Contracts are a vital key to many business relationships. These agreements specify certain legally enforceable rights and obligations of two or more parties and can cover many topics. In a perfect world, all parties fulfill their responsibilities detailed in the contract, but this is not always the case. An individual or entity may be liable for a breach of contract claim when it fails to meet its obligations. These cases often become complicated and confusing, requiring the assistance of an experienced breach of contract lawyer.
Elements of a Contract
A contract must meet certain elements to be legally enforceable. However, meeting these elements isn’t always as formal as people expect. While many assume a contract needs to be in writing to be valid, some verbal agreements can be legally binding as long as they meet the following basic requirements:
- Offer and acceptance. There must be a clear offer by one party and an unambiguous acceptance by the other, demonstrating mutual agreement on the same terms.
- Consideration. Both parties must exchange something of value such as money, goods, or services. This exchange ensures each side incurs a legal detriment or obligation should they fail to meet their side of the bargain.
- Mutual consent. The agreement must be voluntary and not obtained through fraud, duress, misrepresentation, or mistake.
Depending on their scope and the subject matter involved, there may be additional requirements for contracts. For example, contracts for the sale of goods valued at $500 or more generally require a written document or confirmation to be enforceable.
What Is a Breach of Contract?
Put simply, a breach of contract occurs when one party fails to perform any obligation outlined in a valid and enforceable agreement without a legal justification. To prove a breach of contract, a party must meet the following elements:
- Existence of a valid contract. The foundation of a breach of contract claim is the existence of a valid and enforceable contract. This contract can be written, oral, or implied by the conduct of the parties, as long as it meets the necessary legal requirements, such as offer, acceptance, consideration, and mutual consent.
- Failure to perform. The non-breaching party must demonstrate the other party failed to fulfill their obligations as outlined in the contract. The party could show failure to deliver goods or services, incomplete performance, or non-payment.
- Damages were incurred. The harmed party must demonstrate that they suffered damages due to the breach, which can be compensatory, consequential, or punitive if the breach was particularly egregious.
In short, when one party breaks their contractual obligations, the harmed party can seek compensation through a Texas breach of contract claim.
What Is a Material Breach of Contract?
One issue to consider when weighing whether to bring a breach of contract claim is if the breach was material. A material breach of contract fundamentally undermines the core of the agreement, preventing the harmed party from receiving the expected benefits. It goes to the heart of the contract’s purpose, causing significant harm or rendering its objectives impossible. On the other hand, a non-material breach, while still a breach of the contract, doesn’t critically affect its essence. Non-material breaches typically result in minor inconveniences or partial failures to meet contractual obligations, allowing the injured party to seek compensation for damages but not necessarily discharge the contract. Material breaches warrant legal remedies, such as contract termination, whereas non-material breaches often lead to claims for damages without nullifying the entire agreement.
What Damages are Available in Breach of Contract Cases?
Under Texas contract law, the non-breaching party may obtain a remedy that will restore them to the position they would have been in if the breaching party had performed their obligations under the agreement. Several types of damages may be available to the non-breaching party, including.
- General damages. Reimburses the non-breaching party for the actual and direct losses suffered due to the breach, placing them in the position they would have been in had the contract been fulfilled.
- Special damages. These damages cover indirect losses resulting from the breach, such as lost profits or additional expenses incurred due to the breach.
- Punitive damages. Under certain circumstances, Texas courts may award punitive damages to punish the breaching party for willful, malicious, or fraudulent conduct.
In unique cases where monetary compensation isn’t sufficient, a court may order the breaching party to fulfill their contractual obligations, also known as special performance. It is also important to note the breach of contract statute of limitations, which is the period the non-breaching party has to file a suit. In Texas, this is generally four years from the date of the breach.
Contact a Texas Breach of Contract Attorney Today
If you find yourself dealing with a potential breach of contract case, call the business litigation team at the Curley Law Firm today. Call our office or fill out our online contact form to set up a consultation.