Contracts: formation, review and disputes

Business & Civil Litigation

What a breach of contract claim requires in Texas.

• A valid contract — offer, acceptance, consideration, and terms definite enough to enforce.
• That the plaintiff performed, or was excused from performing.
• That the defendant breached.
• That the breach caused damages.

Two features of Texas law shape these cases. The limitations period for breach of contract is generally four years. And a party who prevails on a valid contract claim may recover reasonable attorney's fees, subject to statutory requirements including presentment — which changes the economics of a modest dispute considerably.

Where contracts fail

• Ambiguity. Scope, deadlines and payment triggers described loosely enough that both readings are reasonable.
• The statute of frauds. Certain agreements must be in writing to be enforceable, including many real estate agreements and contracts not performable within a year.
• Modifications by conduct. Years of doing it differently from what the document says, which becomes an argument about waiver and course of dealing.
• Boilerplate nobody negotiated. Forum selection, arbitration, limitation of liability, indemnity and notice provisions decide cases more often than the operative terms.
• Conditions precedent, particularly pay-when-paid and pay-if-paid clauses in construction subcontracts.

Before filing suit

Preserve the file, including emails and messages, and stop the informal negotiation that generates admissions. Check the notice and cure provisions — many contracts require written notice and an opportunity to cure before a claim can be brought, and skipping that step is a defence handed over for free. Make formal presentment of the claim, which is a prerequisite to recovering fees. And look at whether the agreement compels arbitration before a petition gets filed in the wrong forum.

Remedies

Expectation damages — what performance would have been worth — plus consequential damages where they were foreseeable and not excluded. Specific performance in limited circumstances, most commonly real estate. Rescission where the contract was induced improperly. Recovery in quantum meruit where work was performed without an enforceable contract. And attorney's fees where the statute allows them.

Common questions