Breach of Contract Texas Law
Every business runs on contracts. When those contracts are broken, the financial impact can be devastating. Whether you’re owed millions under a complex commercial agreement or defending against claims that could destroy your business, you need an attorney who understands both the black letter law of contracts and the practical realities of Texas business.
Mark Alexander has spent over 20 years enforcing and defending breach of contract claims in Texas courts. From representing international companies in complex disputes to recovering unpaid invoices for small businesses, we understand that every contract dispute threatens real business consequences. Our approach combines vigorous litigation when necessary with practical business judgment about when and how to resolve disputes efficiently.
When Contracts Are Broken: Understanding Breach in Texas
A contract is more than just words on paper—it’s the foundation of business trust. When one party fails to perform, refuses to pay, or delivers something different than promised, the resulting breach of contract can disrupt operations, damage relationships, and cost significant money. Texas law provides various remedies for breach of contract, but only if you act strategically and understand the complexities involved.
The Four Elements of Breach of Contract in Texas:
To prevail on a breach of contract claim in Texas, you must prove: (1) a valid contract exists, (2) you performed or tendered performance, (3) the other party breached, and (4) you suffered damages. Simple in theory, complex in practice. Each element involves potential disputes about contract interpretation, conditions precedent, substantial performance, and damage calculations.
Texas follows traditional common law for most contracts but applies the Uniform Commercial Code (UCC) to sales of goods. This distinction matters—the UCC includes gap-fillers, different statute of limitations, and unique remedies. Many business disputes involve both services and goods, requiring careful analysis of which law applies.
Types of Contract Breaches We Handle
Material vs. Minor Breaches
Not all breaches are created equal. In any breach of contract case, a material breach goes to the heart of the contract and excuses further performance by the non-breaching party. A minor breach may entitle you to damages but doesn’t excuse your own performance. Determining materiality often decides whether you can walk away from a bad deal or must continue performing while seeking damages.
Anticipatory Breach
When the other party clearly indicates they won’t perform before performance is due, you don’t have to wait for actual breach. Texas recognizes anticipatory repudiation as a breach of contract, allowing immediate suit when the other party unequivocally refuses to perform. This often arises in long-term contracts when market conditions change or relationships deteriorate.
Breach of Warranty
Commercial contracts include express and implied warranties. When products or services don’t meet warranted standards, buyers have remedies including repair, replacement, or damages. Texas law implies certain warranties like merchantability and fitness for particular purpose unless properly disclaimed. Warranty litigation often involves technical specifications, industry standards, and expert testimony.
Failure of Consideration
When one party doesn’t receive what they bargained for, the consideration fails. This differs from standard breach—it goes to contract formation rather than performance. Texas courts carefully examine whether consideration truly failed or whether the complaining party simply made a bad bargain.
Fraudulent Inducement
When contracts are obtained through fraud, victims can both rescind the contract and seek damages. Texas allows recovery of benefit-of-the-bargain damages (difference between value received and value promised) or out-of-pocket damages (what you paid minus what you received). Fraud claims also support exemplary damages and attorney’s fees.
Common Commercial Contract Disputes
Purchase and Sale Agreements
Whether buying a business, commercial property, or major equipment, purchase agreements involve significant money and complex terms. Disputes arise over representations and warranties, purchase price adjustments, earnest money, and closing conditions. We have experience handling purchase agreement disputes ranging from small asset purchases to complex multi-million dollar company acquisitions involving international parties.
Service Agreements
Professional services, consulting agreements, and master service agreements create ongoing relationships and recurring disputes. Common issues include scope creep, payment terms, deliverable disputes, and termination rights. Service agreement breaches often involve subjective standards requiring careful proof of industry norms and reasonable expectations.
Supply and Distribution Contracts
Texas’s central location makes it a distribution hub, generating numerous supply chain disputes. These include failure to deliver conforming goods, exclusive territory violations, minimum purchase requirements, and wrongful termination. Supply contracts often involve UCC provisions, CISG for international sales, and complex damage calculations including lost profits.
Construction Contracts
Construction disputes involve unique considerations including mechanics liens, payment bonds, and statutory requirements. We handle disputes between owners and contractors, general contractors and subcontractors, and disputes over change orders, delays, and defective work. Texas Property Code provisions add layers of complexity to construction contract litigation.
Licensing and Franchise Agreements
Intellectual property licenses, franchise agreements, and technology transfers create long-term relationships prone to disputes. These include royalty disputes, territory violations, quality control issues, and wrongful termination. Franchise litigation involves additional regulatory considerations under federal and state franchise laws.
Employment and Separation Agreements
Employment contracts, especially for executives, involve significant compensation and complex terms. Disputes include bonus calculations, equity vesting, severance terms, and post-employment restrictions. We handle both employer and executive-side disputes, understanding the business and personal stakes involved.
Partnership and Operating Agreements
Business divorce cases involve interpreting partnership agreements, LLC operating agreements, and shareholder agreements. Disputes include profit distributions, management rights, buyout provisions, and dissolution terms. These cases often involve both breach of contract and breach of fiduciary duty claims.
Damages and Remedies in Texas Contract Law
Direct Damages
Direct damages flow naturally from the breach of contract. In Texas, these include the benefit of the bargain—the difference between what was promised and what was delivered. Calculating direct damages requires careful analysis of contract terms, market values, and performance costs.
Consequential Damages
Consequential or special damages are those the breaching party should have foreseen when entering the contract. Texas follows Hadley v. Baxendale—consequential damages must be foreseeable and not speculative. Many contracts attempt to exclude consequential damages, but these exclusions aren’t always enforceable.
Lost Profits
Lost profits are recoverable when proven with reasonable certainty. Texas courts allow lost profits for established businesses with track records but scrutinize new business claims carefully. Proving lost profits often requires expert testimony from economists or industry specialists who can establish profits with reasonable certainty.
Liquidated Damages
Contracts may specify damages for breach, but liquidated damage clauses must reflect reasonable estimates of actual damages, not penalties. Texas courts examine whether liquidated damages were reasonable when made and whether actual damages are difficult to determine. Unenforceable penalty clauses can invalidate entire remedy provisions.
Specific Performance
When money damages are inadequate, courts may order specific performance—requiring actual performance of contract obligations. This remedy is available for unique property, including real estate and rare goods. Texas courts rarely order specific performance of personal service contracts but will enforce non-compete agreements through injunction.
Rescission and Restitution
When contracts are void, voidable, or obtained through fraud, rescission unwinds the transaction. Parties return what they received, restoring the status quo. Rescission requires prompt action after discovering grounds—delay can constitute waiver. Restitution prevents unjust enrichment when contracts fail.
Attorney’s Fees
Texas follows the American Rule—each side pays their own attorney’s fees unless statute or contract provides otherwise. Chapter 38 of the Texas Civil Practice and Remedies Code allows recovery of attorney’s fees for breach of written or oral contracts. Many commercial contracts include prevailing party fee provisions, raising stakes for both sides.
Defenses to Breach of Contract Claims
Statute of Limitations
Texas generally provides four years to sue for breach of contract, but many contracts specify shorter periods. The UCC provides four years for sale of goods but allows reduction to one year by agreement. Determining when claims accrue—at breach of contract or discovery—can be disputed.
Prior Material Breach
When the plaintiff breached first, they cannot recover for defendant’s subsequent breach. This defense requires proving plaintiff’s breach was material and preceded defendant’s breach. Careful timeline analysis and document review are essential to establish this defense.
Impossibility and Impracticability
When performance becomes impossible or impracticable due to unforeseen circumstances, breach may be excused. Texas recognizes this defense narrowly—mere difficulty or expense increases don’t qualify. COVID-19 has renewed focus on force majeure and impossibility defenses.
Waiver and Modification
Parties can waive contract rights through words or conduct. Accepting non-conforming performance without objection may waive breach claims. Modifications require consideration unless under UCC Article 2, which allows good faith modifications without consideration.
Statute of Frauds
Certain contracts must be in writing to be enforceable, including contracts that cannot be performed within one year, real estate sales, and goods over $500. Partial performance, admission, or promissory estoppel may overcome statute of frauds defenses.
Duress and Undue Influence
Contracts obtained through improper pressure may be voidable. Economic duress requires wrongful acts or threats that overcome free will. Undue influence involves abuse of confidential relationships. These defenses are narrow but powerful when proven.
The Contract Litigation Process
Pre-Suit Investigation and Demand
Before filing suit, we thoroughly investigate claims, review documents, interview witnesses, and analyze damages. A strategic demand letter can resolve disputes without litigation, but must be carefully crafted to preserve claims while opening productive dialogue.
Pleading Requirements
Texas is a fair notice pleading state, but contract claims require factual detail. We must identify the contract, specify provisions breached, describe performance, and articulate damages. Conditions precedent must be specifically denied or they’re admitted. Deficient pleadings face special exceptions.
Discovery Strategy
Contract cases are document-intensive. We pursue targeted discovery to obtain:
- Contract negotiations and drafts
- Performance documentation
- Communications about disputes
- Financial records proving damages
- Industry standards and customs
Discovery abuse is common in contract litigation. We protect clients from overbroad requests while aggressively pursuing necessary evidence.
Summary Judgment Practice
Many contract disputes are resolved on summary judgment when material facts aren’t disputed. Contract interpretation is a legal question for the court. We regularly file and defend summary judgment motions, understanding that well-crafted motions can end cases efficiently.
Trial Presentation
When cases reach trial, clear presentation is essential. Jurors must understand complex contracts and business relationships. We use demonstrative exhibits, timelines, and expert testimony to make complex contracts accessible. Themes must resonate with jurors’ sense of fairness while respecting legal requirements.
Industry-Specific Contract Expertise
Technology Contracts
Software licenses, SaaS agreements, and development contracts involve unique terms and rapid change. We understand agile development, milestone payments, acceptance testing, and source code escrow. Technology disputes often involve intellectual property issues adding complexity.
Energy Contracts
Oil and gas contracts include unique provisions like take-or-pay, dedication clauses, and complex pricing formulas. We handle joint operating agreement disputes, farmout agreements, and midstream contracts. Energy litigation involves specialized industry knowledge and regulatory understanding.
Healthcare Contracts
Medical practice purchases, hospital affiliations, and managed care contracts involve regulatory overlay from Stark Law, Anti-Kickback Statute, and state regulations. Healthcare contract disputes require understanding both business and regulatory implications.
Real Estate Contracts
Commercial leases, purchase agreements, and development contracts drive Texas’s growth. We handle disputes over earnest money, specific performance, lease defaults, and construction contracts. Real estate litigation often involves title issues, environmental concerns, and financing contingencies.
Financial Services Contracts
Loan agreements, security documents, and investment contracts involve complex terms and regulatory requirements. We handle lender liability claims, guarantee enforcement, and securities disputes. Financial contract litigation often involves choice of law and forum selection issues.
Strategic Considerations in Contract Disputes
Cost-Benefit Analysis
Not every breach justifies litigation. We analyze:
- Probability of success
- Likely recovery amount
- Collection prospects
- Litigation costs
- Business relationship impact
- Opportunity costs
Settlement Leverage
Most contract disputes settle. We create leverage through:
- Early case assessment showing strength
- Strategic motion practice
- Discovery revealing weaknesses
- Expert opinions supporting damages
- Fee-shifting provisions
Insurance Coverage
Many businesses have insurance covering contract disputes:
- General liability for third-party claims
- Errors and omissions for professional services
- Directors and officers for management disputes
We identify coverage and coordinate with carriers.
Preserving Business Relationships
Some contract disputes involve ongoing relationships. We understand when vigorous litigation is necessary and when collaborative resolution preserves valuable relationships. Business judgment, not just legal analysis, guides strategy.
Frequently Asked Questions
Protecting Your Contract Rights
When contracts are breached, quick action is essential. Evidence disappears, witnesses forget, and limitations periods run. Whether pursuing millions owed or defending against baseless claims, you need experienced counsel who understands contracts and business.
Mark Alexander brings 20+ years of experience, board certification in civil trial law, and a track record of success from defending against $17 million claims to recovering damages for breached agreements. We understand contracts are business tools, not academic exercises.
Schedule Your Consultation with a Breach of Contract Texas Attorney
Don’t let contract breaches threaten your business. Contact us for a confidential consultation about your contract dispute. We’ll analyze your position, explain options, and develop a strategic plan to protect your interests.
Contact Mark A. Alexander, P.C.
The Gild
8150 North Central Expressway, 10th Floor
Dallas, Texas 75206
Phone: (972) 544-6968
Fax: (972) 421-1500
Email: mark@markalexanderlaw.com
Web: commerciallitigationtexas.com
Web: oilandgasfraudlawyer.com
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Serving businesses throughout Texas including Dallas, Houston, Austin, San Antonio, Fort Worth, Plano, Arlington, and all surrounding areas.
The information provided on this page is for educational purposes only and should not be construed as legal advice. No attorney-client relationship is formed by reading this information. Each business dispute is unique and requires individual analysis by qualified legal counsel.
Past results do not guarantee future outcomes. Each case is unique and must be evaluated on its own merits. This information is educational only and does not constitute legal advice or create an attorney-client relationship.