Principal Attorney
You can sue for the recoverable financial losses caused by the breach, including direct and reasonably foreseeable consequential damages, or enforceable liquidated damages specified in the contract, as well as attorney’s fees in qualifying cases. Texas does not impose a single universal dollar limit on ordinary breach of contract damages. The total recovery depends on the actual harm suffered, the contract’s terms, the available evidence, and whether the court orders monetary damages or specific performance.
At Sul Lee Law Firm, PLLC, we help businesses and individuals throughout Texas navigate contract disputes and pursue appropriate legal remedies. Below, we explain the key factors that determine how much you can recover in a breach of contract lawsuit.
How Much Can You Recover in a Texas Breach of Contract Lawsuit?
The amount you can sue for depends on various factors, including:
- The financial losses you suffered due to the breach.
- Whether the contract contains a liquidated damages clause.
- Whether additional, independently actionable legal claims support other remedies.
- Whether attorney’s fees and court costs are recoverable under the contract.
- Whether the contract limits certain damages and whether the losses were foreseeable, provable, and reasonably mitigated.
Texas courts aim to restore the injured party, not penalize the breaching party. This means the awarded damages must be supported by the evidence and consistent with the applicable measure of damages. For example, if a supplier’s breach causes a business $40,000 in additional purchasing costs and $15,000 in provable lost profits, the business may seek those losses if they are legally recoverable and do not overlap. The amount ultimately awarded depends on the evidence and the contract.
Understanding Breach of Contract Claims
A breach of contract occurs when one party fails to fulfill their contractual obligations, either by failing to perform as agreed or by violating specific terms. Breaches can be classified as:
- Material Breach: A major violation that significantly impacts the contract’s purpose, potentially excusing further performance by the non-breaching party and supporting a claim for damages or termination, depending on the circumstances.
- Minor Breach: A less significant violation that does not entirely undermine the contract but still may warrant legal action for damages.
The type and severity of the breach will influence how much you can sue for and what damages you may recover. Businesses should also distinguish between a breach that has already occurred and an anticipatory breach, in which one party clearly indicates that it will not perform its contractual obligations when due.
Types of Damages Available in a Breach of Contract Lawsuit
The amount you can sue for depends on the damages suffered due to the breach. In Texas, courts may award or order the following remedies, depending on the circumstances:
Compensatory (Actual) Damages
Compensatory damages are designed to put the non-breaching party in the position they would have been in if the contract had been fulfilled. These damages include:
- Direct Damages: Financial losses directly caused by the breach, such as unpaid invoices, the cost of obtaining substitute performance, or additional costs incurred.
- Consequential Damages: Losses that result from the breach but are not directly tied to the contract itself, such as lost business opportunities or supply chain disruptions, when the losses were reasonably foreseeable at the time of contracting and can be established with sufficient certainty.
Lost profits may qualify as direct or consequential damages depending on the contract and the nature of the loss. Businesses must generally support lost-profit claims with objective evidence rather than speculation.
Liquidated Damages
Some contracts include liquidated damages clauses, which specify a predetermined amount that must be paid if a breach occurs. Texas courts will generally enforce these clauses as long as they are reasonable and not punitive.
Under the Texas Supreme Court’s decision in FPL Energy, LLC v. TXU Portfolio Management Co., 426 S.W.3d 59 (Tex. 2014), an enforceable liquidated damages provision generally must address harm that was difficult to estimate when the parties contracted and provide a reasonable forecast of compensation. A provision may still be unenforceable if it operates as a penalty in light of actual damages.
Punitive Damages (Rare in Contract Cases)
Punitive, or exemplary, damages are generally unavailable for breach of contract alone, even when the breach is intentional. In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), the Texas Supreme Court explained that exemplary damages require an independently actionable tort and an injury supporting that claim.
If a dispute also involves a legally distinct fraud claim or another qualifying tort, additional remedies may be available. However, alleging fraud or bad faith does not automatically entitle a party to punitive damages.
Specific Performance
Instead of monetary compensation, a court may order specific performance, requiring the breaching party to fulfill their contractual obligations. This remedy may be available in cases involving unique goods, real estate transactions, or other circumstances where monetary damages would be inadequate.
Attorney’s Fees and Court Costs
In Texas, attorneys’ fees are not automatically awarded in breach of contract cases. However, under Texas Civil Practice and Remedies Code § 38.001, a claimant may recover reasonable attorney’s fees on qualifying oral or written contract claims against eligible individuals or organizations, subject to statutory requirements.
Texas Civil Practice and Remedies Code § 38.002 also establishes requirements for presenting the claim and allowing an opportunity for payment before recovering attorney’s fees under Chapter 38. Contractual fee provisions and other statutes may provide additional grounds for recovery.
Examples of Breach of Contract Damages
Here are some examples of how damages may be calculated in breach of contract cases:
- Business Contract Dispute: A vendor breaches a supply contract, causing a business to incur $30,000 in additional costs to purchase replacement materials and $20,000 in provable lost profits. The business may seek $50,000 in damages, subject to the contract’s terms, mitigation, and applicable legal requirements.
- Real Estate Contract Breach: A buyer backs out of a real estate deal, violating the contract. The seller may seek damages based on the difference between the contract price and the property’s value at the relevant time, subject to the agreement and applicable law. Depending on the circumstances, other remedies may also be available.
- Employment Contract Violation: An employee breaches a valid and enforceable contractual obligation, causing their former employer to lose customers. The employer may seek provable lost profits or other appropriate relief, provided the claim meets applicable Texas law and the losses can be established with reasonable certainty.
How to Maximize Your Recovery in a Breach of Contract Case
To strengthen your claim and maximize the damages you can recover, consider these steps:
- Gather Strong Evidence: Maintain records of the contract, communications, financial losses, and any attempts to resolve the dispute.
- Act Quickly: Texas has a four-year statute of limitations for many breach of contract claims, although different deadlines can apply to certain transactions or claims. The deadline generally runs from when the claim accrues.
- Consult an Experienced Attorney: A skilled business litigation attorney can help you calculate damages, negotiate settlements, and represent your interests in court.\
- Take Reasonable Steps to Limit Losses: Texas law generally requires injured parties to mitigate avoidable damages when reasonable steps are available. Businesses should document replacement purchases, efforts to continue operations, and other measures taken to reduce losses.
Before filing suit, businesses should also review any contractual provisions governing damage limitations, notice requirements, mediation, arbitration, or attorney’s fees. These terms can affect both the potential recovery and the process for pursuing a claim.
Sul Lee Law Firm: Protecting Texas Businesses in Contract Disputes
At Sul Lee Law Firm, we understand the financial and operational impact of contract breaches. Whether you are pursuing damages for lost revenue, enforcing a business agreement, or defending against a breach of contract claim, our experienced attorneys are here to help.
Our Dallas breach of contract attorneys assist Texas businesses with evaluating contract claims, calculating potential damages, and addressing commercial disputes.
If you need legal guidance on a breach of contract case in Texas, contact Sul Lee Law Firm today for a consultation. Our team can help you evaluate your options for protecting your business interests and pursuing or defending against a contract claim.