Breach of Contracts/Contract Disputes
Houston Breach of Contract Attorneys
Resolving Contract Disputes and Breach of Contract Litigation in Texas
Contracts are at the heart of business transactions. At Hendershot Cowart P.C., our breach of contract lawyers can help you and your business prevent or mitigate any resulting damage from a breach of contract when a partner, vendor, or third party violates the terms of a contract or fails to perform any promise contained in the binding and legally enforceable contract.
Founded in 1987, Hendershot Cowart P.C. is a premier business law and business litigation law firm serving businesses throughout the state of Texas. The contract law attorneys at Hendershot Cowart P.C. leverage decades of experience to help businesses both litigate breach of contract cases and defend against them. We value our important role in the well-being of our clients’ businesses, and will work zealously to protect your interests, manage risks, and reduce your exposure to damages or the inability to recover. We know how to win these cases.
On This Page:
- What are the Different Types of Contract Breaches?
- Types of Contract Disputes We Can Help With
- What Remedies Are Available for a Breach of Contract?
- Protecting Your Interests in a Breach of Contract Case
- Licensing Agreement Disputes and Violations
- Has a Third Party Interfered With Your Business Contract?
- Tortious Interference: Contracts vs. Business
What are the Different Types of Contract Breaches?
Contracts are created to establish the responsibilities and expectations of parties that choose to engage in business transactions with one another, whether they involve business to business transactions, construction or licensing agreements, or the employee / employer relationship. They also provide for recourse and remedies for when things don’t go as planned.
The three types of contract breaches that can lead to disputes include:
- Non-material breach
- Material/fundamental breach
- Anticipatory breach
Non-Material Breach of Contract
Also referred to as a partial breach, a non-material breach occurs when one party fails to perform a minor, nonessential obligation stipulated in a contract, even when the specified product or service is ultimately delivered. This may occur when one party meets all demands made by the other party in a contract, but completed them a day after completion was requested.
Unless there were terms in the contract specifying deadlines or that time was of the essence, a reasonable delay would be considered a minor breach. In cases involving a non-material breach of contract, the non-breaching party is entitled to damages, if it can be shown they actually suffered damages, but is not typically prevented or excused from performance.
Material / Fundamental Breach of Contract
A breach of contract is considered material if the breaching party failed to complete terms fundamental to the contract’s satisfactory completion. A material breach may mean the contract cannot be completed.
Determining whether a breach of contract can be considered material requires a review of the unique facts involved, including the extent to which the breaching party has already performed, whether the breach was a result of negligence, an honest mistake, or an intentional act, the likelihood of the breaching party performing the rest of the contract, how the non-breaching party was deprived of benefits they reasonably expected, and whether the non-breaching party can be adequately compensated.
A material breach of contract may provide the right to sue for damages if damages can be shown. If damages cannot be reasonably calculated – such as in the case of theft of trade secrets or violations of non-compete or non-disclosure agreements – the non-breaching party may seek an injunction to stop the other party from continuing the breach. Depending on the nature of the relationship between the two parties, the non-breaching party may also choose to request a court order requiring all parties to complete contractual terms, or re-form the contract to facilitate performance and completion by the other party.
Anticipatory Breach of Contract
An anticipatory breach of contract, or anticipatory repudiation, occurs when it becomes clear that one party will not meet its contractual obligations, such as when one party indicates it cannot uphold its part of the contract or refuses to do so. This allows the non-breaching party to terminate the contract and sue for damage prior to the breach.
Mitigating damages and avoiding unnecessary costs in cases involving an anticipatory breach requires swift action by the non-breaching party. In construction contracts, for example, a non-breaching party can hire a new contractor to complete a project when the first indicates they do not have the ability to perform in order to mitigate damages, and then sue for what was lost.
Types of Contract Disputes We Can Help With
Our law firm represents both plaintiffs and defendants in a wide range of breach of contract disputes, including:
- Purchase agreements
- Noncompete and trade secrets
- Corporate "squeeze-outs"
- Corporate/partnership disputes
- Insurance coverage disputes
- Shareholder disputes
- Tortious interference with contracts or prospective clients
- Tortious interference with business relationships
- Construction contracts
- Corporate control agreements
- Management agreements
- Billing agreements
- Shareholder oppression
- Declaratory judgment actions
- Prompt payment of claims
- Trust fiduciary litigation
- Intellectual property breach of contract and licensing agreements
- Collection of payments for medical services against insurance carriers
- Software agreements
- Oil and gas agreements
- Distribution agreements
- Franchise agreements
- Development agreements
- Manufacturing agreements
To speak with our contract dispute team call (713) 909-7323today.
What Remedies Are Available for a Breach of Contract?
Under Texas law, remedies for a breach could include:
- Financial compensation or "damages", such as actual, reliance, restitution and liquidated damages; and/or
- Non-monetary or "equitable remedies", such as asking the court to order the other party to fulfill their contractual duties.
Financial Damages Available for a Breach of Contract in Texas
Non-breaching parties may be entitled to a recovery of damages when the other party breaches their contract. Because damages are dependent on the individual facts of a contract, contracts must be evaluated to determine if they are available and what remedies are most appropriate. When recoverable damages are available, they may include:
- Actual damages – Actual damages are the monetary damages incurred as a result of a contract breach, such as lost revenue. This is known as your expectation damages and it refers to your financial position should the contract have been fulfilled. Expectation damages are measured by any diminution in value, as well as consequential and incidental damages.
- Reliance damages – Your reliance interest is a measurement for compensation when you suffer financial losses for relying on the party whose lack of contractual performance cost you money.
- Restitution damages – Restitution is awarded to restore you to the position where you were before the contract was formed and breached by the other party, and when you conferred a benefit with the expectation that they would perform. Restitution is calculated based on how much the breaching party gained.
- Quantum meruit – Quantum meruit refers to the recovery of the value of services performed which benefited the other party. The phrase is Latin for “as much as he deserved.”
- Liquidated damages – Liquidated damages are agreed upon during the formation of a contract, and entitles the non-breaching party to recovery for a specific breach. These are common in construction contracts where there is late performance.
- Specific performance – When monetary damages do not make a non-breaching party whole, the breaching party may be required to perform a specific duty, often the contractual duty that was originally agreed upon.
What Are the Equitable Remedies Available for Breach of Contract in Texas?
What if money damages alone can't make things right? In that case, you may be entitled to what is known as an “equitable remedy.” In Texas, in addition to suing for financial damages, there are four available equitable remedies for breach of contract disputes:
- Rescission. Rescission is an agreement to void the contract and return both parties to the position they were in prior to the agreement. When the court grants rescission as a remedy, the contract and the parties’ rights and liabilities under it are cancelled, and any money exchanged must be returned. This remedy for breach of contract is not available if substantial performance on the contractual obligations have already been completed by one party or another.
- Specific Performance. Another option is to go to court and ask for specific performance, namely ask the court to order the breaching party to do everything that was promised. A court will not order specific performance as a remedy for breach of contract unless it can effectively oversee compliance with the order. For example, a court will not likely order a party to perform a series of activities over an extended period.
- Reformation. Reformation is essentially agreeing to a different deal. If one party breaches the contract, the other party is no longer bound by the agreement. But they wouldn't have entered into the agreement in the first place if they didn't have mutual interests. Reformation allows the contract to be tweaked or "re-formed" so that both parties want to comply with the terms. It’s a way of clarifying a contract that was based on a misunderstanding, a mistake, or one party's failure to disclose all the relevant information.
- Injunction. An injunction is a court order that tells a party either to do something or refrain from an action that would be harmful. This remedy is a way of maintaining, or restoring, the status quo.
When you work with Hendershot Cowart P.C., you work with our entire legal team. Our clients are backed by attorneys with more than 100 years of combined legal experience in Texas contract law,business fraud, and other types of business disputes. We are very familiar with what it takes to win a breach of contract lawsuit. We are here to guide you every step of the way – whether the contract dispute is resolved through mediation, arbitration, or litigation.
Our contract law attorneys also specialize in drafting, reviewing, and negotiating business agreements and contracts, handling thousands of such matters each year.
Protecting Your Interests in a Breach of Contract Case
There is no one strategy to win a breach of contract claim; every case is different. There are, however, a few critical steps to take to make sure your contracts are enforceable and your rights are protected. If your contract is breached and you are forced to bring legal action, these steps will help protect your interests:
- A clear, detailed contract. A carefully crafted, unambiguous contract is a significant step in being clear about the duties and responsibilities of each party. Make sure the terms are very clearly defined, and that they are customized to your situation. Don’t simply turn to the internet and find a form to do it. They are not tailored to your particular needs and many times are unenforceable or cause more harm than good.
- Negotiations. Establishing ground rules, such as in the event of a disagreement and how it should be resolved, is important when negotiating the contract. This includes a full assessment of where a dispute will be resolved, what laws will apply, recoverable damages, legal definitions, and more.
- Documented performance. Performance is a critical aspect while a contract is being fulfilled. If you are on the side contractually obligated to perform, document what you are doing and that you have fulfilled your contractual duty. If you are on the other side, also document any problems with performance, as you will need to insist on performance when the other party is consistently performing under the contract. This creates favorable evidence.
- Evidence. Evidence needs to be truthful, and it should always be preserved. Evidence will be important to demonstrating that one side performed in accordance to a contract, while the other did not.
- Witnesses. Successful cases require someone who has seen, and can speak from firsthand experience, relevant facts related to the breach of contract. This can include expert witnesses, or individuals who had direct or indirect involvement. Witnesses will also need to be evaluated to ensure they are as credible as possible.
- Timeliness. The statute of limitations, or the time in which a claim must be brought before it will be barred by law, will run when the start of the action accrues; the time when you knew or should have known there was a breach of the contract. In Texas, that statute of limitations is 4 years.
Many of the same steps apply for defendants who have been accused of breaching a contract. There are also many affirmative defenses, including ambiguous contracts, mutual mistakes due to a lack of clearly defined conditions, being fraudulently induced into a contract, or estoppel, which prevents plaintiffs from making claims that go against their prior positions. A plaintiff may be stopped when they don’t address the defendant performing under the contract prior to court.
Licensing Agreement Disputes and Violations
Licensing agreement disputes frequently involve businesses alleging that a licensee has violated the terms of the agreement, typically by:
- Acting beyond the scope of the agreement
- Failing to pay royalties
- Not abiding by geographic requirements
- Fail to provide service and support required under licensing agreements
- Failure to actively market products under licensing agreements
- Engaging in competitive activities in violation of licensing agreements
- Failure of Licensor to deliver functional product
Our breach of contract attorneys have successfully helped business owners obtain relief when their legal rights – whether sales guarantees or the protection of their brand – are on the line.
Texas Tortious Interference: Has a Third Party Interfered With Your Business Contract?
Texas contract law recognizes a legal claim known as “tortious interference,” which allows a business owner whose contractual relationships are exploited by a third party to seek damages directly from that third party. These claims can address current as well as prospective business opportunities.
As part of our comprehensive, consultative approach, our attorneys will determine every legal claim – including possible claims for tortious interference in contracts or interference in respect to oral or informal agreements such as tortious interference of business.
Tortious Interference: Contracts vs. Business
- Tortious interference of a contract is when a person intentionally and wrongfully disrupts a formal contract between two parties and causes one party to breach the contract.
- Tortious interference of business is when a third party uses false claims against a business in order to drive business away from them or to cause another party to not enter into a business relationship with them.
The contract litigation attorneys at Hendershot Cowart P.C. represent business clients in Houston, surrounding counties, and across the state of Texas.
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