GOVERNMENT INSOLVENCY AGAINST CONTRACTORS

Contracting with the government can lead to unusual problems not found when dealing with private companies. One issue to consider in contracting with the government is sovereign immunity, which can mean that, even if the government breaches the contract, the contractor cannot sue to recover damages. Immunity apparently is being decided by the Texas courts based on the individual facts at hand: if the court sees that the state has done more than merely sign a contract, it is more likely to find that sovereign immunity has been waived. A contractor's best chance at recovering damages if the government breaches a contract is to show more than the contract was signed and breached. Four different cases from Texas are cited as examples.