Can A Breach Of Contract Lead To Theft Charges In Texas?

Most people will eventually enter into a contract. But, unfortunately, one of the parties may occasionally fail to uphold their end of the deal. Because such occasions may lead to criminal charges, it’s crucial to comprehend the fundamentals of a breach of contract.

What Is A Breach Of Contract?

In a breach of contract, a party violates the conditions of an agreement between two or more parties. It covers situations where there is a breach of contractual duty, such as when you are late with a rent payment or when a tenant vacates their unit without paying six months’ worth of back rent. Therefore, a breach could constitute anything from a late payment to a more significant infraction, like failing to deliver a promised asset.

A contract is enforceable in court and has legal force. However, although a breach of contract is not a crime nor a tort, the court may still award punitive damages for the failed performance of obligations. If a victim can prove to authorities the breach of contract, the usual remedy is to give them what the other party initially promised.

The original contract may occasionally indicate the procedure for handling a breach of contract. For instance, a contract might include the offender paying a $25 fee in the event of late payment. 

In addition, the parties concerned may settle the dispute amicably, which could create a new contract, adjudication, or another resolution if the agreement does not specify the penalties for a particular violation.

Types Of Breaches Of Contract

As mentioned, each party must fulfill specific obligations under the contract terms. These conditions consist of one party offering goods or services for which the other party pays. However, there might be other conditions, such as details on the products or services, deadlines for completion, payment options, etc. A breach of the contract results from any party’s failure to fulfill their obligation.

A breach of contract has two categories, the first of which is the seriousness of the breach:

Minor Breach Vs. Material Breach

A minor breach occurs when a party does not get a promised item or service by the deadline. Meanwhile, a material breach is when one party receives anything materially different from what the other promised in the contract.

Courts consider the following when determining the materiality of a breach of contract:

• The benefit that the offender obtained.
• The non-breaching party can receive fair compensation for the damages.
• The violating party’s level of performance.
• The difficulty for the violating party.
• The violating party’s negligence or malice.
• The possibility that the offender will fulfill the remaining obligations.

Furthermore, a breach of contract could generally be either actual or anticipatory:

Actual Vs. Anticipatory Breach

An actual breach happens when one party fails to carry out their end of the deal before the deadline or executes imperfectly. On the other hand, an anticipated breach occurs when one party expresses their intention to break the agreement before the performance deadline.

Actual and anticipated contract breaches are bad for the parties involved, personally and professionally. They undoubtedly cause frustration for everyone concerned and can squander time and money. However, that doesn’t imply that either situation is without recourse. Regardless of the type of breach of contract, the victim can file a claim for damages.

Legal Issues Of A Breach Of Contract

A plaintiff filing an action in court alleging a contract violation must prove the existence of a written agreement between the parties. Additionally, they must show how the defendant failed to uphold the terms of the contract.

Contract Validity

Having a written and signed document by both parties is the most straightforward approach to demonstrating the contract’s validity. Although some agreements still require a written contract to carry any legal weight, it is feasible to enforce an oral contract. 

These contracts involve products valued at over $500, selling or transferring real estate, and agreements that continue binding after one year.

Courts will examine each party’s contractual obligations to decide whether they met such terms. They will also review the contract to determine if any amendments would have led to the alleged breach. Before starting legal action, the plaintiff must inform the defendant that they violate the agreement.

Possible Reasons For The Breach Of Contract

The court will also determine whether or not there was a valid justification for the breach. The defendant may argue, for instance, that the contract was fraudulent because the plaintiff omitted or misrepresented vital information.

Alternatively, the defense could claim that the parties executed the agreement under duress and that the plaintiff physically or verbally coerced them into signing it. In other situations, mistakes made by both parties may have worsened the breach.

Can A Breach Of Contract Lead To Theft Charges?

A civil contract violation may lead to theft charges in Texas if the state can demonstrate that a defendant acted with fraudulent intent under specific circumstances. Therefore, a breach of contract must involve purposeful misappropriation for the court to consider it theft.

For instance, suppose a building contractor accepts money from a customer to build a house and promises to do it in a certain number of months for less than the cost of comparable buildings in the area. There will be grounds for charges if they abandon the project after receiving payment.

A theft accusation would be unavoidable, particularly if the contractor has a history of offenses or if other clients have reported difficulties with the contractor comparable to or linked to their own. While such a situation may constitute a breach of contract, the court may also find the contractor to have misappropriated cash based on deception. 

If there is evidence that the contractor used the money for purposes other than building the house as promised, such occasions may count as theft in Texas.

Moreover, there must be proof of the theft intention. This factor also applies when a party makes exaggerated claims to entice customers or past issues with other clients.

Remedies For A Breach Of Contract

In general, if the plaintiff can prove the presence of a valid contract and a breach, they should return to the same financial situation they would have been in if there were not a breach. Therefore, an individual or organization who violates a contract owes the other party a remedy according to applicable laws.

Damages

The most typical remedy for a breach of contract is the payment of damages in one way or another.

Compensatory Damages

The purpose of compensatory damages is to restore the position the non-breaching party would have been in if the breach had not occurred.

Punitive Damages

Punitive damages are sums of money the violating party must pay in addition to the amount necessary to compensate the non-violating party completely. A wrongdoer may be penalized for especially wrongful acts but these are rarely applicable in business contracts.

Nominal Damages

When a breach occurs but causes no actual financial loss to the non-breaching party, nominal damages will serve as token damages.

Liquidated Damages

When there is a contract breach, the parties may seek liquidated damages, specific terms previously specified by the parties in the agreement. Liquidated damages should represent a realistic estimation of potential losses due to a breach.

Specific Performance

The victim may seek specific performance as an alternative remedy if damages are insufficient as a legal remedy. The most accurate definition of specific performance is the breaching party’s court-ordered compliance with its contractual obligations.

Suppose the agreement’s subject matter is uncommon, and damages would not be sufficient to put the victim in the same position they would have had the breach not occurred. In that case, the court could order specific performance as a remedy.

Cancellation And Restitution

If the non-breaching party has provided a benefit to the breaching party, the non-breaching party may opt to terminate the agreement and sue for compensation. Restitution, as a contractual remedy, refers to restoring the non-breaching party to its pre-breach condition. Meanwhile, cancellation of the contract nullifies it and releases all parties from its terms and conditions.

Reformation

Reformation occurs when the court alters or reforms unclear or poorly stated contract terms to represent the parties’ true intentions and produce a fair outcome.

Key Takeaways

Contract parties must honor their terms and conditions and uphold their responsibilities. However, there are instances where a party breaches them, and lawyers, law enforcement, or the parties must discover a remedy to make good on broken promises.

Unless all parties agree to back out on it, involved parties must honor a contract, and it is not very simple to get out of one, even though it is not technically a crime. The contract may specify the penalties for breaking it. As an alternative, a solution might be necessary, compelling the breacher to honor its initial commitment.

A lot could be on the line if you face breach of contract allegations or think another party has broken a contract with your business. It will help if you speak with a competent attorney from The Medlin Law Firm to review your alternatives before selecting how to handle the conflict. They may advise you on the benefits and drawbacks of bringing a claim for breach of contract while weighing your alternative options.

See: How Can A Theft Charge Be Enhanced
&
Home Page