Contract Dispute Lawyer in Houston, Texas | The Spencer Law Firm

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Quick Answer: What You Need to Know About Contract Disputes in Houston

When a business contract is broken in Houston, you typically have four years from the date of the breach to file a lawsuit under Texas law. Contract disputes can result from non-payment, failure to deliver services, misrepresentation, or violation of agreement terms. The Spencer Law Firm represents Houston businesses in all types of contract disputes, from negotiation through trial, with a focus on protecting your financial interests and business relationships.

📞 Facing a contract dispute? Call The Spencer Law Firm at [Phone Number] for immediate guidance from experienced Houston contract dispute attorneys.

Table of Contents

1. What Is a Contract Dispute?

2. Types of Contract Disputes We Handle

3. Houston Contract Dispute Attorney: How We Help

4. Breach of Contract in Texas: What You Need to Know

5. Remedies Available Under Texas Law

6. The Contract Dispute Resolution Process

7. Industries We Serve in Houston

8. Defending Against Contract Dispute Claims

9. Cost Considerations

10. Frequently Asked Questions

11. Why Choose The Spencer Law Firm

12. Contact Our Houston Contract Dispute Lawyers

What Is a Contract Dispute? {#what-is-a-contract-dispute}

A contract dispute occurs when one or more parties to a legally binding agreement disagree about the terms, performance, or interpretation of that contract. In Houston's diverse business environment—spanning energy, healthcare, real estate, construction, and technology—contract disputes can threaten operations, cash flow, and valuable business relationships.

Under Texas law, a valid contract requires:

• Offer: One party proposes specific terms

• Acceptance: The other party agrees to those terms

• Consideration: Something of value is exchanged (money, services, goods)

• Mutual intent: Both parties intend to be legally bound

• Legal purpose: The agreement's objective must be lawful

When any party fails to fulfill their contractual obligations without legal excuse, a breach of contract occurs. Not every disagreement constitutes a legal breach—minor delays or trivial variations may not rise to the level requiring litigation. However, when substantial obligations go unfulfilled, legal action may be necessary to protect your interests.

Common Contract Dispute Scenarios in Houston

Houston businesses face contract disputes across multiple contexts:

Commercial Transactions: Vendor agreements where suppliers deliver defective goods, miss deadlines, or fail to meet specifications outlined in purchase orders affect Houston's extensive supply chain network.

Service Contracts: Professional service providers—from IT consultants to marketing agencies—sometimes fail to deliver promised results, creating disputes over payment and performance quality.

Real Estate Agreements: Houston's booming real estate market generates disputes over property sales, development agreements, lease terms, and commercial tenant obligations.

Partnership Agreements: When business partners disagree about profit distribution, management authority, or exit strategies, contract disputes can threaten the entire enterprise.

Employment Contracts: Executive employment agreements, non-compete clauses, and severance packages frequently become sources of litigation in Houston's competitive job market.

Construction Contracts: Given Houston's rapid growth, construction contract disputes involving project delays, change orders, and payment schedules are particularly common.

Types of Contract Disputes We Handle in Houston {#types-of-contract-disputes}

Breach of Contract Claims

The Spencer Law Firm represents Houston businesses and individuals when contracts are broken. We handle both material breaches (substantial failures that defeat the contract's purpose) and minor breaches (partial failures that don't completely undermine the agreement).

Material Breach Examples:

• A Houston software developer fails to deliver a functional product by the agreed-upon launch date, causing your business to lose a major client

• A commercial landlord refuses to make critical repairs, rendering your retail space unusable

• A manufacturing partner substitutes inferior materials, causing product recalls

Minor Breach Examples:

• A vendor delivers supplies two days late but without causing significant harm

• An invoice contains small billing discrepancies

• Minor quality variations that don't substantially affect usability

Non-Payment and Collection Disputes

When clients or customers refuse to pay for goods delivered or services rendered, Houston businesses need aggressive representation to recover what they're owed. We handle:

• Unpaid invoices for completed work

• Disputed payment amounts

• Refusal to pay based on claimed defects

• Collection of outstanding debts

• Mechanics' liens (construction industry)

• UCC Article 9 secured transactions

Houston-Specific Context: In Houston's energy sector, payment disputes can involve complex contractual arrangements with multiple parties across the supply chain—from drilling operations to pipeline transportation to refining.

Fraudulent Inducement and Misrepresentation

When someone enters a contract based on false statements or concealed information, Texas law provides remedies beyond standard breach of contract claims. We represent clients who have been deceived through:

• Fraudulent Inducement: False statements made to convince you to sign a contract

• Negligent Misrepresentation: Careless false statements made without reasonable investigation

• Concealment: Hiding material facts that would have affected your decision

Texas Legal Standard: Under Texas law, fraud requires proof that: (1) a material representation was made, (2) it was false, (3) the speaker knew it was false or made it recklessly, (4) the speaker intended you to rely on it, (5) you actually relied on it, and (6) you suffered injury as a result.

Construction Contract Disputes

Houston's construction boom—from Energy Corridor office buildings to Medical Center expansions—generates frequent disputes over:

• Delays and Schedule Extensions: Weather delays, permit issues, and supply chain disruptions

• Change Orders: Scope modifications and additional work disputes

• Defective Work: Substandard materials or workmanship claims

• Payment Disputes: Progress payments, final payments, and retention releases

• Mechanics' Liens: Contractor and subcontractor payment protection

• Delay Damages: Liquidated damages and consequential loss claims

Texas Prompt Payment Act: Construction contracts in Texas are governed by specific statutory requirements for prompt payment, including strict timelines for payment applications, approvals, and disputes.

Real Estate Contract Disputes

Houston's dynamic real estate market—from residential developments in The Woodlands to commercial properties in Uptown—creates numerous contract dispute opportunities:

• Purchase Agreement Disputes: Earnest money, title defects, disclosure violations

• Lease Agreement Conflicts: Tenant defaults, landlord failures to maintain premises

• Development Agreements: Zoning compliance, environmental issues, financing contingencies

• Option Contracts: Rights of first refusal, purchase options

• Commercial Lease Disputes: Percentage rent calculations, CAM charges, renewal options

Oil & Gas Contract Disputes

Houston's position as the energy capital of the world means contract disputes in this sector have unique complexity:

• Joint Operating Agreements (JOAs): Operator responsibilities, non-consent penalties, voting disputes

• Drilling Contracts: Performance standards, day rates, equipment failures

• Purchase and Sale Agreements: Title disputes, environmental liabilities, earnout provisions

• Service Contracts: Oilfield services, equipment leasing, transportation agreements

• Royalty Disputes: Calculation methods, deduction disputes, pooling agreements

Employment Contract Disputes

Houston's competitive business environment requires sophisticated employment agreements that sometimes become sources of litigation:

• Executive Compensation: Bonus disputes, equity compensation, golden parachutes

• Non-Compete Agreements: Enforceability under Texas law, geographic and temporal restrictions

• Non-Solicitation Clauses: Customer and employee solicitation restrictions

• Confidentiality Agreements: Trade secret protection, NDA violations

• Severance Agreements: Separation terms, release validity, stock option treatment

Partnership and Shareholder Disputes

When business relationships deteriorate, partnership and operating agreements become battlegrounds:

• Profit Distribution Disputes: Allocation of earnings, special distributions

• Management Authority Conflicts: Decision-making powers, voting deadlocks

• Breach of Fiduciary Duty: Self-dealing, usurpation of opportunities, conflicts of interest

• Buy-Sell Agreement Enforcement: Valuation disputes, funding mechanisms, closing conditions

• Dissolution and Wind-Up: Asset distribution, debt allocation, business continuation

Intellectual Property Contract Disputes

Houston's growing technology sector and established healthcare industry generate IP-related contract disputes:

• Licensing Agreements: Royalty calculations, field-of-use restrictions, termination provisions

• Technology Transfer Agreements: Performance milestones, technical support obligations

• Joint Development Agreements: Ownership of improvements, patent prosecution responsibilities

• Non-Disclosure Agreements: Confidentiality breaches, permitted disclosures

Healthcare and Medical Practice Contracts

The Texas Medical Center—the world's largest medical complex—and Houston's extensive healthcare network create unique contract dispute issues:

• Physician Employment Agreements: Compensation formulas, call obligations, restrictive covenants

• Facility Agreements: Hospital privileges, exclusive service contracts

• Payor Contracts: Insurance reimbursement disputes, credentialing issues

• Medical Equipment Leases: Service level agreements, upgrade obligations

• Healthcare Partnership Disputes: Practice buy-ins, revenue splits, referral arrangements

Government Contract Disputes

Houston businesses that contract with federal, state, or local government entities face specialized rules:

• Bid Protest Procedures: Challenge improper contract awards

• Performance Disputes: Meeting specifications, delivery schedules

• Payment Claims: Proper invoice submission, certification requirements

• Termination for Convenience: Government right to end contracts, recovery limitations

How a Houston Contract Dispute Attorney Helps Your Business {#how-we-help}

The Spencer Law Firm provides comprehensive representation throughout every stage of contract disputes, from initial consultation through trial and appeal if necessary.

Initial Case Evaluation and Strategy Development

What Happens in Your First Consultation:

When you contact The Spencer Law Firm about a contract dispute, we conduct a thorough analysis of your situation:

1. Contract Review: We examine the actual contract language, looking for ambiguities, missing terms, or favorable provisions

2. Fact Investigation: We gather all relevant documents, emails, text messages, and other evidence showing what actually transpired

3. Legal Analysis: We identify all potential claims and defenses under Texas law

4. Risk Assessment: We provide honest evaluation of strengths and weaknesses

5. Strategic Options: We present multiple paths forward with pros and cons of each

Our Strategic Approach:

Not every contract dispute requires litigation. We evaluate:

• Negotiated Settlement: Can we resolve this quickly through direct negotiation?

• Mediation: Would a neutral mediator help facilitate resolution?

• Arbitration: Does your contract require arbitration rather than court litigation?

• Litigation: Is court action necessary to protect your interests?

Contract Dispute Negotiation and Settlement

Most contract disputes in Houston settle before trial. The Spencer Law Firm's attorneys are skilled negotiators who work to achieve favorable settlements that:

• Preserve Business Relationships: When possible, we structure settlements that allow ongoing business dealings

• Protect Financial Interests: We aggressively pursue full compensation for your losses

• Minimize Disruption: We resolve disputes efficiently to let you focus on running your business

• Maintain Confidentiality: Settlement agreements can include confidentiality provisions protecting sensitive information

Our Negotiation Tactics:

• Leveraging strong legal positions to create settlement pressure

• Identifying creative business solutions beyond pure monetary recovery

• Using discovery and depositions strategically to strengthen negotiating position

• Knowing when to settle and when to proceed to trial

Alternative Dispute Resolution (ADR)

Many Houston business contracts include ADR provisions requiring mediation or arbitration before litigation.

Mediation in Contract Disputes:

Mediation involves a neutral third party who facilitates settlement discussions but doesn't impose a decision. Benefits include:

• Confidentiality: What happens in mediation stays in mediation

• Flexibility: Creative solutions not available in court

• Speed: Typically resolves within weeks rather than months or years

• Cost Savings: Substantially less expensive than full litigation

• Control: You decide the outcome rather than leaving it to a judge or jury

Arbitration of Business Disputes:

Arbitration is more formal than mediation, with an arbitrator making a binding decision. Key considerations:

• Binding Nature: Generally final with limited appeal rights

• Procedural Rules: Can be more streamlined than court litigation

• Arbitrator Selection: Parties often select arbitrators with business expertise

• Discovery Limitations: Typically less extensive than court litigation

• Cost: Can be expensive but usually less than full trial

The Spencer Law Firm has extensive experience with both mediation and arbitration, representing Houston businesses before the American Arbitration Association (AAA), JAMS, and other ADR forums.

Contract Dispute Litigation in Houston Courts

When settlement isn't possible, The Spencer Law Firm provides aggressive trial representation in:

Texas State Courts:

• Harris County District Courts: General jurisdiction for larger contract disputes

• County Courts at Law: Jurisdiction for cases under $250,000

• Justice Courts: Small claims up to $20,000

Federal Courts:

• Southern District of Texas: For disputes involving federal questions or diversity jurisdiction

• Bankruptcy Court: Contract claims in bankruptcy proceedings

Our Litigation Approach:

1. Complaint/Answer: We draft detailed pleadings establishing legal and factual grounds

2. Discovery: We aggressively pursue evidence through depositions, interrogatories, and document requests

3. Expert Witnesses: We retain industry experts, accountants, and damages specialists as needed

4. Dispositive Motions: We seek summary judgment when the law favors our client

5. Trial Preparation: We thoroughly prepare for trial with jury selection, opening statements, witness examination, and closing arguments

6. Appeals: We handle appellate work when trial decisions require review

Injunctive Relief and Emergency Remedies

Some contract disputes require immediate court action to prevent irreparable harm:

Temporary Restraining Orders (TROs):

• Immediate court orders (often within hours or days)

• Prevent imminent harm before full hearing

• Common in non-compete violations, trade secret theft

Temporary Injunctions:

• Preserve status quo pending trial

• Require notice and hearing

• Bond may be required

Permanent Injunctions:

• Final court orders after trial or settlement

• Require ongoing compliance

• Contempt sanctions for violations

Houston TRO Practice: Harris County courts have specific local rules for emergency hearings and ex parte TROs that experienced counsel must navigate carefully.

Contract Drafting and Review to Prevent Disputes

The best contract dispute is the one that never happens. The Spencer Law Firm helps Houston businesses avoid disputes through:

Comprehensive Contract Review:

• Identifying ambiguous terms that could cause future disputes

• Ensuring Texas law compliance

• Negotiating favorable dispute resolution provisions

• Adding protective clauses for your specific industry

Custom Contract Drafting:

• Partnership agreements

• Service agreements

• Employment contracts

• Non-compete agreements

• Purchase and sale agreements

• Lease agreements

• Licensing agreements

Breach of Contract Under Texas Law: What You Must Prove {#breach-of-contract-texas}

To succeed in a breach of contract claim in Texas, you must establish four essential elements. Understanding these requirements helps you evaluate your case's strengths and prepare for litigation.

1. Valid Contract Exists

What Makes a Contract Valid in Texas:

Texas recognizes both written and oral contracts as legally enforceable, but the requirements differ:

Written Contracts:

• More easily proven in court

• May be required under Statute of Frauds for certain agreements

• Terms are clearly documented

Oral Contracts:

• Valid in Texas but harder to prove

• Require evidence of agreement terms

• Subject to Statute of Frauds limitations

Texas Statute of Frauds:

Certain contracts must be in writing to be enforceable in Texas:

• Real estate transfers: Sales, leases longer than one year

• Promises to answer for debt of another: Guarantee agreements

• Agreements not performable within one year: Long-term service contracts

• Commission agreements for real estate: Broker compensation

• Marriage considerations: Prenuptial agreements

Example - Houston Real Estate: A verbal agreement to sell a commercial property in Houston's Energy Corridor would be unenforceable under the Statute of Frauds, but a verbal agreement for consulting services lasting six months could be valid.

2. You Performed Your Obligations (or Have Legal Excuse)

To recover for breach, you must show you either:

• Performed all your contractual obligations, or

• Tendered performance (offered to perform and were ready, willing, and able), or

• Were excused from performance by the other party's breach or other legal doctrine

Performance Standards Under Texas Law:

• Substantial Performance: Minor deviations don't constitute breach if the essential purpose is achieved

• Material Breach: Significant failures that go to the heart of the contract excuse further performance

• Time of Performance: Unless "time is of the essence," reasonable delays may not be material breaches

Example - Houston Construction: A contractor who completes 98% of a medical office building in the Texas Medical Center, with only minor punch list items remaining, has substantially performed even if not literally perfect.

3. The Other Party Breached

You must prove the breach occurred and was not excused. Common defenses to alleged breaches include:

Excusable Non-Performance:

• Impossibility: Performance became objectively impossible (e.g., unique goods destroyed)

• Impracticability: Performance became unreasonably difficult or expensive (not just unprofitable)

• Frustration of Purpose: The contract's fundamental purpose was destroyed by unforeseen events

• Force Majeure: Contract clause excusing performance due to unforeseeable events

Texas Force Majeure Law: After Hurricane Harvey (2017) and the COVID-19 pandemic, Texas courts carefully scrutinize force majeure claims. Simply being more expensive to perform doesn't excuse performance—the event must truly prevent performance.

Waiver and Modification:

• The breach was waived by your conduct

• The contract was modified by mutual agreement

• Prior breaches were accepted without objection

4. You Suffered Damages

Texas law requires proof of actual damages resulting from the breach. You can't sue simply because a contract was breached—you must show harm:

Proving Damages in Houston Contract Cases:

• Lost Profits: Revenue you would have earned but for the breach

• Additional Costs: Extra expenses incurred due to breach

• Benefit of Bargain: The difference between what you received and what was promised

• Consequential Damages: Indirect losses that were foreseeable

Damages Calculation Requirements:

• Must be proven with reasonable certainty

• Cannot be speculative or conjectural

• Requires documentation (invoices, financial records, expert testimony)

• Must be causally related to the breach

Example - Houston Energy Sector: If an oilfield services contractor breaches, your damages might include: (1) cost to hire replacement contractor at higher price, (2) production losses during downtime, (3) penalties paid to downstream purchasers for delayed delivery, (4) lost profits on futures contracts you couldn't fulfill.

Remedies Available Under Texas Contract Law {#remedies-texas-law}

When a contract is breached, Texas law provides several remedies to make the non-breaching party whole. The appropriate remedy depends on the specific facts and the nature of the breach.

Compensatory Damages (Actual Damages)

The primary remedy for breach of contract in Texas is compensatory damages—money intended to put you in the position you would have occupied had the contract been performed.

Components of Compensatory Damages:

1. Direct Damages:

• Losses that flow directly from the breach

• Contract price paid for goods or services not delivered

• Cost to obtain substitute performance

• Value of defective goods or services

2. Consequential Damages:

• Indirect losses resulting from breach

• Must be reasonably foreseeable at time of contract formation

• Requires proof of causation and amount

Example - Houston Medical Equipment: A hospital in the Texas Medical Center contracts for delivery of specialized surgical equipment by a specific date for planned procedures. The supplier breaches and delivers late. Direct damages include extra cost for emergency rental equipment. Consequential damages include lost revenue from cancelled procedures—but only if foreseeable (supplier knew about planned surgeries).

Mitigation of Damages Requirement:

Texas law requires you to take reasonable steps to minimize your losses after a breach:

• You must make reasonable efforts to reduce damages

• Cannot sit idle while damages accumulate

• Breaching party can offset recoverable damages by amount you could have avoided

Calculating "Benefit of the Bargain":

The typical measure is: Value of promised performance - Value of actual performance = Damages

Damages Limitations:

• Certainty Requirement: Damages must be proven with reasonable certainty, not speculation

• Foreseeability: Consequential damages must have been foreseeable when contract formed

• Contract Limitations: Parties can contractually limit or exclude certain damages (subject to unconscionability)

Specific Performance

In some cases, money damages don't adequately compensate for breach, and Texas courts may order specific performance—requiring the breaching party to actually perform their contractual obligations.

When Houston Courts Order Specific Performance:

Real Estate Contracts:

• Each piece of real estate is considered unique

• Courts routinely order specific performance for property sales

• Houston example: Purchase agreement for prime Uptown office building

Unique Goods or Services:

• One-of-a-kind items or services

• No adequate market substitute exists

• Houston example: Custom manufacturing equipment for specialized petrochemical process

Long-Term Supply Contracts:

• Essential inputs for business operations

• No substitute suppliers readily available

• Houston example: Exclusive supply agreement for critical medical supplies to area hospitals

Requirements for Specific Performance:

• Valid, enforceable contract with clear terms

• Inadequacy of legal remedy (money damages)

• Feasibility of enforcement and supervision

• Equitable considerations favor plaintiff

Limitations on Specific Performance:

• Generally not available for personal service contracts

• Court won't order specific performance if supervision is impractical

• Party seeking specific performance must have "clean hands"

Rescission and Restitution

Rescission cancels the contract and places parties back in their pre-contract positions as if the agreement never existed.

Grounds for Rescission Under Texas Law:

Mutual Mistake:

• Both parties shared same mistaken belief about critical fact

• Mistake goes to basic assumption of contract

• Party seeking rescission didn't bear the risk of mistake

Unilateral Mistake:

• One party mistaken about basic fact

• Other party knew or should have known of mistake

• Enforcement would be unconscionable

Fraud or Misrepresentation:

• False statements induced contract formation

• Innocent party would not have contracted otherwise

• Material misrepresentation about important fact

Duress or Undue Influence:

• Party forced into contract by threats or pressure

• No meaningful choice about contracting

Example - Houston Real Estate Development: Developer discovers title defect after contract but before closing on land purchase in Houston's East End. If both parties were unaware of title problem, court may rescind based on mutual mistake.

Restitution:

Along with rescission, courts order restitution to restore parties to pre-contract status:

• Return of money paid

• Return of property transferred

• Value of services rendered

• Interest and incidental costs

Reformation

Reformation involves rewriting the contract to reflect the parties' true intent when the written agreement doesn't accurately express what was agreed.

When Texas Courts Reform Contracts:

Mutual Mistake in Expression:

• Parties agreed to certain terms

• Written contract doesn't reflect actual agreement

• Mistake was in reducing agreement to writing, not in making deal

Unilateral Mistake + Fraud/Inequitable Conduct:

• One party mistaken about terms

• Other party knew and took advantage

• Enforcement as written would be unconscionable

Example - Houston Business Partnership: Two Houston entrepreneurs agree to 60/40 profit split but partnership agreement mistakenly states 50/50. With clear evidence of actual agreement (emails, testimony), court may reform to reflect 60/40 intent.

Requirements for Reformation:

• Clear and convincing evidence of mistake

• Proof of true agreement

• Mistake in expressing agreement, not in making it

Declaratory Judgment

When parties disagree about contract interpretation without an actual breach, a declaratory judgment action can clarify rights and obligations.

Uses in Houston Contract Disputes:

Insurance Coverage Disputes:

• Does policy cover claimed loss?

• Which insurer is primarily responsible?

• Houston example: Hurricane Harvey business interruption claims

Ambiguous Contract Terms:

• Parties disagree about meaning

• Need clarification before performance deadline

• Houston example: Interpretation of "best efforts" clause in joint venture agreement

Rights Under Complex Agreements:

• Multi-party contracts with competing interpretations

• Threshold questions before further performance

• Houston example: Joint operating agreement voting rights dispute

Liquidated Damages

Parties can agree in advance to a specific damages amount if breach occurs. Texas law enforces liquidated damages clauses if they meet certain requirements.

Valid Liquidated Damages Under Texas Law:

Two-Part Test:

1. Reasonable Forecast: The stipulated amount must be a reasonable forecast of just compensation for the harm caused by breach

2. Difficult to Estimate: Actual damages must be difficult to estimate accurately at time of contracting

Not a Penalty:

• Amount must bear reasonable relation to anticipated damages

• Cannot be disproportionately large compared to possible losses

• Purpose must be compensation, not punishment

Example - Houston Construction: Developer building a medical office building near the Texas Medical Center includes liquidated damages of $5,000/day for late completion. If this reasonably approximates lost rental income and increased financing costs, it's likely enforceable. If it's $50,000/day when actual damages are $5,000/day, it may be void as a penalty.