When you are counting on someone to do something they are legally obligated to do and they fail to execute, you may have a claim for breach of contract. There are consequences when someone does not uphold their end of the bargain. But the window of opportunity for relief is limited. The Texas statute of limitations for breach of contract extends for four years past the date of the breach.
What Are Statutes of Limitations?
A statute of limitations is a fixed period during which a legal proceeding can be brought. These usually start on the date that the event in question occurred. The purpose of the statute of limitations in Texas for breach of contract is to make sure that the case is still relevant. Evidence can be lost, and witnesses become difficult to locate as time passes. That is why it is important to bring your cause of action within the four-year Texas statute of limitations for contract disputes.
Exceptions to Texas Statute of Limitations for Breach of Contract
In most cases, if you do not file your claim in court before the statute of limitations expires, your claim will be barred. However, there are two primary exceptions to the breach of contract statute of limitations in Texas.
This type of defense applies to the statute of limitations for a Texas contract when the defendant has concealed information about the breach in such a way that you could not have known it had occurred. The statute of limitations for breach of contract will not begin until this information was discovered or reasonably should have been discovered.
This rule is similar to fraudulent concealment and pertains to situations where the plaintiff was unaware the breach had occurred or that they had sustained an injury because of the breach of contract. Under these circumstances, the statute of limitations in Texas for breach of contract will not begin until the breach, or injury caused by the breach, is discovered.
When Can You Claim Breach of Contract in Texas?
To prevail on a valid claim for breach of contract in Texas, you must first prove that there was a valid contract. Once this fact has been proven, you can claim that the obligations stated in the contract were not met.
Proving a Valid Contract
A legally binding contract in Texas must satisfy several conditions:
- An offer was made;
- Offer terms were accepted;
- Written or verbal communication existed to demonstrate consent to the terms;
- The contract was intended to be mutual and binding to both parties; and
- There was consideration on both sides of the contract.
Consideration is a legal term that means that both parties were benefiting from the contract. These requirements for a valid contract apply to both written and verbal contracts.
Verbal Contracts in Texas
Verbal contracts are more difficult to prove, and the actions of both parties can play a big role in determining whether a contract existed. Some types of contracts fall under the statute of frauds, which is a law requiring certain agreements to be in writing, including:
- Contracts relating to real property;
- Contracts for the sale of goods for over $500;
- A will or trust;
- Marriage contracts (with the exception of common-law marriages);
- Sale of securities;
- Contracts that cannot be completed within one year; and
- Contracts to answer for the duty of another (guarantee/suretyship).
It is always a better idea to put everything in writing when possible.
What Constitutes a Breach of Contract in Texas?
Establishing that there was a valid contract is the first step of proving breach of contract. There is no breach without a valid contract. Additionally, the elements of a Texas breach of contract include:
- The plaintiff performed their end of the contract;
- The defendant breached the contract; and
- The breach caused damage to the non-breaching party.
If all these elements exist, you can bring a cause of action for breach of contract in Texas within the statute of limitations for breach of contract.
What Damages Are Available for Breach of Contract?
The damage from a breach of contract is often financial. The non-breaching party is generally entitled to compensation, which should restore them to the position they would have been in had the contract been performed as planned.
The non-breaching party will be responsible for proving the extent of their damages due to the breach. Because important documents and conversations may be less accessible with time, it is important to start legal proceedings as soon as possible despite the four-year Texas statute of limitations for contract disputes. There are multiple types of damages available depending on the circumstances of your case.
Compensatory damages are a part of general damages and include the foreseeable losses suffered by the non-breaching party. Compensatory damages include things like reimbursement of costs for the breach and other basic financial losses.
Texas courts may grant special or consequential damages caused indirectly by the breach. Loss of profits would constitute special damages. These could be due to delays, tarnished business reputation, or loss of business opportunities
In some cases, the Texas court may order non-monetary relief. Some examples include specific performance of the contract, which requires the breaching party to fulfill their obligations under the contract. A court-issued injunction, revision, or recession of the contract agreement are also available as equitable remedies.
Defenses to Breach of Contract
There are several valid defenses to breach a contract that a court may honor:
- A mistake was made during contract formation;
- The contract was made under duress;
- The contract is unconscionable or grossly unfair;
- The contract is illegal—for example, it includes unlawful dealings, violates tax law, or requires the destruction of records; or
- It becomes impossible for one of the parties to fulfill their end of the bargain.
The court will review the circumstances of each contract to determine if there is a valid defense.
Should You Hire a Contract Attorney?
The first step toward protecting your best interest in your breach of contract case is to seek help from experienced legal counsel. Do not wait until the Texas breach of contract statute of limitations is near expiration before you take action.
A Texas contract attorney can help you determine the value of your claim, which is an important factor when seeking relief. Negotiations, documentation, filing paperwork, and following court procedure are all areas where an attorney can provide valuable expertise. They can also prepare for litigation if necessary.
Steve Hunnicutt and the professional team at The Hunnicutt Law Group have 30 years of experience in contract disputes and other business law legal issues. We know that the circumstances of your contract are unique and that understanding the intricacies of the Texas legal system can be difficult. When choosing legal counsel, you want someone who cares about your case, will zealously seek the relief you deserve, and is confident in court proceedings. Schedule your consultation today.