Breach of contract in Texas — and the fee statute that decides what the case is worth

Breach of contract is the most-filed civil claim in Texas, and most of the volume is not what people picture. It is debt — a card issuer, a hospital, a supplier, or a debt buyer suing on an unpaid balance, usually pleading breach of contract and a sworn account in the same petition.

Two features of Texas law shape the claim more than anything in the agreement itself. A winning plaintiff recovers attorney's fees by statute, which changes what a small case is worth. And that fee recovery has a trap in front of it: you must present the claim in writing and wait 30 days before filing, or the fees are gone even though the claim survives.

What the claim is

Someone promised you something in an enforceable agreement and did not deliver.

The claim covers written, oral, and implied agreements. Texas enforces oral contracts. The statute of frauds in Business and Commerce Code § 26.01 requires a signed writing only for specific categories — the sale of real estate, an agreement that cannot be performed within a year, a promise to answer for someone else's debt, and a handful of others.

What you are asking for is the benefit of your bargain: the position you would have been in if the contract had been performed.

Where the right comes from

Common law, with the deadline and the fee remedy supplied by statute. The Texas Supreme Court has applied the same four-element formulation for decades, most recently in Pathfinder Oil & Gas, Inc. v. Great Western Drilling, Ltd., 574 S.W.3d 882 (Tex. 2019).

What a plaintiff has to prove — PJC 101.2

1. A valid contract existed. Offer, acceptance, a meeting of the minds, consideration, and terms definite enough for a court to enforce.
2. The plaintiff performed or tendered performance — or was excused from performing.
3. The defendant breached by failing to do something the contract required, or by doing something it prohibited.
4. The breach caused the plaintiff's damages.

Conditions precedent matter here. If the contract required written notice of default, a cure period, or mediation before suit, the party suing has to plead that those conditions were met.

How long you have to file

Four years, under CPRC § 16.004(a)(3), running from the breach. If a claim has no express period, the four-year residual in CPRC § 16.051 catches it.

The discovery rule rarely applies to a contract claim. Texas defers accrual only where the injury is inherently undiscoverable and objectively verifiable, and a broken promise usually is neither.

Installment contracts have a separate clock for every payment. A claim accrues on each missed installment, so a lender suing on a five-year-old default can still collect the payments that came due within the last four years and loses the ones that did not.

For the sale of goods, the deadline comes from the UCC instead: four years from tender of delivery under Business and Commerce Code § 2.725, with no discovery rule.

What has to happen before you file

Nothing, to bring the claim. Everything, to recover fees.

CPRC § 38.002 sets three conditions for statutory attorney's fees:

1. The claimant must be represented by an attorney.
2. The claimant must present the claim to the opposing party or an authorized agent.
3. Thirty days must pass without the just amount owed being tendered.

Presentment is the step people miss. It has no prescribed form — a demand letter does it — but it has to happen, and it has to happen before suit. A plaintiff who wins at trial without having presented the claim keeps the judgment and loses the fees.

What the claim pays

Expectancy damages. The money that puts you where performance would have put you — the unpaid balance, the cost to complete, the difference in value.

Consequential damages, where the loss was foreseeable to both parties when they contracted.

Attorney's fees under CPRC § 38.001(b)(8) for an oral or written contract. The fee shift is one-way: a prevailing plaintiff who recovers damages gets fees; a prevailing defendant gets nothing under the statute, though a contract's own prevailing-party clause can run both ways.

No exemplary damages for a pure breach. Punitive damages in Texas require fraud, malice, or gross negligence under CPRC § 41.003, which means an independent tort.

Who can be sued — and what changed in 2021

Until September 1, 2021, § 38.001 allowed fees only against "an individual or corporation." Texas courts read that literally, and fees were unavailable against a limited liability company or a partnership — the two forms most Texas businesses use.

House Bill 1578 rewrote the section to reach an "individual or organization," and restructured it so the enumerated claims now sit under subsection (b). The change applies to actions filed on or after its effective date.

The current subsection also carves several defendants out: a quasi-governmental entity authorized to perform a function by state law, a religious organization, a charitable organization, and a charitable trust are outside the fee statute.

Common defenses

• Limitations. More than four years since the breach.
• Statute of frauds. The agreement was in a category requiring a signed writing.
• Failure of a condition precedent. A required notice, cure period, or approval never happened.
• Prior material breach. The plaintiff broke the contract first, excusing the defendant.
• Waiver or modification. The plaintiff accepted late payments for a year, then sued over one.
• No meeting of the minds. The parties never agreed on terms definite enough to enforce.

What people get wrong

Fees do not go to whoever wins. Section 38.001 pays a claimant who prevails and recovers damages. A defendant who defeats the claim recovers nothing under the statute, and a plaintiff who wins a declaration but no money generally recovers nothing either.

Oral contracts are enforceable. The statute of frauds covers specific categories. Outside them, a spoken agreement is a contract — the problem is proving its terms, not its validity.

Presentment is not optional. Skipping the demand letter forfeits the fees that often make the case worth bringing.

Each installment has its own deadline. People assume one clock runs from the first missed payment. It does not.

Where it came from

Texas has had a statutory fee remedy for contract claims since 1923, and the list in § 38.001 still reads like the commercial disputes of that era — freight overcharges, lost or damaged freight, killed or injured stock. The list survived recodification into the Civil Practice and Remedies Code in 1985 with those items intact.

The 2021 amendment closed a gap that had opened underneath the statute rather than inside it. When the list was written, businesses were corporations or partnerships of individuals. As the LLC became the default Texas business form, a statute naming only individuals and corporations quietly stopped reaching most defendants.

Common questions

How long do I have to sue for breach of contract in Texas?

Four years from the date of the breach. For an installment contract, a separate four-year period runs on each missed payment, so older installments drop off while newer ones survive.

Can I recover my attorney's fees?

Yes, if you are the claimant, you recover damages, and you met the presentment requirement — an attorney, a written demand, and 30 days without payment. The fee shift runs one way unless your contract says otherwise.

Does the contract have to be in writing?

Not usually. Texas enforces oral contracts. A signed writing is required for the categories in the statute of frauds, including real estate sales and agreements that cannot be performed within a year.

Can I sue an LLC for attorney's fees?

Yes, for actions filed on or after September 1, 2021. Before that amendment the statute reached only individuals and corporations, and LLCs were outside it.

Can I get punitive damages for a broken contract?

No. Exemplary damages require clear and convincing proof of fraud, malice, or gross negligence, which means proving an independent tort alongside the breach.

What if I breached too?

A prior material breach by you can excuse the other side's performance. Whether a breach is material is a fact question, and it is one of the most common defenses in contract litigation.

Where these rules live

• CPRC § 16.004 — Four-year limitations period
• CPRC § 16.051 — Residual four-year limitations period
• CPRC § 38.001 — Recovery of attorney's fees
• CPRC § 38.002 — Procedure for recovery of attorney's fees
• CPRC § 41.003 — Standards for recovery of exemplary damages
• TRCP 91a — Dismissal of baseless causes of action
• TRCP 166a — Summary judgment