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 [email protected] 3rd Annual Construction Symposium January 25, 2008 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 i 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 ii 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 iii 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,