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.
IP Infringement: What Steps Can You Take If You're Affected?
IP infringement occurs when someone uses your intellectual property without your permission or beyond the scope of the permission you granted. Common examples of IP infringement include copying a product’s patented features or using a trademarked logo in a way that is likely to confuse consumers about the source or affiliation of goods or services. […]
Public Allegations, Unfinished Investigation: What New Jersey Businesses Should Do Next
When facing public allegations of wrongdoing, companies should not let the speed of the public conversation dictate the speed of an investigation. An investigation designed to confirm a preferred narrative rather than establish the facts can create serious problems later, particularly if litigation, regulatory scrutiny, or employment claims follow. Key Takeaways When public allegations surface […]
BESS Interconnection: Managing Grid, Cost, and Schedule Risk
For battery energy storage system (BESS) developers, securing equipment and site control is only part of the development equation. A project must also connect to the electric grid, and increasingly, BESS interconnection is one of the biggest sources of schedule, cost, and contractual risk. Key Takeaways This article is Part 3 of our Battery Storage […]
Navigating Director and Officer Liability in Times of Financial Distress
Director and officer liability increases sharply when a company is in financial distress. Decisions that would draw little attention in a healthy business can later be challenged by creditors, shareholders, bankruptcy trustees, and regulators as breaches of fiduciary duty, fraudulent transfers, or oversight failures. Understanding where that exposure comes from, and how to manage it, […]
Before You Buy: Managing Real Estate and Permitting Risk for BESS Projects in New York and New Jersey
For developers pursuing battery energy storage system (BESS) projects, finding the right property is only the beginning. BESS site selection is as much a legal and transactional exercise as a real estate decision, with risk analysis central to the project’s ultimate success. Key Takeaways The core questions for BESS site selection in New York and […]
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
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!
