Suing for Breach of Contract in Texas: Laws, Remedies, and Defenses

Key Takeaways:

• A breach of contract occurs when one party fails to fulfill agreed-upon terms in a legally binding agreement.
• Suing for breach of contract in Texas requires proving the existence of a valid contract, adherence by the plaintiff, the defendant’s breach, and damages.
• There are different types of breaches, including material, anticipatory, and minor breaches, each affecting legal remedies.
• Texas law provides various legal remedies, including compensatory damages, specific performance, rescission, and restitution.
• Statute of limitations for breach of contract claims is typically four years but can be shorter if contractually specified.
• Defenses to breach of contract include impossibility of performance, fraud, mistake, duress, and unconscionability.
• Certain contracts must be in writing under the Texas Statute of Frauds, such as real estate and contracts that cannot be completed within one year.
• Alternative dispute resolution methods, such as mediation and arbitration, can resolve contract disputes outside of court.

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, an experienced contract attorney can advocate on your behalf.

Anticipatory Breach and Partial Breach

Beyond material breaches, anticipatory breach and partial breach are critical legal concepts.

• Anticipatory Breach: This occurs when one party signals, before performance is due, that they will not fulfill their obligations. The non-breaching party may seek legal remedies immediately rather than waiting for the breach to occur.
• Partial Breach: A minor breach where the contract is still largely performed, but a specific term is violated. Damages may be awarded, but typically, the contract remains enforceable.

If a party anticipates a breach, they can take proactive legal action rather than waiting for non-performance.

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

Defenses Against a Breach of Contract Claim

A defendant accused of breach of contract in Texas can raise various legal defenses, including:

• Lack of Capacity – If a party was legally unable to enter into the contract (e.g., due to age or mental incapacity), the contract may be void.
• Fraud or Misrepresentation – If one party was deceived into signing, the contract may be invalid.
• Mistake – A mutual mistake regarding an essential term may void the contract.
• Duress or Undue Influence – Contracts signed under coercion or manipulation may not be legally binding.
• Impossibility of Performance – If performance becomes impossible due to unforeseen events (e.g., natural disasters, legal changes), the contract may be discharged.
• Unconscionability – If a contract is grossly unfair to one party, courts may refuse to enforce it.
• Statute of Frauds – Certain contracts must be in writing under Texas law, including real estate contracts and agreements lasting more than one year.

Understanding these defenses can be crucial for both plaintiffs and defendants in breach of contract cases.

Remedies for Breach of Contract in Texas

If a breach of contract occurs, Texas courts may grant various legal remedies based on the extent of the breach and contract terms. These include:

1. Compensatory Damages – Covers actual financial losses incurred due to the breach.
2. Consequential Damages – Compensation for indirect losses foreseeable at the time of contract formation.
3. Liquidated Damages – Pre-agreed damage amounts specified in the contract for breach scenarios.
4. Specific Performance – A court order requiring the breaching party to fulfill contractual obligations, often applied in real estate contracts.
5. Rescission – Cancels the contract, returning both parties to their pre-contract positions.
6. Restitution – Requires the breaching party to return any benefit unjustly gained from the contract.
7. Punitive Damages – Awarded in cases of fraud or intentional misconduct (rare in contract cases).

Each case is unique, and the court will evaluate damages based on contract terms, performance, and evidence presented.

How to Sue for Breach of Contract in Texas

Filing a lawsuit for breach of contract in Texas involves several legal steps:

1. Determine Legal Standing
   • Ensure you have a valid contract and standing to sue as a direct party to the contract.
2. Gather Evidence
   • Collect emails, written contracts, invoices, witness statements, and communication logs proving the breach.
3. Attempt Pre-Litigation Resolution
   • Many contracts include dispute resolution clauses requiring mediation or arbitration before litigation.
4. File a Lawsuit
   • A petition must be filed in a Texas civil court detailing the breach, damages, and legal remedies sought.
5. Serve the Defendant
   • The defendant must be formally notified of the lawsuit through an official service process.
6. Trial and Judgment
   • If the case is not settled, it proceeds to trial, where a judge or jury determines liability and damages.

Legal action can be costly, so consulting an experienced contract attorney is advisable.

Frequently Asked Questions 

1. What is the statute of limitations for suing for breach of contract in Texas?

Texas law generally allows four years from the date of the breach to file a lawsuit, but some contracts specify shorter limitation periods.

2. Can you sue for breach of an oral contract in Texas?

Yes, oral contracts are enforceable in Texas unless they fall under the Statute of Frauds, which requires certain contracts (like real estate agreements) to be in writing.

3. What damages can I recover for a breach of contract in Texas?

You may recover compensatory, consequential, liquidated, and sometimes punitive damages, depending on the contract terms and breach severity.

4. Is mediation required before filing a breach of contract lawsuit in Texas?

Some contracts require mediation or arbitration before litigation. Otherwise, parties may voluntarily seek mediation to resolve disputes without court intervention.

5. Can I sue for attorney’s fees in a breach of contract case in Texas?

Yes, Texas Civil Practice and Remedies Code § 38.001 allows recovery of attorney’s fees in breach of contract cases, provided you prevail in court.

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