A contract breach occurs when one of the parties fails to fulfill its obligations under the agreement. However, not all contract breaches are created equal. A “material” breach is so significant that it reaches the core of the agreement and negatively impacts its entire outcome. In contrast, a “non-material” breach often involves less important details.
The distinction between a material and non-material contract breach impacts the legal recourse available to a Monmouth County business. After a material breach, the aggrieved party does not need to perform its part of the contract.
What types of contract breaches are considered material?
In some cases, a material breach will be obvious. For instance, if a band is hired to perform at an event on a specific date and fails to show up without a valid excuse, the breach is likely material.
In other situations, the distinction is far less clear, and the parties should consult with a Monmouth County business lawyer to determine the type of breach and the available remedies. There are several factors to consider when determining whether a contract breach is material, including:
How far along are the parties in completing their obligations under the contract? A court is more likely to find a non-material breach in the later stages of an agreement.
How extensive is the failure?The court will evaluate the losses suffered by the non-breaching party to determine if they impact the heart of the bargain. If so, it will generally find a material breach.
What was the intent of the parties? If the court finds that the breaching party acted unfairly or in bad faith, it is more likely to characterize the breach as material.
How easy is it to rectify the breach? If the problem could be remedied using reasonable effort and expense, the court is more likely to find a minor breach.
How will the breaching party be impacted if the other party is not obligated to perform? Even though the breaching party may be responsible for the problem, the court will still evaluate the severity of the impact (e.g., forfeiture) if the non-breaching party’s performance is excused.
Does the contract address breaches?In some case, the terms of the contract specify what constitutes a material breach. The court will look to those provisions to make its determination.
What recourse is available for a material breach?
The type of breach will impact the legal remedies available to the non-breaching party. If the breach is material, the aggrieved party can:
File a lawsuit to recover damages and continue the contract, or
File a lawsuit to recover damages and cancel its performance under the contract
If the contract breach is minor, the non-breaching party may only sue to recover damages.
Don’t Overlook the Importance of Business License Management
If you operate a business without the proper license, you risk fines, insurance issues, reputational harm, and even business closure. Even innocent mistakes, like forgetting to renew a license, can have significant consequences, such as losing your lawsuit for payment of services that are unlicensed, which makes it imperative to have business license management procedures […]
Failing to Comply With NJ Rent Control Exemption May Prove Costly
What Developers Need to Know About New Jersey’s Rent Control Exemption Law to Ensure Entitlement to Exemption for Newly Constructed Multi-family Housing. A property owner in Jersey City is facing a $400 million federal class action lawsuit alleging that the landlord did not follow the procedural steps required to be eligible for exemption from local […]
Crypto Securities Law: When Tokens Become Investment Contracts
The application of traditional federal securities laws to crypto assets continues to evolve. In some cases, the Securities and Exchange Commission (SEC) considers tokens and other digital assets to be securities. This makes them subject to federal securities law, including the Securities Act of 1933 and the Securities Exchange Act of 1934. This classification has […]
The Due Diligence Process for NY Condominiums and Cooperatives
While the New York City real estate market can be extremely competitive, moving too quickly often backfires. Before purchasing a condominium or cooperative in New York City, it is important to do you homework. Purchasing property in NYC can involve a dizzying number of legal issues. These include condo and co-op rules, rent restrictions, and […]
Smart Contract Legal Issues: Drafting Agreements for Blockchain
Smart contracts feature a unique blend of legal agreement and technical code. This innovation has the potential to reshape how business is conducted. At the same time, smart contract legal issues around enforceability, jurisdiction, identity, and compliance are common. The legal framework for these self-executing agreements is still evolving. What Are Smart Contracts? Smart contracts, […]
Are Stay Interviews the Key to Retaining Top Talent?
Retaining top talent continues to be one of the greatest challenges facing employers today. Even in an employer’s market, the loss of a key employee can disrupt operations and result in significant costs. While compensation plays a role, long-term retention often depends on workplace culture, communication, and employee engagement. One increasingly popular strategy for improving […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
