What Happens If a Contract is Breached?

by | May 11, 2019 | Business | 0 comments

Contracts are a part of our daily lives. Whenever you hire a housecleaner, start a new job, or rent or purchase a home, you enter into a contract. One party offers to pay money for a good or service, and the other party agrees to provide that good or service in exchange. It’s a solid system, but problems arise when one party feels that the other did not live up to their end of the deal. This is known legally as a breach of contract, and it is a valid cause for a lawsuit.

The Elements of a Breach of Contract Lawsuit

In order to have a successful breach of contract lawsuit, the plaintiff must be able to prove four things:

1. That a contract exists, and it is valid. This is much easier to do in the case of written contracts, which is why it’s always a good idea to put such agreements in writing. To be considered valid, a contract must consist of an offer by one party to the other; acceptance of the offer by the other party, and agreement to the terms by both parties; and consideration, meaning that both parties give and receive something of value.

2. That the plaintiff performed according to the terms of the contract. A plaintiff cannot accuse the other party of breaching the contract when they themselves have not held up their side.

3. That the defendant did not perform according to the terms of the contract. This means the defendant was contractually obligated to provide a good, service, or payment, and failed to do so.

4. That the beach damaged the plaintiff. In this case, damages typically refer to lost money, lost time, or loss of some other valuable asset.

Needless to say, contract are not valid if they involve illegal sales, if the terms of the contract were too vague, or if one or both parties were not competent to enter into a binding contract. A party must be an adult of sound mind, entering into the contract of their own free will.

Oral vs. Written Contracts

The State of Texas does recognize oral contracts as valid if they meet certain criteria.

For a verbal contract to be legally binding, there must have been a “mutual reciprocal exchange” between the parties, such as bargaining and exchanging goods; and the parties must be doing something they are not otherwise obliged to do under law.

Furthermore, the Statute of Frauds requires certain types of contracts to be put into writing for both parties’ protection. This includes the following types of contracts:

  • Wills and Trusts
  • Guarantees and Suretyships
  • Marriage
  • Real Estate
  • Contracts Longer than 1 Year
  • Sales of Goods Greater than $500
  • Sales of Securities

Unfortunately, it is very hard to prove that an oral contract was entered into without a written record or the testimony of witnesses. Such cases often dissolve into “he said/she said” court battles. It is good policy to put any and all agreements in writing.

 

Material Breaches and Damages

A material breach deprives the plaintiff of the thing they contracted for. This could be money that was never paid to them, or goods or services that were never delivered after payment.

If the court finds that there was a material breach, they will order the defendant to fulfill the terms of the contract as initially agreed. They might also award damages to the plaintiff for time and money lost in pursuit of the judgment, legal expenses incurred, and any other damages caused by the breach.

We Are On Your Side

If you believe that you have been the victim of a breach of contract, or if you have been accused of breaching a contract, call us today so that we can discuss your options and give you expert counsel and representation.