Key points
- Texas generally gives you four years to sue for breach of contract.
- Under § 38.001, a party who prevails on a contract claim and recovers damages can generally recover reasonable attorney’s fees from an individual or organization, but must first present the claim to the other side.
- The contract’s own terms, such as fee-shifting, limitation of liability, forum, arbitration and notice-and-cure provisions, often decide how a dispute plays out.
- Penalty clauses disguised as liquidated damages are unenforceable. See our federal case result invalidating a penalty clause that saved our client more than $250,000.
Contract disputes we handle
- Unpaid invoices, accounts and promissory notes;
- Supply, distribution, services and master service agreements;
- Purchase and sale of businesses and assets, including earn-out and indemnity disputes;
- Partnership, operating and shareholder agreements (see partnership and shareholder disputes);
- Non-compete, non-solicitation and confidentiality agreements;
- Settlement agreements and their enforcement;
- Construction and real estate contracts (see construction disputes and purchase and sale contracts); and
- Guaranties and personal liability for business debts.
Elements of a Texas breach of contract claim
- A valid, enforceable contract: offer, acceptance, consideration and mutual assent on essential terms, and a writing where the statute of frauds requires one;
- Performance or tender by the plaintiff, or an excuse for non-performance;
- Breach by the defendant; and
- Damages caused by the breach.
Remedies
| Remedy | Purpose |
|---|---|
| Expectation (benefit-of-the-bargain) damages | Puts you where you would have been had the contract been performed. |
| Consequential damages | Foreseeable losses, such as lost profits, that flow from the breach, unless the contract excludes them. |
| Reliance damages | Recovers amounts spent in reliance on the contract when profits are hard to prove. |
| Specific performance / injunction | Orders performance where money is inadequate, as with unique property or restrictive covenants. |
| Rescission | Unwinds the contract, typically for fraud or mutual mistake. |
| Attorney’s fees and interest | Fees under § 38.001 or the contract, plus pre- and post-judgment interest. |
Before you terminate a contract or stop paying, call us.
A premature termination can make you the breaching party. Book a discovery call or call (346) 363-0334.
Presentment and the demand letter
To recover fees under Chapter 38, the claimant must present the claim to the opposing party, and the opposing party must fail to tender the just amount owed within 30 days. A well-documented demand letter satisfies presentment, establishes the record, and often produces payment without litigation.
Defending contract claims
Common defenses include no enforceable contract, statute of frauds, prior material breach by the plaintiff, waiver, modification, impossibility, failure of conditions precedent, limitation-of-liability clauses, unenforceable penalties, and limitations. Counterclaims for fraud or breach often change the dynamics.
Litigation or arbitration in Houston
Contract cases are typically filed in the Harris County civil district courts, county civil courts at law for smaller amounts, or the federal court for the Southern District of Texas when federal jurisdiction exists. Many commercial contracts require arbitration. We assess forum, venue and arbitration clauses early because they affect cost and strategy.