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What is a material breach of contract?

On Behalf of | Apr 11, 2022 | Business Law

Contracts are a basic part of doing business in Los Angeles. They provide the mechanism for ensuring financial transactions occur in an organized and efficient manner. However, sometimes one side to the contract does not follow through on their end of the agreement. When this happens, the contract has been breached. There are two types of breach of contract: material and minor. The following is a basic overview of material versus minor breach of contract.

Material breach

A material breach of contract exists when one side’s failure to perform causes the other side to receive something substantially different than what they agreed upon. For example, if the contract was for a shipment of hammers and the nonbreaching party received a shipment of wrenches, this could be considered a material breach of contract. If a material breach of contract exists, the nonbreaching side is absolved of their duty to perform their end of the contract. They also have the immediate right to all pertinent remedies available to them due to the breach.

Minor breach

A minor breach of contract exists when, although one side failed to perform per the terms of the agreement, the other side still receives what they agreed upon. For example, unless the contract specifically indicated time is of the essence or a deadline is included in the agreement, a reasonable delay in shipment of the agreed upon product may be considered a minor breach of contract. When there is a minor breach of contract, the nonbreaching side must still fulfill the duties they agreed to, but they still can seek damages for the harms incurred due to the breach.

Know your options

If you believe you have suffered damages due to breach of contract you will want to make sure you understand your options for recovery. These options are dependent on whether the breach is material or minor. Knowing the basics of the breach and how the law applies to them is the first step in seeking the compensation you deserve should you pursue commercial litigation.

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