Consequences and Remedies for Breach of a Business Contract

What Constitutes a Contract Breach?

Contracts are agreements with terms and conditions that both parties must follow. If one party fails to fulfill their part of the agreement without a valid reason, it’s called a breach of the contract. There are different types of contract breaches, such as:

1. Non-Payment: This happens when someone doesn’t pay for services as the contract says they should.
2. Non-Delivery: When products or services aren’t provided as agreed upon or within the specified timeframe.
3. Violation of Restrictive Covenants: This occurs when someone does something that the contract explicitly forbids, like competing with the other party or soliciting their clients.
4. Misrepresentation: If one party hides important information or lies in a way that prevents the other party from getting the benefits they expected from the contract.

If you suspect a breach of contract, your ability to take legal action depends on whether the contract is legally valid. In Texas, a valid contract must include:

1. Offer: One party makes an offer.
2. Acceptance: The other party agrees to the offer.
3. Meeting of Minds: Both parties genuinely agree on the contract’s terms.
4. Mutual Consideration: Both parties exchange something valuable, like money for a service.

Contracts can be invalidated if the people involved lack the legal capacity to enter into them (like minors or people who aren’t mentally competent) or if the contract involves something illegal.

If you claim a breach of contract in Texas, you must prove:

1. The contract is valid, meeting the criteria mentioned above.
2. You performed your part according to the contract.
3. The other party materially breached the contract.
4. You suffered damages as a result of the breach.

Under Texas law, if you prevail in a breach of contract case, you can seek different types of damages, including:

1. General Damages: Lost profits directly connected to the breached contract.
2. Special Damages: Lost profits from other contracts or relationships due to the breach.
3. Liquidated Damages: These are predetermined compensation amounts for harm that’s hard to calculate but must be stated in the contract.
4. Nominal Damages: Small symbolic amounts that support recovering attorney’s fees.
5. Attorney’s Fees: You can recover these fees if the breach is proven, even for nominal damages. However, you typically can’t recover exemplary, punitive, or mental anguish damages in breach of contract cases.

If seeking monetary compensation doesn’t fully address the harm caused by the breach, you can pursue non-monetary remedies, including:

1. Injunction: A court order that stops someone from doing certain things during the dispute.
2. Specific Performance: Forcing the breaching party to fulfill their contractual obligations.
3. Rescission: Canceling the contract to prevent one party from unfairly benefiting, with consideration returned.
4. Reformation: Court intervention to correct contract mistakes to reflect the parties’ true intentions.

Sometimes, these remedies may already be specified in the contract, so it’s crucial to review the contract thoroughly.

When dealing with breach of contract matters, it’s advisable to consult with a lawyer experienced in contract drafting and dispute resolution. Legal professionals like Dike Law Group specialize in handling business contracts and disputes, providing guidance to help you navigate these challenges effectively.

Contact one of our attorneys at Dike Law Group and schedule a meeting so we can discuss at dorismeet.com.