The Difference Between “Material” and “Immaterial” Contract Breaches

Contracts are a basic component of our everyday lives, especially if you have a business of any size. Sometimes one party fails to fulfill the terms outlined in the contract, leading to a breach of contract. But not all breaches of contract are equal. Some breaches may be deemed to be "material" while others are considered "non-material" or "immaterial." 

Being aware of the difference between a material and immaterial breach of contract is essential for anyone entering into a legally-binding agreement. While both types of breaches can lead to legal action, the consequences for material breaches are much more severe. 

The business litigation attorney at Clark Law Firm PC helps clients resolve different types of contract breaches. John has experience in dealing with both material and immaterial contract breaches and understands that every contract requires a unique approach. With an office in Birmingham, Alabama, John provides legal services to clients throughout Alabama and the Florida Panhandle.  

Understanding Breach of Contract

A breach of contract occurs when one party fails to perform its obligations as agreed upon in a legally-binding contract. A contract breach can take various forms, ranging from a failure to deliver goods or services to a late delivery or even the failure of a party to provide certain regular updates to the other party on time. In essence, any deviation from the agreed-upon terms of a contract can constitute a breach of contract. 

To better understand what a breach of contract entails, let’s review an example. Let’s say you enter into a contract with a vendor to provide you with a certain quantity of materials by a specific date. If the vendor fails to deliver the materials on time or delivers an insufficient amount of materials, the vendor would be in breach of the contract. In such a scenario, you would have the right to take legal action against the vendor to recover any losses incurred due to their breach of contract. 

Elements of a Contract Breach

To prove a breach of contract, there are four key elements that need to be established:  

1. A legally-binding contract must exist;  

2. The non-breaching party must have performed its obligations under the contract;  

3. There must be a failure of the breaching party to perform its obligation(s); and  

4. The non-breaching party must suffer some harm or loss due to the breach of contract.  

Without these four elements, a contract breach cannot be established in court. When filing a breach of contract claim, you need to understand the type of breach with which you are dealing with. There are two primary types of contract breaches: material and immaterial.  

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: 

• 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. 

• 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. 

Don’t Hesitate to Contact a Business Litigation Attorney

Every type of contract breach should be taken seriously, especially if you suffered any damages or harm from the breach. Consider speaking with a business litigation attorney at Clark Law Firm PC if the other party breached a contract or if you are accused of a contract breach. Contact John today to schedule a case evaluation.