Material vs. Non-Material Breach Of Contract: What Are The Differences?
Understanding How Breaches Of Contract Occur in Arizona
You probably know that a contract is a written document outlining legal obligations that are agreed upon and must be fulfilled by the parties to the agreement. Most of the time, contracts are fulfilled and both parties are happy with the outcome of their arrangement. But sometimes, one party to the contract fails to honor the agreement. In legal terms, this failure to fulfill a contract is called “breach of contract”. In addition to frustration and disappointment, breach of contract can lead to damaged relationships, loss of trust between the parties, small or large financial losses, business reputation loss, and much more. The aggrieved party can respond to breach of contract by working with an Arizona contract or litigation lawyer. Taking legal action against the other party can compel fulfillment of the contract or recover financial losses that may have occurred as a result of the broken agreement. Additionally, depending on the circumstances, the aggrieved party may be relieved of the requirement to fulfill that party’s portion of the contract.
Material or Non-Material Breach of Contract
Contracts frequently contain a multitude of specific terms and may impose many types of requirements upon each party who chooses to agree to the terms. However, a failure to fulfill one of the requirements does not automatically create a breach of contract that would enable the aggrieved party to cancel the contract or regain their financial losses. It’s important to recognize the difference between material and non-material breach of contract, which will greatly affect the options that are available to you. If you have agreed to a contract and suspect that the other party is failing to fulfill their obligations, a Glendale business lawyer can examine the situation and help you understand your legal options.
Understanding Material & Non-Material Breaches of Contract
In basic terms, a material breach of contract is a significant failure to fulfill obligations according to the terms of the agreement. This type of breach will strike at the central meaning of the contract, involving a failure to perform the essence of the contract and rendering the agreement irreparably broken.
A non-material breach of contract means that one of the minor details, ancillary provisions, or smaller terms of the agreement have been broken, but does not affect the root or heart of the contract.
For example, in simple terms, a person could make a contract with a building contractor to build a new home. If the contractor refuses to move forward with building the home, that would be considered a material breach of contract. However, if the home was built as agreed upon but it was painted light blue instead of medium blue, that would likely be considered a non-material breach of contract. The person who hired the contractor would have different legal options available of differing severity in each situation. Since many contracts are much more complex than this example, determining whether a breach was material or non-material – and therefore the legal options available to the aggrieved party – requires the expertise of an experienced Peoria business lawyer who can carefully analyze the contract and the specific failure.
Your Rights After Breach Of Contract
Your rights as an aggrieved party to a failed contract depend on whether the breach was material or non-material, but in both cases, you may be able to take legal action to recover the value of the losses that resulted from the breach of contract.
In most cases of non-material breach, you will need to fulfill your part of the agreement in order to recover your financial losses. In the example above with the building contractor, you would need to uphold your side of the contract by issuing payment and working with the contractor on the specifications of the home, as agreed upon, but you might still be able to come to a legal resolution in which the home would be repainted to the right color as originally agreed upon, at the contractor’s expense.
In a material breach of contract situation, such as when the contractor outright disregards the contract and does not build the home at all, you may be excused from your obligations within the contract since the essence of the contract has not been fulfilled. You may be able to recoup all of your losses and would be free to contract with a different contractor if you desired.
Regardless of the situation, a San Tan Valley business attorney can distinguish whether you are the victim of a material or non-material breach of contract, inform you of your rights and legal options, and assist in making a breach of contract claim so that you can regain your losses and move forward.
Legal Help With Breach Of Contract
With their decades of experience in Arizona business law, the attorneys at Denton Peterson Dunn know how to make deals and solve problems. If you are facing a breach of contract and need assistance regaining your financial losses, our team is ready to confidentially review your case and discuss your options, with no obligation. Call our office today to schedule your strategy session.