What Is a ‘Material’ Contract Breach?
A material breach of contract is a serious violation of the agreement. The damages or consequences of a material breach are significant and may profoundly impact the agreement’s objectives. In most cases, a material breach allows the non-breaching party to terminate the contract and seek remedies for the damages that the non-breaching party suffered.
Two common examples of material breaches include:
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Failure to pay. A client fails to pay a contractor for the services rendered. The failure to pay impairs the contractor’s ability to conduct business and may cause a forced closure.
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Failure to deliver. A manufacturer fails to deliver an order of goods. The failure to deliver the goods defeats the purpose of the contract, and the non-breaching party is now forced to source the goods from somewhere else (potentially at a higher cost) leading to financial strain.
A breach of a material term of the contract, such as failing to deliver goods or services, can cause significant financial harm to the non-breaching party.
What Is an ‘Immaterial’ Contract Breach?
An immaterial breach of contract is a violation that is typically considered minor and does not have a significant impact on the agreement’s overall objective. Immaterial breaches usually do not permit the non-breaching party the right to terminate the contract. An immaterial breach may not actually be a breach at all because often these types of contractual violations do not cause any meaningful damages to the non-breaching party (which is a required element of any claim for breach of contract). In general, an immaterial breach might be viewed as a breach that is not “fundamental” or “essential” to the contract’s expectations.
An example of an immaterial contract breach could be a delivery delay. For example, let’s imagine that the delivery of goods occurs a few days (or hours or minutes) after the agreed-upon delivery date. The delay in delivery is technically a "default" or breach of the parties' agreement. The delay may cause slight inconvenience to the non-breaching party. But the non-breaching party likely suffered no real or practical damage and the intended purpose of the contract is still fulfilled.
