Business contracts come in all shapes and sizes, including leases, vendor agreements, franchise agreements, customer contracts, and many more. Sometimes, people don’t keep their contractual promises – or worse – they accuse you of not keeping your promise.
If your business has been sued for breach of contract, or you need to file a lawsuit because someone else breached, we can help. Read below for some information about breaches of contracts in Texas, and then call Davis Business Law’s team of contracts attorneys today for a free consultation.
Types of Contracts Recognized in Texas
Texas law recognizes various types of contracts. They can be broadly categorized into three main types: verbal contracts, implied contracts, and written contracts.
- Verbal Contracts – Also known as oral contracts, these agreements are verbal and do not involve a written document. In Texas, verbal contracts are generally valid and enforceable, provided they meet requirements, such as an offer, acceptance, consideration, and a clear intent to create a legally binding agreement. However, proving the terms of a verbal contract can be challenging, as there is no written record of the agreement. Texas also follows the “statute of frauds,” requiring written contracts for real estate transactions and agreements lasting more than a year.
- Implied Contracts – Implied contracts are not expressly stated in words but are inferred from the parties’ conduct or the circumstances surrounding their interactions. In Texas, the courts may recognize an implied contract if there is evidence that the parties intend to be bound by the terms, even without a formal written or verbal agreement.
- Written Contracts – Written contracts are formal agreements written down and signed by the parties involved. These contracts provide clear evidence of the terms and conditions, making it easier to enforce them in court. Texas law generally requires certain types of contracts, such as those involving real estate transactions or agreements that cannot be performed within one year, to be in writing to be enforceable.
Material Breach Vs. Minor Breach of Contract
In Texas law, distinctions between material and minor contract breaches are important. A material breach signifies a substantial failure in fulfilling a crucial aspect of the contract. This breach is so significant that it fundamentally changes the agreement’s core purpose. Consequently, the non-breaching party can often terminate the contract and pursue compensation for resulting damages.
Conversely, a minor breach is a less significant violation that doesn’t significantly alter the contract’s primary objectives. While the non-breaching party is still obligated to uphold their end of the contract, they can seek damages caused by the breach. Courts analyze factors like the extent of the breach, the parties’ actions, and whether they breached in good faith.
These distinctions determine the legal recourse available in case of a breach. Understanding the contrast between material and minor breaches is essential for navigating contractual disputes in Texas. An experienced attorney can help you determine what type of contract breach occurred and what your next steps should be.
Remedies for Breach of Contract in Texas
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:
- 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.
- Consequential Damages – These damages go beyond direct losses and cover foreseeable damages resulting from the breach, like lost promised future revenue.
- 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.
- Rescission – This remedy allows the parties to cancel the contract, returning both to their original positions before the agreement.
- Restitution – This remedy returns any benefits or property transferred to the breaching party under the contract.
- Liquidated Damages – Sometimes, contracts include a provision specifying damages in case of a breach.
- 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 Breach of Contract Claims
In Texas, the statute of limitations for a breach of contract claim is generally four years, meaning that a party seeking legal action due to a breach of contract must file a lawsuit within four years of the breach. If you do not file your lawsuit within this timeframe, the court may dismiss it based on the statute of limitations, unless certain exceptional circumstances apply.
Contact an Experienced Business Attorney
If you have a contract that you need to enforce or are defending a breach of contract claim, the experienced Texas contract attorneys at Davis Business Law can help. We stand ready to analyze your contract claim and guide your business regarding risks, rewards, and next steps. Call us at (469) 780-0761 or contact us online for a free consultation.