Contracts are the cornerstone of businesses in Texas. Businesses need them to interact with other businesses as well as their clients, customers, or consumers. Each party to a contract – whether oral or written – enters into it for mutually beneficial reasons. When one party breaches the contract, disputes can arise. In some cases, the solution may seem straightforward while in other cases, the breach is more problematic. Whether or not you are the party who breached the agreement or not, settling the matter as soon as possible is in everyone's best interests.
At Lawhorn Law, PC, our breach of contract lawyer in East Texas prioritizes our clients' interests and acts promptly to secure those interests. Our business legal services include everything from analyzing, drafting, and reviewing contracts to contract negotiation and litigation. Contact us today at 9039991234 to schedule a Consultation.
Breach of Contract and Non-Performance in Texas
A contract is a legally binding agreement between two parties, where one party offers to do something—for example, build a new house—and the other party accepts the offer and promises to do something in exchange—for example, pay money.
We deal with contracts regularly in our daily lives, as well as in a business context. Contracts in terms of consumers are used, for example, when:
- Setting up a mobile phone plan
- Renting an apartment
- Engaging a plumber to do repairs
- Buying a house
- One business buys or merges with another
- Hiring an employee
- Taking a loan from a bank
Contracts in terms of businesses are used, for example, when:
- Setting up a commercial lease
- Entering into a licensing agreement
- Entering into a purchase agreement
- Hiring new employees or contractors
- Creating any other type of business agreement, like partnership agreements, indemnity agreements, non-disclosure agreements, etc.
If one party fails to perform their obligations under an agreement without a reasonable excuse, the other party may be able to sue them for breach of contract.
To do this, the contract must be valid—it must be legal and both parties must have the capacity to enter into it. A contract is also usually written, although a breach of contract can apply to a verbal agreement in certain situations.
Where a party sues for breach of contract, the party that fails to perform their obligations is called the defendant and the wronged party is called the plaintiff.
Types of Breaches of Contract in Texas
Not all breaches are alike, and as such, not all breaches may be resolved through litigation. The law categorizes breaches of contracts based on their seriousness and timing.
Material vs Minor Breach
Material breaches occur when a defendant fails to perform an important obligation under the contract and that causes the contract to be “irreparably broken.” A material breach makes it impossible for the other party to perform their obligations under the contract.
Some contracts explicitly define a material breach of the agreement. If the contract is silent on the issue, a court looks at factors like whether or not the defendant acted in bad faith and whether the plaintiff can be compensated for their loss. An example of a material breach is when a buyer fails to pay for a product they received.
In comparison, a minor breach does not materially disadvantage the other party and the contract can still be substantially performed. For example, the delivery of a product one day late does not go to the core of the agreement and is likely a minor breach.
Actual vs Anticipatory Breach
An actual breach occurs when one party fails to perform a term under the contract.
Anticipatory breaches, on the other hand, occur when one party notifies the other that they will not comply with a term of the contract. This allows the other party to claim a breach of contract, even though it has not yet happened.
Remedies in Texas for Breaches of Contract
Remedies exist to resolve contract breaches. What those remedies might be will depend on the facts and circumstances. More than one remedy may apply in your unique cases. Potential remedies for a breach of contract include but are not necessarily limited to:
- Compensatory damages, which are the most common type of remedy for breach of contract, covering the actual loss caused to the non-breaching party – these damages can be viewed in terms of (1) expectation damages where the non-breaching party recovers monetary damages based on the contract itself or the market value; and (2) consequential damages where the non-breaching party recovers indirect damages for reasonably foreseeable harm resulting from the breach
- Punitive damages are the least common type of remedy for breach of contract but when awarded, are meant to punish the breaching party who acted fraudulently, maliciously, or willfully when breaching the contract and to prevent the same type of breaches in the future
- Specific performance, which is the result of a court order requiring a defendant to perform an obligation under the contract
- An injunction, which is a court order requiring a defendant not to do something, either temporarily or permanently
- Rescission, which occurs when the court cancels the parties' obligations under the contract so that, theoretically at least, they are in the same position as before the contract was made
- Restitution, which is a court order requiring the defendant to pay the plaintiff the amount agreed to in the contract – often involving the return of money or property
Again, the remedies available in your case depend on the jurisdiction, type of breach, specific terms of the contract, and circumstances in which the contract was made.
Possible Defenses to Breaches of Contract
It is important to know the possible defenses a business or consumer may have when they breach a contract. If you are the party to breach the contract, make sure to speak with an attorney about how any one of these or other defenses may apply in your case.
If you are the non-breaching party, knowing these defenses can help you understand how the other party may argue their case. This knowledge will provide insight on how to move forward to uphold the terms and conditions of the contract or to come to another resolution, even if that means litigation.
Defenses available to a party accused of breaching a contract include but are not limited to:
- Fraud, where the plaintiff intentionally misrepresented material facts about the contract, making it fraudulent and therefore invalid
- Invalid contract, where the contract does not meet the criteria of a valid contract
- Duress, where the breaching party was forced to enter into the contract against their will
- Incapacity, where the breaching party did not have the necessary capacity to enter into the contract in the first place – for example, because they were a minor at the time
- Unclean hands, where both parties are at fault for the breach of contract
- Mutual mistake, where the contract contains a mistake, different from what both parties intended
- Illegality, where the contract was an agreement to do something illegal – for example, commit a murder
Regardless of whether you are the breaching or non-breaching party, you should speak to a contracts lawyer to see what defenses may apply or how those defenses may be used in your situation. A breach of contract lawyer in Texas will assess the facts and circumstances and plan a strategy accordingly.
Contact a Contracts Attorney in East Texas Today
At Lawhorn Law, PC, our contracts attorney in East Texas will help you determine whether you have a breach of contract case. If you do, we will outline a strategy and consider all the possible remedies available.
We know the laws, filing procedures, and deadlines in Texas breach of contract cases. We will find a resolution to your contract dispute today. All you need to do is fill out the online form or call us at 9039991234 to schedule a Consultation.