Business Contracts That Are Commonly Breached in Texas, and Why
Typically, business leaders, employees and other professionals signing contracts do so in good faith, meaning they intend to fulfill their obligations as outlined in the agreement. However, breaches of contract are a relatively common operational complication faced by Texas companies.
Certain types of contracts are more likely than others to end up in breach litigation, including:
- Employment contracts
- Nondisclosure, nonsolicit and noncompete agreements
- Partnership agreements
- Sales contracts
- LLC operating agreements
- Service agreements
- Supply and delivery contracts
Contract breaches can occur for a variety of reasons. Frequently, the underlying issue is contractual ambiguity, possibly due to poorly-drafted terms in the initial document. Both parties may read the same language and have a different understanding of what the contract requires.
Other times, financial constraints lead to a breach of contract. Vendors and service providers may not be able to deliver what they promised if they experience financial setbacks. They may struggle to conform to estimates regarding project costs or pricing promised in a supply contract.
A breach may be caused by miscommunication, meaning that the parties failed to properly explain their expectations or intentions to one another. A variety of unexpected complications, ranging from health issues experienced by a service provider to a sudden loss of talent within an organization, could lead to an inability to perform obligations in a timely fashion.
If the parties to a contract dispute cannot reach an amicable resolution, the nature of the contract breach largely influences the remedies available. In a case involving a minor breach of contract, the courts might award compensatory damages or determine that deducting the financial impact of the breach from the future payment obligations is a reasonable solution. A judge might also order specific performance to compel the completion of a contractual obligation that is not yet fulfilled.
In a case involving a material breach in contract, the plaintiff may have a stronger claim for damages. The courts may also terminate the contract through judicial rescission. They may order specific performance, impose injunctions limiting certain activities and even award liquidated damages as outlined in the contract for a material breach of the agreement.
During a business dispute, timely legal guidance can prove invaluable. Parties to a dispute can benefit from advocacy by a lawyer familiar with the complexities of breach of contract litigation.
At the Law Firm of Richard L. Ellison, P.C. in Kerrville, you will be represented by an attorney board-certified by the Texas Board of Legal Specialization in Civil Trial Law. Call 830-955-8168 or contact me online to arrange for a consultation.