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  • Writer's pictureRic Armstrong

Breach of Contract Law in Texas

Texas follows the "economic loss rule" which means plaintiffs generally cannot recover damages for purely economic losses under a tort theory of negligence or strict liability. Therefore, contract law is the vehicle for recovering economic damages.

The elements required to prove a breach of contract claim are: 1) a valid contract existed between the parties, 2) the plaintiff performed or was ready to perform their contractual obligations, 3) the defendant breached the contract, and 4) the plaintiff suffered damages as a result of the breach.

Common breaches of contract include failure to deliver goods or services as promised, failure to pay, providing defective goods/services, anticipatory breach (indicating intent not to perform in the future), and prevention of performance by the other party.

Remedies for breach of contract in Texas may include monetary damages, specific performance (an order for the breaching party to fulfill obligations), rescission (canceling the contract), reformation (changing the contract to fix problems), and injunctions.

Damages are intended to place the plaintiff in the position they would have been in if the contract had been properly performed. Texas recognizes benefit-of-the-bargain damages and reliance damages.

Certain types of contracts like real estate purchase agreements may allow for liquidated damages or earnest money forfeiture if a party breaches.

In Texas, the statute of limitations for breach of an oral or a written contract is 4 years from the date of the breach.

Arbitration clauses in contracts may require the parties to resolve disputes through arbitration instead of filing a lawsuit. Arbitration awards can be converted to court judgments.

Texas contract law aims to protect parties' expectation interests and provide remedies for losses caused by a breach. The specific remedies will depend on the nature and circumstances of the contract and breach. If you have any questions regarding a breach of contract, contact us today to set up a consultation.


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