In the world of contracts, not all breaches hold the same weight or lead to the same legal consequences.
Understanding the distinction between a material breach and a non-material breach is necessary in determining the response and remedy that the affected party can seek.
Material breach of contract
A material breach occurs when one party fails to perform a part of the contract that strikes at the heart of the agreement’s purpose. This type of breach is so significant that it harms the very foundation of the contract, making it impossible for the other party to get the benefit for which they bargained. For example, if a contractor agrees to build a house and then stops work halfway through without reason, this would likely constitute a material breach. The homeowner cannot use half a house as intended, which dramatically undermines the contract’s purpose.
When a material breach happens, the non-breaching party is no longer obligated to perform their duties under the contract. They are also entitled to sue for damages that arise directly from the breach. In many cases, they can seek compensation for losses that were foreseeable at the time both parties signed the agreement.
Non-material breach of contract
Conversely, a non-material breach, sometimes called a minor breach, happens when the failure to fulfill some part of the contract does not destroy its overall intent and purpose. This type of breach pertains to less significant aspects of the agreement, and although it may be inconvenient, it does not prevent the contract from being fulfilled as a whole. For instance, if a painter contracted to paint a house blue uses a slightly lighter shade of blue than specified, this might be a non-material breach. The house gets painted, and the overall purpose of the contract remains intact.
In the case of a non-material breach, the non-breaching party must continue to fulfill their contractual obligations. They may still seek damages for the breach, but the contract itself remains in force.
Legal remedies and considerations
The remedies available for each type of breach differ significantly. With a material breach, the non-breaching party may terminate the contract and seek damages that put them in the position they would have been in had the breach not occurred. For a non-material breach, the remedies usually involve compensation for the specific harm caused by the breach, but the contract continues toward completion.
Understanding these differences can help parties negotiate contracts more effectively and handle disputes more strategically. It is important to clearly define the elements of a contract to ensure both parties understand what is necessary for the agreement’s success.