Contracts are agreements that can be enforced by law and are commonly used between businesses or individuals to define relationships. Contracts are often related to the purchase of goods or services. Contracts can be written or oral and are consented to by all parties within the contract. Sometimes, however, a party may not fulfill all of its obligations or perform the promises dictated in the contract–finding itself in breach of contract. A breach of contract lawsuit can be filed when one or more parties claim the contract was breached.
A breach of contract occurs when one party fails to perform a promise that forms part of or the whole basis for the agreement. This can include the failure to perform the promise in a way that would meet the standards of quality set forth in the contract. If the product provided by one party does not meet the quality standards set forth in the contract, that party may be in breach of contract.
A breach of contract can be considered material or minor. The result of a lawsuit will depend on which type of breach occurred. A breach is considered material if one party receives a product or service that is substantially different from what the contract specified due to the other party’s failure to perform some aspect of the contract as agreed upon. For example, if a contract specifies the sale of high-heeled shoes and the buyer receives a box of hiking books, the breach is material. When a breach is a material breach, the party receiving the wrong goods no longer has to perform under the contract and has the immediate right to all available remedies for the breach. A breach is considered minor when the party receiving the item or service still receives what was expected, but one party did not fully perform the contract. For example, a slight delay in receiving the item specified in the contract, when the contract did not specify a delivery date, may be considered a minor breach.
When one party claims a breach of contract, they may file a civil lawsuit. The lawsuit will be litigated in front of a judge or jury that reads the contract to determine its meaning as written. The finder of fact will require answers to quite a few questions before proceeding with the case. These questions include:
Did a contract actually exist?
If a contract did exist, what did the contract require from the parties?
Were there any changes to the contract?
Did one of the parties to the contract breach the contract?
If yes, was the breach of contract material to the contract, or was it a minor breach?
Does the party that breached the contract have a valid legal defense?
What damages resulted from the breach?
The party claiming there was a breach of contract is responsible for providing proof the breach occurred. The claiming party must prove four elements to show a contract existed. These include proof of the offer, consideration, acceptance, and mutuality. The offer is the promise of one party to do or refrain from doing a specific action in the future. The existence of consideration distinguishes a contract from a gift in that a contract outlines something of value promised in exchange for the specific action or nonaction. Acceptance occurs when both parties ratify the contract through words, actions, or performance as called for in the document. Lastly, the plaintiff in a breach of contract lawsuit must prove mutuality. Mutuality means both parties fully understood and agreed to the terms of the contract. Finally, the defending party must provide evidence to refute the plaintiff’s allegations.
There are many legal defenses available when you are sued for breach of contract. The defendant must review the contract to ascertain whether any defenses can be claimed, including:
Impossibility of Performance – Unforeseen events may occur, beyond the control of either party, preventing at least one party from performing its contractual obligations.
Frustration of Purpose – Unforeseen events occurred that made the original purpose of the contract obsolete.
Enforcing Violates Public Policy – The contract outlines actions that would violate state and/or federal laws.
Illegal Contract – The contract was written to provide goods or services that are illegal under state or federal laws.
Contract Lacks Consideration – The contract does not provide a defined benefit to all parties and may thus be considered a voluntary gift, not a contract.
Mutual Mistake – All parties agreed upon a specific portion of the contract; however, all parties were mistaken. For example, if all parties agreed to a delivery date of June 15th but they all really meant to write May 15th in the contract instead.
One or More Parties Lacked Capacity – If the parties were underage or not of sound mind when entering into the contract, the contract may not be valid or enforceable.
Reviewing your contract with an experienced business litigation lawyer and finding potential defenses will be vital to defending yourself against a Texas lawsuit.
Martin Cukjati & Tom, LLP is a civil litigation firm with decades of trial experience. Our lawyers stand ready to assist your business with contract disputes, so please let us know how we can help. Our team of results-driven professionals goes the extra mile for our clients. When you work with us, you will be treated with the respect, customized approach, and attentive counsel you need.