If you or another party has breached a contract, then it must be determined whether the breach is material or immaterial in order to determine the appropriate remedy. An immaterial breach typically involves a minor error that results in little if any actual harm. A material breach undermines the purpose of the contract and may lead to damages being paid by the breaching party.
For example, if you contract with Company A to have the company clean your place of business each Tuesday, but Company A is late one week and does the cleaning on Wednesday, then it is likely that the breach will be immaterial. That is, unless you can show how the late cleaning resulted in damages to you.
The contract itself can specify what would constitute a material breach. For example, if the contract between you and Company A specified that the cleaning must be done for safety purposes, and thus time is of the essence, then the late cleaning may hold up operations and cost you money. The breach would likely be seen as a material breach, as the contract presumed that you would incur damages as a result of the breach.
Depending on the circumstances, different remedies are possible for a breach of contract. Damages — or some form of payment from the breaching party to the other — are the most common kind of remedy, and there are different kinds of damages for different situations. The party harmed by the breach may also seek restitution after cancelling the contract, or the harmed party may seek what is called specific performance, whereby a court orders the breaching party to perform a contractual duty.
The business lawyers of Shulman, Hodges & Bastian handle a variety of transactional matters, including the drafting of contracts and disputes over breach of contract. To learn more about our full-service approach to business law, please visit our transactions overview.