Material Breach of Contract

Material Breach of Contract

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One of the four main types of contract breaches under modern contract law is known as a material breach. A material breach of contract involves an issue that is large enough to render the original agreement “irreparably broken,” thereby defeating the purpose of forming the contract in the first place. These breaches, also referred to as “total” breaches, go to the very root of the agreement between the parties and are noticeable enough to cause actual monetary damages and undue hardship. If you have entered into a contract with another party and you believe the other party violated the contract’s terms, a skilled Atlanta contract attorney from Buckley Beal can represent your interests and help you pursue a fair legal remedy for your losses.

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Elements of a Material Breach of Contract

Determining whether or not a material breach occurred involves reviewing prior court decisions from similar contract disputes and consulting with a well-known legal treatise titled “The Restatement (Second) of the Law of Contracts.” The following factors generally dictate whether or not there was a material breach.

1. Was the other party deprived of “the heart” of what it bargained for? – For example, say a person were to purchase a brand new car from a dealership under the promise from the dealer that their vehicle would have tinted windows. Instead, the customer is delivered a stock vehicle. Since the primary purpose of the transaction was to buy a car, this would likely not be considered a material breach. On the other hand, say for example a guitar collector were to purchase at auction the very first guitar ever owned by Jimi Hendrix, but was later presented with a different guitar. In this case, the deal was not about just purchasing a guitar; it was about one particular guitar of historical value.

2. Can the other party be compensated? – If the issue can be easily fixed with a reasonable effort or expense while still keeping the terms of the contract intact, it is probably not a material breach. For example, since the car dealer in the previous example could easily have tint installed after the fact, this likely is not a material breach and is not a satisfactory reason to terminate the contract.

3. What will the breaching party lose? – If the breaching party has already fulfilled a majority of their contractual obligations when the breach occurs, there is less likely to be a material breach. For example, say a person were to be commissioned to custom remodel a person’s bathroom. If the homeowner claims that a breach occurs a day before the bathroom is to be completed, the contractor would lose far more than the homeowner would than if the breach was made known prior to the beginning of the project. The closer a breaching party is to fulfilling their duties, the less likely a material breach has occurred.

4. Is the breaching party likely to make things right? – If a breaching party is highly likely and able to fix the issue, it is unlikely that a material breach has occurred. If the breaching party is financially weak or otherwise unable to correct the problem, however, a material breach may have occurred.

5. Did the breaching party act in bad faith? – Courts are far more likely to deem a breach a material breach if it resulted from willful noncompliance or dishonest conduct. Conversely, breaches resulting from carelessness or other factors beyond the party’s influence are less likely to be deemed material breaches.

6. Is the non-breaching party “ready, willing, and able” to perform their duties? – If the contract has not been performed already, the non-breaching party must be “ready, willing, and able” to perform their duties as outlined in the contract. If this is not the case, no material breach has occurred.

7. Does the contract have any specific provisions? – In some cases, a contract will explicitly state within its terms what conduct is or is not considered a material breach. For example, a contract can have a clause dictating that failure to make payments in full and on time constitutes a material breach.

Get a Team of Super Lawyers® on Your Side

At Buckley Beal, our Atlanta business attorneys understand the frustrations that can arise when a person fails to fulfill their promises. If you believe you or your business have been a victim of a material breach of contract, our firm can walk you step-by-step through the appropriate legal channels and fight to ensure your rights are upheld in a court of law. Whether you seek financial compensation or specific performance from the offending party, we are prepared to go the distance to protect your wellbeing during this time. Whether you anticipate a breach or a breach has already occurred, our team works diligently and proactively to protect your interests.

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