Materiality is assessed by the extent the injured party is deprived of expected benefit, adequacy of compensation, forfeiture to the breaching party, likelihood of cure, and good faith. Immaterial breaches support damages but not termination.
Termination for an immaterial breach is itself a breach.
Alternative Names:
Material Failure|Total Breach
Why it Matters?
Misjudging materiality converts the terminating party into the breaching party, which is the most consequential error in contract disputes and the reason termination decisions warrant analysis before action. Contractual definitions of material breach displace the common law factors and are enforced, which makes a clause enumerating specific material defaults substantially safer than relying on the multi-factor test.
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Frequently asked questions
What happens if materiality is misjudged?
What reduces the risk?
