Material and immaterial breach of contract

Material and immaterial breach of contract

On Behalf of | Jul 25, 2019 | Uncategorized |

A lot of the time when people hear about contract disputes they hear about full-fledged breach.

In these instances, one party to a contract, or sometimes both parties, have violated a material term of the agreement. Terms are considered “material” if they go to the heart of the agreement such that, without them, the purpose of the agreement is meaningless. These contract disputes can lead to a massive lawsuit with a lot at stake, including each party’s finances and reputation.

Yet, not every violation of a contract constitutes a material breach. In fact, there are many instances where the terms of a contract are violated to the detriment of one party but the purpose of the contract can be fulfilled. For example, when parties agree to the rental of a furnished apartment but a piece of furniture is missing, then the heart of the contract, a furnished apartment, remains intact. Here, only a minor detail is missing and it can easily be remedied by reducing the rental amount until that furniture is provided. These violations are referred to as partial or immaterial breaches.

Although the distinction between material and immaterial breach may seem obvious, it is the driving force of many lawsuits. This is because what is material to one party may not be considered material to another. This may be seen in any number of contexts, but timing can serve as an example. One party may feel like its delivery of goods one day late is immaterial to the contract, whereas the receiving party may consider it material to the agreement. A determination will be based on the facts at hand, such as how the delay cost the receiving party as well as the reason for delay, and the wording of the agreement. If the verbiage utilized in the contract’s creation clearly spells out the importance of timely delivery, then a failure to meet a delivery deadline is more likely to be found to be material in nature.

Contract disputes are often hotly contested, which means parties to them need to be prepared to aggressively assert their interests and fight to protect themselves. This is where the assistance of a skilled legal professional may prove beneficial.