In the world of contracts, breaches can happen, regardless of how well-drafted the agreement is. The two types of breaches that occur are material breaches and non-material breaches. Understanding the difference between these two types of breaches is critical because it can impact how the breach is handled and what remedies are available to the parties involved.
A material breach of contract is a serious breach that goes to the heart of the agreement, affecting the fundamental performance of the contract. Essentially, a material breach is when one party fails to perform their obligations under the contract to such an extent that it defeats the purpose of the contract. Breaching a material term of the contract may result in termination of the agreement. The non-breaching party can file a lawsuit for damages, which can include lost profits, costs, expenses or any other damages linked to the breach.
On the other hand, a non-material breach of contract is a minor breach that does not affect the core purpose of the agreement. It is less serious and often considered a technical violation of the contract. Non-material breaches are often referred to as “partial breaches,” in which one party fails to perform only a small part of their obligations under the agreement. The non-breaching party can still request remedies such as reperformance of the contractual obligation, specific performance, or a claim for damages. However, the damages available for non-material breaches are often limited compared to damages available for material breaches.
For instance, if a company contracts an advertising agency to create an advertising campaign, a material breach would be the advertising company failing to deliver any advertisement material or delivering it late, making the whole contract meaningless. If the agency creates the advertisement, but there is a minor misspelling or a misprint in the ad, it would be considered a non-material breach.
In conclusion, the most significant difference between a material breach and a non-material breach of contract is the severity of the violation. A material breach is a severe violation that significantly affects the purpose of the agreement, and a non-material breach is a minor violation that does not affect the agreement`s fundamental purpose. The remedies available for the non-breaching party differ based on the type of breach, and it is essential to have a thorough understanding of these distinctions to make informed decisions in managing the breach.