Material Breach of Contract and Lawsuits

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 What is a Material Breach of Contract?

As you might already know, a breach of contract occurs when a party to a contract does not fulfill their side of the bargain. There are two main types of breaches in contract law: a minor breach and a material breach.

As its name implies, a material breach or total breach, is a serious violation of the terms of a contract. While it usually only causes harm to one of the parties to the contract, it oftentimes can hurt both parties because it typically makes fulfilling the terms of the contract extremely difficult to almost impossible.

In other words, the purpose of the contract may be completely wiped out when a material breach occurs. Thus, the non-breaching party is excused from having to perform their portion of the contract and is free to seek legal remedies in order to recover for the harm done by the breach in court.

What are Some Examples of a Material Breach of Contract?

Contracts cover a broad variety of topics. As such, a material breach of contract can arise in many different areas of everyday life.

One example may occur when someone is purchasing a house. If the buyer completes all of the necessary paperwork, pays the seller at the closing, but the seller suddenly decides not to sell or refuses to give up the deed and keys to the house, then this would be considered a material breach of contract.

Alternatively, if the seller goes through all of the steps to sell their house and then the buyer refuses to pay, then this could also be considered a material breach of contract.

Another example of a material breach is when a buyer is purchasing a rare item from a seller. If the buyer pays for the item, but the seller does not give or ship it to them and instead hands it over to someone else, then this would be considered a material breach of contract.

Much like the house example, this scenario can also be reversed where the buyer never pays the seller after receiving the item.

Finally, material breaches can also happen in business settings like when two parties contract for services. A common scenario is when two companies enter into a contract that involves one of them shipping or supplying goods to the other.

Similar to the buyer purchasing a rare item, the parties here may also cause a material breach of their contract if the receiver fails to make payments for the goods or the shipper fails to deliver the proper goods to the buyer.

What Happens If You Committed a Material Breach of a Contract?

Material breaches often require a court’s intervention before it can be resolved. This is because the remedies for a material breach of contract typically go beyond monetary damages, and call for an equitable remedy.

If you are the one responsible for causing the material breach, then you should try to minimize the damage as much as possible by either performing your side of the bargain, asking the other party if there is another way you can make up for your mistake, or supplying an alternative remedy.

It is important that you document every way in which you tried to make up for your error. You should also contact a contract attorney to ensure that there was an actual breach and so that you are protected in the event your matter goes to court.

On the other hand, if you are the non-breaching party, then you should reach out to the other party to figure out if they can fulfill their side of the bargain. If they cannot, then be sure to document all evidence that you completed your promise and save anything that shows they did not hold up their end.

If there is no way to fix the issue, then you should contact a contract lawyer to initiate a lawsuit where you can either sue to compel the breaching party to perform their half of the contract or seek other damages to recover what you have lost.

In most cases, however, there is usually a clause located in the parties’ contract for how to handle a breach. If there is one available in your particular contract, then it will most likely dictate how the entire issue is settled.

One final thing to note is that when you are the person who breaches a contract, the contract is not discharged until a court deems it so. This means you are responsible for any damages you have caused due to the breach and may be forced to perform your side of the bargain regardless.

In other words, a breach does not necessarily mean that the contract is cancelled, so be prepared to be compelled to fulfill it. Obviously, there are exceptions to this rule depending on the circumstances involved.

What Remedies are Available for a Material Breach of Contract?

As previously mentioned, a material breach is a much more serious kind of contract violation. A material breach generally makes it exceedingly difficult to nearly impossible for the parties to be able to complete their contract.

Thus, if a material breach has occurred, then the court may issue an equitable remedy (as opposed to a monetary remedy) to help the non-breaching party, or in some cases both parties, recover from the damage caused by the incomplete fulfillment of their deal.

Some common examples of equitable remedies include the following:

It is important to keep in mind, however, that equitable remedies are not always granted by the court. Instead, equitable remedies are typically only issued by the court when a monetary award would be considered inadequate to protect the party or parties harmed by the material breach of contract.

Do I Need to Hire a Lawyer If I Am Facing a Material Breach of Contract?

Cases involving material breach of contract claims can be quite complex. For one, the laws governing contracts are heavily guided by state law, which means they may vary depending on the state.

The type of contract also contributes to the difficulty of the case because other areas of laws may be involved (e.g., property law for real estate contracts, employment law for business contracts, and so forth).

Finally, since the remedies for a material breach of contract do not usually involve monetary damages, it can be challenging to get the proper remedy that will best help the harmed party recover from the breach.

As such, if you are having issues involving a material breach of contract, then you should contact a local contract attorney for further assistance.

An experienced contract lawyer will be able to determine whether or not your contract was in fact breached, can help you secure the type of remedy you need to recover from the breach, and can ensure your legal rights as a party to a contract are properly protected.

Additionally, a lawyer can also represent your interests both in a courtroom as well as at a negotiation table.

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