News & Blog

Business Solutions to Breaches of Contracts

by

When two Texas businesses form a contract—whether that contract be oral or written—the objective is to facilitate the business relationship and to avoid future misunderstandings and hiccups in productivity. This may be counter-intuitive coming from a Houston business litigation attorney, but not all breaches of contracts should end up in the Texas civil courts. For instance, if a Houston paper supplier guarantees the delivery of fifty pallets of printer paper to a retailer in Corpus Christi every month, but on a single month only is able to deliver forty, a breach of contract has occurred. However, it may not be in the retailer’s best interest to become too litigious over the matter—particularly if the breach is easily remedied and they prefer the services of the Houston supplier.

Commercial or business litigation attorneys often try to steer their clients away from trying to settle all of their disputes in the Texas courts or through arbitration. Of course, the ideal solution is for businesses to only guarantee the work or products that they know that they’ll be able to deliver or purchase from their business partners and secure that relationship with a detailed, ironclad contract. However, fortunes can change and even the best corporate managers can overestimate their needs or output.

Furthermore, it’s important to recognize that not all breaches of contract are monetarily significant enough to seek a settlement through the Texas courts or—in cases where mandatory binding arbitration exists—through an arbitrator. Sometimes, the juice is simply not worth the squeeze for either business. The following are some of the common types of contract breaches that occur between businesses:

Minor Breach

This occurs when there is a partial breach or the breach is immaterial to the successful performance of the contract. The plaintiff can only sue for actual damages—the monetary loss sustained from the breach. However, the plaintiff usually can’t compel correction or reimbursement for correcting the contract.

Material Breach

A more significant breach in the contract, where the plaintiff can force a correction in the contract or is entitled to damages for having the contract corrected.

Fundamental Breach

This is a breach in contract that substantially violates the terms of the contract that it allows the plaintiff to terminate the contract. Damages can still be recovered through the Texas courts.

Anticipatory Breach

This occurs when it becomes obvious that one of the contracting parties will not be able to complete the contract in advance of a deadline or benchmark. The other party can cancel the contract even though the breach has not yet technically occurred.

Again, just because a breach exists doesn’t mean that the parties should become litigious. Oftentimes, a phone call or letter from a professional business attorney can prompt the breaching party to comply with the terms of the contract. Contracts are meant to be enforced, but not every breach should result in a courtroom showdown between the parties.

PageLines