In contract law, a breach of contract occurs when one party fails to perform their duties as specified in the contract. A contract may be breached by one or all parties and there may be legal consequences for the breaching party.
What is a Material Breach of Contract?
The two major types of breach of contract are material and non-material breach. A material breach of contract is a major breach which seriously impairs the contract as a whole and which defeats the purpose of the agreement.
In the case of a material breach (which is also sometimes referred to as a “total breach”), the non-breaching party can just cancel its performance, end the agreement and go to court in order to collect damages from the breaching party.
An example of a material breach is when a used car dealer promises you a yellow car but ends up giving you a blue car instead.
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How to Prove a Material Breach of Contract?
In general, a court will look at certain factors to determine if the breach was material such as:
- The Level of Breach: If the breach impairs the overall contract and defeats the main reason for entering the contract in the first place, then it will be considered material.
- The Possibility of Compensation: If the breach can be solved with money and if it is something that can be fixed with reasonable effort or expense while keeping the contract in place, then it will less likely be considered material.
- Loss for the Breaching Party: If the breach occurred when the breaching party already performed most or a significant portion of its duties, then the breach may not be considered material. In this case, the non-breaching party cannot just walk away from the contract but must give the breaching party an opportunity to fix the issue.
- Chances of Fixing the Issue: If the breaching party is able and willing to fix the issue, then it is less likely that the breach will be considered material. However, if the breaching party is unable and/or unwilling to fix the situation, it can be considered a material breach.
- Intention of the Breaching Party: If the breaching party willfully and intentionally breached a part of the contract, then it may be considered a material breach. However, if the party breached the contract because of ordinary carelessness or because of circumstances beyond the party’s control, then the breach is less likely to be considered material.
- Intention of the Non-Breaching Party: Even if one party breached the contract, if the non-breaching party was not ready, willing and able to perform its side of the contract in the first place then the non-breaching party cannot claim material breach of the contract to recover damages from the party which breached.
- Language of the Contract: Sometimes, the language of the contract may directly mention and describe what constitutes a material breach.
What are the Remedies for a Material Breach?
In a material breach, the non-breaching party can:
- End their side of the performance and terminate the contract, and
- Sue the breaching party for violating the contract and recover any damages.
It’s important for the non-breaching party to check the contract and see if the contract has any steps they should take in the event of a breach. While, in general, they may end their side of the performance or immediately sue the breaching party, many contracts have specific instructions in the event of a breach.
There are defenses that the breaching party can use if the non-breaching party sues. While there are several options, one of the defenses is that the non-breaching party also made an error like delaying the process so the breaching party was put in a difficult position.
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Should I Contact a Lawyer?
If you entered into a contract and one party breached, it is important to figure out if the breach was material or non-material and if so, what types of damages you can recover.
In this context, it is important to consult with a local business attorney who can help recover damages and represent you in court if necessary.