Contract disputes in the state of Texas can be extremely complex due to the high volume of business conducted in major cities such as Houston, Dallas, and Austin. The state of Texas is a business hub, and contracts are one of the most important components of the business relationships that help make Texas one of the most economically prosperous states in the country.
Understanding Material Breach and the Basic Principles of Contract Law
Material breach of contract is a complete inability to complete contractual obligations. The overall purpose of the contract is broken and the parties cannot fulfill the requirements of the contract. The Texas Supreme Court has ruled that material breach excuses the non-breaching party from being obligated to complete their contractual obligations. If one party commits a non-material breach, then the non-breaching party can only pursue a civil lawsuit for damages.
The party who did not initiate the breach can file a civil lawsuit against the party who breached the contract. However, material breach permits the party which did not breach the contract to cancel the contract as a whole. The following factors are important when assessing whether or not a breach is material in Texas:
- Whether or not the party who breached acted in bad faith or good faith
- The amount of money or time the breaching party has put into the contractual relationship
- Determining whether the breaching party will correct any problems with the contractual relationship
- Assessing whether or not the breaching party can receive financial compensation
- Evaluating whether or not the contract breach fractured the overall purpose of the contract
It is important to consider the context of any contractual relationship. The language of a contract is important, but the conduct of the parties is also important. Also, the relationship between the contractual parties can help a court determine if one of the parties committed a material breach.
Courts often analyze the course of performance, course of dealing, and usage of trade when analyzing cases involving breach of contract issues. The parties may have a long history of engaging in contracts, and this history will be relevant to any current breach of contract case.
Evaluating the Circumstances of Cases Involving Material Breach of Contract
Whether a contract breach constitutes a material breach is established by common law principles and case precedent in Texas state law. Judges analyze prior cases to determine if the case you are involved in involves the material breach of a contract.
One source of law is the Restatement of Contracts, which judges and attorneys use to assess whether a particular action constitutes a material breach of contract. Some factors relevant to the assessment include the degree to which a party will be deprived of the benefit they expected to receive from the contract. Also, courts will consider the degree to which the breaching party can cure their failure to perform under the terms of the contract. The standard of good faith and fair dealing is also relevant to questions regarding material breach of contract.
One of the most important components of contract law is the benefit of the bargain associated with a contract. Courts will attempt to ensure that parties still receive the benefit of the bargain even if one of the parties commits a material breach.
Also, legal scholars promote the idea of efficient breach to enable large corporations and other business organizations to breach contracts if it is more economically efficient than performing all of the terms connected to a contractual relationship. Both material breach and efficient breach are relevant to any assessment of a contract breach by any party in a legal dispute.
Five Examples of Material Breach of Contract
Many different acts may constitute a material breach of contract. Courts may scrutinize a series of acts to determine if one party committed a material breach. The following are five examples of material contract breaches.
Example 1: Residential Real Estate Seller Breaches
A home buyer may complete all of the required closing documents and pay the seller the purchase price, and yet the seller refuses to provide the deed and the keys to the purchaser.
Example 2: Residential Home Buyer Breaches
A home buyer refuses to pay the purchase price of a home after the seller completes all the closing requirements and is prepared to sell it.
Example 3: Seller Breaches a Contract for the Sale of Goods
A buyer may purchase a unique item, but the seller provides the buyer with a generic item that the buyer did not intend to purchase.
Example 4: Buyer Breaches a Contract for the Sale of Goods
A buyer may purchase raw materials from a seller, but the seller may not receive payment after delivery of the raw materials.
Example 5: Construction Company Breaches a Contract with a Homeowner
A married couple pays a construction company $10,000 down to replace the siding on their home within four months, but the company delays production by four months and the work is only 30 percent complete at the end of the four-month period.
Legal Remedies for the Material Breach of a Contract
Contract remedies exist to compensate parties and make them whole if one party breaches the terms of a contract. Many contracts contain provisions and clauses specifying which legal remedies are available to the parties in the event of a breach of contract. An attorney likely drafted the contract which is operative in your case, and if you seek legal representation one of the best things to do is have your attorney scrutinize the contract and determine which courses of action are available to you and the other party to the contract.
Our business attorneys focus on contract analysis in cases involving breach of contract issues. The discovery phase of these cases is critical because both sides can discover information regarding the breach and what caused one party to breach the terms of the deal. One party may not have lived up to the terms of the deal, and a judge or jury may need to determine the legal remedies relevant to the case. If one party unilaterally breached a contract and acted maliciously, then it is more likely that a judge or jury will rule in favor of the other party.
Contracts are not identical, and the terms of a contract need to be interpreted, not simply recited. One of the most fundamental aspects of the American legal system is the opportunities afforded to parties for interpreting and analyzing the language used in contracts. Boilerplate language may not be relevant to a breach of contract case, and in some cases, a party may have acted unconscionably in dealing with a party who was less sophisticated or knowledgeable about the terms of the contract in dispute.
Non-Material Breaches and Civil Damages
Parties to contracts are entitled to the benefit of the bargain. Each party can rely on the other party to perform their contractual obligations. The damages a party seeks are often associated with the benefit the party expected to receive under the contract. Oftentimes these are referred to as expectation damages. Other types of damages in contract cases include reliance damages and compensatory damages.
It can be extremely difficult to seek civil damages without having an attorney on your side who is experienced with civil litigation. Contractual disputes are often complex, and if you do not understand how to plead your legal claims then you will likely not recover the benefit of the bargain that you expected to receive under the contract.
Consulting with a Houston business attorney can help you understand what you can do to strengthen your case and ensure that you have the best chance of recovering civil damages in your case.
Different tools may be used to measure the amount of damages you are entitled to under the law. The performance of the contract terms by both parties will be critical to understanding what each party had performed up to the moment a breach of contract occurred. It is necessary to understand the facts of the case and how they relate to the legal strategies your attorney will employ to help you enforce your rights.
Contact Feldman & Feldman Today to Schedule a Consultation
Contractual disputes are often confusing and require the legal counsel of experienced breach of contract lawyers. The legal team at Feldman & Feldman, PC in Houston, Texas has the experience, knowledge, and skills necessary to help you enforce your contract rights. You do not have to stand alone as you try to enforce the terms of a contractual agreement. If you want to learn more about the benefits of retaining an attorney for your contract dispute, then contact us today to schedule a consultation.