Texas business owners know that contracts are vital to the success of their business. When the other party to a contract fails to perform their duty, they have breached their contract.
You are entitled to different types of damages for a breached contract. Before you can sue for breach of contract, you must confirm you have a valid contract and that what the other party did constituted a breach.
Once you have established that you have a valid claim for breach of contract, there are various types of damages you can potentially recover:
- Compensatory damages
- Consequential damages
- Liquidated damages
- Specific performance
Compensatory and consequential damages
Compensatory damages are exactly what they sound like: they are designed to compensate you for your losses. You will typically need to provide evidence of any losses through documentation.
Consequential damages are damages that you suffer because of the breach. These damages usually only extend to foreseeable damages, as opposed to something completely unexpected.
Liquidated damages
Your contract may have had a liquidated damages clause, stating an amount you are to be paid in the event of a breach. There are advantages and disadvantages to this type of clause.
A liquidated damages clause ensures you are paid a certain amount for a breach no matter what; however, your damages may exceed the amount you have agreed upon in the clause. This leaves you with a loss.
Specific performance
In some cases, a court can order specific performance. This means that rather than paying money, the other party must perform their duty under the contract.
Specific performance is only awarded if the performance can realistically be accomplished. For example, if the other party was to deliver a shipment of goods that were destroyed in a plane crash, specific performance is impossible.
It can help to talk with an experienced business litigation attorney before filing a breach of contract claim. You have a right to protect your business interests and learn about all of your options.