Written by attorney Gregory James Glaser

Material Breach of Contract

Misconceptions are rampant in the business world regarding what constitutes a “material breach of contract" versus a “non-material breach of contract." Beware litigious people. Unless the contract defines “breach" very specifically, the general rule is that a material breach of contract is a significant failure to perform an important obligation in the contract. This means that minor imperfections are not considered a “material breach." A material breach will excuse any further contract obligations by the non-breaching party. By contrast, a non-material breach does not excuse either party, but only may warrant some corrective measures like a small refund or credit depending on the circumstances. So, a party’s failure to perform a contract obligation may or may not be deemed “significant" or “material." It depends on all the facts and circumstances, including the language of the contract, the conduct of the parties, the industry standards, and any other relevant factors. Generally, things like minor delays and minor product imperfections are not deemed significant, because they are commonplace in the market. A good rule of thumb is that if you demand perfection, state explicitly in the contract that you are demanding “perfection." I think you’ll find that people either won’t wish to sign a contract with you, or you’ll pay a premium for your high expectations.

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