Dinn, Hochman & Potter, LLC

What makes a breach of contract "material?"

It can be the case that after the parties to a contract begin their respective performance obligations under the document, disagreement can ensue as to whether one party performed its contractual duties sufficiently or whether it failed to do so in such a way as to constitute an actionable breach of contract. When making the determination of whether a breach of contract will support a legal claim for damages or another form of contractual remedy such as specific performance, an important question to tackle is whether the breach was "material" in nature.

The distinction between a material and a non-material breach of contract can be important, because if the breach is not material then the non-breaching party's legal remedies may be limited in scope. Indeed, the Ohio State Bar Association suggests that unless a breach is material in nature, there is no cause of action for breach of contract. Put another way a breach is material when a party violates a term essential to the purpose of the agreement; otherwise minor, trifling, or technical departures from a party's performance obligations will not result in a breach of contract.

Ohio courts use a number of criteria to decide whether a breach of contract is material. These include:

  • the extent to which the party claiming breach by the other party will be deprived of the benefit of the bargain that it negotiated for;  
  • the degree to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
  • whether and how much the party failing to perform will suffer forfeiture;  
  • the likelihood that the party failing to perform will cure its failure; and
  • whether the behavior of the party failing to perform is consistent with standards of good faith and fair dealing.   

Assessing these criteria, and determining whether a material breach of contract has taken place is something that an experienced Ohio commercial law firm can help with if you find your business in a contract dispute.   

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