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“Material” vs. “Immaterial” Contract Breaches 

Rutkin & Wolf PLLC Nov. 14, 2023

Breach of contract papers with pen and gavelAs experienced business litigation attorneys, we've seen firsthand how contract breaches can disrupt business operations and relationships. We understand the stress and uncertainty that come with these situations, and it's our mission to help you navigate these complex legal waters. 

Being informed is critical. Many clients come to us knowing they've been impacted by a breach of contract, but they may not know what type of breach they're dealing with. Understanding the differences between material and immaterial breaches can greatly benefit you in your decision-making should you ever find yourself in this unfortunate situation.  

If you find yourself facing a potential breach of contract, it's crucial to consult with an experienced attorney. We at Rutkin & Wolf PLLC are here to provide comprehensive legal guidance and representation in such cases. Based in White Plains, New York, we serve clients throughout Bronx, New Rochelle, and Lower Westchester County.  

Understanding Breach of Contract

A breach of contract happens when one party doesn't fulfill their obligations as outlined in the agreement. This could be anything from not delivering goods on time to not paying in full for services rendered. 

Business disputes often arise due to contract breaches and can lead to business litigation — a civil lawsuit filed in court to resolve disputes between individuals, entities, or companies involved in a business relationship. When contracts are breached, their impending lawsuits can become quite complex and require the guidance of an experienced lawyer.  

There are a few different types of contract breaches. An anticipatory breach, for example, refers to a situation where one party expresses their intention not to fulfill the contract. This could occur, for example, when a customer cancels their order after it has been processed and refuses to pay, even when your agreement states that the order cannot be canceled once it's placed.  

Breaches can also be classified as either "material" or "immaterial" (also known as minor), depending on the severity and impact of the violation. 

What Is a "Material" Contract Breach?

A material breach is a serious violation that completely undermines the contract's purpose. In other words, it's a violation so significant that it prevents the parties from carrying out the contract altogether. When this happens, the non-breaching party is excused from performing their part of the deal and can seek legal remedies in court for the harm caused by the breach. 

For instance, say a supplier fails to deliver critical goods or services. Your company has a contract with a supplier to deliver a specific quantity of raw materials by a certain date for your manufacturing process. If the supplier doesn't deliver the materials on time, your production line could come to a halt. This is a clear violation of the contract terms and could significantly disrupt your business operations. As such, it would be considered a material breach of contract. 

What Is an "Immaterial" Contract Breach?

On the other hand, an immaterial breach, or minor breach, doesn't render the entire contract void. It's a slight deviation from what was agreed upon, but it doesn't affect the overall fulfillment of the contract. Even when a minor breach occurs, the parties can still carry out any remaining contractual obligations. 

As an example, suppose you're running a marketing agency and you have a contract with a freelance graphic designer to provide a logo design for one of your clients. The contract stipulates that the logo must be delivered in four different file formats, including .png, .jpg, .svg, and .eps. 

However, the designer delivers the logo in three formats — .png, .jpg, and .svg — but fails to provide the .eps version. In this case, while the designer has not fully met the stipulated terms of the contract, they have substantially fulfilled the primary obligation, which is creating and delivering the logo. The missing .eps file format, while a part of the agreement, does not inhibit the overall purpose of the contract, which is to provide the client with a new logo. 

Regardless of the type of contract breach you find yourself in, you must act quickly to find a resolution with the other party. The longer the issue sits unresolved, the more likely it is that damage will be done to your relationship and to both parties’ reputations. If you cannot reach a resolution with the other party on your own, you may need to consider taking legal action. Be sure to work with a knowledgeable business attorney if this is the option you decide to pursue. 

Consult a Business Litigation Attorney

Understanding the difference between material and immaterial contract breaches is crucial in determining your next steps. Whether you're facing a breach or accused of one, it's essential to get legal guidance to protect your interests and business objectives. 

As business law and litigation attorneys at Rutkin & Wolf PLLC, we serve clients throughout White Plains, New York, as well as the Bronx, New Rochelle, and Lower Westchester County with their business law and civil litigation needs. We bring our experience and dedication to every case, helping you understand your options and strategize for the best possible outcome. 

Contact us today to schedule a free consultation and see how we can help you navigate your contract and business litigation matters.