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How do you know when a contract breach is material?

On Behalf of | May 10, 2022 | Contracts

When someone fails to live up to one or more of the obligations called for in your contract with him or her, your first inclination may be to sue for breach of contract.

Per the Judicial Education Center, however, you would do well to first analyze the situation to determine whether the breach is material enough to warrant spending the time and money necessary to sue.

Material breach factors

A material breach, as its name implies, is one that causes you to receive something quite different from what the contract called for and what you expected to receive had the other party performed appropriately. Many factors go into determining the materiality of a breach, including the following:

  • Did you suffer substantial hardship or loss because of the breach?
  • Has the breaching party already performed some of the other contract terms?
  • How much benefit have you already received from the other party’s performance?
  • How likely is it that the other party will perform the rest of the contract in accordance with its remaining terms?
  • Has the breaching party exhibited any other negligent behavior since the contract’s inception?

Possible court remedies

If you determine that the breach is material, the next question becomes what remedy will you seek in court. In general, court remedies for a material breach of contract include the following:

  • Compensatory money damages
  • Specific performance of the contract
  • Injunction against the breaching party
  • Rescission of the contract
  • Reformation of the contract

Given that money damages represent the most common remedy, this is where the amount of your actual and consequential losses stemming from the breach become all-important.