Imagine that a supplier doesn’t deliver a piece of crucial equipment to your business. It could cause your latest big project to stall and cost your company thousands of dollars. At times like this, it’s good to understand your legal options for a breach of contract under Texas law. It also helps to know the types of damages in breach of contract cases so you can recover compensation for the losses your business suffers.
Types of Damages in Breach of Contract Cases
Compensatory
The purpose of compensatory damages is to address the direct financial impacts caused by the breach. These damages aim to put the injured party in the position they would have been in if the contract had been fulfilled as agreed.
For example, suppose that a supplier doesn’t deliver a shipment of supplies you need to perform your daily business activities. Compensatory damages could recover the cost of replacement goods. In most cases, you can also recoup any profits you lost due to the interruption of your operations. For most businesses, the bulk of an award of breach of contract damages will consist of compensatory damages.
Consequential
Consequential damages, also known as “special damages,” address indirect losses that were foreseeable when the contract was created. These damages go beyond immediate financial harm, but they still need to be directly linked to the breach.
Consider the example of the supplier not delivering an important shipment. If that failure caused delays that damaged your company’s reputation or led to a loss of future contracts, those losses could qualify for consequential damages. However, proving them would require detailed evidence of the broader impact of the breach felt throughout the business.
Liquidated
Some contracts include a clause that specifies agreed-upon damage amounts in case of a breach. These so-called liquidated damages help streamline disputes by eliminating the need to calculate the actual losses.
Note that Texas courts will enforce liquidated damages only if they’re reasonable and proportionate to the anticipated harm suffered by the business. If the amount specified in a clause looks excessive, it might not be valid.
Punitive
Punitive damages are rarely (if ever) mentioned in contracts, but they might be awarded if a breach involved malicious or fraudulent behavior from the party who violated the agreement. This form of damages serves to punish the offending party and discourage others from acting similarly.
For instance, if a contractor deliberately misrepresents their ability to meet a contract in order to gain an unfair advantage, they may be ordered to pay punitive damages when they can’t fulfill their end of the agreement. However, Texas courts usually reserve this type of financial punishment for the most egregious misconduct.
Nominal
In cases where a breach occurs but causes no measurable financial harm, courts might award nominal damages. Typically involving small payout amounts, they’re meant to acknowledge that a violation has taken place without providing compensation for any major losses. In this way, they’re more symbolic than anything else.
Texas law offers several avenues for recovering financial losses. With the help of a breach of contract lawyer, Houston business owners can seek justice.
Equitable Remedies for Breach of Contract
When monetary damages can’t fully cover the harm caused by a breach, courts might order equitable remedies. This is a non-monetary solution with the goal of restoring balance between the parties involved.
Specific Performance
Specific performance forces the breaching party to meet their obligations under the contract. This remedy is usually reserved for cases where the subject of the contract is unique or irreplaceable, such as rare goods or real estate.
Injunctions
An injunction is a court order that prevents a party from taking certain actions, such as disclosing trade secrets or violating a non-compete agreement. Injunctions play an important part in protecting organizations’ intellectual property and helping them maintain a competitive advantage.
Rescission and Restitution
Rescission allows the parties to cancel the contract, effectively undoing the agreement. Restitution, meanwhile, ensures that each party returns any benefits they received under the contract, restoring them to their original positions.
These remedies are particularly useful in cases involving fraudulent misrepresentation or situations where continuing the contract would be unfair to the injured party.
If you’re dealing with a breach of contract dispute, call the Weisblatt Law Firm, PLLC, at (713) 666-1981 to schedule a case consultation and discuss your options.
Proving Damages and Pursuing Your Claim
Importance of Documentation
Detailed records are a necessity in order to prove damages. At the very least, this will typically include the original contract, invoices, communications, and proof of the financial losses. Such records will help ensure that your claim is credible and well-supported.
Mitigation of Damages
Texas law requires the affected party to take reasonable steps to minimize their losses. Going back to the example of the supplier failing to deliver the necessary goods, the inconvenienced business would be expected to make a reasonable effort to find an alternative supplier. If you don’t try to mitigate your losses, the courts may reduce your compensation.
Statute of Limitations
The statute of limitations for a breach of contract claim in Texas is typically four years. The clock starts ticking on the date that the violation occurred or was discovered. It’s important to act quickly to preserve your right to recover your financial losses.
Alternative Resolutions
Before taking the matter to court, it’s worth considering arbitration or mediation. These dispute-resolution methods can save both parties considerable time and money while allowing them to negotiate a mutually satisfactory resolution.
How a Business Lawyer Can Help Remedy Your Breach of Contract Dispute
When you’re dealing with a breach of contract, having a dedicated legal team in your corner can make all the difference. With the help of a contract dispute attorney, Texas business owners can receive personalized solutions, no matter the nature or size of their organization. At the Weisblatt Law Firm, PLLC, our deep understanding of state contract law and commitment to protecting our clients’ interests make us a trusted ally in resolving disputes.
Protect Your Business Against Contract Breaches
Knowing your options for addressing a breach of contract is critical for recovering your losses and protecting your business operations. Whether you need to settle an ongoing disagreement or require legal counsel for an upcoming court case, we’re here to help.
If you’re facing a contract-related dispute, call us today at (713) 666-1981 to learn more about your options.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
