When the Other Side Does Not Keep Its End of the Deal

Texas contract law is built on the agreement itself. Courts enforce what the parties wrote, read as a whole and in its ordinary meaning, and they fill gaps only where the contract is silent or ambiguous. That makes the text the first and most important piece of evidence.

What has to be proved

A breach of contract claim in Texas requires a valid, enforceable contract, performance or tendered performance by the claimant, a breach by the other party, and damages caused by the breach. A defendant may argue there was no meeting of the minds, that the claimant breached first, that performance was excused, or that the losses were not caused by the breach. Certain agreements must be in writing and signed to be enforced under the statute of frauds, Section 26.01 of the Texas Business and Commerce Code, including contracts for the sale of real estate and agreements that cannot be performed within one year. Most everyday business agreements fall outside those categories.

Deadlines

Texas gives most breach of contract claims four years from the date of the breach. Section 16.004 of the Civil Practice and Remedies Code sets four years for suits on a debt, and Section 16.051 sets a four-year residual period for any claim without its own rule. A contract for the sale of goods is governed by Section 2.725 of the Business and Commerce Code, which also provides four years and lets the parties shorten it to no less than one year, but not lengthen it. The period runs from the breach, not from when the loss was discovered, so an old unpaid invoice can expire while the business is still hoping to be paid.

Damages and attorney's fees

The usual measure is expectation damages: the money that would put the claimant where it would have been had the contract been performed. Consequential damages, such as lost profits on other business, are recoverable when they were foreseeable and can be proved with reasonable certainty, unless the contract excludes them. Liquidated damages clauses are enforced when the harm was hard to estimate at signing and the amount was a reasonable forecast; otherwise courts treat them as an unenforceable penalty. Specific performance is available where money will not do, most often for unique property.

Attorney's fees are recoverable under Section 38.001 of the Civil Practice and Remedies Code by a party who prevails on a breach of contract claim and recovers damages. Since September 1, 2021, the statute reaches individuals and organizations, which includes LLCs and partnerships. A defendant who successfully defends a contract claim has no fee claim under Section 38.001 unless the contract itself provides one.