A contract is at the foundation of virtually every successful commercial relationship—from employment agreements to contract with vendors and suppliers.
Unfortunately, even the most carefully crafted, well-prepared agreements can still be violated.
When one party fails to live up to their end of the bargain of a deal, they may be held legally liable through a breach of contract claim. These are complicated legal cases. Here, our Houston contract law attorney provides an overview of the most important things that you need to know about breach of contract in Texas.
How to Establish a Legally Enforceable Contract in Texas
In many breach of contract cases, the core of the legal dispute is centered around whether or not a binding agreement was ever actually formed. To be clear, in Texas, contracts are relatively easy to form.
They do not need to be formalized. In fact, an oral/verbal contract may be fully enforceable. That being said, a valid contract will only be formed when certain criteria are met. Specifically, the agreement must meet the following basic requirements:
- An offer was made;
- The offer was accepted;
- There was a ‘meeting of the minds’; and
- There was ‘consideration’ offered by each party.
In other words, a contract will only be formed if both parties have reached a genuine agreement on overall the terms and both parties are giving up something of value in exchange for something else of value.
If the parties never reached a common understanding of the terms, then it is likely that no contract was formed. When there is no ‘meeting of the minds’, there is no final deal.
Similarly, when there is no consideration, there is no binding contract. A one-way promise is generally not enforceable in Texas. In order to be a legally valid contract, each party must exchange value.
Breach of Contract Texas: The Required Elements
Businesses and business owners preparing to bring a breach of contract claim must be prepared to establish all required elements. In order to prevail in a breach of contract lawsuit brought under Texas law, you must prove the following four things:
- A legally enforceable contract was formed;
- You (the plaintiff) performed to your obligations under the agreement;
- The other party (the defendant) failed to perform to their obligations; and
- Your company suffered damages as a result of the defendant’s non-performance.
Simply put, Texas businesses can recover financial compensation or obtain other remedies through a breach of contract claim if they can prove that they suffered harm because the other party failed to stick to the terms of the agreement.
What Remedies are Available in a Breach of Contract Claim?
As a general rule, contract remedies are designed to be purely compensatory in nature. Texas courts do not “penalize” parties in breach of contract cases.
The non-breaching party is generally entitled to a remedy that will put them into the position that they would have been in if the breaching party had actually performed to their obligations under the agreement.
In practice, breach of contract remedies can come in many different forms, including:
- General Damages: In Texas, general damages are the basic financial losses that flow directly out of the breach of contract. These are the foreseeable losses suffered as a result of the contract breach. This includes things like reimbursement of costs.
- Special Damages: In some cases, Texas courts grant non-breaching parties special damages. These are damages that flow out of the breach. As an example, some businesses may be eligible to recover compensation for loss of profits in a breach of contract claim.
- Equitable Relief: Beyond financial compensation,
non-breaching parties may be entitled to some form of equitable relief. Some examples of equitable remedies include an injunction, specific performance of the contract, and revision or rescission of the agreement.
Finally, Texas law (Texas Civil Practice and Remedies Code § 38.001) allow for the recovery of reasonable attorneys’ fees. If your company suffered damages due to a breach of contract, you can seek financial compensation for your legal fees and other related court costs.
Discuss Your Case With Our Texas Contract Litigation Attorney Today
At The Curley Law Firm, our Texas contract law attorney is committed to providing sophisticated, effective legal representation to clients. If you are involved in a breach of contract dispute, we are here to help.
To set up your strictly confidential business law consultation, please contact our law firm right away. With an office in Houston, we represent business and business owners in Harris County and throughout the surrounding communities in Southeast Texas.