LESSER KNOWN BREACH OF CONTRACT DEFENSES
Jack A. Walters, III
Cooper & Scully, P.C.
Founders Square
900 Jackson Street, Suite 100
Dallas, Texas 75202
(214) 712-9500
(214) 712-9540 fax
www.cooperscully.com
3rd Annual Construction Symposium
January 25, 2008
i
TABLE OF CONTENTS
I. INTRODUCTION...............................................................................................................1
II. BACKGROUND ON CONSTRUCTION CONTRACTS..................................................1
A. Contract Documents...............................................................................................1
B. Checklist of Issues Covered in a Contract..............................................................1
C. Definitions..............................................................................................................2
III. CONTRACT DEFENSES...................................................................................................3
A. Limitations (Statute of Limitations & Statute of Repose)......................................3
B. Standing/Privity......................................................................................................5
C. Failure of consideration / Lack of consideration....................................................6
D. Mistake 7
E. Ratification.............................................................................................................8
F. Waiver 9
G. Plaintiff's Prior Material Breach.............................................................................9
H. Estoppel by contract & Quasi-estoppel................................................................10
I. Mitigation of damages..........................................................................................11
J. Repudiation ..........................................................................................................11
K. Revocation............................................................................................................11
L. Lack of capacity ...................................................................................................11
M. Fraud 13
N. Modification.........................................................................................................13
O. Failure to perform conditions precedent...............................................................14
P. Impossibility of performance ...............................................................................14
Q. Limitatition-of-liability provisions.......................................................................15
ii
TABLE OF AUTHORITIES
CASES
1464-Eight, Ltd. v. Joppich,
154 S.W.3d 101 (Tex. 2004)......................................................................................................7
46933, Inc, v. Z&B Enters.,
899 S.W.2d 800 (Tex.App.—Amarillo 1995, writ denied) .......................................................3
A.L.G Enters v. Huffman,
660 S.W.2d 603 (Tex.App.—Corpus Christi 1983), aff'd, 672 S.W.2d 230
(Tex. 1984).................................................................................................................................8
ANCO Ins. Servs. v. Romero,
27 S.W.3d 1 (Tex.App.—San Antonio 2000, pet. denied) ........................................................5
Adkins Servs. v. Tisdale Co.,
56 S.W.3d 842 (Tex.App.—Texarkana 2001, no pet.)..............................................................6
Affright, Inc, v, Elledge,
515 S.W.2d 266 (Tex. 1974)....................................................................................................15
Alamo Clay Prods, v. Gunn Tile Co.,
597 S.W.2d 388 (Tex.App.—San Antonio 1980, writ ref'd n.r.e.)..........................................15
American Garment Props., Inc. v. CB Richard Ellis-El Paso, L.L.C.,
155 S.W.3d 431 (Tex.App.—El Paso 2004, no pet.)...............................................................13
Antwine v. Reed,
199 S.W.2d 482 (Tex. 1947)....................................................................................................11
Arthur's Garage, Inc, v. Racal-Chubb Sec. Sys.,
997 S.W.2d 803 (Tex.App. —Dallas 1999, no pet.)................................................................15
Askey v. Williams,
11 S.W. 1101 (Tex. 1889)........................................................................................................12
Atlantic Lloyds Ins. Co. v. Butler,
137 S.W.3d 199 (Tex.App.—Houston [1st Dist.] 2004, pet. denied)........................................8
Atomic Fuel Extraction Corp, v. Estate of Slick,
386 S.W.2d 180 (Tex.App. —San Antonio 1964), writ ref'd. n.r.e., 403
S.W.2d 784 (Tex.1965)............................................................................................................14
Austin Hill Country Rlty., Inc. v. Palisades Plaza, Inc.,
948 S.W.2d 293 (Tex. 1997)....................................................................................................11
B.D. Holt Co. v. OCE, Inc.,
971 S.W.2d 618 (Tex.App.—San Antonio 1998, pet. denied) ..................................................7
iii
Bank One v. Stewart,
967 S.W.2d 419 (Tex.App.—Houston [14th Dist.] 1998, pet. denied) .....................................9
Barker v. Eckman,
__ S.W.3d. __ (Tex. 2006).........................................................................................................3
Barrera v. Hondo Creek Cattle Co.,
132 S.W.3d 544 (Tex.App.—Corpus Christi 2004, no pet.)......................................................5
Belew v. Rector,
202 S.W.3d 849 (Tex.App.—Eastland 2006, no pet.) ...............................................................7
Bencon Mgmt, & Gen. Contracting, Inc, v. Boyer, Inc.,
178 S.W.3d 198 (Tex.App. —Houston [14th Dist.] 2005, no pet)..........................................14
Board of Regents v. Yarbrough,
470 S.W.2d 86 (Tex.App.—Waco 1971, writ ref'd n.r.e.).......................................................13
Boland v. Mundaca Inv.,
978 S.W.2d 146 (Tex.App.—Austin 1998, no pet.) ..................................................................7
Bolle, Inc. v. American Greetings Corp.,
109 S.W.3d 827 (Tex.App.—Dallas 2003, pet. denied)............................................................8
Bookout v. Bookout,
165 S.W.3d 904 (Tex.App.—Texarkana 2005, no pet.)............................................................5
Bowles v. Fickas,
167 S.W.2d 741 (Tex. 1943)....................................................................................................11
Breaux v. Allied Bank,
699 S.W.2d 599 (Tex.App.—Houston [14th Dist.] 1985, writ ref'd n.r.e.) .......................12, 13
Bristol-Myers Squibb Co. v. Burner,
964 S.W.2d 299 (Tex.App.—Corpus Christi 1998, no pet.)....................................................10
Brown-McKee, Inc. v. Western Beef, Inc.,
538 S.W.2d 840 (Tex.App.—Amarillo 1976, writ ref'd n.r.e.)..................................................8
Cal-Tex Lumber Co. v. Owens Handle Co.,
989 S.W.2d 802 (Tex.App.—Tyler 1999, no pet.) ....................................................................9
Carson Energy, Inc. v. Riverway Bank,
100 S.W.3d 591 (Tex.App.—Texarkana 2003, pet. denied) .....................................................6
Centex Corp. v. Dalton,
840 S.W.2d 952 (Tex.1992).....................................................................................................14
Champlin Oil & Ref. Co. v. Chastain,
403 S.W.2d 376 (Tex. 1965)......................................................................................................8
iv
Cherry v. McCall,
138 S.W.3d 35 (Tex.App.—San Antonio 2004, pet. denied) ....................................................8
Cigna Ins. Co. v. Rubalcada,
960 S.W.2d 408 (Tex.App.—Houston [1st Dist.] 1998, no pet.) ..............................................7
City of Corpus Christi v. Taylor,
126 S.W.3d 712 (Tex.App.—Corpus Christi 2004, pet. dism'd)...............................................3
Commercial Credit Corp. v. Taylor,
448 S.W.2d 190 (Tex.App.—Tyler 1969, no writ)....................................................................9
Conquest Drilling Fluids, Inc. v. Tri-Flo Intl,
137 S.W.3d 299 (Tex.App.—Beaumont 2004, no pet.).............................................................6
Consolidated Eng'g v. Southern Steel,
699 S.W.2d 188 (Tex. 1985)......................................................................................................9
Cook Composites, Inc. v. Westlake Styrene Corp.,
15 S.W.3d 124 (Tex.App.--Houston [14th Dist.] 2000, pet. dism'd).......................................11
Copeland v. Alsobrook,
3 S.W.3d 598 (Tex.App.—San Antonio 1999, pet. denied)......................................................5
Cowman v. Allen Monuments, Inc.,
500 S.W.2d 223 (Tex. App.-Texarkana 1973, no writ)...........................................................10
D.E.W., Inc. v. Depco Forms, Inc.,
827 S.W.2d 379 (Tex.App.—San Antonio 1992, no writ) ........................................................3
Dairyland Cty. Mut. Ins. Co. v. Roman,
498 S.W.2d 154 (Tex. 1973)..............................................................................................11, 12
Dallas Joint Stock Land Bank v. Dolan,
120 S.W.2d 798 (Tex.Comm'n App. 1938, judgm't adopted)..................................................12
Davis v. Grammer,
750 S.W.2d 766 (Tex. 1988)......................................................................................................8
de Monet v. PERA,
877 S.W.2d 352 (Tex.App.—Dallas 1994, no writ)..................................................................8
DeSantis v. Wackenhut Corp.,
732 S.W.2d 29 (Tex.App.—Houston [14th Dist.] 1987), rev'd in part on
other grounds, 793 S.W.2d 670 (Tex.1990)..............................................................................9
Delaney v. Davis,
81 S.W.3d 445 (Tex.App.—Houston [14th Dist.] 2002, no pet.)..........................................5, 6
DiMiceli v. Affordable Pool Maint., Inc.,
v
110 S.W.3d 164 (Tex.App.—San Antonio 2003, no pet)........................................................13
In re Doe,
917 S.W.2d 139 (Tex.App.—Amarillo 1996, writ denied) .....................................................15
Duran v. Henderson,
71 S.W.3d 833 (Tex.App.—Texarkana 2002, pet. denied) ...................................................4, 5
Durham v. Uvalde Rock Asphalt Co.,
599 S.W.2d 866 (Tex.App.—San Antonio 1980, no writ) ........................................................8
Echols v. Bloom,
485 S.W.2d 798 (Tex.App.—Houston [14th Dist.] 1972, writ ref'd n.r.e.) .............................11
Eckland Consultants, Inc. v. Ryder; Stilwell Inc.,
176 S.W.3d 80 (Tex.App.—Houston [1st Dist.] 2004, no pet.) ..............................................10
Edlund v. Bounds,
842 S.W.2d 719 (Tex.App.—Dallas 1992, writ denied)............................................................7
El Paso Prod. Co. v. Valence Oper. Co.,
112 S.W.3d 616 (Tex .App. Houston [1st Dist.] 2003, pet. denied)........................................11
Enserch Corp, v. Rebich,
925 S.W.2d 75 (Tex.App. —Tyler 1996, writ dism'd) ............................................................13
Erickson v. Rocco,
433 S.W.2d 746 (Tex.App.—Houston [14th Dist.] 1968, writ ref'd n.r.e.) .............................14
Evans v. Henry,
230 S.W.2d 620 (Tex.App.—San Antonio 1950, no writ) ......................................................12
F.D. Stella Prods. v. Scott,
875 S.W.2d 462 (Tex.App.—Austin 1994, no writ)..................................................................3
Federal Sign v. Texas S. Univ.,
951 S.W.2d 401 (Tex. 1997)......................................................................................................7
Fernandez v. Fernandez,
717 S.W.2d 781 (Tex.App.—El Paso 1986, writ dism'd)........................................................12
Fletcher v. A.W. Koch Co.,
189 S.W. 501 (Tex.App.—Austin 1916, no writ)....................................................................13
Fox Elec. Co. v. Tone Guard Sec., Inc.,
861 S.W.2d 79 (Tex.App.—Fort Worth 1993, no writ)...........................................................15
Frady v. May,
23 S.W.3d 558 (Tex.App.—Fort Worth 2000, pet. denied) ......................................................3
Fubar, Inc. v. Turner,
vi
944 S.W.2d 64 (Tex.App.—Texarkana 1997, no writ)............................................................13
Fuentes v. Continental Conveyor & Equip. Co.,
63 S.W.3d 518 (Tex.App.—Eastland 2001, pet. denied)...........................................................4
Garcia v. Karam,
276 S.W.2d 255 (Tex. 1955)....................................................................................................13
Gaston v. Copeland,
335 S.W.2d 406 (Tex.App.—Amarillo 1960, writ ref'd n,r.e.)................................................13
Glass v. Anderson,
596 S.W.2d 507 (Tex. 1980)....................................................................................................11
Great Am. Ins. Co. v. North Austin MUD,
908 S.W.2d 415 (Tex. 1995)....................................................................................................11
Greathouse v. Charter Nat'l Bank-Sus,
851 S.W.2d 173 (Tex. 1992)....................................................................................................14
Green v. Morris,
43 S.W.3d 604 (Tex.App.—Waco 2001, no pet).......................................................................7
Greenstein v. Simpson,
660 S.W.2d 155 (Tex.App.—Waco 1983, writ ref'd n.r.e.).......................................................3
Griffith v. Porter,
817 S.W.2d 131 (Tex.App.—Tyler 1991, no writ)..................................................................11
Group Hop. Scrim v. I & 2 Brookriver Ctr.,
704 S.W.2d 886 (Tex.App. —Dallas 1986, no writ)...............................................................13
Guido & Guido, Inc. v. Culberson Cty.,
459 S.W.2d 674 (Tex.App.—El Paso 1970, writ ref'd n.r.e.)....................................................7
Gunn Infiniti, Inc. v, O'Byrne,
996 S.W.2d 854 (Tex. 1999)....................................................................................................11
HECI Expl. Co. v. Neel,
982 S.W.2d 881 (Tex. 1998)......................................................................................................4
Hague v. Wilkinson,
291 S.W.2d 750 (Tex.App.—Texarkana 1956, no writ)..........................................................12
Hanks v. GAB Bus.,
644 S.W.2d 707 (Tex. 1982)......................................................................................................3
Harry Brown, Inc. v. McBryde,
622 S.W.2d 596 (Tex.App.—Tyler 1981, no writ)....................................................................7
Hathaway v. General Mills, Inc.,
vii
711 S.W.2d 227 (Tex. 1986)....................................................................................................13
Hauglum v. Durst,
769 S.W.2d 646 (Tex.App.—Corpus Christi 1989, no writ)...................................................11
Helsley v. Anderson,
519 S.W.2d 130 (Tex.App.—Dallas 1975, no writ)................................................................11
Hernandez v. Gulf Group Lloyds,
875 S.W.2d 691 (Tex. 1994)....................................................................................................10
Hill v. Thompson & Knight,
756 S.W.2d 824 (Tex.App. —Dallas 1988, no writ)...............................................................14
Holubec v. Brandenberger,
111 S.W.3d 32 (Tex. 2003)....................................................................................................4, 5
Houston Chronicle Publ'g v. McNair Trucklease, Inc.,
519 S.W.2d 924 (Tex.App.—Houston [1st Dist.] 1975, writ ref'd n.r.e.)................................11
Houston Ice & Brewing Co. v. Keenan,
88 S.W. 197 (Tex.1905)...........................................................................................................14
Hubble v. Lone Star Contracting Corp.,
883 S.W.2d 379 (Tex.App.—Fort Worth 1994, writ denied)..............................................3, 11
Hudson v. Wakefield,
645 S.W.2d 427 (Tex. 1983)....................................................................................................10
Huffines v. Senor Sand & Gravel Co.,
750 S.W.2d 38 (Tex.App. —Fort Worth 1988, no writ)....................................................14, 15
Ingersoll-Rand Co. v. Valero Energy Corp.,
997 S.W.2d 203 (Tex. 1999)..................................................................................................3, 4
Inter Sys. v. Lowrey,
230 S.W.3d 913 (Tex.App. —Dallas 2007, n.p.h.)..................................................................13
Interceramic, Inc. v. South Orient R.R.,
999 S.W.2d 920 (Tex.App.—Texarkana 1999, pet. denied) .....................................................9
International Bank of Commerce v. Union Nat'l Bank,
653 S.W.2d 539 (Tex.App.—San Antonio 1983, writ ref'd n.r.e.)..........................................14
Interstate Contracting Corp. v. City of Dallas,
135 S.W.3d 605 (Tex 2004).......................................................................................................5
Jamail v. Thomas,
481 S.W.2d 485 (Tex.App.-Houston [1st Dist.] 1972, writ ref'd n.r.e.) ....................................8
James T. Taylor & Son, Inc. v. Arlington ISD,
viii
335 S.W.2d 371 (Tex. 1960)......................................................................................................7
James v. Barnett,
404 S.W.2d 886 (Tex.App.—Dallas 1966, writ ref d n.r.e.)....................................................12
Janak v. FDIC,
586 S.W.2d 902 (Tex.App.—Houston [1st Dist 1979, no writ) ..............................................14
Jenkins v. Jenkins,
991 S.W.2d 440 (Tex.App.—Fort Worth 1999, pet. denied) ..................................................11
Jernigan v. Langley,
111 S.W.3d 153 (Tex. 2003)......................................................................................................9
Johnson v. Newberry,
267 S.W. 476 (Tex.Comm'n App. 1924, holding approved)...................................................12
Jon-T Farms, Inc. v. Goodpasture, Inc.,
554 S.W.2d 743 (Tex.App.—Amarillo 1977, writ ref'd n.r.e.)..................................................9
Jones v. Blume,
196 S.W.3d. 440 (Tex.App.—Dallas 2006, pet. denied)...........................................................3
Juarez v. Hamner,
674 S.W.2d 856 (Tex.App.—Tyler 1984, no writ)..................................................................11
K.B. v. N.B.,
811 S.W.2d 634 (Tex.App.—San Antonio 1991, writ denied)..................................................8
Kargar v. Sorrentino,
788 S.W.2d 189 (Tex.App.—Houston [14th Dist] 1990, no writ) ....................................11, 12
Kerrville HRH, Inc. v. City of Kerrville,
803 S.W.2d 377 (Tex.App. —San Antonio 1990, writ denied)...............................................13
Kish v. Van Note,
692 S.W.2d 463 (Tex.1985).......................................................................................................7
Knandel v. Cameron,
263 S.W.2d 184 (Tex.App.—San Antonio 1953, no writ) ......................................................12
Land Title Co. v. M. Stigler, Inc.,
609 S.W.2d 754 (Tex. 1980)......................................................................................................8
Lazy M Ranch, Ltd. v. TXI Opers., L.P,
978 S.W.2d 678 (Tex.App.--Austin 1998, pet denied)..............................................................9
Long Trusts v. Griffin,
___ S.W.3d ___ (Tex. 2006)......................................................................................................9
Lopez v, Munoz, Hockema & Reed, L.L.P.,
ix
22 S.W.3d 857 (Tex 2000).......................................................................................................10
MCI Telecomms. Corp. v. Texas Utils. Elec. Co.,
995 S.W.2d 647 (Tex. 1999)......................................................................................................6
MJR Corp, v. B&B Vending Co.,
760 S.W.2d 4 (Tex.App.—Dallas 1988, writ denied)................................................................9
MacDonald v. Bank of Kerrville,
849 S.W.2d 371 (Tex.App. —San Antonio 1993, writ dism'd)...............................................14
Mandell v. Hammon Oil & Ref Co.,
822 S.W.2d 153 (Tex.App.—Houston [1st Dist.] 1991, writ denied) .......................................5
Mandell & Wright v. Thomas,
441 S.W.2d 841 (Tex. 1969)....................................................................................................13
Martin v. Birenbaum,
193 S.W.3d 677 (Tex.App.—Dallas 2006, pet. denied)............................................................9
Mathews v. Sun Oil Co.,
411 S.W.2d 561 (Tex.App.—Amarillo 1966), aff'd, 425 S.W.2d 330 (Tex
1968)........................................................................................................................................10
McKenzie v. Farr,
541 S.W.2d 879 (Tex.App.—Beaumont 1976, writ ref'd n.r.e.)..............................................11
Meek v. Bishop Peterson & Sharp,
919 S.W.2d 805 (Tex.App.—Houston [14th Dist.] 1996, writ denied).....................................9
Metrocon Constr. Co. v. Gregory Constr. Co.,
663 S.W.2d 460 (Tex.App. —Dallas 1983, writ ref'd n.r.e.)...................................................14
Missouri Pac. R.R. v. Lely Dev. Corp.,
86 S.W.3d 787 (Tex.App.—Austin 2002, pet. dism'd)..........................................................8, 9
Missouri Pac. Ry. v. Brazil,
10 S.W. 403 (Tex. 1888)..........................................................................................................13
Monarch Marking Sys. v. Reed's Photo Mart, Inc.,
485 S.W.2d 905 (Tex, 1972)......................................................................................................7
Montgomery Cty. Hosp. Dist. v. Brown,
965 S.W.2d 501 (Tex.1998).......................................................................................................3
Motel Enters. v. Nobani,
784 S.W.2d 545 (Tex.App.—Houston [1st Dist.] 1990, no writ)..............................................8
Motor & Indus. Fin. Corp. v. Hughes,
302 S.W.2d 386 (Tex. 1957)......................................................................................................7
x
Mulvey v. Mobil Prod'g Tex. & N.M. Inc.,
147 S.W.3d 594 (Tex.App.—Corpus Christi 2004, pet. denied).............................................10
Mustang Pipeline Co. v. Driver Pipeline Co.,
134 S.W.3d 195 (Tex. 2004)......................................................................................................9
Newsom v. Starkey,
541 S.W.2d 468 (Tex.App.—Dallas 1976, writ ref'd n.r.e.)......................................................8
Nohra v. Evans,
509 S.W.2d 648 (Tex.App.—Austin 1974, no writ)................................................................13
Northern Nat Gas Co. v. Chisos Jt.V.1,
142 S.W.3d 447 (Tex.App. —El Paso 2004, no pet )..............................................................15
O'Shea v. IBM Corp.,
578 S.W.2d 844 (Tex.App.—Houston [1st Dist.] 1979, writ ref'd n.r.e.)................................10
Old Republic Ins. Co. v. Fuller,
919 S.W.2d 726 (Tex.App.—Texarkana 1996, writ denied).....................................................9
In re Palm Harbor Homes, Inc.,
195 S.W.3d 672 (Tex. 2006)......................................................................................................6
Peacock v. Harrison,
189 S.W.2d 500 (Tex.App.—Austin 1945, writ dism'd) .........................................................11
Perry v. Breland,
16 S.W.3d 182 (Tex.App.—Eastland 2000, pet. denied)...........................................................6
Perry v. Citizens Life Ins. Co.,
163 S.W.2d 743 (Tex.Civ.App.1942, no writ).........................................................................10
Perry v. Little,
419 S.W.2d 198 (Tex. 1967)......................................................................................................3
Petroleum Anchor Equip., Inc, v, Tyra,
419 S.W.2d 829 (Tex. 1967)......................................................................................................8
Phoenix Network Tech. v. Neon Sys.,
177 S.W.3d 605 (Tex.App.—....................................................................................................5
Pickett v. Keene,
47 S.W.3d. 67 (Tex.App.—Corpus Christi 2001, pet. dism'd)..................................................3
Pioneer Cas. Co. v. Bush,
457 S.W.2d 165 (Tex.App.—Tyler 1970, writ ref'd n.r.e,)......................................................12
Pitman v. Lightfoot,
937 S.W.2d 496 (Tex.App.—San Antonio 1996, writ denied)..................................................8
xi
Price Pfister, Inc. v. Moore & Kimmey, Inc.,
48 S.W.3d 341 (Tex.App. —Houston [14th Dist,] 2001, pet. denied) ....................................13
Prudential Bldg. & Loan Ass'n v. Shaw,
26 S.W.2d 168 (Tex.Comm'n App. 1930, judgm't adopted)..............................................11, 12
Raymond v. Rahme,
78 S.W.3d 552 (Tex.App.—Austin 2002, no pet.) ....................................................................6
River Consulting, Inc. v. Sullivan,
848 S.W.2d 165 (Tex.App.—Houston [1st Dist.] 1992, writ denied),
disapproved on other grounds, Formosa Plastics Corp. v. Presidia Eng'rs &
Contractors, Inc., 960 S.W.2d 41 (Tex. 1998) ..........................................................................6
Robinson v. Roquemore,
2 S.W.2d 873 (Tex.App.—Texarkana 1928, no writ)..............................................................12
Roland v. McCullough,
561 S.W.2d 207 (Tex.App.—San Antonio 1977, writ ref'd n.r.e.)............................................7
Rutherford v. Hughes,
228 S.W.2d 909 (Tex.App.—Amarillo 1950, no writ)............................................................12
Ryland Group v. Hood,
924 S.W.2d 120 (Tex. 1996)......................................................................................................4
S&H Sup. v. Hamilton,
418 S.W.2d 489 (Tex. 1967)......................................................................................................7
Sage St. Assocs. v. Northdale Constr. Co.,
809 S.W.2d 775 (Tex.App.—Houston 114th Dist.] 1991), remanded in part
on other grounds, 863 S.W.2d 438 (Tex. 1993)......................................................................10
Samms v. Autumn Run Cmty. Imprv. Ass'n,
23 S.W.3d 398 (Tex.App.—Houston [1st Dist.] 2000, pet. denied)..........................................8
San Felipe Rd, L.P. v. Trafalgar Holdings 1, Ltd.,
218 S.W.3d 137 (Tex.App. —Houston [14th Dist.] 2007, pet. denied) ..................................13
Sanchez v. Mica Corp.,
107 S.W.3d 13 (Tex.App.—San Antonio 2002, pet. granted, judgm't vacated
w.r.m.)........................................................................................................................................4
Schroeder v. Texas Iron Works, Inc.,
769 S.W.2d 625 (Tex.App.—Corpus Christi 1989), aff'd, 813 S.W.2d 483
(Tex. 1991)...............................................................................................................................10
Searcy v. Hunter,
17 S.W. 372 (Tex. 1891)..........................................................................................................12
Seymour v. American Engine & Grinding Co.,
xii
956 S.W.2d 49 (Tex.App.—Houston [14th Dist] 1996, writ denied)....................................7, 8
Slusser v. Union Bankers Ins. Co.,
72 S.W.3d 713 (Tex.App.—Eastland 2002, no pet.).................................................................4
Sonnier v. Chisholm-Ryder Co.,
909 S.W.2d 475 (Tex. 1995)......................................................................................................4
Southwestern Bell Tel. Co. v. Wilson,
768 S.W.2d 755 (Tex.App.—Corpus Christi 1988, writ denied) ..............................................8
Stafford v. Southern Vanity Mag,, Inc.,
231 S.W.3d 530 (Tex.App. —.................................................................................................14
State Farm Fire & Cas. Co. v. Gandy,
925 S.W.2d 696 (Tex. 1996)......................................................................................................6
Stine v. Stewart,
80 S.W.3d 586 (Tex. 2002)................................................................................................3, 5, 6
Stowers v. Harper,
376 S.W.2d 34 (Tex.App.—Tyler 1964, writ ref'd n.r.e.)..........................................................9
Sun Opera, Ltd. v. Holt,
984 S.W.2d 277 (Tex.App.—Amarillo 1998, pet. denied)......................................................15
Tag Res. v. Petroleum Well Servs.,
791 S.W.2d 600 (Tex.App.—Beaumont 1990, no writ)............................................................8
Tennessee Gas Pipeline Co. v. Lenape Res.,
870 S.W.2d 286 (Tex.App.—San Antonio 1993), rev'd in part on other
grounds, 925 S.W.2d 565 (Tex. 1996).......................................................................................9
Texas Farmers Ins. Co. v. Murphy,
996 S.W.2d 873 (Tex. 1999)....................................................................................................13
Texas Gas Expl. Corp. v. Fluor Corp.,
828 S.W.2d 28 (Tex.App.—Texarkana 1991, writ denied).......................................................4
Texas Seed & Floral Co. v. Chicago Set & Seed Co.,
187 S.W. 747 (Tex.App. —Amarillo 1916, writ ref'd)............................................................15
Tinsley v. Dowell,
26 S.W. 946 (Tex. 1894)............................................................................................................6
Tirbelite v. Risica & Sons, Inc.,
819 S.W.2d 801 (Tex.1991).....................................................................................................13
Trinity River Auth. v. URS Consultants, Inc.,
889 S.W.2d 259 (Tex. 1994)......................................................................................................4
xiii
Trunkhill Capital, Inc. v. Jansma,
905 S.W.2d 464 (Tex.App.—Waco 1995, writ denied) ............................................................4
Twelve Oaks Tower I, Ltd. v. Premier Allergy, Inc.,
938 S.W.2d 102 (Tex.App.—Houston [14th Dist.] 1996, no writ)............................................5
U.S. Fid. & Guar. Co. v. Bimco Iron & Metal Corp.,
464 S.W.2d 353 (Tex. 1971)......................................................................................................9
United States v. Spearin,
248 U.S. 132 (1918)...................................................................................................................2
Valdina Farms, Inc. v. Brown, Beasley & Assocs.,
733 S.W.2d 688 (Tex.App.—San Antonio 1987, no writ) ......................................................11
Valero Transmission Co. v, Mitchell Energy Corp.,
743 S.W.2d 658 (Tex.App. —Houston [1st Dist.] 1987, no writ)...........................................14
Valiance & Co. v. De Anda,
595 S.W.2d 587 (Tex.App.—San Antonio 1980, no writ) ......................................................15
Vaughn v. DAP Fin, Servs.,
982 S.W.2d 1 (Tex.App.—Houston [1st Dist.] 1997, no pet.) ..................................................5
Wagner & Brown, Ltd. v. Norwood,
58 S.W.3d 732 (Tex. 2001)........................................................................................................4
Walden v. Affiliated Computer Servs.,
97 S.W.3d 303 (Tex.App.—Houston [14th Dist.] 2003, pet. denied) .......................7, 8, 13, 14
Walker v. Salt Flat Water Co.,
96 S.W.2d 231 (Tex. 1936)......................................................................................................11
Webb v. Finger Contract Sup.,
447 S.W.2d 906 (Tex. 1969)....................................................................................................13
Welkener v. Welkener,
71 S.W.3d 364 (Tex.App.—Corpus Christi 2001, no pet.)........................................................7
Ex parte Williams,
420 S.W.2d 135 (Tex. 1967)....................................................................................................12
Williams v. Glash,
789 S.W.2d 261 (Tex. 1990)..................................................................................................7, 8
Willis v. Donnelly,
199 S.W.3d 262 (Tex. 2006)......................................................................................................5
Wilson Cty. Peanut Co. v. Hahn,
364 S.W.2d 468 (Tex.App.—San Antonio 1963, no writ) ........................................................6
xiv
World Broad Sys. v. Eagle Broad. Co.,
162 S.W.2d 463 (Tex.App.—San Antonio 1942, writ dism'd)..................................................3
Zuniga v. Wooster Ladder Co.,
119 S.W.3d 856 (Tex.App.—San Antonio 2003, no pet.).........................................................5
SECONDARY SOURCES
1 Lord, Williston on Contracts §11 (4th ed. 1990)...........................................................................3
31 CJS Estoppel & Waiver §2 (1996 & Supp.2005)......................................................................10
Black's Law Dictionary 341-42 (8th ed. 2004)......................................................3,5,6,7,8,10,14,15
Perillo, Calamari & Perillo on Contracts §1.1 (5th ed. 2003) ........................................................3
Restatement (2d) of Agency §8B (1958)........................................................................................10
Restatement (2d) of Contracts §2(1) (1979).....................................................................................3
Tex. Civ. Prac. Com. Code § 24.010(a)(1)...................................................................................4, 5
Tex. Civ. Prac. & Rem. Code §16.051...............................................................................3, 4, 5, 12
Tex. Agric. Code § 251.004(a).........................................................................................................5
Tex. Fam. Code §101.003(a)..........................................................................................................12
Tex. R. Civ. P. 54...........................................................................................................................14
Tex. Civ. Prac. & Rem. Code § 16.009............................................................................................4
Tex. R. Civ. P. 93(9), 94 ..................................................................................................................7
LESSER KNOWN BREACH OF CONTRACT DEFENSES
1
LESSER KNOWN BREACH OF CONTRACT
DEFENSES
I. INTRODUCTION
This first section of this paper provides a general
background on construction contracts as well as some
helpful definitions. The second section sets forth a list
of various breach of contract claim defenses and the
supporting substantive law.
II. BACKGROUND ON CONSTRUCTION
CONTRACTS
A. Contract Documents
Generally speaking, a construction contract
contains the following parts: (1) owner-contractor
agreement; (2) conditions of contract (general &
supplementary); (3) drawings and specifications; (4)
bonds to secure payment or performance; and (5)
exhibits, modifications, or addenda. However, because
a construction contract is not a single document but
consists of a group of "construction documents."
These are typically referred to as the "Contract
Documents," and include the following: (1) agreement
between the owner and contractor, which sets for the
basic provisions between of the relationship; (2)
General Conditions, which describe the legal terms and
conditions of the work of the contractor for the owner;
(3) Supplementary and Special Conditions, which
modify the terms of the General Conditions; (4) Plans
or Drawings, which describe in graphic terms the
construction to be performed; (5) Specifications, which
contain detailed technical instructions and descriptions
of the materials form that the building is to be
constructed; (6) Addenda, which are modifications
issued before the Agreement is signed; (7) Change
Orders, which are subsequent modifications to the
contract; and (8) Soils reports or other engineering
data. One or more of the contract documents, usually
the agreement and/or the general conditions, defines
what documents comprise the "contract" and refer to
them as the "Contract Documents." Additionally, there
are three general ways to set the payment price for
construction contracts: (1) lump-sum contracts; (2) cost
plus fee agreement (cost-plus); and (3) guaranteed
maximum price contracts. Finally, there are three
general types of construction project delivery: (1)
design-bid-build; (2) design-build; and (3) construction
management.
B. Checklist of Issues Covered in a Contract
The following is a general list of issues to look for
in a contract. Specifically, in reviewing a contract,
determine whether the contract does the following: (1)
identify the owner and contractor and include the legal
method of operation (e.g., corporation, partnership, or
sole proprietorship-of each party to the contract); (2)
describe the project in detail, with specific reference to
drawings, special contracts, bid documents, addenda,
and specifications and try to avoid performance
specifications; (3) include the specific time of
commencement, and establish a completion date within
reasonable and realistic deadlines; (4) set forth the
contract sum, subject to provisions for additions and
deductions by properly approved change orders; (5)
describe change order procedures in detail, to avoid
disputes as to whether or not the work was approved or
authorized; (6) set forth progress payment schedules
and documentation required as a condition of payment;
(7) include final payment guidelines to determine when
the con-tractor and subcontractors are entitled to final
payment; (8) key interest for sums not paid to the
subcontractor when due to the local prime rate to avoid
frivolous payment delays by general contractors; (9)
describe working conditions and scheduling
responsibilities between the specialty trades with
particularity to avoid overlapping responsibility and
conflicting access to the site by the trades; (10) specify
the insurance responsibilities of the owner, contractor,
and subcontractor; (11) describe the rights and
remedies of the parties in the event of contract
disputes; (12) define the owner's and contractor's rights
and liabilities with regard to stopping the work prior to
completion; (13) define the risk of loss for stored
materials, and establish the responsibility for protection
and insurance of the materials; (14) provide for
extraordinary or unanticipated delays due to severe and
unusual weather conditions not usually encountered in
order to permit time extensions when such conditions
prevent performance; (15) provide for extra
compensation to the contractor for unforeseen
subsurface conditions, which could not reasonably
have been contemplated or discovered by the parties;
(16) if performance bond and labor and material
payment bonds are to be required by the owner, ensure
that the cost is paid for by the owner; (17) establish
progress schedules for each subcontractor (e.g., use of
bar charts or Critical Path Method); (18) key retention
to performance, not punishment, and provide for line-
item reductions as each trade completes its portion of
the contract; (19) ensure that delays, extensions of
time, and change orders are always in writing; (20)
establish the subcontractor's right to payment when
there is a wrongful failure of payment by the owner or
general contractor, and include the right of the
subcontractor to obtain shutdown costs; (21) define
"Substantial Completion," and clearly set forth the
method by which it is established; (22) set forth change
order procedures and requirements, including a
procedure to be followed when the parties are unable to
reduce change orders to writing due to "practical"
difficulties (e.g., field conditions); (23) to avoid a
statutory prohibition against the recovery of attorney's
fees, provide for attorney's fees in the contract to be
LESSER KNOWN BREACH OF CONTRACT DEFENSES
2
awarded to the prevailing party, if you want to recover
such fees from a party; and; (24) prepare a contract
notification checklist, to make sure you do not lose any
rights by failing to act in a timely manner.
C. Definitions
Assignment. The right to transfer to another
person the contract rights of a party to the contract. By
assignment, a contractor may transfer to a bank, factor,
or other creditor the right to receive contract funds.
Many construction contracts permit assignment only
with the consent of the other party to the contract,
Frequently, the contract includes a provision that
allows an owner to assume subcontracts by assignment
upon termination of a general contract,
Condition Precedent. An act or event that must
occur before a right dependent upon it accrues,
Frequently used in the payment context, i.e., the
contractor must perform the work and submit a fully
completed and acceptable payment
application/requisition before its right to be paid
accrues.
Design Specification. Specifications set forth
precise measurements, tolerances, materials, in-
process, and finished product tests, QC measures,
inspection requirements, and other specific information
about how the project or a portion of the project is to
be built, The owner is responsible for the correctness
and adequacy of the design and engineering Compare
with Performance Specification.
Performance Specification. Technical
requirements that set forth the operational
characteristics desired for the work or a portion of the
work. The contractor accepts general responsibility for
product design and engineering and for achievement of
the stated performance requirements.
Differing Site Condition (DSC). An unanticipated
physical condition at the site that differs materially
from those set forth in the contract or ordinarily
encountered in work of the same nature. In federal
construction contracts, DSCs are distinguished as Type
I, subsurface, or latent physical conditions at a
construction site that differ materially from the
conditions indicated in the contract; or Type II,
unknown physical conditions at the site, of an unusual
nature, that differ materially from conditions ordinarily
encountered and generally recognized as inherent in
work of the kind provided for in the contract.
Final Acceptance. The owner's acceptance of the
project from the contractor upon the architect or
engineer's certification that it is complete and in
accordance with the contract requirements. Final
payment usually is what confirms final acceptance
unless otherwise stipulated in the contract.
Final Completion. The time when the contractor
completes the work and fulfills all of the contract
requirements.
Force Majure. A superior or irresistible force,
such as lightning, earthquakes, storms, hurricanes,
flood, sunstroke, and freezing occurs without any
human intervention. Some contracts include war,
governmental action, or labor strikes in their definition
of force majure. Force majure clauses are commonly
used to protect the parties if part of the contract cannot
be performed as a result of causes outside the control
of either party and could not be avoided by the exercise
of due care.
Latent Defect. A hidden defect in materials,
equipment, or the work that a reasonably careful
observation during the performance of the contract or
during any warranty period would not have revealed.
Patent Defect. A defect which is open or obvious
or which the owner should have discovered by
reasonable observation. A patent defect is the
opposite of a latent defect.
Liquidated Damages. Contracts often include
completion dates to which the contractor agrees. In the
event there is a delay in the contractual completion
date, the liquidated damage clause obligates the
contractor to pay the owner a daily rate that
compensates the owner for damages, assuming the
contractor and not the owner caused the delay.
No Damages For Delay. A provision contained in
some contracts prohibiting the contractor (or
subcontractor) from seeking or recovering damages for
delays caused by persons other than the contractor (or
subcontractor). Some states have legislatively banned
the use of no-damages-for-delay clauses in public
contracts, finding them void and against public policy.
Order of Precedence. The order of hierarchy of
various parts of the contract. Commonly defined in the
contract, the order of precedence clause resolves
conflicts and omissions in the contract drawings and
contract documents by defining which part of the
contract controls over another conflicting part.
Spearin Doctrine. The legal theory, first
pronounced in United States v. Spearin, 248 U.S. 132
(1918), imposing responsibility under an implied
warranty theory, on the government that the
specifications it furnishes for construction are suitable
for their intended purpose.
Substantial Completion. The date certified by the
architect when the work or a designated portion thereof
is sufficiently complete, in accordance with the
contract documents, so the owner may occupy or
utilize the work or designated portion thereof for the
use for which it is intended. Some contracts have a
very specific definition of substantial completion and
set out express conditions that the contractor must
satisfy.
Plans. Plans are the drawings that the design
professional has prepared and that are the graphic
expressions of the work that the contractor is to
perform. The plans may be in electronic as well as
LESSER KNOWN BREACH OF CONTRACT DEFENSES
3
printed media. Disputes on failed construction projects
often involve questions as to whether the plans and the
specifications were defective.
Specifications. Specifications are the written
technical requirements for the materials, equipment,
systems, and standards for the work.
Contract. An agreement between two or more
persons that creates an obligation to do or not do a
particular thing.
1
The term "contract" can also refer to
the physical document executed by the parties that sets
forth their obligation or obligations.
2
Promise. An assurance that a party will do
something or refrain from doing some-thing, conveyed
in such a way that another party understands a
commitment has been made.
3
Dependent promise. A promise that is
conditioned on the performance of a reciprocal promise
by the other party.
4
Dependent promises are usually
intended to be mutual and concurrent acts; the parties
do not intend that either party should perform some act
as a condition precedent to the act of the other.
5
A
dependent promise is sometimes referred to as a
"concurrent condition."
6
1
Frady v. May, 23 S.W.3d 558, 565
(Tex.App.—Fort Worth 2000, pet.
denied); see Black's Law Dictionary 341-
42 (8th ed. 2004); 1 Lord, Williston on
Contracts §11 (4th ed. 1990); see also
Perillo, Calamari & Perillo on Contracts
§1.1 (5th ed. 2003).
2
Black's Law Dictionary 341 (8th ed.
2004); see Calamari & Perillo on
Contracts §1.1.
3
Montgomery Cty. Hosp. Dist. v. Brown,
965 S.W.2d 501, 502 (Tex.1998);
Restatement (2d) of Contracts §2(1)
(1979); Black's Law Dictionary 1249-50
(8th ed. 2004).
4
46933, Inc, v. Z&B Enters., 899 S.W.2d
800, 807-08 (Tex.App.—Amarillo 1995,
writ denied); D.E.W., Inc. v. Depco Forms,
Inc., 827 S.W.2d 379, 382 (Tex.App.—
San Antonio 1992, no writ); see
Greenstein v. Simpson, 660 S.W.2d 155,
160 (Tex.App.—Waco 1983, writ ref'd
n.r.e.).
5
See Perry v. Little, 419 S.W.2d 198, 200-
01 (Tex. 1967).
6
Id.
Independent promise. A promise that must be
performed by a party even if another party does not
perform according to the parties' agreement.
7
III. CONTRACT DEFENSES
A. Limitations (Statute of Limitations & Statute
of Repose)
A defendant can assert the defense of limitations
to a breach of contract action. The statute of
limitations for a breach of contract is four years.
8
However, parties to a contract can agree to a different
limitations period in the underlying contract.
9
If the
parties agree to a different limitations period, it must
be a period of at least two years, unless the contract
involves the purchase or sale of a business entity and
one of the parties will pay or receive at least $500,000
in consideration.
10
Breach of contract claims generally accrue at the
time of the breach.
11
However, a claim for breach of a
continuing contract accrues at the earlier of the
following: (1) when the work is completed; (2) when
the contract is terminated in accordance with its terms;
or (3) when the contract is anticipatorily repudiated by
the defendant and this repudiation is adopted by the
plaintiff.
12
Further, an action for breach of a
7
Black's Law Dictionary 1250 (8th ed.
2004); see World Broad Sys. v. Eagle
Broad. Co., 162 S.W.2d 463, 465
(Tex.App.—San Antonio 1942, writ
dism'd) see, e.g. , Hanks v. GAB Bus., 644
S.W.2d 707, 708 (Tex. 1982).
8
Tex. Civ. Prac. & Rem. Code §16.051;
Stine v. Stewart, 80 S.W.3d 586, 592 (Tex.
2002).
9
See Tex. Civ. Prac. & Rem. Code
§16.070.
10
Id.
11
Jones v. Blume, 196 S.W.3d. 440, 446
(Tex.App.—Dallas 2006, pet. denied);
Barker v. Eckman, __ S.W.3d. __, __
(Tex. 2006); e.g., F.D. Stella Prods. v.
Scott, 875 S.W.2d 462, 464 (Tex.App.—
Austin 1994, no writ) there is failure to
perform); see also Pickett v. Keene, 47
S.W.3d. 67, 77 (Tex.App.—Corpus Christi
2001, pet. dism'd).
12
City of Corpus Christi v. Taylor, 126
S.W.3d 712, 725 (Tex.App.—Corpus
Christi 2004, pet. dism'd); Hubble v. Lone
Star Contracting Corp., 883 S.W.2d 379,
382 (Tex.App.—Fort Worth 1994, writ
denied); see Ingersoll-Rand Co. v. Valero
Energy Corp., 997 S.W.2d 203, 211 (Tex.
1999).
LESSER KNOWN BREACH OF CONTRACT DEFENSES
4
contractual indemnity provision accrues when all the
potential liabilities of the party to be indemnified have
become fixed and certain.
13
Additionally, the
discovery rule applies to breach of contract claims if
the nature of the plaintiff's injury is inherently
undiscoverable and the injury is objectively verifiable
by physical evidence.
14
A statute of repose cuts off a plaintiff’s cause of
action before it accrues.
15
A statute of repose begins to
run from a specified date without regard to the accrual
of the plaintiff's cause of action.
16
The effect of a
statute of repose is that unless a plaintiff's cause of
action arises within the time allowed, the plaintiff does
not have a cause of action, regardless of the plaintiff's
diligence after discovering the defect or problem.
17
The following are some statutes of repose that cut off a
plaintiff's cause of action: (1) actions against architects,
engineers & design professionals; (2) actions against
persons furnishing construction; (3) actions against
surveyors; (4) actions involving products liability; (5)
actions involving a fraudulent conveyance; (6) actions
against agricultural operations; and (7) actions
involving a health-care-liability claim.
An action arising out of a defective or unsafe
condition of real property or an improvement to or
equipment attached to real property against a registered
or licensed architect, a landscape architect, an
engineer, or an interior designer who designed,
planned, or inspected the construction of the
improvement or equipment must be brought no later
than ten years after the substantial completion of the
improvement or the beginning of operation of the
equipment.
18
An action arising out of a defective or
13
Ingersoll-Rand Co., 997 S.W.2d at 210.
14
HECI Expl. Co. v. Neel, 982 S.W.2d
881, 886 (Tex. 1998); e.g., Wagner &
Brown, Ltd. v. Norwood, 58 S.W.3d 732,
736-37 (Tex. 2001). Slusser v. Union
Bankers Ins. Co., 72 S.W.3d 713, 718
(Tex.App.—Eastland 2002, no pet.).
15
Holubec v. Brandenberger, 111 S.W.3d
32, 37 (Tex. 2003); Trinity River Auth. v.
URS Consultants, Inc., 889 S.W.2d 259,
263 (Tex. 1994).
16
Trinity River Auth., 889 S.W.2d at 261;
Trunkhill Capital, Inc. v. Jansma, 905
S.W.2d 464, 467 (Tex.App.—Waco 1995,
writ denied).
17
Trunkhill Capital, 905 S.W.2d at 467.
18
Tex. Civ. Prac, & Rem. Code §
16.008(a); Sonnier v. Chisholm-Ryder Co.,
909 S.W.2d 475, 478 (Tex. 1995); Trinity
River Auth., 889 S.W.2d at 261.
unsafe condition of real property or a deficiency in the
construction or repair of an improvement to real
property against a person who constructed or repaired
the improvement must be brought no later than ten
years after the substantial completion of the
improvement.
19
Texas Civil Practice and Remedies
Code section 16.009 does not bar an action based on
willful misconduct or fraudulent concealment in
connection with the performance of the construction or
repair.
20
An action arising from an injury or loss
caused by an error in a survey conducted by a
registered public surveyor or licensed state land
surveyor must be brought no later than ten years after
the date the survey was completed.
21
A products-liability action against a manufacturer
or seller of products must be brought no later than
either of the following: (1) Fifteen years after the date
of the sale of the product by the manufacturer or
seller;
22
or (2) if the manufacturer or seller expressly
warranted in writing that the product had a useful safe
life of longer than 15 years, the number of years
warranted after the date of the sale of the product by
the seller.
23
An action arising from the fraudulent
conveyance of property by a debtor with the intent to
hinder, delay, or defraud his creditors by placing his
property beyond the creditors' reach must be brought
no later than either of the following: (1) four years
after the conveyance;
24
or (2) if more than four years
after the conveyance, one year after the creditor knew
19
Tex. Civ. Prac. & Rem. Code §
16.009(a); Sanchez v. Mica Corp., 107
S.W.3d 13, 31 (Tex.App.—San Antonio
2002, pet. granted, judgm't vacated
w.r.m.); Fuentes v. Continental Conveyor
& Equip. Co., 63 S.W.3d 518, 520
(Tex.App.—Eastland 2001, pet. denied);
see Sonnier, 909 S.W.2d at 478, 483
(comparing Tex. Civ. Prac. & Rem. Code
§16.008 to §16.009).
20
Tex. Civ. Prac. & Rem. Code §
16.009(e)(3); Ryland Group v. Hood, 924
S.W.2d 120, 121 (Tex. 1996); Texas Gas
Expl. Corp. v. Fluor Corp., 828 S.W.2d
28, 32-33 (Tex.App.—Texarkana 1991,
writ denied).
21
Tex. Civ. Prac. & Rem. Code §
16.011(a)(1).
22
Tex. Civ. Prac. & Rem. Code
§16,012(b).
23
Id. §16.012(c).
24
Tex. Bus. & Com. Code § 24.010(a)(1);
Duran v. Henderson, 71 S.W.3d 833, 837
(Tex.App.—Texarkana 2002, pet. denied)
LESSER KNOWN BREACH OF CONTRACT DEFENSES
5
or reasonably should have known about the
conveyance.
25
A nuisance action against an
agricultural operation that has been in lawful operation
for more than a year must be brought no later than one
year after the start of the conditions or circumstances
that give rise to the nuisance action.
26
A health-care-
liability claim must be brought no later than ten years
after the date of the act or omission that gives rise to
the claim.
27
B. Standing/Privity
If a plaintiff is not the proper party to assert a
breach of contract claim, the defendant can allege that
the plaintiff “lacks standing” to sue.
28
To be a proper
party, a plaintiff must be (1) a party to the contract; (2)
an assignee of a party to the contract; (3) an agent
entitled to sue on behalf of a party to the contract; or
(4) an intended third-party beneficiary of the contract.
Parties to a contract are the signatories to the
contract or those who have otherwise indicated their
consent to be bound by the contractual promises.
29
Parties are considered to be in "privity of contract,"
when they have formed a relationship that allows them
to sue each other based on their contractual duties.
30
In
25
Tex. Bus. & Com. Code § 24.010(a)(1);
Duran, 71 S.W.3d at 837.
26
Tex. Agric. Code § 251.004(a);
Holubec, 111 S.W.3d at 38; Barrera v.
Hondo Creek Cattle Co., 132 S.W.3d 544,
547 (Tex.App.—Corpus Christi 2004, no
pet.).
27
Tex. Civ. Prac. & Rem. Code §
74.251(b).
28
Stine v. Stewart, 80 S.W.3d, 586, 590
(Tex. 2002); Mandell v. Hammon Oil &
Ref Co., 822 S.W.2d 153, 161
(Tex.App.—Houston [1st Dist.] 1991, writ
denied).
29
See, e.g., Willis v. Donnelly, 199 S.W.3d
262, 271 (Tex. 2006); Bookout v. Bookout,
165 S.W.3d 904, 911-12 (Tex.App.—
Texarkana 2005, no pet.); ANCO Ins.
Servs. v. Romero, 27 S.W.3d 1, 5-6
(Tex.App.—San Antonio 2000, pet.
denied).
30
Black's Law Dictionary 1237 (8th ed.
2004). The doctrine of privity in contract
law provides that a contract cannot confer
rights or impose obligations arising under
it on any person or agent except the parties
to it. This is based on the desire to afford
only the parties to contracts the ability to
sue to enforce their rights or claim
damages as such.
certain circumstances, a party to a contract may be
entitled to seek damages on behalf of others. For
example, a party to a contract can sue for an injury to
an intended third-party beneficiary of the contract.
31
However, it is unclear whether a party suing on behalf
of a third-party beneficiary can seek damages or is
limited to seeking specific performance.
32
In
construction contracts involving owners, general
contractors, and subcontractors, the general contractor
can sue the owner for breach of contract on behalf of a
subcontractor if the contract between the general
contractor and the subcontractor includes a "pass-
through" agreement, also known as a "liquidation" or
"consolidation-of-claims" agreement.
33
These
agreements are designed to prevent unnecessary
litigation between contractors and subcontractors over
money owed by a property owner.
34
An assignee is a person to whom a party to the
contract assigned its contractual rights. "Assignment"
refers to the transfer of property or some right or
interest from one person to another;
35
and Texas law
generally allows parties to assign their contractual
rights and affords assignees the same rights as an
original party to a contract.
36
An assignee of a party's
interests in a contract can sue for breach of contract.
37
Unless otherwise stipulated, contracts are freely
assignable.
38
Contractual rights can be assigned orally
31
Zuniga v. Wooster Ladder Co., 119
S.W.3d 856, 862 (Tex.App.—San Antonio
2003, no pet.); Copeland v. Alsobrook, 3
S.W.3d 598, 608 (Tex.App.—San Antonio
1999, pet. denied).
32
Compare Zuniga, 119 S.W.3d at 862,
with Delaney v. Davis, 81 S.W.3d 445,
449-50 (Tex.App.—Houston [14th Dist.]
2002, no pet.).
33
See Interstate Contracting Corp. v. City
of Dallas, 135 S.W.3d 605, 607 (Tex
2004).
34
See id. at 610.
35
Twelve Oaks Tower I, Ltd. v. Premier
Allergy, Inc., 938 S.W.2d 102, 113
(Tex.App.—Houston [14th Dist.] 1996, no
writ); Black's Law Dictionary 128 (8th ed.
2004).
36
See Phoenix Network Tech. v. Neon
Sys., 177 S.W.3d 605, 620 (Tex.App.—
Houston [1st Dist.] 2005, no pet.
37
See Vaughn v. DAP Fin, Servs., 982
S.W.2d 1, 7 (Tex.App.—Houston [1st
Dist.] 1997, no pet.).
38
Id.; see also Tex. Bus. & Com. Code
§2.210(b).
LESSER KNOWN BREACH OF CONTRACT DEFENSES
6
unless the contract giving rise to the claim, or a statute
pertaining to the claim, requires a written transfer.
39
An assignee of a party's breach-of-contract claim can
also sue for breach of contract.
40
To recover on an
assigned cause of action, the plaintiff must prove that
the cause of action was in fact assigned.
41
An agent of a party to a contract can sometimes
sue for breach of contract on behalf of its principal.
42
Generally, an agent cannot sue for a breach of its
principal's contract.
43
However, an agent can bring suit
if (1) the agent contracts in its own name; (2) the
principal is undisclosed; (3) the agent is authorized to
act as owner of the property; or (4) the agent has an
interest in the subject matter of the contract.
44
An intended third-party beneficiary of a contract
can bring suit for breach of the contract.
45
A third
party is an intended third-party beneficiary of a
contract when (1) the contracting parties intended to
secure a benefit to the third party, and (2) the
contracting parties entered into the contract directly for
the third party's benefit.
46
Plaintiffs are not required to
39
Adkins Servs. v. Tisdale Co., 56 S.W.3d
842, 845 (Tex.App.—Texarkana 2001, no
pet.).
40
See Conquest Drilling Fluids, Inc. v.
Tri-Flo Intl, 137 S.W.3d 299, 308
(Tex.App.—Beaumont 2004, no pet.).
River Consulting, Inc. v. Sullivan, 848
S.W.2d 165, 169 (Tex.App.—Houston [1st
Dist.] 1992, writ denied), disapproved on
other grounds, Formosa Plastics Corp. v.
Presidia Eng'rs & Contractors, Inc., 960
S.W.2d 41 (Tex. 1998).
41
Delaney, 81 S.W.3d at 448-49. See
generally State Farm Fire & Cas. Co. v.
Gandy, 925 S.W.2d 696, 705-11 (Tex.
1996).
42
See Perry v. Breland, 16 S.W.3d 182,
187 (Tex.App.—Eastland 2000, pet.
denied).
43
Tinsley v. Dowell, 26 S.W. 946, 948
(Tex. 1894).
44
Id.; Perry, 16 S.W.3d at 187; Wilson
Cty. Peanut Co. v. Hahn, 364 S.W.2d 468,
470 (Tex.App.—San Antonio 1963, no
writ).
45
In re Palm Harbor Homes, Inc., 195
S.W.3d 672, 677 (Tex. 2006); Stine v.
Stewart, 80 S.W.3d 586, 589 (Tex. 2002).
46
Stine, 80 S.W.3d at 589; MCI
Telecomms. Corp. v. Texas Utils. Elec.
Co., 995 S.W.2d 647, 651 (Tex. 1999).
give consideration for the agreement to be considered
third-party beneficiaries.
47
However, there is a
presumption against third-party beneficiary
agreements.
48
In order to show that contracting parties
intend to secure a benefit to a third party, the contract
must clearly and fully express the intent to confer a
direct benefit on the third party.
49
To determine the
parties' intent regarding a third-party beneficiary,
courts examine the entire contract and give effect to all
its provisions so that none are rendered meaningless.
50
A contract does not directly benefit a third party if the
benefit received is merely incidental to the contract.
51
To show a direct benefit, a third party must establish
that it is either a "donee" beneficiary or a "creditor"
beneficiary of the contract.
52
A contract benefits a
donee beneficiary if the performance promised in the
contract will, when rendered, be a pure donation to the
third party.
53
A contract benefits a creditor beneficiary
if the performance promised in the contract by the
promisor will satisfy a legal duty owed by the promisee
to the beneficiary.
54
This duty may be an indebtedness,
contractual obligation, or other legally enforceable
commitment owed to the third party.
55
C. Failure of consideration / Lack of consideration
In response to a breach of contract claim, a
defendant can assert the defenses of failure of
47
In re Palm Harbor Homes, 195 S.W.3d
at 677.
48
MCI, 995 S.W.2d at 652; Carson
Energy, Inc. v. Riverway Bank, 100
S.W.3d 591, 600 (Tex.App.—Texarkana
2003, pet. denied).
49
Stine, 80 S.W.3d at 589; MCI, 995
S.W.2d at 651.
50
Stine, 80 S.W.3d at 589; MCI, 995
S.W.2d at 652.
51
Stine, 80 S.W.3d at 589; MCI, 995
S.W.2d at 651; e.g., Raymond v. Rahme,
78 S.W.3d 552, 561 (Tex.App.—Austin
2002, no pet.).
52
Stine, 80 S.W.3d at 589; MCI, 995
S.W.2d at 651.
53
Stine, 80 S.W.3d at 589; MCI, 995
S.W.2d at 651; see Restatement (2d) of
Contracts §302(1)(b) (1981).
54
Stine, 80 S.W.3d at 589; MCI, 995
S.W.2d at 651; see also Restatement (2d)
of Contracts §302(1)(a).
55
Stine, 80 S.W.3d at 589; MCI, 995
S.W.2d at 651.
LESSER KNOWN BREACH OF CONTRACT DEFENSES
7
consideration or lack of consideration. Although the
courts sometimes use these terms interchangeably, they
represent different defenses.
56
Both defenses must be
raised by verified pleading.
57
The verified defense
places the burden on the defendant to prove the failure
or lack of consideration.
58
Failure of consideration
occurs when, after the inception of the contract, the
plaintiff does not perform a condition precedent to the
defendant's duty to perform.
59
In a few instances,
failure of consideration is not a defense to a breach-of-
contract suit.
60
Lack of consideration occurs when the
contract, at its inception, does not impose obligations
on both parties. A contract that lacks consideration is
unenforceable.
61
D. Mistake
Mistake is a defense to a breach of contract claim.
There are two kinds of mistake that can be raised as a
defense to a breach of contract: unilateral mistake and
mutual mistake.
62
Both forms of mistake involve only
mistakes concerning past or present facts.
63
A mistake
in predicting a future fact known to be uncertain cannot
be raised as a defense.
64
Generally, a unilateral mistake is not grounds for
equitable relief.
65
However, equitable relief may be
56
Motor & Indus. Fin. Corp. v. Hughes,
302 S.W.2d 386, 394 (Tex. 1957); Belew
v. Rector, 202 S.W.3d 849, 854 n.4
(Tex.App.—Eastland 2006, no pet.).
57
Tex. R. Civ. P. 93(9), 94; Kish v. Van
Note, 692 S.W.2d 463, 467
(Tex.1985)(failure of consideration);
Edlund v. Bounds, 842 S.W.2d 719, 724
(Tex.App.—Dallas 1992, writ denied)(lack
of consideration).
58
See Edlund, 842 S.W.2d at 724.
59
S&H Sup. v. Hamilton, 418 S.W.2d 489,
492 (Tex. 1967)(Greenhill, J., dissenting).
60
See, e.g., 1464-Eight, Ltd. v. Joppich,
154 S.W.3d 101, 109-10 (Tex. 2004).
61
Federal Sign v. Texas S. Univ., 951
S.W.2d 401, 409 (Tex. 1997).
62
See Green v. Morris, 43 S.W.3d 604,
606-07 (Tex.App.—Waco 2001, no pet).
63
See id. at 607.
64
Id.
65
Cigna Ins. Co. v. Rubalcada, 960
S.W.2d 408, 412 (Tex.App.—Houston [1st
Dist.] 1998, no pet.); Seymour v. American
Engine & Grinding Co., 956 S.W.2d 49,
granted for a unilateral mistake when all of the
following conditions are met: (1) the mistake is of so
great a consequence that to enforce the contract as
made would be unconscionable;
66
(2) the mistake
relates to a material feature of the contract;
67
(3) the
mistake would have been made regardless of the
exercise of ordinary care;
68
and (4) the parties can be
returned to the status quo; that is, the rescission will
not result in prejudice to the other party except for the
loss of its bargain.
69
A mutual mistake based on both
parties’ misconception or ignorance of a material fact
can render a contract voidable.
70
Mutual mistake is
determined by the language of the document and not
by self-serving subjective statements of the parties'
intent.
71
The objective circumstances surrounding the
execution of the contract can be examined, such as the
parties' knowledge at the time of signing, the amount
of consideration paid, the extent of the negotiations and
discussions, and the haste or lack of haste in obtaining
58 (Tex.App.—Houston [14th Dist] 1996,
writ denied).
66
James T. Taylor & Son, Inc. v. Arlington
ISD, 335 S.W.2d 371, 372-73 (Tex. 1960);
Welkener v. Welkener, 71 S.W.3d 364, 367
(Tex.App.—Corpus Christi 2001, no pet.);
see, e.g., Cigna Ins., 960 S.W.2d at 412.
67
James T. Taylor & Son, 335 S.W.2d at
373; e.g., B.D. Holt Co. v. OCE, Inc., 971
S.W.2d 618, 620 (Tex.App.—San Antonio
1998, pet. denied); Harry Brown, Inc. v.
McBryde, 622 S.W.2d 596, 600
(Tex.App.—Tyler 1981, no writ).
68
James T. Taylor & Son, 335 S.W.2d at
373; see Roland v. McCullough, 561
S.W.2d 207, 213 (Tex.App.—San Antonio
1977, writ ref'd n.r.e.); see, e.g., Boland v.
Mundaca Inv., 978 S.W.2d 146, 149
(Tex.App.—Austin 1998, no pet.); Guido
& Guido, Inc. v. Culberson Cty., 459
S.W.2d 674, 676-77 (Tex.App.—El Paso
1970, writ ref’d n.r.e.).
69
Monarch Marking Sys. v. Reed's Photo
Mart, Inc., 485 S.W.2d 905, 906-07 (Tex,
1972); James T. Taylor & Son, 335
S.W.2d at 373.
70
Williams v. Glash, 789 S.W.2d 261, 264
(Tex. 1990); Walden v. Affiliated
Computer Servs., 97 S.W.3d 303, 326
(Tex.App.—Houston [14th Dist.] 2003,
pet. denied); see Restatement (2d) of
Contracts §152.
71
See Williams, 789 S.W.2d at 264.
LESSER KNOWN BREACH OF CONTRACT DEFENSES
8
the agreement.
72
To prove mutual mistake, the party
seeking to void the contract must establish the
following: (1) both parties had the same
misunderstanding of the same material fact;
73
(2) the
mistake involved a material part of the contract;
74
and
(3) the risk of mistake was not allocated to the
defendant.
75
Unilateral mistake by one party and knowledge of
that mistake by the other party is equivalent to mutual
mistake.
76
The mistake must not relate merely to a
collateral matter.
77
A party cannot void a contract
based on mutual mistake if the risk of mistake has been
allocated to that party.
78
A party can assume this risk
when it (1) specifically agrees to assume the risk or (2)
is consciously ignorant of the facts surrounding the
mistake (i.e., it proceeds even though it knows it has
limited knowledge of the facts).
79
Unilateral mistake
72
Id.
73
Walden, 97 S.W.3d at 326; A.L.G Enters
v. Huffman, 660 S.W.2d 603, 606
(Tex.App.—Corpus Christi 1983), aff’d,
672 S.W.2d 230 (Tex. 1984); Newsom v.
Starkey, 541 S.W.2d 468, 472
(Tex.App.—Dallas 1976, writ ref'd n.r.e.);
see, e.g., Champlin Oil & Ref. Co. v.
Chastain, 403 S.W.2d 376, 381-82 (Tex.
1965).
74
A.L.G. Enters., 660 S.W.2d at 606;
Durham v. Uvalde Rock Asphalt Co., 599
S.W.2d 866, 870 (Tex.App.—San Antonio
1980, no writ); see, e.g., Chastain, 403
S.W.2d at 392 (Hamilton, J., concurring).
75
See Cherry v. McCall, 138 S.W.3d 35,
40 (Tex.App.—San Antonio 2004, pet.
denied); de Monet v. PERA, 877 S.W.2d
352, 359 (Tex.App.—Dallas 1994, no
writ).
76
Davis v. Grammer, 750 S.W.2d 766,
768 (Tex. 1988); Atlantic Lloyds Ins. Co.
v. Butler, 137 S.W.3d 199, 213
(Tex.App.—Houston [1st Dist.] 2004, pet.
denied); Seymour, 956 S.W.2d at 58.
77
A.L.G. Enters., 660 S.W.2d at 606; e.g.,
Brown-McKee, Inc. v. Western Beef, Inc.,
538 S.W.2d 840, 845 (Tex.App.—
Amarillo 1976, writ ref’d n.r.e.).
78
Cherry, 138 S.W.3d at 40; de Monet,
877 S.W.2d at 359; see Restatement (2d)
of Contracts §152 cmt. e. (1981).
79
See Cherry, 138 S.W.3d at 40; de
Monet, 877 S.W.2d at 359-60; see Bolle,
Inc. v. American Greetings Corp., 109
S.W.3d 827, 832 (Tex.App.—Dallas 2003,
pet. denied).
and mutual mistake are affirmative defenses that must
be pleaded or they are waived.
80
E. Ratification
Ratification is a defense to a breach of contract
claim.
81
Ratification occurs when the plaintiff, after
learning all the material facts, confirms or adopts an
earlier act that did not then legally bind it and that it
could have repudiated.
82
Once the plaintiff ratifies a
contract, it may not later withdraw the ratification and
seek to avoid the contract.
83
The elements of
ratification are: (1) plaintiff’s approval; (2) plaintiff’s
knowledge; and (3) plaintiff’s intention.
84
The
defendant must show the plaintiff approved the
contract by its acts, words, or conduct.
85
Approval
may be proved by silence in the face of actual
knowledge of an earlier act.
86
The defendant must
show the plaintiff fully knew of the facts of the earlier
act.
87
The defendant must show the plaintiff intended
to give validity to the earlier act.
88
The plaintiff does
not need to have the intent to ratify, but rather must
per-form a voluntary, intentional act that is inconsistent
80
Tag Res. v. Petroleum Well Servs., 791
S.W.2d 600, 604 (Tex.App.—Beaumont
1990, no writ).
81
Petroleum Anchor Equip., Inc, v, Tyra,
419 S.W.2d 829, 834 (Tex. 1967); Samms
v. Autumn Run Cmty. Imprv. Ass’n, 23
S.W.3d 398, 403 (Tex.App.—Houston [1st
Dist.] 2000, pet. denied).
82
K.B. v. N.B., 811 S.W.2d 634, 638
(Tex.App.—San Antonio 1991, writ
denied).
83
Missouri Pac. R.R. v. Lely Dev. Corp.,
86 S.W.3d 787, 792 (Tex.App.—Austin
2002, pet. dism'd).
84
Motel Enters. v. Nobani, 784 S.W.2d
545, 547 (Tex.App.—Houston [1st Dist.]
1990, no writ).
85
Nobani, 784 S.W.2d at 547; see Jamail
v. Thomas, 481 S.W.2d 485, 490
(Tex.App.-Houston [1st Dist.] 1972, writ
ref'd n.r.e.).
86
Pitman v. Lightfoot, 937 S.W.2d 496,
523 (Tex.App.—San Antonio 1996, writ
denied); see Southwestern Bell Tel. Co. v.
Wilson, 768 S.W.2d 755, 764 (Tex.App.—
Corpus Christi 1988, writ denied).
87
Nobani, 784 S.W.2d at 547; see Land
Title Co. v. M. Stigler, Inc., 609 S.W.2d
754, 756 (Tex. 1980).
88
Nobani, 784 S.W.2d at 547.
LESSER KNOWN BREACH OF CONTRACT DEFENSES
9
with an intention of avoiding the earlier agreement.
89
The inconsistent act does not have to be shown by
express word or deed and may be inferred by a party's
course of conduct.
90
Any act inconsistent with an
intent to avoid a contract has the effect of ratifying the
contract.
91
F. Waiver
Waiver is a defense to a breach of contract
claim.
92
Waiver is an intentional relinquishment of a
known right and is either made expressly or indicated
by conduct that is inconsistent with an intent to claim
the right.
93
Prolonged silence or inaction in asserting a
known right may amount to waiver.
94
The plaintiff's
intent is the primary factor in determining waiver, and
in the absence of a clear intent expressed in words,
acts, or conduct, waiver will be implied only to prevent
fraud or inequitable consequences.
95
The plaintiff
may affirm a breached contract and thus waive its
claim of breach in one of two ways: (1) by showing a
conscious intent to do so or (2) by acting to induce the
defendant's detrimental reliance, thereby creating an
estoppel situation.
96
However, the following do not
necessarily constitute waiver: (1) a plaintiff's
acceptance of a defendant's late performance
97
; (2) a
89
Old Republic Ins. Co. v. Fuller, 919
S.W.2d 726, 728 n.l (Tex.App.—
Texarkana 1996, writ denied).
90
Missouri Pac. R.R., 86 S.W.3d at 792.
91
Id.
92
Cal-Tex Lumber Co. v. Owens Handle
Co., 989 S.W.2d 802, 812 (Tex.App.—
Tyler 1999, no pet.).
93
Jernigan v. Langley, 111 S.W.3d 153,
156 (Tex. 2003); U.S. Fid. & Guar. Co. v.
Bimco Iron & Metal Corp., 464 S.W.2d
353, 357 (Tex. 1971); Martin v.
Birenbaum, 193 S.W.3d 677, 681
(Tex.App.—Dallas 2006, pet. denied);
Cal-Tex Lumber, 989 S.W.2d at 812.
94
Martin, 193 S.W.3d at 681.
95
Stowers v. Harper, 376 S.W.2d 34, 40
(Tex.App.—Tyler 1964, writ ref’d n.r.e.).
96
Consolidated Eng'g v. Southern Steel,
699 S.W.2d 188, 191 (Tex. 1985).
97
Cal-Tex Lumber, 989 S.W.2d at 812;
e.g., Jon-T Farms, Inc. v. Goodpasture,
Inc., 554 S.W.2d 743, 747 (Tex.App.—
Amarillo 1977, writ ref’d n.r.e.); see, e.g.,
Commercial Credit Corp. v. Taylor, 448
S.W.2d 190, 195 (Tex.App.—Tyler 1969,
no writ).
plaintiff's continuing performance after a defendant's
breach;
98
or (3) a plaintiffs honest efforts to induce a
defendant to perform the contract.
99
G. Plaintiff's Prior Material Breach
A defendant is discharged from performing a
contract if the plaintiff repudiates a dependent promise
or materially breaches the contract.
100
A party that
does not perform its obligation cannot enforce the
remaining terms of the contract against the other
party.
101
"Breach" means the failure, without legal excuse,
to perform any promise that forms all or part of an
agreement, the refusal to recognize the existence of an
agreement, or the doing of something inconsistent with
its existence.
102
Whether a party breached the contract
is a question of law for the court, not a fact question for
the jury.
103
The court must examine the contract and
determine what conduct is required of the parties, and
then, if there is a dispute concerning the failure of a
party to comply with the contract, the court should
submit the disputed fact question to the jury.
104
A
party breaches a contract if it neglects to or refuses to
perform a contractual obligation.
105
A party also
98
Cal-Tex Lumber, 989 S.W.2d at 812.
99
Consolidated Eng'g, 699 S.W.2d at 191-
92; Cal-Tex Lumber, 989 S.W.2d at 812.
100
Long Trusts v. Griffin, ___ S.W.3d ___
(Tex. 2006)(material breach); Mustang
Pipeline Co. v. Driver Pipeline Co., 134
S.W.3d 195, 196 (Tex. 2004)(material
breach); Lazy M Ranch, Ltd. v. TXI Opers.,
L.P, 978 S.W.2d 678, 680-81 (Tex.App.--
Austin 1998, pet denied)(repudiation and
material breach); MJR Corp, v. B&B
Vending Co., 760 S.W.2d 4, 20-21
(Tex.App.—Dallas 1988, writ
denied)(repudiation and material breach).
101
Interceramic, Inc. v. South Orient R.R.,
999 S.W.2d 920, 924 (Tex.App.—
Texarkana 1999, pet. denied).
102
DeSantis v. Wackenhut Corp., 732
S.W.2d 29, 34 (Tex.App.—Houston [14th
Dist.] 1987), rev'd in part on other
grounds, 793 S.W.2d 670 (Tex.1990).
103
Bank One v. Stewart, 967 S.W.2d 419,
432 (Tex.App.—Houston [14th Dist.]
1998, pet. denied).
104
Meek v. Bishop Peterson & Sharp, 919
S.W.2d 805, 808 (Tex.App.—Houston
[14th Dist.] 1996, writ denied).
105
Tennessee Gas Pipeline Co. v. Lenape
Res., 870 S.W.2d 286, 302 (Tex.App.—
LESSER KNOWN BREACH OF CONTRACT DEFENSES
10
breaches a contract if it prevents the other party from
performing the contract.
106
For example, a contractor
is excused from performance if the owner refuses to
allow the contractor to proceed, does not provide the
means required to complete the contract, or does not
make payments provided by the contract, including
installment payments.
107
A breach is “material” if it deprives a defendant of
the benefit that could have been reasonably anticipated
from full performance.
108
A breach will be considered
material when the breaching party does not
substantially perform a material obligation or duty
required under the contract.
109
The determination of
whether a breach is material is usually a question of
fact.
110
In determining whether a failure to render or
offer performance is material, the following
circumstances are significant: (1) the extent to which
the injured/non-breaching party will be deprived of the
benefit it reasonably expected; (2) the extent to which
the non-breaching party can be adequately
compensated for the benefit it will be deprived of; (3)
the extent to which the breaching party who failed to
perform or to offer to perform will suffer forfeiture; (4)
the likelihood that the breaching party will cure its
breach, taking account of all the circumstances
including any reasonable assurances; and (5) the extent
to which the behavior of the breaching party comports
with standards of good faith and fair dealing.
111
H. Estoppel by contract & Quasi-estoppel
In response to a breach of contract action, a
defendant can assert the defense of estoppel by
contract or quasi-estoppel. Generally, estoppel
San Antonio 1993), rev'd in part on other
grounds, 925 S.W.2d 565 (Tex. 1996).
106
O'Shea v. IBM Corp., 578 S.W.2d 844,
846 (Tex.App.—Houston [1st Dist.] 1979,
writ ref’d n.r.e.).
107
Sage St. Assocs. v. Northdale Constr.
Co., 809 S.W.2d 775, 777 (Tex.App.—
Houston 114th Dist.] 1991), remanded in
part on other grounds, 863 S.W.2d 438
(Tex. 1993).
108
Hernandez v. Gulf Group Lloyds, 875
S.W.2d 691, 693 (Tex. 1994).
109
Cowman v. Allen Monuments, Inc., 500
S.W.2d 223, 226-27 (Tex. App.-Texarkana
1973, no writ).
110
Hudson v. Wakefield, 645 S.W.2d 427,
430 (Tex. 1983).
111
Hernandez v. Gulf Group Lloyds, 875
S.W.2d 691, 693 (Tex. 1994).
prevents a party from asserting or denying rights,
claims, or matters of fact contrary to or inconsistent
with previous allegations, admissions, denials, or acts
of the party or those in privity with the party.
112
Estoppel by contract prevents a party from denying the
terms of a valid or fully executed contract unless the
contract is set aside by fraud, accident, or mistake.
113
There are two kinds of estoppel by contract: (1)
estoppel to deny facts set forth in the contract, and (2)
estoppel arising from acts done in performance of the
contract.
114
Quasi-estoppel is an equitable doctrine that
prevents a party from asserting, to another's
disadvantage, a right inconsistent with a position the
party previously took.
115
Quasi-estoppel requires no
proof of a false representation or of detrimental
reliance.
116
To establish the defense of quasi-estoppel,
a defendant must prove the following: (1) the plaintiff
acquiesced to or accepted a benefit under a transaction;
(2) the plaintiff's present position is inconsistent with
its earlier position when it acquiesced to or accepted
the benefit of the transaction; and (3) it would be
unconscionable to allow the plaintiff to maintain its
present position, which is to another's disadvantage.
117
112
Perry v. Citizens Life Ins. Co., 163
S.W.2d 743, 747 (Tex.Civ.App.1942, no
writ); Restatement (2d) of Contracts §90
cmt. a. (1979); Restatement (2d) of
Agency §8B (1958); 31 CJS Estoppel &
Waiver §2 (1996 & Supp.2005).
113
Mathews v. Sun Oil Co., 411 S.W.2d
561, 564 (Tex.App.—Amarillo 1966),
aff'd, 425 S.W.2d 330 (Tex 1968); see
Schroeder v. Texas Iron Works, Inc., 769
S.W.2d 625, 628 (Tex.App.—Corpus
Christi 1989), aff'd, 813 S.W.2d 483 (Tex.
1991).
114
31 CJS Estoppel & Waiver §§55-57.
115
Lopez v, Munoz, Hockema & Reed,
L.L.P., 22 S.W.3d 857, 864 (Tex 2000);
Mulvey v. Mobil Prod'g Tex. & N.M. Inc.,
147 S.W.3d 594, 607 (Tex.App.—Corpus
Christi 2004, pet. denied).
116
Eckland Consultants, Inc. v. Ryder;
Stilwell Inc., 176 S.W.3d 80, 87
(Tex.App.—Houston [1st Dist.] 2004, no
pet.); Bristol-Myers Squibb Co. v. Burner,
964 S.W.2d 299, 302 (Tex.App.—Corpus
Christi 1998, no pet.).
117
Lopez v, Munoz, Hockema & Reed,
L.L.P., 22 S.W.3d 857, 864 (Tex 2000).
LESSER KNOWN BREACH OF CONTRACT DEFENSES
11
I. Mitigation of damages
A plaintiff’s failure to mitigate its damages is a
defense to a breach of contract claim.
118
A plaintiff
must exercise reasonable care to minimize damages if
the damages can be avoided with only slight expense
and reasonable effort.
119
However, a plaintiff is not
required to accept an offer to mitigate from the
defendant if it is conditioned on the plaintiff
surrendering its claim for breach.
120
Further, a
defendant bears the burden of proving what damages
could have been mitigated.
121
J. Repudiation
In response to a breach of contract claim, a
defendant can assert that plaintiff repudiated the
contract
122
and/or that defendant timely retracted its
own repudiation by notifying the plaintiff that it
intended to perform.
123
A plaintiff repudiates a
contract if, without just excuse, it indicates by
unconditional words or actions that it will not perform
its contractual obligations.
124
The plaintiff's conduct
must show a fixed intention to abandon, renounce, and
refuse to perform the contract.
125
If the plaintiff's
118
Cook Composites, Inc. v. Westlake
Styrene Corp., 15 S.W.3d 124, 135
(Tex.App.--Houston [14th Dist.] 2000, pet.
dism'd).
119
Great Am. Ins. Co. v. North Austin
MUD, 908 S.W.2d 415, 426 (Tex. 1995);
Walker v. Salt Flat Water Co., 96 S.W.2d
231, 232 (Tex. 1936); see, e.g., Austin Hill
Country Rlty., Inc. v. Palisades Plaza,
Inc., 948 S.W.2d 293, 299 (Tex. 1997).
120
Gunn Infiniti, Inc. v, O'Byrne, 996
S.W.2d 854, 858 (Tex. 1999).
121
Cook Composities, 15 S.W.3d at 135;
Houston Chronicle Publ'g v. McNair
Trucklease, Inc., 519 S.W.2d 924, 929
(Tex.App.—Houston [1st Dist.] 1975, writ
ref'd n.r.e.).
122
See El Paso Prod. Co. v. Valence Oper.
Co., 112 S.W.3d 616, 621 (Tex .App.
Houston [1st Dist.] 2003, pet. denied).
123
Griffith v. Porter, 817 S.W.2d 131, 135
(Tex.App.—Tyler 1991, no writ); Valdina
Farms, Inc. v. Brown, Beasley & Assocs.,
733 S.W.2d 688, 692 (Tex.App.—San
Antonio 1987, no writ).
124
Id.; see Hauglum v. Durst, 769 S.W.2d
646, 651 (Tex.App.—Corpus Christi 1989,
no writ).
125
Hubble, 883 S.W.2d at 383; Hauglum,
769 S.W.2d at 651.
refusal to perform its contractual obligations was based
on a genuine mistake or misunderstanding about
matters of fact or law, there is no repudiation.
126
The
defendant must retract its repudiation before the
plaintiff either has materially changed its position in
reliance on the repudiation or has notified the
defendant that it considers the repudiation to be
final.
127
K. Revocation
In response to a breach of contract claim, a
defendant can assert that it revoked its offer before the
plaintiff accepted, and thus no binding contract was
formed.
128
An offeror may revoke an offer at any time
before acceptance.
129
The revocation must be
communicated to the offeree.
130
Formal notice is not
required as long as the offeror does some act
inconsistent with the offer and the offeree has
knowledge of the act.
131
Revocation sent by mail is
effective only when it is actually received by the
offeree.
132
L. Lack of capacity
A defendant can assert lack of capacity based on
age or mental deficiency as a defense to a breach of
contract claim. A contract made with a minor is
voidable at the minor's election.
133
A minor may set
126
Jenkins v. Jenkins, 991 S.W.2d 440,
447 (Tex.App.—Fort Worth 1999, pet.
denied); McKenzie v. Farr, 541 S.W.2d
879, 882 (Tex.App.—Beaumont 1976,
writ ref’d n.r.e.).
127
Glass v. Anderson, 596 S.W.2d 507,
510 (Tex. 1980); Juarez v. Hamner, 674
S.W.2d 856, 860 (Tex.App.—Tyler 1984,
no writ); e.g., Helsley v. Anderson, 519
S.W.2d 130, 133 (Tex.App.—Dallas 1975,
no writ).
128
Bowles v. Fickas, 167 S.W.2d 741,
742-43 (Tex. 1943).
129
Id. at 743; see Echols v. Bloom, 485
S.W.2d 798, 800 (Tex.App.—Houston
[14th Dist.] 1972, writ ref’d n.r.e.).
130
Antwine v. Reed, 199 S.W.2d 482, 485
(Tex. 1947).
131
Id.
132
Peacock v. Harrison, 189 S.W.2d 500,
503 (Tex.App.—Austin 1945, writ
dism'd).
133
Dairyland Cty. Mut. Ins. Co. v. Roman,
498 S.W.2d 154, 158 (Tex. 1973);
Prudential Bldg. & Loan Ass'n v. Shaw, 26
S.W.2d 168, 171 (Tex.Comm'n App. 1930,
LESSER KNOWN BREACH OF CONTRACT DEFENSES
12
aside the entire contract at her option, but she cannot
enforce portions that are favorable to her and void
other pro-visions that are burdensome.
134
A contract
voided by a minor is deemed to have been void for
both parties from the beginning.
135
A minor is a person
under 18 whose disability has not been removed.
136
A
minor's disability can be removed by either (1)
marriage,
137
or (2) judicial order.
138
The minor must
void the contract within a reasonable time after
reaching the age of majority.
139
What constitutes a
reasonable time is usually a question of fact to be
determined based on the particular circumstances of
the case.
140
If the minor voids the contract on the
grounds of incapacity, the minor can recover the full
amount of consideration paid.
141
The minor must
restore any consideration she received from the other
party if she still has it.
142
Even if the other party's
consideration depreciated in value or was lost, the
judgm't adopted); e.g., Kargar v.
Sorrentino, 788 S.W.2d 189, 191
(Tex.App.—Houston [14th Dist] 1990, no
writ).
134
Roman, 498 S.W.2d at 158.
135
Kargar, 788 S.W.2d at 191.
136
See Tex. Civ. Prac. & Rem. Code
§129.001; Tex. Fam. Code §101.003(a);
Fernandez v. Fernandez, 717 S.W.2d 781,
782 (Tex.App.—El Paso 1986, writ
dism'd); Pioneer Cas. Co. v. Bush, 457
S.W.2d 165, 168 (Tex.App.—Tyler 1970,
writ ref’d n.r.e,).
137
Ex parte Williams, 420 S.W.2d 135,
137 (Tex. 1967); Fernandez, 717 S.W.2d
at 782.
138
Tex. Fam. Code §31.001; Dallas Joint
Stock Land Bank v. Dolan, 120 S.W.2d
798, 800-01 (Tex.Comm'n App. 1938,
judgm't adopted).
139
Searcy v. Hunter, 17 S.W. 372, 372-73
(Tex. 1891); Shaw, 26 S.W.2d at 171;
Robinson v. Roquemore, 2 S.W.2d 873,
874 (Tex.App.—Texarkana 1928, no writ).
140
Robinson, 2 S.W.2d at 874.
141
Shaw, 26 S.W.2d at 171; James v.
Barnett, 404 S.W.2d 886, 888
(Tex.App.—Dallas 1966, writ ref d n.r.e.).
142
Shaw, 26 S.W.2d at 171; Hague v.
Wilkinson, 291 S.W.2d 750, 753
(Tex.App.—Texarkana 1956, no writ);
Rutherford v. Hughes, 228 S.W.2d 909,
91I (Tex.App.—Amarillo 1950, no writ).
minor is entitled to recover the full amount of
consideration she paid.
143
A minor cannot void a
contract if she obtained it by a fraudulent
misrepresentation intended to induce the plaintiff to
believe she was at least 18 years old.
144
To prove
fraud, the plaintiff must show (1) the minor
consciously deceived the plaintiff, (2) the plaintiff was
in fact misled by the minor, and (3) the
misrepresentation induced the making of the
agreement.
145
The mere fact that the plaintiff really
believed she was dealing with an adult will not prevent
the minor from disaffirming the contract.
146
A minor
cannot void a contract for "necessaries."
147
"Necessaries" include items such as food, lodging,
clothing, medicine, medical care, education, and legal
services.
148
What constitutes a necessary is a mixed
question of law and fact.
149
The court decides what
classes of articles are necessaries; the jury determines
whether the particular articles fall within any of these
classes and whether they were actually necessary for
the minor.
150
A minor can be required to pay only the
reasonable value of the items actually furnished under
the contract.
151
A minor cannot void a contract if she
ratified it after reaching majority.
152
"Ratification"
means the former minor, knowing that the contract was
not binding because of her minority when she made it,
143
Shaw, 26 S.W.2d at 171; James, 404
S.W.2d at 888; Hogue, 291 S.W.2d at 753.
144
Evans v. Henry, 230 S.W.2d 620, 621
(Tex.App.—San Antonio 1950, no writ);
see Hogue, 291 S.W.2d at 753;
Rutherford, 228 S.W.2d at 911.
145
Evans, 230 S.W.2d at 621.
146
Id.
147
Johnson v. Newberry, 267 S.W. 476,
478 (Tex.Comm'n App. 1924, holding
approved); see Askey v. Williams, 11 S.W.
1101, 1101 (Tex. 1889).
148
Johnson, 267 S.W. at 478; e.g., Searcy,
17 S.W. at 373 (legal fees for services
rendered to minor were necessaries).
149
Johnson, 267 S.W. at 480-81.
150
Id.
151
See Breaux v. Allied Bank, 699 S.W.2d
599, 604 (Tex.App.—Houston [14th Dist.]
1985, writ ref'd n.r.e.).
152
Knandel v. Cameron, 263 S.W.2d 184,
185 (Tex.App.—San Antonio 1953, no
writ).
LESSER KNOWN BREACH OF CONTRACT DEFENSES
13
decided to waive that defect and adopt the contract.
153
The plaintiff must show that the minor, by her actions
or words, clearly and distinctly intended to ratify the
contract.
154
A contract made with a person who lacks
mental capacity is voidable.
155
Examples of persons
who lack mental capacity include the following: (1) a
person under guardianship after adjudication of mental
illness or defect;
156
a person who is insane;
157
a person
who is so intoxicated she is incapable of exercising
judgment;
158
a person who did not appreciate the effect
of what she was doing and did not understand the
nature and consequences of her acts and the business
she was transacting;
159
a person who suffers from a
mental disease or disorder, such as manic
depression.
160
M. Fraud
The defendant can assert the defense of fraud.
Tex.R.Civ.P. 94; Texas Farmers Ins. Co. v. Murphy,
996 S.W.2d 873, 879 (Tex. 1999).
N. Modification
The defendant can assert that the original contract
was modified and the defendant complied with the
terms of the modification. A contract is modified when
a change to the original agreement introduces a new or
different element into the contract but leaves the
general purpose and effect unchanged.
161
Whether a
153
Fletcher v. A.W. Koch Co., 189 S.W.
501, 503 (Tex.App.—Austin 1916, no
writ).
154
Id.
155
Missouri Pac. Ry. v. Brazil, 10 S.W.
403, 406 (Tex. 1888); Gaston v. Copeland,
335 S.W.2d 406, 409 (Tex.App.—
Amarillo 1960, writ ref’d n,r.e.).
156
Breaux, 699 S.W.2d at 602.
157
Brazil, 10 S.W. at 406-07; see Nohra v.
Evans, 509 S.W.2d 648, 653 (Tex.App.—
Austin 1974, no writ).
158
Brazil, 10 S.W. at 406.
159
Board of Regents v. Yarbrough, 470
S.W.2d 86, 90 (Tex.App.—Waco 1971,
writ ref’d n.r.e.); e.g., Mandell & Wright v.
Thomas, 441 S.W.2d 841, 845 (Tex.
1969).
160
See Nohra, 509 S.W.2d at 654-55.
161
Webb v. Finger Contract Sup., 447
S.W.2d 906, 908 (Tex. 1969); Enserch
Corp, v. Rebich, 925 S.W.2d 75, 83
(Tex.App. —Tyler 1996, writ dism'd).
contract is modified is a question of fact and depends
on the parties' intentions.
162
The burden of proving
modification rests on the party asserting the
modification. Id. at 229;
163
For a modification to be
enforceable, it must satisfy the elements of a contract
and comply with the statute of frauds.
There must be a "meeting of the minds" between
all parties to the contract on the terms of the
modification.
164
A party's failure to object to the
unilateral addition of a term to the contract does not
support a finding of implied modification.
165
A modification to a contract must be supported by
new consideration.
166
A written contract can be modified by a
subsequent oral agreement.
167
However, the contract
as modified must comply with the statute of frauds, if
the terms of the oral modification materially change
the original contract so that it becomes subject to the
statute of frauds, the modification must be in writing to
be enforceable.
168
If the modification itself is not
subject to the statute of frauds and does not change
terms that are material to the original contract, the oral
modification is enforceable, Id;
169
162
Hathaway v. General Mills, Inc., 711
S.W.2d 227, 228-29 (Tex. 1986); Inter
Sys. v. Lowrey, 230 S.W.3d 913, 919
(Tex.App. — Dallas 2007, n.p.h.).
163
Inter Sys., 230 S.W.3d at 919; Price
Pfister, Inc. v. Moore & Kimmey, Inc., 48
S.W.3d 341, 349 (Tex.App. —Houston
[14th Dist,] 2001, pet. denied).
164
Hathaway, 711 S.W.2d at 228; Fubar,
Inc. v. Turner, 944 S.W.2d 64, 67
(Tex.App.—Texarkana 1997, no writ).
165
See Tirbelite v. Risica & Sons, Inc.,
819 S.W.2d 801, 805 (Tex.1991).
166
Hathaway, 711 S.W.2d at 228; Walden
v. Affiliated Computer Servs,, 97 S.W.3d
303, 3I4 (Tex.App,-Houston [14th Dist.]
2003, pet. denied).
167
American Garment Props., Inc. v. CB
Richard Ellis-El Paso, L.L.C., 155 S.W.3d
431, 435 (Tex.App.—El Paso 2004, no
pet.); DiMiceli v. Affordable Pool Maint.,
Inc., 110 S.W.3d 164, 171 (Tex.App.—
San Antonio 2003, no pet).
168
See Garcia v. Karam, 276 S.W.2d 255,
257 (Tex. 1955).
169
Kerrville HRH, Inc. v. City of Kerrville,
803 S.W.2d 377, 389 (Tex.App. —San
Antonio 1990, writ denied); Group Hop.
Scrim v. I & 2 Brookriver Ctr., 704
S.W.2d 886, 890 (Tex.App. —Dallas
LESSER KNOWN BREACH OF CONTRACT DEFENSES
14
O. Failure to perform conditions precedent
If the plaintiff invokes Texas Rule of Civil
Procedure 54 in its petition, alleging that "all
conditions precedent have been performed or have
occurred," the defendant must specifically deny any
conditions precedent to the contract that the defendant
claims the plaintiff did not perform
170
The plaintiff
may counter the defendant's denial by alleging that the
defendant, through either words or conduct, waived
any conditions precedent.
171
If the defendant does not
specifically deny the conditions precedent, the plaintiff
is relieved of its burden of proving the performance or
occurrence of any condition precedent to its
recovery.
172
P. Impossibility of performance
The defendant can assert that its performance is
excused because performance was impossible. The
defendant's performance can be excused if the contract
is impossible to perform from the outset because of
facts unknown to the defendant.
173
The defendant's performance can be excused if it
is made impossible by supervening circumstances that
could not have been anticipated when the contract was
executed.
174
(corporation excused from performance
because federal bank regulations prohibited paying
1986, no writ); see BACM2001-11] San
Felipe Rd, L.P. v. Trafalgar Holdings 1,
Ltd., 218 S.W.3d 137,145-46 (Tex.App. —
Houston [14th Dist.] 2007, pet. denied).
170
. Greathouse v. Charter Nat'l Bank-
Sus, 851 S.W.2d 173, 174 (Tex. 1992);
Hill v. Thompson & Knight, 756 S.W.2d
824, 825-26 (Tex.App. —Dallas 1988, no
writ).
171
See Atomic Fuel Extraction Corp, v.
Estate of Slick, 386 S.W.2d 180, 187
(Tex.App. —San Antonio 1964), writ
ref'd. n.r.e., 403 S.W.2d 784 (Tex.1965).
172
Bencon Mgmt, & Gen. Contracting,
Inc, v. Boyer, Inc., 178 S.W.3d 198, 204
(Tex.App. —Houston [14th Dist.] 2005,
no pet); MacDonald v. Bank of Kerrville,
849 S.W.2d 371, 372 (Tex.App. —San
Antonio 1993, writ dism'd).
173
Janak v. FDIC, 586 S.W.2d 902, 906-
07 (Tex.App.—Houston [1st Dist 1979, no
writ); Restatement (2d) of Contracts
§266(1).
174
Erickson v. Rocco, 433 S.W.2d 746,
751-52 (Tex.App.—Houston [14th Dist.]
1968, writ ref’d n.r.e.); e.g., Centex Corp.
v. Dalton, 840 S.W.2d 952, 954
(Tex.1992).
finder's fees);
175
(performance excused by supervening
change in law);
176
(legal impediment had been
removed, making performance possible);
177
(performance prohibited by injunction); see, e.g.,
178
(high wind blowing down wall during construction did
not make performance impossible simply because it
could not reasonably have been anticipated). If the
impossibility was created by the defendant's voluntary
act, however, performance is not excused.
179
, pet. filed
10-2-07). If the obligation to perform is absolute, an
impossibility of performance arising after the contract
is made is not a defense if the impossibility might
reasonably have been anticipated and guarded against
in the contract.
180
(although foreseeability is one factor
used to decide which party assumed risk of
supervening impossibility, this factor has de-creased in
importance).
The defendant's performance can be excused if the
defendant is unable to perform because of some
intervening, unforeseeable circumstance, such as an act
of God, as long as the con-tract contains a force-
majeure clause.
181
A force-majeure clause is a
contractual provision that allocates the risk of loss if
performance becomes impossible or impracticable as a
result of an event or effect that the parties could not
175
Houston Ice & Brewing Co. v. Keenan,
88 S.W. 197, 198 (Tex.1905).
176
Walden v. Affiliated Computer Servs.,
97 S.W.3d 303, 325 (Tex.App. —Houston
[14th Dist] 2003, pet. denied).
177
International Bank of Commerce v.
Union Nat'l Bank, 653 S.W.2d 539, 550
(Tex.App.—San Antonio 1983, writ ref’d
n.r.e.)
178
Metrocon Constr. Co. v. Gregory
Constr. Co., 663 S.W.2d 460, 462-63
(Tex.App. —Dallas 1983, writ ref’d n.r.e.)
179
Stafford v. Southern Vanity Mag,, Inc.,
231 S.W.3d 530, 537 (Tex.App. —Dallas
2007
180
Huffines v. Senor Sand & Gravel Co.,
750 S.W.2d 38, 40 (Tex.App. —Fort
Worth 1988, no writ); Metrocon Constr.,
663 S.W.2d at 462; see Centex, 840
S.W.2d at 954
181
See Valero Transmission Co. v,
Mitchell Energy Corp., 743 S.W.2d 658,
663 (Tex.App. —Houston [1st Dist.] 1987,
no writ).
LESSER KNOWN BREACH OF CONTRACT DEFENSES
15
have anticipated or controlled. Black's Law Dictionary
674 (8th ed. 2004);
182
The defendant's performance can be excused
when it is contingent on the continued existence of a
set of circumstances and, through no fault of the
defendant, those circumstances cease to
exist
183
Performance may be excused if (1) an
unexpected contingency occurs, (2) the risk of the
contingency was not allocated either by agreement or
by custom, and (3) the occurrence of the contingency
has made the defendant's performance impossible.
184
For example, when two parents enter into a contractual
agreement regarding child support, and custody is later
changed from one parent to the other parent, the
continued payment of child support according to the
contract is excused because it does not accomplish the
underlying purpose of the agreement, which is to
support the child. Id
The defendant's performance cannot be excused
simply because it became more economically
burdensome than anticipated.
185
Q. Limitation-of-liability provisions
The defendant can assert that its liability is limited
by contract. Agreements that limit the contracting
parties' liability in damages to a specified amount are
enforceable if they do not violate public policy.
186
These provisions do not violate public policy if there is
no disparity in bargaining power between the parties.
187
Thus, a contractual provision setting an upper limit on
182
see Sun Opera, Ltd. v. Holt, 984
S.W.2d 277, 282-83 (Tex.App.—Amarillo
1998, pet. denied).
183
Texas Seed & Floral Co. v. Chicago Set
& Seed Co., 187 S.W. 747, 750 (Tex.App.
—Amarillo 1916, writ ref’d); In re Doe,
917 S.W.2d 139, 142 (Tex.App.—
Amarillo 1996, writ denied).
184
In re Doe, 917 S.W.2d at 142.
185
Huffines, 750 S.W.2d at 40; Alamo
Clay Prods, v. Gunn Tile Co., 597 S.W.2d
388, 392 (Tex.App.—San Antonio 1980,
writ ref'd n.r.e.); see Northern Nat Gas Co.
v. Chisos Jt.V.1, 142 S.W.3d 447, 458
(Tex.App. —El Paso 2004, no pet ).
186
Valiance & Co. v. De Anda, 595
S.W.2d 587, 590 (Tex.App.—San Antonio
1980, no writ); see Affright, Inc, v,
Elledge, 515 S.W.2d 266, 267 (Tex.
1974); Fox Elec. Co. v. Tone Guard Sec.,
Inc., 861 S.W.2d 79, 82-83 (Tex.App.—
Fort Worth 1993, no writ).
187
Affright, 515 S.W.2d at 267; Fox Elec.
Co., 861 S.W.2d at 82-83.
the amount recoverable for a breach of the contract
may be enforce-able as a limitation on the defendant's
liability.
188
188
Arthur's Garage, Inc, v. Racal-Chubb Sec. Sys., 997
S.W.2d 803, 810 (Tex.App. —Dallas 1999, no pet.);. see
Fox Elec. Co., 861 S.W.2d at 83.
