Material breach (of a contract)

A violation of a contract serious enough that the person harmed may compel performance and collect damages, and/or terminate the contract.

A contract is fundamentally a list of terms to which the parties have agreed – things each party has agreed to do or not do. However, no contract, no matter how complex or carefully written, can foresee every possible eventuality. Therefore, it will sometimes happen that a party to a contract will violate one or more of the contract’s terms. Sometimes the breach will be deliberate, sometimes accidental, sometimes driven by circumstance. The question that arises, in the case of a breach, is what will be done about the violation.

Typically, minor violations of a contract mean only that the person harmed by the violation can collect only actual damages. If the breach is sufficiently immaterial these damages may well be zero.

However, substantial violations, which are also known as material breaches, are a different story. They are material breaches because the breached clauses fundamentally matter to the contract. Such breaches typically mean that the injured party can legally compel performance of the contract in addition to collecting damages. Of course, a particular contract may contain specific provisions for what will happen in the case of a material breach.

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