Contracts are an essential part of many business transactions. It’s expected that both parties will uphold their responsibilities that are outlined in any particular contract. When that doesn’t happen, the contract is said to have been breached.
A material breach of contract occurs when one party doesn’t meet the core obligations of the agreement, significantly harming the other’s interests. There are a few points to consider if someone is trying to determine if a particular breach was material or not.
Requirements for a material breach of contract
In the event that such concerns are eventually litigated, one of the key points that the court will consider is whether the breaching party committed the breach on purpose or acted in bad faith. If the action or inaction that violated the contract was on purpose, the court may determine that a material breach occurred.
Another key concern is whether the breaching party can correct the breach or not. If the breaching party can solve the problem and can ensure that it will take care of it, the breach may not be considered material.
The timing of the breach could also matter. For example, if the party whose rights are being violated could have sought an alternative solution earlier in the process, a breach late in the process may be more likely to be considered material.
The non-breaching party has to be able to show that they can take care of their side of the contract immediately. If they are willing and able to do this, the breach might not be material because only when one side is not able and/or willing to meet their obligations, can a material breach occur.
Dealing with contract breaches is a challenging undertaking, whether a particular breach is material or not. Any company that’s handling these matters should work with a legal representative who can assist them with asserting their rights and finding a resolution for a particular breach-related concern. Doing this as quickly as possible is critical to preserve possible resolution options that are time sensitive.