Contracts govern many aspects of our lives. When we rent or lease, purchase a ticket to an event, or even hire a contractor, we enter into a contract. In most cases, these contracts are fulfilled without issue.
However, there are situations where a dispute over a contract arises. For example, if your business entered into a contract for the sale of a property, and the other side backs out, costing you a substantial amount of money, that may be the basis for a breach of contract lawsuit.
There are many ways that contract disputes come up, both in daily life and in business dealings. If you are facing a contract dispute, or simply want to make sure that the potential for such a dispute is minimized, a skilled El Paso contract lawyer can help.
Breach of Contract
Even when a contract has clear, readily-understandable terms, there are times when one of the parties to the contract violates it. This is known as a breach of contract.
Generally, to win a breach of contract lawsuit, you must be able to demonstrate:
- You had a valid and enforceable contract;
- You performed, tendered performance, or were excused from performing under the contract;
- The other party failed to perform their contractual obligations; and
- Their breach caused you an injury (damages).
Consider a situation where your businesses entered into a contract to purchase widgets from another company, with half of the amount payable upfront and the remainder payable upon delivery. You made the initial payment, but the widgets are never delivered. The other company has breached the contract by failing to perform (deliver widgets). You may be able to file a lawsuit for breach of contract to recover any losses that you suffered as a result of the other company’s failure to deliver the widgets.
However, lawsuits are not always the best way to resolve these matters. In many cases, an experienced El Paso contract lawyer can help to achieve an outcome that avoids litigation, which can save you a significant amount of money.
What is the Difference Between a “Non-material” and “Material” Breach of Contract?
Under the Texas Business and Commerce Code, a breach of contract can be considered material or non-material.
Non-material breaches are less serious, as they pertain to a minor contract detail. For example, if you engage a professional to remodel your office and they complete all work a day late, it would generally be considered non-material because the one-day delay does not go to the heart of the contract unless the contract contains language stating that time is of the essence.
However, such a delay could be considered material if the contractor knew you needed the work completed on time because you were holding a widely advertised open house’ for clients the next morning. This is because the completion date went to the heart of the contract, and the contractor did not come through. In this scenario, the Contract would likely contain a “time of the essence” clause.
Does It Matter Whether Your Contract was Written or Oral?
In Texas, oral contracts are generally enforceable, but there are some important exceptions. The Texas Statute of Frauds requires certain agreements to be in writing. They include:
- Contracts for the sale of real estate
- Real estate leases for longer than one year
- Agreements to pay someone else’s debt
- Contracts that won’t be performed for at least one year
- Promises or agreements to pay a commission for the purchase or sale of an oil or gas royalty, mining lease, minerals, or a mineral interest
Except under very rare circumstances, these contracts cannot be enforced if they aren’t in writing.
What Damages are Recoverable in a Breach of Contract Case?
It depends on whether you have a liquidated damages clause in your contract, which will specify how much is owed if the contract is breached. If there is no such clause, Texas law allows you to claim compensatory damages, of which there are two types:
- Direct: These damages are the direct and foreseeable result of the breaching party’s conduct. Lost profits are a common example of direct damages.
- Consequential: These damages result from the other party’s wrongful conduct, but they may not be a necessary outcome. A Texas breach of contract lawyer can advise you whether you can seek consequential damages in your case.
Are Attorney’s Fees Recoverable in a Breach of Contract Suit?
Under the Texas Civil Practice and Remedies Code, you may recover reasonable attorney’s fees in a breach of contract lawsuit if your claim is for:
- Services rendered
- Labor performed
- Materials furnished
- Freight or express overcharges
- Lost or damaged freight or express
- Injured or killed stock
- A sworn account
- An oral or written contract
Contract Review and Drafting
The best way to avoid contract disputes is to make sure that they reflect the true understanding and agreement of the parties in a clear and legally binding way. A well-drafted contract can address many issues that may arise over the document’s term, avoiding future disputes and litigation over the terms of the contract.
Our firm represents both individuals and businesses in drafting and reviewing contracts, as well as interpreting the terms of a contract. Our experience handling contract disputes and litigation allows us to see many potential problem areas in a proposed contract, and to draft contracts that proactively address likely sources of dispute.
We draft and review contracts for clients in a range of industries and legal matters, including:
- Residential and commercial leases
- Non-compete and non-disclosure agreements
- Purchase and sale agreements
- Operating agreements
- Contracts for deeds
By protectively working with an attorney, you may be able to avoid some of the most common issues that arise in a contract.
Offer and Acceptance
In Texas, a valid contract has five elements:
- An offer;
- An acceptance in strict compliance with the terms of the offer;
- A meeting of the minds;
- A communication that each party has consented to the terms of the agreement; and
- Execution and delivery of the contract, with the intent that it is mutual and binding.
A common sticking point in contract negotiations comes during the offer and acceptance phase. Generally, an offer must have clear and definite terms, and the acceptance must not change or qualify the terms of the offer. If the proposed acceptance changes the terms, such as by proposing a different price, then it is considered a rejection.
It is only when the parties reach mutual assent — also known as a “meeting of the minds” — that a contract is considered valid and binding. If the parties to a contract failed to agree on a material term, then the contract cannot be enforced.
Because the offer and acceptance is such a crucial part of contract negotiations and will affect the overall validity of a contract, it is important to consult with an El Paso contract lawyer during the negotiation process. Doing so can help ensure that your contract is valid, which may prevent issues from arising in the future.
Covenants Not to Compete/Non-Compete Agreements
In Texas, covenants not to compete (non-compete agreements) are legal. However, in order to be enforceable, they must meet certain requirements.
A covenant not to compete must (1) be part of an otherwise valid employment agreement; (2) be reasonable, and not impose greater restrictions on an employee than is necessary to protect a business’s legitimate interests. In other words, as long as the restrictions contained in a non-compete agreement are reasonable, it will be upheld in court. Restrictions that are overly broad in location, time, or scope of activity may result in litigation.
Whether you are an employee considering a non-compete agreement or a business owner looking to have a covenant not to compete drafted for your employees, a skilled attorney can help. Performing a thorough review of a proposed agreement or tightly drafting an agreement can ensure that all parties’ expectations are understood — and that the contract is upheld in court.
Fraud can occur in almost any context, including in contract law. When one party is induced to sign a contract due to fraud, the contract may be invalidated as a result. Most commonly, this happens in real estate agreements (i.e., stating that a home has never flooded when it has), but can occur in any type of contract.
Contract fraud occurs where:
- One party makes a material representation;
- That representation was false;
- The party made the representation knowing that it was false, or made the statement recklessly without knowledge of the truth;
- The party made the representation with the intent that the other party would rely upon it; and
- The other party relied upon the misrepresentation to their detriment.
Representation is considered material if there is a substantial likelihood that a reasonable person would consider it important when entering into a contract.
When contract fraud occurs, the party who has suffered a loss as a result may seek to have the contract invalidated. A seasoned lawyer can aggressively advocate for your best interests in these situations, which may include filing a lawsuit to recover damages and to have the contract declared invalid.
Facing a Contract Dispute? We Can Help.
With any agreement, a dispute over the terms is always possible. Proactively having a knowledgeable attorney review and/or draft a contract can help reduce the likelihood of a contract dispute. If an issue does arise, an El Paso contract lawyer can advocate for your best interests.
At Forbes & Forbes, we are dedicated to helping our clients with a variety of legal issues, including those related to contracts. With nearly 80 years of combined experience, we understand how contract disputes tend to arise — and we work to help our clients avoid them. To learn more or to schedule a consultation, contact us at 877-585-3827 or email us at any time.