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  • Writer's pictureRic Armstrong

What is the Breach of Contract Law in Texas?

Texas breach of contract laws provide a legal remedy in instances where one party fails to uphold the terms of a contract. A breach of contract claim is a civil action in Texas. For a successful lawsuit, the plaintiff alleging breach of contract must prove all these elements:

  • A valid oral or written contract exists. To be valid, a contract must contain an offer, acceptance of that offer, and consideration. Consideration means that each party offers something of value as part of the contract terms.

  • He or she adhered to the terms of the contract.

  • The defendant failed to fulfill the contract terms.

  • Damage occurred to the plaintiff because of this breach.

Material Breach

If a person is deprived of a specific contract benefit, the court may determine that a material breach has occurred. The defendant can attempt to prove that the plaintiff received the contract benefit based on the performance of the defendant and thus, no material breach exists. For example, he or she can attest that no valid contract existed or that the terms of the contract were illegal or vague.

To assess potential damages, the court will first examine the terms of the contract. In many instances, a business contract will specify the penalties for breach of contract. If this is not included in the contract terms, the court may award the plaintiff:

  • An order for the defendant to fulfill the contract terms as agreed, known as specific performance, common in real estate agreements that have been breached

  • Damages in the amount lost due to the contract breach, also called liquidated damage

  • Damages for time lost, including the time it takes to repair damages (loss of use)

  • Reimbursement for incurred expenses

  • Reimbursement for future lost time and money

  • Other damages as indicated in the contract

  • Consequential and incidental damages, given to compensate foreseeable losses

  • Compensation for loss of credit reputation that occurred as a result of the breach

  • Rescission, where the court cancels the contract and parties are no longer required to perform

  • Restitution, in which the parties return any gains from the contract

It must be proven that a valid contract existed, plaintiff made a good faith effort to fulfill their agreement, a breach of contract on the defendant's part occurred, and damages resulted in order for a court to determine an award. Whether you have been damaged by a breach of contract or been accused of a breach, one of our Plano business lawyers can advocate on your behalf.

Types of Contract Breach

Some common situations that constitute breach of contract include:

  • Material misrepresentation of fact, where a person is convinced to sign a contract based on misleading or untrue information. This means that something of importance was intentionally concealed, misrepresented, or withheld, thus voiding the contract.

  • Cases in which a contract was signed under duress, such as blackmail or threat, or where significant pressure or force was applied in order to obtain a signature

  • Inability to fulfill the contract based on uncontrollable circumstances, called impossibility of performance. Examples include the death of a necessary service provider, loss or destruction of necessary property, or passage of a law by which contract terms are no longer legal.

Contract breach claims must be filed within four years of the breach, although this is sometimes limited to two years by the terms of the contract. Claims brought after the designated time period are invalid and the court will automatically dismiss them.

Unenforceable Contracts

Some types of contracts are not legally enforceable by the court. Breaking these contracts does not constitute a breach as they are not valid. Examples include:

  • Mutual mistakes, such as errors in the contract or subject matter that cause one or both parties not to perform as obligated

  • Alternative payment in lieu of contract fulfillment accepted by the plaintiff, which discharges the original obligation

  • Mistaken belief, in which neither party understands the terms of the contract

  • Replacement of the original contract with a new agreement

  • Cases in which the defendant's action or lack thereof was approved by the plaintiff

  • Oral contracts in situations where a written contract is required, such as a real estate agreement

  • Contracts in which pricing, duration, or other required terms are missing

source: UpCounsel


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