When Does Breach of Contract Become Criminal?
Contracts are the foundation of many personal and business relationships. They establish clear agreements that outline the rights, responsibilities, and expectations of both parties. However, it's not uncommon for disputes to arise when one party fails to live up to their end of the deal.
While most breaches of contract are considered civil matters, there are instances when they cross the line into criminal territory. Knowing the difference can be key for individuals and businesses alike, particularly in Texas, where specific laws govern contract disputes.
If you’re involved in a breach of contract and aren't sure if there's criminal activity involved, The Parzivand Law Firm, PLLC can help. Led by Attorney Hessam Parzivand, the firm serves residents in Texas, including Stafford, Sugar Land, and Fort Bend County, with employment and contract law matters.
Whether you’re dealing with a contract dispute or other legal challenge, The Parzivand Law Firm strives to provide clear communication and tailored solutions. They provide accessible, dependable legal representation to help individuals and businesses resolve complicated issues.
What is a Breach of Contract?
A breach of contract occurs when one party in a legally enforceable agreement fails to fulfill their contractual obligations. This can include anything from skipping payments, failing to deliver promised goods, or violating key terms specified in the agreement. Most breaches are resolved through civil lawsuits, financial settlements, or contract amendments.
Examples of civil breaches of contract include a contractor who doesn’t deliver work as specified in their agreement or a borrower who fails to make agreed-upon payments. Remedies for these incidents may include compensatory damages, cancellation of the contract, or forcing performance through court orders. However, these situations are rarely considered criminal unless additional, unlawful behaviors arise.
When Does a Breach Become Criminal?
For a breach of contract to rise to the level of criminal activity, the act must involve elements of fraud, intent to deceive, or theft. These cases go beyond simple noncompliance with contractual terms—they involve behaviors that violate state or federal laws. Some scenarios where contract breaches may involve criminal activity include:
Fraudulent intent: If a party enters into a contract without any intention of fulfilling the terms, this may constitute fraud. For instance, accepting payment for services without any intention of delivering.
Theft by deception: Misleading another party to gain money or property under the guise of a legal agreement can attract criminal charges.
Forged contracts: Altering or falsifying contract terms for personal gain is an illegal act that can result in severe legal consequences.
Unlawful gain: A breach of contract may become criminal when it involves intentional deception or fraud to obtain unlawful financial gain. This could include manipulating contract terms, misrepresenting facts, or engaging in fraudulent activities for profit.
Pattern of deceptive behavior: When a party repeatedly breaches contracts with the intent to defraud others or engage in fraudulent schemes, it can elevate the breach to a criminal offense. A pattern of deceptive behavior indicates a systematic intent to deceive and defraud, which may result in criminal charges.
Violation of specific criminal statutes: Certain breaches of contract may directly violate specific criminal statutes, such as laws related to embezzlement, money laundering, or securities fraud. When a breach involves actions that are explicitly covered by criminal laws, it can attract criminal charges and penalties.
Proving criminal intent in a contract breach often involves reviewing communication, documents, and behaviors leading up to and during the agreement's tenure. When trying to determine if a breach of contract involves a criminal offense, it's important to consider the circumstances, actions, and intent of the parties involved.
Legal professionals and law enforcement authorities play an important role in determining when a breach crosses the line into criminal behavior and pursuing appropriate legal action based on the severity and nature of the breach.
Texas Laws Governing Breach of Contract
The Texas Business and Commerce Code governs contract creation, interpretation, and enforcement standards. Most breaches of contract fall under civil jurisdiction, with remedies awarded through state courts. However, situations involving fraud, theft, or forgery move into criminal territory, governed by state statutes for fraud and theft.
Fraud is addressed under Chapter 32 of the Texas Penal Code. This includes committing deceptive acts during contractual agreements for financial or other gains.
Theft as defined in Chapter 31 of the Penal Code includes unlawfully taking another party’s property, sometimes under the pretense of fulfilling a contract.
Forgery is a criminal offense in Texas, detailed in Section 32.21 of the Penal Code. It involves altering or creating a false document with the intent to deceive.
Statute of limitations: The Texas statute of limitations for breach of contract cases sets a specific time limit within which a lawsuit must be filed.
Remedies for breach: When a breach of contract occurs, Texas law provides various remedies, including monetary damages, specific performance (enforcing the terms of the contract), or cancellation and restitution (terminating the contract and returning any property or funds exchanged).
Good faith and fair dealing: Texas law imposes a duty of good faith and fair dealing on parties involved in a contractual relationship. This means that both parties must act honestly, fairly, and in a manner that upholds the reasonable expectations established by the contract.
Employment Law Attorney Serving Stafford, Texas
At The Parzivand Law Firm, legal representation goes beyond just addressing cases—it is about creating meaningful connections with clients as they tackle legal challenges. With a strong foundation in employment law and a background in human resources, this approach promotes open communication and solutions tailored to your specific needs.
Reach out to The Parzivand Law Firm today to get the help you need. Located in Stafford and Houston, Texas, we serve clients throughout Sugar Land and Fort Bend County.