Contracts form the foundation of all economic transactions, whether international commercial deals or weekly mowing of the front lawn.
However, things don’t always go as planned.
Therefore, when you rely on the other party to perform and they fail to do so, there could be a breach of contract and a claim for damages.
In that event, what do you do? In this article, the Texas business law attorneys atMassingill will go over the details of breach of contracts in Texas.
If you have questions or would like to schedule a free consultation, contact us today. Our business attorneys in Texas are ready to help.
Elements of Texas Breach of Contract Law
To start, let’s look at the elements of a breach of contract claim. Texas breach of contract law has a very straightforward test.
A claim exists when:
- There is a valid contract between the parties,
- You have performed your obligations under the contract,
- The other party has not performed their obligations under the contract, and
- You have suffered damages.
This is a great starting point to understand whether you have a claim for breach of contract in Texas. We will go through each element in more detail below.
What Is a Valid Contract?
The Texas test for a valid contract is:
- One party makes an offer
- The other party accepts the offer
- There is a meeting of the minds on the transaction
- Consideration is exchanged
Again, we will flesh out the details a little bit for each of these four elements. First, an offer must be clear and intentional, giving the other party a chance to accept it.
Second, the acceptance must be unconditional (e.g., an acceptance with a condition is a counter-offer and not an acceptance).
Third, for a meeting of the minds, the parties must have come to the same agreement on the subject matter of the contract.
Finally, “consideration” is a legal term of art that essentially means that each party has given something up in exchange for a future benefit.
For example, consideration could be money, a good or service, a promise to do something, or a promise not to do something.
As a brief side note, most contracts can be oral. Even so, certain contracts must be in writing to be enforceable (e.g. contracts for real property, performance that requires a year or more, etc.).
Consult with a Texas contract lawyer today to learn the nuances of how Texas contract laws can impact your case. Contact us online or give us a call at (512) 410-0343 to schedule your free consultation.
You Have Performed Under the Contract
Before you can seek compensation for a breach of contract, you have to prove that you had performed all your obligations under the contract at the time of the breach.
This point is important—if you are also in breach of the contract, the other party can use that as a defense for its failure to perform.
The Other Party Has Not Performed Under the Contract
This part of the test is extremely important. A breach of contract means the failure to perform has deprived the non-breaching party of the benefit of the contract.
Examples of a breach of contract may be:
- Shipping the wrong widgets
- A delivery that arrives a week later than contracted
- The failure to repaint the outside of a house as promised in a sales contract
These errors cut straight to the heart of the contract and what was bargained for.
Also bear in mind that even though the other party has not performed, you may not be excused from performing yourself under the contract unless the breach by the other side was “material.”
Material means that the very purpose of the contract is destroyed and non-performance renders the rest of the contract useless.
You Have Suffered Damages
The first question in any breach of contract case is, What are the actual damages? In other words, can you quantify, in economic terms, how much the breach of contract has cost you?
This cost can take the form of:
- Lost income
- Lost business opportunities
- Property damage
- Repairs
This list is not exhaustive, but it does give you an idea of what the law is looking for. Thus quantifying your damages is essential. Even so, actual damages are not the only damages you can seek.
There are other types of damages, including:
- Reliance damages: If you ended up in a worse position because you relied on the other side’s promises, you can seek compensation for losses you suffer as a result. For example, if you contracted to buy equipment and you had to pay another seller more to obtain it, you could seek compensation for the difference.
- Specific performance: If money damages won’t be able to fairly compensate you for your loss, you can ask the court to order the other party to fulfill their obligations under the contract. For example, if you had a contract to buy your dream home and the seller breached the contract by backing out, the court may order them to complete the sale.
- Liquidated damages: Sometimes a contract will include a provision outlining a fixed amount that a breaching party will pay. This typically occurs when the parties anticipate that the damages for failure to perform will be difficult to qualify.
Finally, there are still rarer forms of damages such as “restitution,” “quantum meruit,” and “equitable performance.” Your attorney can advise you on whether these types of damages might apply to your claim.
The Other Party Breached the Contract – Now What?
If you think the other party breached the contract, then there are some very concrete steps you can take to protect your interests.
Start with the contract itself and check its terms. First, is there a provision that a party must give notice of a breach to the other party?
This is a relatively common contract clause meaning that if no notice is given, there may not yet be a breach.
Second, what form does notice need to take—written or oral? Notice provisions are critical because failure to give proper notice can be a defense by the breaching party.
Third, is there a cure period? Some contracts give a party time to cure (i.e., “fix”) a breach. If there is a cure period the breaching party is entitled to cure before they are considered in breach.
Fourth, do you have a duty to mitigate the damages? Some contracts, and some laws, require that you make a reasonable attempt to reduce the damages of the breach (e.g., putting goods back on the market).
If your contract has any of these requirements, be sure to follow them to protect your rights.
Contact a Texas Business Law Attorney Today
If you have suffered a breach of contract in Texas, Massingill knows the ins and outs of Texas contract law.
Our business law attorneys can help you navigate a breach of contract matter and give you the best chance of being made whole and getting the benefit of the bargain you made. Contact us online today or call (512) 410-0343.
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Joshua Massingill
Joshua Massingill is an attorney practicing in Austin, Texas. He serves on the Texas State Bar’s Law Practice Management Committee, the Leander Educational Excellence Foundation (LEEF) Board of Directors, and the Success-Werx Board of Advisors. He mentors young entrepreneurs in Leander ISD’s INCubatorEDU program and is active in his church.
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