Breach of Contract
A failure to perform a contractual obligation without legal excuse, which gives the other party remedies.
A breach of contract occurs when a party fails to perform an obligation under the contract without a legal excuse. The non-breaching party may then pursue remedies such as specific performance, liquidated or actual damages, or rescission.
When a buyer breaches, the seller may keep the earnest money as liquidated damages or sue for performance or damages. When a seller breaches, the buyer may sue for specific performance or damages.
On the exam
Exam trap
Tested in
Contracts & Agency (13% of the exam)
From definition to recall
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- Specific Performance
A court remedy that forces a defaulting party to complete the agreed sale, available because real property is unique.
- Liquidated Damages
An amount the parties agree in advance that one will keep or pay if the other defaults, such as retained earnest money.
- Rescission
Canceling a contract and returning the parties to the positions they held before it was made.
This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.