Contracts are like promises – they’re meant to be kept. But what happens when one party doesn’t hold up their end of the deal? That’s when a contract breach occurs.
However, not all breaches are the same. Some have a bigger impact than others. Here is what you need to know about a material and immaterial breach of contract.
The degree of deviation from the contractual terms
A material breach involves a significant departure from the contract’s principal objective. It renders the contract pointless as it compromises its core aspects or goals.
On the other hand, an immaterial breach entails a variation from contractual stipulations that is not substantial enough to undermine the core intent of the agreement. This breach pertains to peripheral aspects of the contract while the central purpose remains intact.
Picture a contract agreement where the supplier delivered the wrong products. That would be a material breach of contract. However, if they delivered the right products but missed a few items, it may amount to an immaterial breach of the initial agreement.
Why does it matter?
Understanding the distinction between material and immaterial breach of contract is essential in business relationships, especially in supplier agreements. It is something that can profoundly impact your business decisions and actions.
For instance, a material breach can release the non-breaching party from all contractual obligations, while an immaterial breach does not necessarily mean the contract is rescinded. That said, it is not always easy to tell whether a breach is immaterial or material since it depends on the prevailing circumstances of each situation.
Take informed action
Promptly addressing breaches and considering their magnitude can help you determine the appropriate course of action, whether negotiating a resolution or seeking legal remedies.
Remember, your approach can make all the difference in maintaining successful and mutually beneficial business relationships, underscoring the need for qualified legal guidance in navigating such eventualities.