If your Texas business is dealing with legal contract issues, it is important to understand what a legally enforceable contract is, what you can do to enforce one when you have a contract claim, and how and when to get help. In this guide, you’ll learn how to determine if a contract is enforceable, what actions you can take if someone breaches, the types of damages you might recover, and the deadlines for legal action. Most importantly, you should contact an experienced business attorney, like the team here at Davis Business Law, to help you protect your business when you have a contract claim.
Key Takeaways
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When someone breaches a valid contract, sometimes a court will force them to perform the contract. Other times, the court may require them to pay damages to the party who the breach hurt. In contract law, you have to prove your damages, and they have to be actual economic damages – how much money did you lose because of the breach?
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While Texas contract law recognizes oral contracts, written agreements are best and required for certain types of contracts, such as those involving real estate, transactions over $500, or contracts that cannot be fully performed within a year.
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The statute of limitations for filing Texas contract claim is four years from the date of the breach, but you should probably file a lawsuit much sooner to mitigate damages and preserve evidence.
Understanding Texas Contract Law
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The enforceability of a Texas contract relies on several factors. The first one being mutual agreement between the parties, where they both accept and understand the definite terms stated in an offer. If both parties do not completely agree on the terms, then the contract is considered invalid. Most written contracts will satisfy this with the signatures. But even a signed contract can be invalid sometimes, like when the signature is forged or when the person signing never had authority to sign.
For a valid contract to be formed, there must be mutual consideration involved. This means that each party needs to give something valuable such as money or benefits in exchange for fulfilling their obligations under the contract – Bob gives Sally fifty widgets and Sally gives Bob $2000. If benefit only flows to one person in the “contract,” it may be invalid.
It is also crucial for individuals or entities to have the capacity and understanding of what they are committing themselves to. If one party lacks this ability due to various reasons, such as age or mental state at the time of making an agreement, the contract may be voided. This also applies to company employees or representatives who clearly do not have authority to enter into that type of agreement (i.e. a Walmart greeter does not have authority to sell the store). Therefore, it is important to determine whether there was indeed a valid contract established between all parties involved to avoid potential disputes regarding its validity.
A Written Contract is Important
A man’s word may be his bond, but get it in writing. Our attorneys handle far too many lawsuits involving “handshake deals.” And the biggest problem is that no one ever agrees over what they shook hands on, or even whether they ever had a valid contract at all. Put your agreements into writing and call us to help you draft the agreement.
Having a written contract simplifies dispute resolution as it eliminates any uncertainties and ambiguities. A written agreement clearly outlines the mutual understanding of both parties, including important details such as payment and services to be provided. While not required for all contracts in Texas, having a written contract is highly recommended to ensure easier enforcement.
A valid written contract between the parties can range from an official typed document to even something informal like notes on a napkin, so long as the writing contains agreed upon terms that have been signed by both parties involved. In short: whether it’s through formal documentation or just simple writing on paper. Signing off ensures authenticity when creating legally-binding agreements.
Texas contract law has a statute of frauds which requires that certain types of contracts, like those for land, for the sale of goods over $500, or those which take over a year to perform, must be in writing to be legally enforceable.
Do I have a Contract Claim: Proving a Valid Contract and That a Breach Occurred
The initial step in establishing a breach under Texas contract law involves providing evidence of the contract’s validity. Did the parties reach a mutual understanding of the terms of obligations to each other? If so, did one party perform and the other party fail to perform? If so, then there is likely a valid contract and a breach.
It is crucial to present proof of how the other side breached specific contractual terms. Under Texas contract law, the burden is upon the party alleging a contract breach to provide evidence of a valid contract, the breach of the contract, and damages the breach caused. Evidence is so essential, particularly of damages, and quickly hiring an attorney to help you identify and preserve evidence will help your chances of succeeding on your contract claim.
Evaluating the Breach
In Texas contract law, some breaches are material, and some don’t really matter. A material breach is a serious violation that significantly hinders the value of a contract, as opposed to minor breaches that do not prevent overall fulfillment.
For example, on a construction project, a material breach could be that a building was not constructed to the required designs. And an immaterial breach could be that the building was completed a few days late, but it did not matter because the owner was not yet prepared to move in.
Legal Remedies Available
In Texas, when a breach of contract occurs, the aggrieved party can seek resolution and compensation with various remedies. These remedies aim to restore the injured party to the position they would have been in had the breach not occurred. The following are some common remedies available:
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Compensatory Damages – This is the most typical remedy, where the non-breaching party can recover the money necessary to cover the losses incurred due to the breach.
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Consequential Damages – These damages go beyond direct losses and cover foreseeable damages resulting from the breach, like lost promised future revenue.
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Specific Performance – In cases where money damages are inadequate, a court may order the breaching party to fulfill their obligations as stated in the contract.
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Rescission – This remedy allows the parties to cancel the contract, returning both to their original positions before the agreement.
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Restitution – This remedy returns any benefits or property transferred to the breaching party under the contract.
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Liquidated Damages – Sometimes, contracts include a provision specifying damages in case of a breach.
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Attorney’s Fees – In Texas, state law provides that the prevailing party may be entitled to recover reasonable attorney’s fees and court costs.
It’s important to note that the availability and extent of these remedies may vary depending on the specific contract terms, the nature of the breach, and the applicable laws.
If you’re facing a breach of contract situation in Texas, seeking legal advice from a qualified attorney is essential to determine the best course of action.
Statute of Limitations for Contract Claims in Texas
Texas contract law requires that any breach of contract claim must be filed within four years from the date on which the breach occurred, unless it was not immediately recognized. This time frame is set by Chapter 16 in the Texas Civil Practice and Remedies Code.
This statute is based on several reasons.
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It ensures that disputes are resolved promptly while evidence is still accessible.
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It promotes stability and predictability in contractual relationships between parties involved.
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The goal is also to encourage timely resolution so both sides can move forward with certainty.
Summary
We have delved into the intricacies of contract enforcement in Texas. We’ve covered important topics such as understanding the essential requirements for a valid contract, the significance of written contracts, the challenges of oral contracts, and steps to take when faced with breach of contract situations.
The most important thing to remember is that contract law can be complicated and it is often very dependent on evidence. Contacting an attorney as son as possible is a good idea. Your attorney can help you identify and preserve the evidence you need to put on your best case. And your attorney can even advise you on how to limit damages (which the law requires you to do). If you have a contract claim, call or contact Davis Business Law today.