What Constitutes a Material Breach of Contract

Entering a contract with another person or entity can be a great way to get business done or meet your needs. But what happens when you want out of a contract you signed? If you do not want to be liable to the other party for damages, you will likely have to prove that they materially breached the agreement before you can toss your contractual obligations aside. What constitutes a material breach of contract? That depends on the facts of your case and the content of your agreement. And if you are seeking to have a court cancel a contract, hiring a skilled attorney can give you the best chance at achieving that outcome. At The Hunnicutt Law Group, our knowledgeable attorneys have multiple decades of combined experience representing clients with businesses of all sizes, and we can tackle your specific needs in a contract dispute case.

Key Takeaways: What Constitutes a Material Breach of Contract in Texas?

  1. Material vs. Immaterial Breach: A material breach significantly affects the contract’s value to the non-breaching party, potentially justifying contract termination. An immaterial breach, while a violation, does not offer the same justification.
  2. Factors for Determination: Texas courts consider several factors to determine a breach’s materiality, including:
    • The impact on the non-breaching party’s expected benefits.
    • The likelihood of the breaching party rectifying the breach.
    • The possibility of compensating the non-breaching party for damages.
    • The consequences of forfeiture for the breaching party.
    • The adherence to standards of good faith and fair dealing by the breaching party.
  3. Examples of Material Breaches:
    • Failure to deliver life-saving medication within a critical time frame as agreed, resulting in loss of life.
    • A brand deal violation where a designer uses materials from a different business contrary to the agreement.
  4. Legal Advice Is Crucial: Given the complexity and the specific circumstances of each case, consulting with an attorney is essential to navigate potential breaches and understand your contractual obligations and rights.

What Is a Material Breach of Contract?

Identifying a material vs. immaterial breach before attempting to cancel your end of a contract can be a dicey challenge. You should always consult with an attorney before deciding whether you are obligated to fulfill an agreement, but here are the factors Texas courts look at (see page six) when determining whether a breach is material: 

  • The extent to which the non-breaching party will be deprived of the benefit of what they reasonably expected with the contract, 
  • The likelihood that the breaching party will fix or “cure” their breach, 
  • The extent to which the non-breaching party can be adequately compensated for the harm caused by the breach, 
  • The extent to which the breaching party will suffer forfeiture, and
  • The extent to which the breaching party unfairly dealt with the non-breaching party or failed to comply with standards of good faith and fair dealing

As you can see, there is no specific definition of a material breach of contract. Rather, there is a set of factors the court reviews before it allows or disallows a party to cancel their contractual agreement.

Applying the Material Breach Factors

So, what do the factors for identifying a material breach of contract mean for your case? Once again, whether a breach is material depends on the terms of your agreement and your specific circumstances, and identifying a material breach is a bit of a balancing act. If a court finds that the breaching party can make you whole by simply paying you back for their non-compliance and that the breaching party would be harmed more than you if the contract were canceled, the court might define the breach as immaterial. But if the breaching party violated an essential term of your contract and you cannot get the benefit of the original agreement through a subsequent “fix” from the breaching party, that breach might be material. 

Be careful with how you proceed in a contract dispute. If you fail to hold up your end of the bargain after the other party commits an immaterial breach, you could be liable to them for damages

Examples of Potentially Material Breaches

The following are scenarios that might be defined as material breaches.

  • You have a time-is-of-the-essence contract with a delivery company where the most important term is that the company delivers a life-saving medication to your family member within 24 hours. The company does not deliver the medication until 48 hours later, and your family member passes away during that time.
  • You have a brand deal with a local designer to create an outfit made of only your business’s textiles, but 98% of the final product from the designer is made with textiles from another business.

Situations such as those outlined above might give you the right to cancel a contract, but you should first speak with an attorney about your options before refusing to fulfill any of your obligations.

We Can Make Sure You Get the Benefit of Your Bargain

At The Hunnicutt Law Group we have more than 30 years of combined experience, so we have basically seen it all when it comes to disputes. Our depth of experience is essential in fact-intensive legal cases such as breach-of-contract cases, and we are ready to help you through a complaint or claim. Please call 214-361-6740 or contact us online for assistance. Video conferencing is also available, so feel free to ask about it when you call.

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J. Stephen Hunnicutt

Our founding attorney, Stephen Hunnicutt, set the precedent for a commitment to excellence and a focus on the client. With 25 years of experience, he has handled countless cases involving business litigation and commercial litigation. Over the years, Mr. Hunnicutt has worked as in-house counsel for a Fortune 500 energy company, a large firm, a small firm, and finally, in his own practice.

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