What is a material breach of contract?

On Behalf of | Jul 26, 2021 | Business Litigation |

In Ohio, business entities enter contracts for a variety of reasons, but generally, the expectation is that both parties will adhere to the terms of the agreement. However, business entities should be aware that it is very possible that one or both parties may end up breaching the terms of the contract. In some cases, a party may end up breaching the terms of a contract by:

  • Failing to pay rent
  • Failing to pay for goods or services
  • Failing to meet deadlines
  • Failing to deliver goods on time or at all
  • Delivering the wrong goods or damaged goods
  • Failing to complete the project

Material vs. non-material breach

Some breaches of contract can completely derail a project or financially ruin a business. However, not all breaches of contract are quite that significant, and therefore, are not treated as such by the courts. A common misconception in contractually based lawsuits is that a minor or non-material breach automatically makes one party financially responsible to the other. In reality, only a material breach warrants recovery by one party from the other.

Business litigation attorneys can help if your contract has been breached

It can be difficult to know what to do if another party has breached the terms of your agreement. Many people think that once the agreement has been breached by the other party, they can stop performance under the contract. This is not always the best idea. Materiality is determined long after the fact, so the best practice is often to fulfill your duties completely under the contract, while mitigating your damages. However, in certain situations, stopping performance immediately may be necessary. If you consult with an attorney specializing in business litigation as soon as possible after the initial breach of contract occurs, your attorney can advise you on what to do next.