Contracts & Breach of Contract
Common Defenses When Your Business Is Accused of Breaching a Contract
Draft for attorney review
Short answer
The defenses fall into two groups. The first denies an element of the claimant's case: no valid contract, the terms do not mean what the claimant says, there was no breach, the claimant breached first, or the claimant suffered no damages. The second group is affirmative defenses that defeat the claim even if the elements are met: statute of frauds, limitations, waiver, estoppel, accord and satisfaction, failure of a condition precedent, mutual mistake, fraud, impossibility, and others. Under Texas Rule of Civil Procedure 94, affirmative defenses must be pleaded in the answer or they are waived, so the first weeks after a claim arrives decide which defenses remain.
Two kinds of defense
Every breach of contract claim in Texas requires the claimant to prove a valid contract, its own performance, the defendant's breach, and damages. A defense can attack one of those elements, in which case the claimant simply fails to carry its burden, or it can be an affirmative defense, a separate matter the defendant must plead and prove that defeats the claim even if every element is established. The distinction matters procedurally: element-based defenses are preserved by a general denial, while affirmative defenses must be specifically pleaded under Rule 94 or they are lost.
Attacking the elements
No contract was formed. The parties never agreed on essential terms, the document was a non-binding letter of intent, acceptance was never communicated, or there was no consideration. Email chains and term sheets are where this defense lives. If the claimant cannot show a meeting of the minds on price, scope and the core obligations, there is nothing to breach.
The contract does not say that. Most contract cases are disputes about meaning. The defendant's reading of the clause is often the whole defense. Texas courts enforce unambiguous language as written; if the language is ambiguous, evidence of the parties' intent comes in and the question goes to the jury.
No breach. The defendant performed, or the thing the claimant complains about was not required by the contract, or the deadline was not essential and performance was substantially complete.
The claimant did not perform. Performance by the claimant is an element of its own claim. If the claimant fell short, the defendant may argue the element fails, and if the claimant's shortfall was material, the prior material breach defense below applies.
No damages, or none caused by the breach. The claimant cannot prove a loss, or its loss has a different cause, or it failed to mitigate.
Prior material breach
A party who commits the first material breach of a contract cannot enforce it against the other party, because that breach excused the other party's further performance. This is the most common substantive defense in commercial contract litigation: "we stopped paying because you stopped performing." It succeeds only if the claimant's breach was material under the factors the Texas Supreme Court adopted from the Restatement (Second) of Contracts, and only if the defendant did not continue performing after learning of it in a way that elected to keep the contract alive. The Texas Supreme Court's 2017 decision in Bartush-Schnitzius confirmed that a nonmaterial breach by the claimant does not excuse the defendant, though it does support an offsetting damages claim. The materiality analysis is covered in material breach versus minor breach.
The affirmative defenses that work in contract cases
Rule 94 lists affirmative defenses that must be pleaded, including accord and satisfaction, duress, estoppel, failure of consideration, fraud, illegality, payment, release, statute of frauds, statute of limitations, waiver, and "any other matter constituting an avoidance or affirmative defense." The ones that recur in business contract cases:
| Defense | What it means | What usually decides it |
|---|---|---|
| Statute of frauds | The agreement is in a category that must be in a signed writing (real estate, over one year, guaranties, loans over $50,000, goods of $500 or more) and is not. | Whether emails or other documents supply the writing; partial performance; the merchant confirmation rule for goods. |
| Statute of limitations | Suit was filed more than four years after the breach (or after a valid shorter contractual period). | The accrual date; tolling agreements; written acknowledgment of the debt. |
| Waiver | The claimant intentionally relinquished a known right, for example by repeatedly accepting late performance without objection. | The claimant's conduct and any anti-waiver clause in the contract. |
| Estoppel | The claimant's representations led the defendant to rely to its detriment, so the claimant cannot now assert the inconsistent position. | Proof of the representation, reliance and harm. |
| Accord and satisfaction | The parties agreed to accept a different performance (often a smaller payment) in full settlement, and it was performed. | Whether the new agreement was clear and the payment was tendered and accepted as full satisfaction. |
| Payment and release | The debt was paid, or the claimant signed a release covering the claim. | The documents. |
| Failure of a condition precedent | An event the contract made a condition of the defendant's duty (an approval, a notice, a certificate) never occurred. | Whether the clause created a true condition and whether the claimant specifically denied it under Rule 54. |
| Mutual mistake | Both parties were wrong about a basic assumption, so the contract does not reflect what either intended. | Evidence that both sides shared the mistake; unilateral mistake rarely suffices. |
| Fraud and fraudulent inducement | The defendant was induced to sign by a material misrepresentation. | Proof of the false statement, knowledge, intent and reliance; merger and disclaimer clauses. |
| Duress and unconscionability | The defendant was forced into the agreement, or the terms are so one-sided no reasonable party would agree. | Rarely successful between businesses with bargaining power. |
| Impossibility and force majeure | Performance became objectively impossible or was excused by an event the contract's force majeure clause covers. | The clause's wording; increased cost alone does not excuse performance. |
Defenses specific to the type of claim
Sworn accounts. A suit on an open account supported by a Rule 185 affidavit treats the account as prima facie proof unless the defendant files a sworn denial in the required form. A general denial, even a sworn one, is not enough. Missing this step can end the case on summary judgment.
Sales of goods. The UCC supplies defenses of its own: the buyer failed to give notice of the breach within a reasonable time under section 2.607, the buyer accepted the goods and cannot revoke, the seller cured, or the implied warranties were properly disclaimed.
Liquidated damages. The argument that a fixed-sum clause is an unenforceable penalty is an affirmative defense that must be pleaded, with evidence of actual damages.
Fee claims. A claim for attorney's fees under Chapter 38 can be defended on the ground that the claim was never presented or that the claimant failed to segregate fees among claims.
Example
Suppose a Dallas commercial cleaning company is sued by a property manager for breaching a two-year service agreement by stopping service in month fourteen. The petition alleges lost cleaning and the cost of a replacement vendor. The cleaning company's records show the manager paid every invoice 60 to 90 days late for eight months, that the company sent two written notices citing the agreement's payment clause, and that the manager then paid two months and stopped again. The agreement states that timely payment is a condition of the company's continued performance. The defenses, in order of strength: prior material breach (the manager's nonpayment, under a clause making payment a condition, excused further service); failure of a condition precedent; and, as to damages, failure to mitigate if the replacement vendor was hired at a premium without seeking other bids. Each must be in the answer. Waiver will be argued against the company because it kept cleaning for eight months despite late payments; the two written notices reserving rights are the answer to that.
Counterclaims are not defenses, but they change the case
A defendant who has its own claim against the claimant, such as unpaid invoices or the claimant's earlier breach, asserts it as a counterclaim. Counterclaims arising from the same transaction are generally compulsory and must be brought in the same suit or lost. A strong counterclaim shifts the economics of the case and can carry its own attorney's fee claim under Chapter 38. Whether to file one is covered in whether your business should file a counterclaim.
Evidence to gather now
- The complete contract with all amendments, exhibits and the other side's standard terms.
- Every notice sent or received under the contract, with proof of delivery.
- Payment records on both sides.
- Correspondence showing the other side's performance problems, complaints, and any acceptance of late or partial performance.
- Any release, settlement, or "paid in full" documentation.
- The timeline of the first breach, by whom, and what each side did afterward.
The defenses available in a contract case are set in the first weeks by the pleading deadline and by what the documents show. What happens procedurally after a suit is filed is covered in what happens after your business is sued for breach of contract. Tina Wysk defends Dallas businesses in contract claims in state and federal court and in arbitration, and brings their counterclaims.
Questions on this topic
What are the affirmative defenses to breach of contract in Texas?
Rule 94 lists them: accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, waiver, and any other matter constituting an avoidance or affirmative defense. In contract cases, prior material breach, failure of a condition precedent, mutual mistake, impossibility and the penalty defense to liquidated damages are also pleaded affirmatively.
Do I have to raise my defenses in the answer in Texas?
Affirmative defenses, yes. Under Texas Rule of Civil Procedure 94 they must be set forth affirmatively in the pleading or they are waived unless tried by consent. Certain defenses must also be verified under Rule 93, and a sworn account requires a sworn denial under Rule 185. Defenses that simply deny an element of the claim, such as no breach or no damages, are preserved by a general denial. Answers can be amended, but late amendments can be refused if they surprise the other side.
What is accord and satisfaction in Texas contract law?
It is a defense that the parties agreed to resolve a disputed or unliquidated claim by a different performance, usually a smaller payment, and that the performance was tendered and accepted in full satisfaction. The agreement must be clear that the payment is offered as full settlement. A check marked 'payment in full' that the creditor deposits can support the defense in some circumstances, which is why creditors should read every notation before depositing.
Can I defend a breach of contract claim by arguing the other side breached first?
Yes, if their breach was material. The prior material breach doctrine excuses your performance when the other side committed the first material breach. It does not apply to a minor breach, and it is weakened if you kept performing after learning of the breach without reserving your rights. The materiality analysis follows the Restatement factors adopted by the Texas Supreme Court, and the defense should be pleaded in the answer.
Is the statute of frauds a defense if we partly performed the contract?
Often not. Texas recognizes a partial performance exception: when a party's acts are unequivocally referable to the agreement and it would be a fraud on that party not to enforce it, the oral agreement is enforced despite the statute. For goods, acceptance of or payment for goods makes the contract enforceable to that extent, and the merchant confirmation rule can remove the defense. The statute remains a strong defense where nothing has been done under the agreement.
Sources
- Tex. R. Civ. P. 93, 94, 185 (Verified pleas, affirmative defenses that must be pleaded, and the sworn denial in a suit on a sworn account)
- Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc., 518 S.W.3d 432 (Tex. 2017), No. 16-0054 (A nonmaterial breach does not excuse the other party's performance; prior material breach doctrine)
- Tex. Bus. & Com. Code § 26.01 (Statute of frauds categories)
- Tex. Civ. Prac. & Rem. Code §§ 16.004, 16.051 (Four-year limitations period for contract claims)
- Tex. Bus. & Com. Code § 2.607 (Buyer's failure to give timely notice of breach bars the remedy in a sale of goods)
Legal sources last checked November 6, 2026. Statutes and rules change; the date matters.
About the author
Tina Wysk
Shareholder, Hallett & Perrin, P.C.. Tina represents businesses and individuals, as plaintiffs and defendants, in contract, partnership, fiduciary duty, fraud, construction, trade secret and investment disputes in Texas state and federal courts and in arbitration.
About TinaThis guide is general information about Texas and federal law for business owners, not legal advice about your situation. Statutes, rules and court decisions change, and small facts change outcomes. Reading it or contacting Tina Wysk through this site does not create an attorney-client relationship.
