Material Breach vs Minor Breach: When Can You Walk Away?
When the other party doesn't fully perform, can you walk away from the contract? The answer depends on whether the breach is "material" or "minor." This distinction can mean the difference between freedom and being stuck.
Material Breach: The Exit Ramp
A material breach goes to the heart of the contract. It's so significant that it defeats the purpose of the agreement. When a material breach occurs:
- The non-breaching party can terminate the contract
- The non-breaching party is excused from further performance
- The non-breaching party can sue for damages
Minor Breach: Still Bound
A minor breach (also called "partial" or "immaterial" breach) doesn't undermine the contract's core purpose. When a minor breach occurs:
- The non-breaching party cannot terminate
- The non-breaching party must still perform their obligations
- The non-breaching party can sue for damages caused by the minor breach
How Courts Determine Materiality
Courts consider multiple factors (from the Restatement of Contracts):
- Extent of deprivation: How much benefit did you lose?
- Adequacy of compensation: Can money damages make you whole?
- Likelihood of cure: Will the breaching party fix the problem?
- Good faith: Was the breach intentional or accidental?
- Hardship to breaching party: How much would termination hurt them?
Examples
Material Breach Examples:
- Contractor completes 20% of the work then abandons the project
- Vendor delivers completely wrong product
- Employee shares trade secrets with competitor
- Landlord refuses to make habitability repairs
Minor Breach Examples:
- Delivery is 2 days late but goods are correct
- Work product has small errors that can be fixed
- Payment is 5 days late
- Minor formatting issues in a report
Protecting Yourself in Contracts
Define What's Material
Don't leave materiality to court interpretation. Specify in the contract which obligations are material:
"Time is of the essence. Any failure to meet delivery deadlines shall be considered a material breach."
Include Cure Periods
Cure periods protect both parties:
"In the event of breach, the breaching party shall have 30 days to cure after written notice."
Define Termination Rights Clearly
Specify exactly what triggers termination rights to avoid disputes.
Frequently Asked Questions
What's the difference between material and minor breach?
A material breach defeats the contract's core purpose and allows termination. A minor breach doesn't undermine the main purpose—you must still perform but can sue for damages. Material breaches let you walk away; minor breaches don't.
Who decides if a breach is material?
Ultimately, a court decides by weighing factors like how much benefit was lost, whether money can compensate, likelihood of cure, and whether the breach was intentional. Contracts can define specific breaches as material to provide clarity.
Can I terminate for a minor breach?
Generally no. If you terminate for a minor breach when you weren't entitled to, you may be liable for breach yourself. However, multiple minor breaches over time might cumulatively become material.
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