, writ denied) (rejecting the

argument that a consent provision in a joint operating agreement “implied [a] duty of mutual

cooperation for the common benefit of all” or implied a “duty of utmost good faith and fair dealing”

because the parties’ agreement was unambiguous as to when consent could be withheld).

       The obligation Barrow-Shaver asks us to imply—that Carrizo not act unreasonably in

withholding consent—amounts to an implied covenant to act reasonably and in good faith. The

contract imposes no such duty, and our precedent does not support implying one. We hold that

Carrizo’s right to withhold consent to a proposed assignment is unqualified.

                        B. Meaning of the Consent-to-Assign Provision

       In construing the contract, our task is to ascertain its meaning. See, e.g., Murphy Expl., 560
S.W.3d at 108–09 (citations omitted); Sun Oil Co., 626 S.W.2d at 727–28, 731 (citations omitted).

Given that the parties do not dispute that Carrizo has a right to withhold consent under the farmout

agreement, and our holding that Carrizo’s right to withhold consent is unqualified, we next address

the meaning of such an unqualified right. The court of appeals held that, under the farmout

agreement, Carrizo is entitled to refuse consent for any reason or no reason at all. 516 S.W.3d at

96. Barrow-Shaver argues that the consent-to-assign provision cannot mean that Carrizo can prevent

an assignment for purely illegitimate reasons that amount to extortion. While we have explained

that the consent-to-assign provision imposes no obligation on Carrizo, it is prudent to further explain

the provision’s meaning as to the parties’ rights and obligations.

       In negotiating the consent-to-assign provision, the parties had two options:             (1) an

unqualified right to withhold consent, which would impose an absolute requirement on Barrow-

                                                  36
Shaver to obtain Carrizo’s consent before it could assign its contractual rights, or (2) a qualified

right to withhold consent, which would impose less than an absolute consent requirement on

Barrow-Shaver and, importantly, would impose an obligation on Carrizo. Under the first option,

Carrizo would be able to prevent Barrow-Shaver from assigning its rights. Because the right to

withhold consent would be unqualified, Carrizo could refuse consent for any reason, expressed or

not, reasonable or not, legitimate or not, or no reason at all. Under the second option, Carrizo’s

ability to prevent an assignment would be limited by some sort of standard. This would require

Carrizo to provide a reason for withholding consent, and if that reason did not meet the agreed-to

standard—reasonable or not arbitrary, for example—then Carrizo presumably could not stand in the

way of Barrow-Shaver’s assignment. And it would allow for the possibility of Barrow-Shaver to

benefit from assignment without having obtained Carrizo’s consent, either by assigning its rights

despite the refusal to consent or by recovery of contractual damages for a lost assignment

opportunity. While the second option, a qualified right to withhold consent, could vary depending

on the standard adopted, the choice here was binary—an unqualified, absolute right to prevent an

assignment, or a qualified, limited right to withhold consent that would prevent an assignment only

if an acceptable reason were provided.

       The consent-to-assign provision to which Barrow-Shaver and Carrizo agreed simply provides

that Barrow-Shaver cannot assign its rights unless Carrizo gives its express written consent. In no

way does the agreement suggest that Carrizo must justify its denial of consent, that the denial of

consent must meet some standard, that Barrow-Shaver has the right to challenge Carrizo’s reason

for denying consent, or that Barrow-Shaver can assign its rights without Carrizo’s consent meeting

                                                37
any requirement other than the two explicitly stated (express and in writing). By not addressing the

circumstances under which Carrizo could withhold consent, the agreement speaks to the parties’

agreement—an unqualified right to withhold consent. In fact, had the consent-to-assign provision

explicitly stated that Carrizo could withhold its consent “for any reason or no reason,” such language

would be surplusage because the phrase “may not be assigned . . . without the express written

consent of Carrizo” has identical meaning. The same can be said if the provision added “which can

be granted or withheld at Carrizo’s sole discretion.” Adding language to this effect would have been

unnecessary and meaningless given the unambiguous language the parties chose in the farmout

agreement. Given the plain, unambiguous language of the consent-to-assign provision, we conclude

that Barrow-Shaver has the absolute obligation to obtain Carrizo’s consent, and Carrizo has no

obligation as to when, how, or why it may withhold its consent to assign. Therefore, the contract

means that Carrizo holds the power through non-consent to prevent Barrow-Shaver from assigning

its rights in the farmout. And, under the agreement, Carrizo could withhold its consent to assign to

Raptor as it did here.

       Because we conclude that the contract unambiguously allowed Carrizo to refuse its consent

for any reason, Carrizo could not breach the parties’ farmout agreement for withholding its consent

as a matter of law. See generally El Paso Field Servs., 389 S.W.3d at 812 (concluding that the

jury’s findings on breach of contract were immaterial, and upholding the trial court’s judgment that

the contract was unambiguous); Columbia Gas Transmission Corp. v. New ULM Gas, Ltd., 940
S.W.2d 587, 593 (Tex. 1996) (rendering judgment for the defendant when the contract was

unambiguous and the parties’ intent should not have been submitted to the jury). Therefore, we

                                                 38
agree with the court of appeals’ conclusion that the breach of contract issue should not have been

submitted to the jury.

                                  C. Public Policy Implications

       Texas has a strong public policy not to hinder the exploration and development of oil and

gas. See generally Coastal Oil & Gas Corp. v. Garza Energy Tr., 268 S.W.3d 1, 34, 39 (Tex. 2008);

Hastings Oil Co. v. Tex. Co., 234 S.W.2d 389, 390 (Tex. 1950); Brown v. Humble Oil & Ref. Co.,

83 S.W.2d 935, 938 (Tex. 1935). And Texas has long recognized the principle that parties are free

to contract as they see fit as long as their agreement does not conflict with public policy. E.g.,

Coyote Lake Ranch, LLC, 498 S.W.3d at 59. We recognize the important public policy favoring the

exploration and development of oil and gas. See generally Coastal Oil & Gas Corp., 268 S.W.3d

at 39. However, we refuse to extend that public policy in favor of rewriting agreements between

experienced, sophisticated parties.

       Contrary to the assertions in JUSTICE GUZMAN’s dissent, our holding today does not conflict

with our well-established public policy in favor of the exploration and development of oil and gas.

See post at ___. In fact, JUSTICE GUZMAN’s view would run afoul of our public policy and would

negatively impact oil and gas litigation. Under a farmout agreement, the lessee chooses to farm out

its drilling obligation to another operator in exchange for a transfer of interest upon the drilling of

a successful well. See Farmout Agreement, WILLIAMS & MEYERS MANUAL OF OIL AND GAS TERMS

(16th ed. 2015). A lessee generally would not choose to farm out its obligation to an unsophisticated

party because the lessee bears the risk of failed drilling and would therefore look to farm out to an

experienced operator. See generally id. JUSTICE GUZMAN’s dissent asserts that Carrizo effectively

                                                  39
prevented the development of oil and gas under the farmout, and underlying lease, by refusing to

consent to Barrow-Shaver’s proposed assignment. See post at ___. But JUSTICE GUZMAN’s dissent

fails to recognize that Carrizo, and farmors generally, have an ongoing interest in exercising caution

as to the operator obligated to drill. In arguing that we should reinstate the jury’s verdict, JUSTICE

GUZMAN’s dissent assumes that Carrizo was not acting reasonably in desiring that Raptor not be the

operator that developed the minerals and discounts that Carrizo, as the farmor, had a significant

interest in ensuring that the drilling not be done by an operator it deemed too risky. See post at ___.

Thus, using the jury’s finding as to industry custom to hold that a farmor has to justify withholding

its consent would actually seem to hinder the development of oil and gas. See generally Coastal Oil

& Gas Corp., 268 S.W.3d at 39.

       Despite JUSTICE GUZMAN’s assertion to the contrary, see post at ___, our holding does not

give Carrizo, or another similarly situated party, permission to extort a multimillion, last-minute

payment in exchange for consent. In fact, the record does not demonstrate that happened. After

initially declining to consent to Barrow-Shaver’s assignment to Raptor, Carrizo later gave Barrow-

Shaver a different offer intended to satisfy both sides—Carrizo offered Barrow-Shaver the ability

to buy out its interest as the lessee in the underlying lease for $5 million, which would have given

Barrow-Shaver the benefits and risks of being the working-interest owner, allowing it to assign its

rights to Raptor. This is far different from an extortion scheme to charge $5 million for consent at

the eleventh hour while retaining the lessee interest, as JUSTICE GUZMAN contends. Our holding

simply recognizes the obligations the contract imposes—Barrow-Shaver must obtain Carrizo’s

consent if it wants to assign its contractual rights—and the obligations it does not impose—Carrizo

                                                  40
need not provide a reason if it chooses not to consent, nor is Carrizo under any obligation when

asked to give consent. Our holding does not run afoul of our long-established oil and gas principles.

                                              III. Fraud

        Finally, we consider whether the court of appeals erred in holding that there was no evidence

to support the justifiable reliance element of Barrow-Shaver’s fraud claim. Barrow-Shaver argues

that it signed the farmout agreement—containing the consent-to-assign provision with no qualifying

“cannot be unreasonably withheld” language—because Carrizo assured Barrow-Shaver that Carrizo

would consent. Carrizo counters that Barrow-Shaver could not justifiably rely on any assurances

of consent when the farmout agreement’s consent-to-assign provision directly and unambiguously

addressed consent to assign. Carrizo also argues that any reliance is not justified because Barrow-

Shaver knew that Laufer, the landman who negotiated the consent-to-assign provision on Carrizo’s

behalf, was not authorized to bind the company.

        To establish fraud, a plaintiff must show that: (1) the defendant made a false, material

representation; (2) the defendant “knew the representation was false or made it recklessly as a

positive assertion without any knowledge of its truth;” (3) “the defendant intended to induce the

plaintiff to act upon the representation;” and (4) the plaintiff justifiably relied on the representation,

which caused the plaintiff injury. Orca Assets G.P., L.L.C., 546 S.W.3d at 653 (citing Ernst &

Young, L.L.P v. Pac. Mut. Life Ins., 51 S.W.3d 573, 577 (Tex. 2001)); see also Anderson v. Durant,

550 S.W.3d 605, 614 (Tex. 2018) (citations omitted).             A representation is material if the

representation was important to the plaintiff in making a decision, such that a reasonable person

would be induced to act on and attach importance to the representation in making the decision. See

                                                   41
Italian Cowboy Partners, 341 S.W.3d at 337 (citations omitted). The representation may be material

even if it was not the only factor inducing the plaintiffs to make the decision or enter into the

transaction, but the plaintiff must have relied on the misrepresentation. See Brush v. Reata Oil &

Gas Corp., 984 S.W.2d 720, 727–28 (Tex. App.—Waco 1998, pet. denied) (citations omitted). A

representation is false if it consists of words or other conduct that suggest to the plaintiff that a fact

is true when it is not. See Custom Leasing, Inc. v. Tex. Bank & Tr. Co., 516 S.W.2d 138, 142 (Tex.

1974) (citation omitted). To establish the fourth element, “the plaintiff must show that it actually

relied on the defendant’s representation and, also, that such reliance was justifiable.” Orca Assets,
546 S.W.3d at 653 (citing Grant Thornton LLP v. Prospect High Income Fund, 314 S.W.3d 913, 923

(Tex. 2010)). Only the fourth element is at issue in this appeal.11

         The jury found in favor of Barrow-Shaver on its fraud claim, but the court of appeals

reversed, holding that no evidence supported the justifiable reliance element of Barrow-Shaver’s

fraud claim. 516 S.W.3d at 98. In doing so, the court of appeals concluded, “No matter how much

confidence Barrow-Shaver and Bertram had in Laufer’s oral promise that Carrizo’s consent would

not be unreasonably withheld, their reliance is of no consequence in light of the unambiguous term

in the written contract that directly contradicts the oral representation.” Id.

         While they were negotiating the consent-to-assign provision, Laufer promised Bertram on

three separate occasions that although Carrizo insisted on deleting the “shall not be unreasonably

withheld” language, Carrizo would work with Barrow-Shaver on any future assignment and would

         11
            Carrizo does not assert that Laufer did not know the promise was false or that he did not have any reckless
intent in making the promise. Carrizo also does not challenge whether the alleged statements were actually false, material
representations.

                                                           42
give consent. Laufer said, “It won’t be a problem” and “Don’t worry about it. We will work with

you. We will promise you . . . the consent and it won’t be a problem.”

       We review whether, as a matter of law, Carrizo could have committed fraud—specifically,

whether Barrow-Shaver could have justifiably relied on Carrizo’s representations. See Orca Assets,

546 SW.3d at 653 (“Judgment without or against a jury verdict is proper at any course of the

proceedings only when the law does not allow reasonable jurors to decide otherwise.” (quoting

Wilson, 168 S.W.3d at 823)). “Justifiable reliance usually presents a question of fact” for the jury

to decide. Id. at 654 (citation omitted). But justifiable reliance may “be negated as a matter of law

when circumstances exist under which reliance cannot be justified.” Id. (citations omitted). To

determine whether, as a matter of law, justifiable reliance has been negated, we must consider the

contract and the nature of the parties’ relationship. See id.

       We recognize a long-standing principle that a “party claiming fraud has a duty to use

reasonable diligence in protecting his own affairs”—specifically that “[i]n an arm’s-length

transaction the defrauded party must exercise ordinary care for the protection of his own interests

and is charged with knowledge of all facts which would have been discovered by a reasonably

prudent person similarly situated.” Thigpen v. Locke, 363 S.W.2d 247, 251 (Tex. 1962) (citation

omitted); see also Orca Assets, 546 S.W.3d at 654. A “failure to exercise reasonable diligence is

not excused by mere confidence in the honesty and integrity of the other party.” Thigpen, 363
S.W.2d at 251 (citation omitted). Accordingly, a plaintiff may not “blindly rely on a representation

by a defendant” when the plaintiff’s knowledge, experience, and background alert it to investigate

                                                 43
the defendant’s representations before acting in reliance on those representations. See Orca Assets,
546 S.W.3d at 654 (citation omitted).

       JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C. is particularly relevant here. In that

case, we determined whether a mineral interest lessee’s reliance on extra-contractual representations

by the lessor’s agent was justifiable. Id. at 650. We concluded that Orca should have been alarmed

by the “negation-of-warranty provision’s direct contradiction of the representation upon which Orca

claim[ed] to have relied.” Id. at 658. This should have alarmed Orca, we explained, because “Texas

courts have repeatedly held, a party to a written contract cannot justifiably rely on oral

misrepresentations regarding the contract’s unambiguous terms.” Id. (quoting Nat’l Prop. Holdings,

L.P. v. Westergren, 453 S.W.3d 419, 424–25 (Tex. 2015) (per curiam)). Written agreements,

relative to oral agreements, serve a purpose under the law to “provide greater certainty regarding

what the terms of the transaction are and that those terms will be binding, thereby lessening the

potential for error, misfortune, and dispute.” DRC Parts & Accessories, L.L.C. v. VM Motori,

S.P.A., 112 S.W.3d 854, 858 (Tex. App.—Houston [14th Dist.] 2003, pet. denied).

       Orca Assets explained that, “[a] party to an arm’s length transaction must exercise ordinary

care and reasonable diligence for the protection of his own interests,” and therefore “reliance upon

an oral representation that is directly contradicted by the express, unambiguous terms of a written

agreement between the parties is not justified as a matter of law.” See 546 S.W.3d at 658 (citation

omitted). Here, Barrow-Shaver argues that the farmout agreement does not contradict Carrizo’s oral

representations, while Carrizo contends that the agreement’s unqualified consent-to-assign provision

directly contradicts Laufer’s oral representations. At first glance, the oral representations do not

                                                 44
seem to be directly contradicted by the consent-to-assign provision—Laufer represented that Carrizo

would consent, and under the consent-to-assign provision, Carrizo was entitled to consent or not.

A direct contradiction would be immediately apparent if, for example, Laufer had represented to

Bertram, “Even if Carrizo doesn’t consent, Barrow-Shaver can still assign its rights; this is all just

a formality.” In that case, the contract on its face would be directly contrary to the oral

representation. While no such conflict is immediately apparent here, a deeper analysis as to the

meaning of the consent provision reveals a direct contradiction. See id. at 658–60 (ascertaining the

meaning of the contract to determine whether there was a direct contradiction).

        In Orca Assets, we articulated a standard for determining whether a direct contradiction

exists such that reliance on the oral representation is unjustifiable as a matter of law. See id. at 658.

A contract sufficiently contradicts a representation if the meaning of contract “conflict[s] with the

earlier representation such that a reasonable person could not read the agreement and still plausibly

claim to believe the earlier representation.” Id. (citation omitted). We rejected the court of appeals’

application of a direct-contradiction standard that “both the contractual clause and the extra-

contractual representation it supposedly contradicts must explicitly speak to the same subject matter

with sufficient specificity to correct and contradict the prior oral representation.” Id. at 659. We

held that “[s]uch a requirement is simply too strict to be workable as it essentially requires the

contract and extra-contractual representation to use precisely the same terms” and that a direct

contradiction may occur “even when the terminology appearing in the representation and the writing

are not exactly the same.” Id. (citing with approval Mikob Props., Inc. v. Joachim, 468 S.W.3d 587,

                                                   45
599 (Tex. App.—Dallas 2015, pet. denied); Playboy Enters. Inc. v. Editorial Caballero, S.A. de

C.V., 202 S.W.3d 250, 256–57 (Tex. App.—Corpus Christi–Edinburg 2006, pet denied)).

       Orca Assets involved a representation that the acreage was “open,” which we determined

was “essentially equivalent to stating [that] the trust had not leased the property and, thus, had good

title.” 546 S.W.3d at 659. We concluded that the agreement’s negation-of-warranty clause directly

contradicted the “essential equivalent of the representation”—that the trust had title—because this

would require Orca to ignore the meaning of the negation-of-warranty clause. Id. at 659–60. It did

not matter that the contract did not include the terms “leased,” “open,” or “unleased”—“it didn’t

need to” because the representation “amounted to” a guarantee of title and the contract provision did

the opposite. Id. at 660. Thus, in determining whether there was a direct contradiction, we did not

look just to the text of the contract clause, but we analyzed what such clauses are designed to do and

the meaning of such a clause—looking beyond the text of the contract itself. See id. at 659–60.

       Here, Carrizo’s oral representations amount to: Carrizo will not stand in the way of Barrow-

Shaver assigning its rights under the farmout agreement; rather, Barrow-Shaver will be able to

assign whenever it desires and to whomever it desires. Based on the unambiguous language that

gives Carrizo an unqualified right to withhold consent, as discussed above, a reasonable person

would conclude that the contract means Carrizo holds the power through non-consent to prevent

Barrow-Shaver from assigning its rights in the farmout. Comparing directly, the contract gives

Carrizo the right to prevent an assignment, so Barrow-Shaver cannot assign whenever it wants; but

if Laufer’s oral representations are to be believed, Carrizo would not prevent an assignment and

Barrow-Shaver could assign whenever it wants. In other words, under the contract Carrizo holds

                                                  46
the keys to an assignment; under Laufer’s representations, however, the keys are firmly in Barrow-

Shaver’s hands.

        We conclude that the consent-to-assign provision directly contradicts Laufer’s oral

statements. Moreover, as the court of appeals recognized, Carrizo’s statements related directly to

the consent requirement, essentially eliminating it from the agreement and representing that Barrow-

Shaver alone held the power to assign—a direct contradiction to Barrow-Shaver only being able to

assign with Carrizo’s express approval. See 516 S.W.3d at 98. Therefore, a reasonable person could

believe the oral representations in light of the consent-to-assign provision’s unambiguous language.

Barrow-Shaver is a sophisticated oil and gas company that negotiated the farmout agreement’s terms

at arm’s length with a full understanding of the consent-to-assign provision’s implications. Cf. Orca

Assets, 546 S.W.3d at 660 (acknowledging that Orca had “sophisticated oil-and-gas business people”

who “understood the implications of the language” in their agreement, and who “negotiated the . . .

terms at arm’s length”); see also Grant Thornton LLP, 314 S.W.3d at 923 (stating that “[i]n

measuring justifiability, we must inquire whether, ‘given a fraud plaintiff’s individual

characteristics, abilities, and appreciation of facts and circumstances at or before the time of the

alleged fraud, it is extremely unlikely that there is actual reliance on the plaintiff’s part’” (footnote

& citations omitted)). And the consent-to-assign provision was specifically negotiated through a

back-and-forth process. See Orca Assets, 546 S.W.3d at 654 (recognizing that “reliance on a

representation made in a business or commercial transaction can be unjustified as a matter of law”

(citation omitted)); AKB Hendrick, LP v. Musgrave Enters., Inc., 380 S.W.3d 221, 232 (Tex.

App.—Dallas 2012, no pet.) (“Generally, reliance on representations made in a business or

                                                   47
commercial transaction is not justified when the representation takes place in an adversarial

context.” (citations omitted)). Barrow-Shaver, therefore, could not reasonably rely on Laufer’s oral

representations contrary to the provision under which Carrizo could prevent an assignment through

non-consent.

       Similarly, in Playboy Enterprises, Inc. v. Editorial Caballero, a case we cited with approval

in Orca Assets, the court of appeals found a direct contradiction between the representation that

renewal of a license agreement would be automatic and the contract, which stated that the licensee

had the option to request renewal of the license. Playboy Enters., 202 S.W.3d at 256–57; see also

Orca Assets, 546 S.W.3d at 659. The court also found a direct contraction between a representation

that a party could sell over 150,000 magazine copies per month and the contract language stating

that distribution would not exceed 150,000 per month. See Playboy Enters., 202 S.W.3d at 257–58.

The court in that case found these to be contradictions although the representations and the contract

did not use precisely the same terms. See id.; see also Orca Assets, 546 S.W.3d at 659 (explaining

that although the oral representations did not use precisely the same terms as the contract, “[f]or

Orca to rely on [the representation], it would have to ignore an express contractual provision

explaining [otherwise]”). Likewise, in Mikob Properties, Inc. v. Joachim, which we also cited with

approval in Orca Assets, the court of appeals held that an agreement containing a specific list of the

parties covered under a settlement agreement directly contradicted a representation that the

settlement agreement covered all parties, some of whom were not listed in the agreement. See

Joachim, 468 S.W.3d at 599; see also Orca Assets, 546 S.W.3d at 659.

                                                 48
         In this case, we recognize that Laufer’s oral representations and the consent-to-assign

provision also do not involve precisely the same language—that is, Barrow-Shaver may not assign

without Carrizo’s express written consent, and Carrizo will work with Barrow-Shaver and will give

its consent. If we were to understand the two not to conflict, we would in effect read the consent-to-

assign provision out of the parties’ agreement, and we would be ignoring its meaning—the very

question before this Court.12 Indeed, if Carrizo would consent to any assignment at any time to any

entity, then the specifically negotiated consent-to-assign provision would be useless. “A party who

enters into a written contract while relying on a contrary oral agreement does so at its peril.” Orca

Assets, 546 S.W.3d at 658 (alteration omitted) (quoting DRC Parts & Accessories, 112 S.W.3d at

858–59). Looking to the meaning and effect of the consent-to-assign provision, we conclude that

it directly contradicts Laufer’s oral representations. See also, e.g., Carto Props., LLC v. Briar

Capital, L.P., No. 01-15-01114-CV, 2018 WL 827558, at *10 (Tex. App.—Houston [1st Dist.] Feb.

13, 2018) (mem. op.) (holding that the complained-of representations that the defendant would

waive enforcement of its rights under the contract was directly contradicted by the express,

unambiguous terms of the contract, and therefore reliance on such representations was unjustifiable

as a matter of law).

         Moreover, we explained in Orca Assets that justifiable reliance can also be negated as a

matter of law when there are “red flags” that indicate reliance is unwarranted. See 546 S.W.3d at

         12
             JUSTICE BOYD seems to say that Laufer’s oral representations cannot conflict with the farmout agreement
because the agreement is silent as to when Carrizo must consent or may withhold consent. See post at ___. But the
absence of qualifying terms, and the lack of any language as to withholding consent, is the premise of the question before
this Court, not the answer. As Orca Assets made clear, we must construe the parties’ agreement and look to its meaning
in determining whether the contract directly contradicts Carrizo’s oral representations. See Orca Assets, 546 S.W.3d
at 659.

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655 (citing Grant Thornton LLP, 341 S.W.3d at 923).              Although we hold that the direct

contradiction negates justifiable reliance in this case, we address red flags as well because, as in

Orca Assets, “both theories apply” and “either would be sufficient to preclude justifiable reliance.”

See id. at 660 n.2.

       Carrizo argues that there were ample red flags alerting Barrow-Shaver that it could not

justifiably rely on Laufer’s representations. In Orca Assets, we reviewed the circumstances of the

agreement’s formation in their entirety—accounting for the parties’ relative levels of sophistication,

and recognizing that a party must exercise reasonable diligence and ordinary care to protect its

interests and must be aware of all the facts that would have been discovered by a similarly situated

and reasonably prudent person—to determine whether red flags make reliance unjustified. See id.

at 657–58. Without even having to reach the parties’ substantive negotiations, we point out the

following red flags: (1) the farmout agreement imposed an unambiguous obligation on Barrow-

Shaver and imposed no obligation on Carrizo; (2) the oral representations contradicted the clear and

unambiguous consent provision; (3) both Barrow-Shaver and Carrizo were sophisticated oil and gas

companies, so Barrow-Shaver should have understood that the oral representations had no bearing

on the contract’s express language; (4) Barrow-Shaver’s representative’s extensive experience in

the oil and gas industry—specifically, thirty-three years of experience; (5) the fact that negotiations

took place at arm’s length to create an agreement other than a form agreement; (6) the parties knew

utilizing consent-to-assign provisions is a common industry practice; and (7) the substance of the

representation was inherently unverifiable because it conveyed a vague intent for someone else to

do something sometime in the future under some circumstances not yet known.

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       A similarly situated “savvy participant” would have recognized that Carrizo could change

its mind, if Laufer’s representations were binding at all, and would have weighed the risk of that

happening before entering into the agreement. See id. at 654, 656–57 (noting that “savvy

participants” to an arm’s-length transaction should be expected to recognize red flags that others

who are less experienced may not, and that when a party is “skeptical” or recognizes “substantial

risk” it cannot blindly rely on the other party’s representations). Instead, Barrow-Shaver chose to

rely blindly on Carrizo’s representations when the contract provision clearly entitled Carrizo to

withhold its consent, thereby preventing an assignment. Here, Laufer’s vague and general

statements indicating that Carrizo would give its consent were merely Laufer’s representations of

Carrizo’s future intentions, statements that were inherently unverifiable, which should have been

a red flag to Barrow-Shaver not to accept them blindly. We conclude that there are sufficient red

flags in the entirety of the circumstances surrounding the farmout agreement’s formation to negate

justifiable reliance on Carrizo’s oral representations as a matter of law.

       We hold that Barrow-Shaver could not have justifiably relied on any statement that purported

to change the parties’ agreement. Therefore, the court of appeals did not err in reversing the trial

court’s judgment as to Barrow-Shaver’s fraud claim.

                                          IV. Conclusion

       In construing the parties’ farmout agreement, we hold that the contract imposed no consent

obligation on Carrizo and that Carrizo’s right to withhold consent is unqualified. We hold that

evidence of the surrounding facts and circumstances concerning the consent-to-assign

provision—including the substantive negotiations and prior drafts of the farmout agreement, as well

as industry custom and usage—is inadmissible extrinsic evidence, which is not to be used to imply

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an obligation into the agreement. We decline to read a reasonableness standard—or impose any

obligation not already in the contract—into the parties’ bargained-for consent-to-assign provision.

Therefore, we hold that Carrizo’s denial of consent to Barrow-Shaver’s proposed assignment could

not have breached the parties’ contract as a matter of law. Finally, we conclude that Barrow-Shaver

could not justifiably rely on Carrizo’s misrepresentations concerning an unambiguous provision.

Therefore, we hold that, as a matter of law, Barrow-Shaver’s fraud claim fails. Accordingly, we

affirm the court of appeals, but on different grounds.

                                                             ____________________________
                                                             Paul W. Green
                                                             Justice

OPINION DELIVERED: June 28, 2019

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