Wright Commercial Litigation represents small and midsize businesses, as well as individual owners, investors, and consumers throughout the Dallas Fort-Worth area, including McKinney and Collin County, Dallas County, Denton County, and Tarrant County, in all types of contract disputes and often can do so on a hybrid contingency basis that greatly reduces the cost of litigation for those who have been wronged. If you or your business have suffered financial harm, loss, or impairment of rights due to a counterparty’s failure or refusal to fully perform, then you need experienced litigation counsel on your side to rectify the wrong that has occurred in your commercial contract dispute.
The firm’s principal attorney—Jason E. Wright—has extensive experience prosecuting and defending contract claims in state court, federal courts, and through arbitration when required. That gives him a unique grasp of the intricacies of Texas contract law, because he has dealt with virtually all issues at one time or another, and it makes him well-versed to anticipate how contractual terms will be interpreted by a court, along with all defenses that can be applicable depending on varying circumstances, to give you sound legal advice before ever heading into a contract fight.
That understanding and skill are vital not only to prevail in a lawsuit but also to advise you of the risks before significant expense is incurred. Wright Commercial Litigation can quickly evaluate any type of contract or agreement, whether it is a commercial, consumer, or business contract, provide an opinion as to its effect, while also conducting a cost-benefit analysis to help you decide whether it is worthwhile to bring or defend a suit in light of the economic factors and other considerations that matter most to you. If you have been wronged, the firm can also often offer to back up its assessment of your case by taking it on a hybrid contingency fee basis.
What Makes a Contract Enforceable?
To understand what constitutes a breach of contract, it is important to first know what a contract is: a legally enforceable agreement between two or more parties. In Texas, such a thing can be created in written or oral form (subject to the “Statute of Frauds” that requires certain types of transactions be in writing), or even implied by the circumstances. The main difference between your ordinary everyday “promise” that gets broken without consequence and a breach that can be enforced in court with damages is a bargained-for exchange of something of value to each side, or at least a detrimental change in economic position made in reliance on the word of another.
A valid contract thus requires each of the following elements:
- An offer (or counteroffer) by one party
- Acceptance by the other party in strict compliance with the terms that were offered
- An agreed exchange of “consideration” (something of value) between the parties
- Execution and delivery of a written contract—if required by the Statute of Frauds or terms of the offer—with intent that it become mutually binding
A breach occurs when, simply put, one side fails to fulfill its obligations in accordance with the terms of an enforceable agreement (and when lacking any of the legal defenses that may be available). Wright Commercial Litigation has successfully represented clients for both consumer and commercial contract disputes throughout Collin County, Dallas County, Denton County, and McKinney.
Do I Have a Valid Breach of Contract Claim?
To prevail in an ordinary breach of contract action, the person bringing suit (the plaintiff) must generally prove each of the following:
- There was a valid and enforceable contract between the parties
- The plaintiff materially performed its contractual obligations (or was excused from having to do so because the other side was required to perform first)
- The defendant failed to materially perform its obligations
- The plaintiff suffered harm (monetary loss or otherwise) due to the breach
Even if a valid contract failed to completely form under the standards previously outlined above, you may still be able to recover the reasonable value of any goods or services that were provided based on legal doctrines known as “quantum meruit” and “unjust enrichment,” or at least receive reimbursement for out-of-pocket expenses incurred in justifiable reliance on the expectation of a contract or inferred promise (known as “promissory estoppel”).
Contracts are formed and promises broken every day across the world, with a dispute sometimes turning on the meaning of a single word in the contract. There are far more complexities than could ever be adequately covered in a single article and each contract is unique in that it may be an issue never decided before. You can trust Wright Commercial Litigation to protect you and your interests no matter the type of contract, industry, or complexity involved with a breach of contract, and often do so on a hybrid contingency basis with the firm getting paid in full only if obtaining a recovery.
Important Factors Relevant to a Breach of Contract Claim in Texas
A contract can be breached in innumerable ways with not all treated equally under Texas law. Some of the circumstances considered whenever a contract is violated may include:
Minor v. Material Breach
A minor (or nonmaterial) breach allows the plaintiff to recover damages that result, if any, but does not justify the plaintiff ceasing performance altogether, whereas a material breach gives the harmed party the option to stop performing and sue for all expectation losses as well. A material breach further allows the plaintiff to choose whether to sue for breach or rescind the contract altogether as if it had never existed. The economic outcome may differ substantially and so you should carefully consider each option to determine what provides a complete recovery.
Breach by Rendering Performance Impossible
In addition to breaches that occur by one side neglecting (or flat-out refusing) to perform their obligations under an agreement, a contract can be breached by taking actions that make carrying out its obligations impossible. The defendant can do this by making its own performance impossible or hindering the other party from carrying out their duties. However, some unforeseen events that truly make performance impossible or impracticable without fault of either party can be a complete defense.
An anticipatory breach occurs when one side indicates through words or actions (or inaction) that it will not fulfill the duties owed under a contract, and is known also as “repudiating” the agreement. Such repudiation must be absolute and unconditional or at least constitute a refusal to provide reasonable assurances of the intent to perform after a specific demand for assurance is made. The plaintiff can accept a repudiation by express words or changing its position in reliance to sue for damages right away, or wait until the time for performance has passed (e.g., to make sure the repudiation is real) and then sue for the losses that accrued in the meantime, subject of course to the obligation of all parties to mitigate (or minimize) damages whenever reasonably possible.
A breach of the implied duty of good faith and fair dealing can occur when a party fails to act honestly with good intentions and thereby deprives the other of the benefits of a contract, even if not breaching a literal term of the agreement. Unlike other states, however, Texas does not recognize such an implied obligation for all contracts in general. Normal commercial agreements are enforced instead according to the parties’ intent as reflected by the plain language of the terms. Bad faith claims in Texas are limited to contracts that involve or create a “special relationship” between the parties involving a recognized imbalance of power, such as those with an insurance company or the duties that an executive rights holder owes to the mineral interest owner in oil and gas leases or royalty situations.
What Are the Remedies for a Breach of Contract in Texas?
A plaintiff who prevails in a contract suit may be entitled to several different types of damages, including:
- Economic damages designed to put the injured party in the same position it would have been if no breach occurred, which can protect one or more of three recognized interests: an “expectation” interest (benefit-of-the-bargain); a “reliance” interest (out-of-pocket damages); or a “restitution” interest (quantum meruit or unjust enrichment).
- Consequential damages may provide further compensation to an injured party for incidental losses that were not necessarily expected but were a reasonably foreseeable consequence of a breach. For example, damages for loss of related business or lost profits, costs of delay, loss of use, fair rental value, costs of mitigation, substitute performance, loss of credit or financing, loss of time, and loss of goodwill or reputation are all harms that may consequentially flow from a breach.
- Liquidated damages set the amount of compensation for a breach in advance by agreement made in the contract itself. These are valid if the contract as a whole was not void and the harm caused was difficult to estimate at the outset (such as for violation of a confidentiality or non-disparagement provision) and the amount of liquidated damages were a reasonable forecast at time of the contract. Liquidated damages are not enforceable, however if designed to be or acting as a penalty to deter breach, since parties are allowed to break a contract so long as they pay damages.
Additional “equitable” remedies that may be available for breach of a contract include:
- Specific performance, or an order directing the breaching party to fulfill and perform its obligation when monetary damages are unavailable or inadequate due to the property or goods having a unique, special, or scarce character, such as real estate, pieces of art, or shares of stock in a closely held corporation.
- Rescission, which invalidates a contract, is a remedy that returns all consideration (or value) to the parties, and puts them back in the position they were prior to signing the contract. Rescission is an option with a total breach of a contract, fraud, or a mistake (mutual or unilateral), so long as the plaintiff did not willingly continue to accept benefits of the contract and offered to return all consideration once becoming aware of the fraud, mistake, or total breach.
- Reformation is used to modify the terms of an agreement (rather than rescind it in whole) to reflect the parties’ true intentions when there was a legal mistake, or in some instances can be available when a statute prevents enforcement of part of a contract as it was originally written.
Other rights you may have in connection with a contract dispute include:
- Declaratory judgment, which is a procedure allowing a court to construe or determine the validity and meaning of a contract’s terms, or rights, status, or legal relations. A declaratory judgment may be issued even before a breach occurs, so long as there is a threat of imminent harm or real dispute that would be resolved.
- Interest can be recovered on both a pre-judgment and post-judgment basis to compensate the harmed party for its loss of use of money owed as damages.
- Court costs are official charges related to prosecuting a lawsuit and not usually all the expenses of litigation (unless provided for as such in the contract itself or a statute).
- Attorney fees are recoverable in Texas for enforcing a contract but may also be provided for by the contract itself to allow an expanded recovery (to the “prevailing” party or otherwise).
An Expert Attorney Resolving Contract Claims in the Dallas-Fort Worth Area of Texas and Beyond
Regardless of whether your contract is standard form agreement (like with a home or real estate purchase) or a highly complex variable contract (such as a private equity investment with numerous representations and warranties), it takes a skilled business litigation attorney to understand and enforce your rights. Wright Commercial Litigation has a history of achieving favorable outcomes not only for routine contract disputes but also those that involve novel, complex, or unique terms and consequences. The firm has handled commercial contract disputes throughout Dallas, McKinney, and the rest of Texas.
The firm takes pride in providing exceptional value no matter the industry by taking many contract cases on a hybrid contingency basis, and is adept at resolving disputes efficiently at either the bargaining table by negotiated resolution, in litigation through a judgment at trial, or by means of alternative dispute arbitration forum, all the while guiding you with clear and understandable explanations and advice.
Contact the firm here to request an initial consultation on your breach of contract dispute.
Wright Commercial Litigation serves residents throughout Texas, including in McKinney, Collin County, Dallas County, Denton County, and Tarrant County, with business, insurance, commercial contract disputes.