Breach of Contract: Legal Remedies for Texas Business Owners
Contracts are the foundation of any business relationship. They outline expectations, terms, and protect parties when things go wrong. But what happens when one side doesn’t hold up their end of the deal?
In Texas, a breach of contract can really mess with your business. It can mean financial losses, missed opportunities, or damaged relationships. However, the law provides several remedies to help business owners recover and move on.
What Is a Breach of Contract?
A breach occurs when one party fails to fulfill the terms of a valid agreement. This can include failing to deliver goods, failing to perform services, or refusing to pay for them.
Texas recognizes both material and minor breaches of contract. A material breach goes to the heart of the contract, giving the non-breaching party the right to terminate the agreement and sue. A minor breach still violates the contract but does not destroy its overall value. Legal remedies may still apply, but termination may not be justified.
Common Remedies for Breach of Contract
When a breach occurs, Texas law offers a range of remedies. The appropriate one depends on the nature of the contract and the harm caused.
Compensatory Damages
This is the most common remedy. Compensatory damages are designed to put the non-breaching party in the position they would have been in if the contract had been fully performed. This includes direct losses, such as unpaid invoices, and indirect losses, provided they can be proven with reasonable certainty, including lost profits.
Liquidated Damages
Some contracts include a clause that predetermines the damages in the event of a breach. These are called liquidated damages. Texas courts will enforce these clauses if the amount is reasonable and not considered a penalty. If it’s too high, the court may strike it down.
Specific Performance
In cases where monetary damages are not enough, a court may order the breaching party to fulfill their end of the agreement. This is known as specific performance. It’s typically used when the subject of the contract is unique, such as real estate or rare goods.
Rescission
Rescission cancels the contract and relieves both parties of their obligations. This remedy is useful when the breach is severe or the contract was formed under fraud or misrepresentation. The goal is to return both parties to their pre-contract positions.
Restitution
Restitution focuses on preventing unjust enrichment. It requires the breaching party to return any benefit they received. It is often used alongside rescission.
Mitigating Damages
Under Texas law, the non-breaching party must make efforts to mitigate damages, meaning they should take reasonable actions to minimize losses. For instance, if a supplier doesn’t deliver goods, the buyer is expected to seek alternatives. If the party fails to mitigate, it could lower the damages they can recover.
Statute of Limitations in Texas
In Texas, the statute of limitations for most breach of contract claims is four years. This clock begins ticking from the date of the breach. Delaying action could result in your case being dismissed, regardless of its strength.
How a Business Attorney Can Help
Dealing with a breach can be a complex process. You may need help interpreting the contract, calculating damages, or negotiating a resolution. In some cases, litigation may be necessary. A knowledgeable attorney can evaluate your options and help protect your business interests.
Early legal advice often prevents minor problems from becoming costly lawsuits. It also ensures that any response complies with contract terms and Texas law.
Contact Coleman Jackson, P.C.
If your business has been affected by a contract breach, don’t wait to understand your rights. At Coleman Jackson, P.C., we help Texas business owners resolve disputes efficiently and protect their bottom line.
Contact our office today to schedule a consultation. Let’s discuss how we can help your business move forward after a breach.
Note: This law blog is written by the attorneys at Coleman Jackson, P.C., located at 6060 North Central Expressway, Suite 620, Dallas, Texas 75206, for educational purposes only. It does not create an attorney-client relationship between this law firm and the reader. You should consult with legal counsel in your geographic area regarding any legal issues affecting you, your family, or your business.
Coleman Jackson, P.C. | Tax Law, Business Law, Immigration Law | English: (214) 599-
0431 | Spanish: (214) 599-0432
