When a party to a contractual agreement believes the other party has not fulfilled their obligations, they may pursue a breach of contract claim to seek financial and other relief. If not handled efficiently and effectively, such breach of contract claims can significantly disrupt business operations. Get the help you need to resolve your breach of contract claim when you contact Mitchell Law, PLLC, today for an initial case evaluation. We look forward to hearing your story, advising you on your options, and doing everything we can to secure the outcome you deserve.
What Constitutes a Breach of Contract
Parties may form a valid, enforceable contract when they reach an agreement that meets all the legal elements for contract formation, including:
- An offer that includes all material terms for the contract
- Unequivocal acceptance of those offered terms (any revision to offered terms may constitute a counteroffer)
- Consideration, or an exchange of something of value for the other party’s contractual promise(s)
Parties to a contract must also have the legal capacity to enter the contract, including the authority to agree on behalf of the contracting party and the ability to understand the nature of the agreement or the consequences of entering the contract.
When parties have a valid contract, one party may breach it by failing to fulfill one or more of their obligations under the agreement. Common types of breaches of contract include:
- Material breach: A material breach occurs when a party fails to perform a significant provision of the contract and thereby frustrates the purpose or essence of the contract. A material breach may relieve the non-breach party from their obligation to continue performing under the contract.
- Minor breach: A minor breach of contract involves a breach of a technical or non-material contract provision when the failure to fulfill that provision does not undermine the primary purpose(s) of the parties’ agreement or prevent the non-breaching party from performing their obligations. In most cases, a minor breach does not relieve the non-breaching party of their obligation to continue performing under the contract.
- Anticipatory breach: A party may commit an anticipatory breach when they advise their counterparty to the contract that they do not intend to perform their obligations, even though the deadline for performance has not yet expired.
- Actual breach: An actual breach of contract occurs when a party fails to fulfill their contractual obligations by the deadline set in the contract.
Legal Remedies for Breaches of Contract
A non-breaching party may pursue various legal remedies against a breaching party in a breach of contract claim. In many cases, a non-breaching party may obtain monetary compensation. This compensation can include money for the non-breaching party’s financial losses, such as lost profits or expenses incurred to replace the breaching party’s performance. When parties anticipate difficulty calculating monetary losses from a breach of contract, they may negotiate a liquidated damages clause, which entitles a non-breaching party to a specific amount of compensation that represents a reasonable estimation of losses caused by a breach of contract.
Non-breaching parties may also pursue equitable remedies for a breach of contract. Examples of such remedies include:
- Specific performance: In rare cases, a non-breaching party may have the right to request specific performance, in which the court compels the breaching party to perform their contractual obligations. Courts usually award specific performance only when monetary compensation cannot provide a complete remedy for a non-breaching party or the parties’ contract involves unique, irreplaceable subject matter (such as a parcel of real estate).
- Injunctive relief: A non-breaching party may pursue an injunction against the breaching party, which prohibits them from taking specific actions that may breach or continue to breach the parties’ agreement.
- Rescission: A party who seeks rescission of a contract asks the court to cancel or void the contract and order any other relief necessary to restore the parties to their positions before they entered the contract, including returning any benefits conferred under the contract.
Steps to Take When Facing a Breach of Contract Case
Whether as the alleged breaching party or the non-breaching party, steps you can take to put yourself in the best position to pursue a breach of contract claim include:
- Review the contract to understand your and the other party’s rights and obligations and when specific actions may constitute a breach of the contract.
- Gather evidence supporting your position in the breach of contract case, such as copies of communications between the parties or records of financial transactions (like purchases of materials/services or contractual payments).
- Contact a business law attorney to evaluate your legal rights and options for resolving the breach of contract case.
- Open negotiations or suggest mediation with the other party to pursue a mutually agreeable resolution to the dispute.
- If necessary, file a lawsuit or an answer to a breach of contract complaint filed against you.
Common Defenses Against a Breach of Contract Claim
Parties alleged to have breached their contractual obligations may raise various defenses in a breach of contract claim. Some of the most common defenses include:
- Invalid contract: A defendant in a breach-of-contract claim may contest the validity of the contract by arguing that it lacks one or more required elements, such as all material terms, mutual agreement on the terms, or consideration.
- Impossibility of performance: A breaching party may seek to avoid liability in a breach of contract claim by arguing that circumstances beyond their control made it impractical or impossible to perform their contractual obligations. Contracts that contain “force majeure” clauses may alter a breaching party’s ability to raise an impossibility defense.
- Mutual mistake: A breaching party may claim mutual mistake by alleging that both sides to the contract misunderstood a material provision of their written or oral agreement and thus did not reach a “meeting of the minds.”
- Unconscionability: An unconscionability defense argues that a contract contains terms so unfair and one-sided in favor of the non-breaching party that equity weighs against enforcing the contract for the non-breaching party.
Contact Us Today to Learn More
Do you have a breach of contract claim? Has a counterparty accused you of breaching your contractual obligations? If so, you need experienced advocacy and advice to navigate contract litigation. Contact Mitchell Law, PLLC, today for a free, confidential consultation with a Houston business litigation attorney to discuss your legal options for pursuing a favorable resolution to your case.