A contract sets out the obligations each party has in a commercial relationship. This includes major obligations, such as the supply of goods and services or the payment for those goods and services and minor obligations, such as ensuring you provide the accompanying documentation with the goods and services. You may seek a remedy if there is a breach of any of those obligations. The remedies available to you if the other party has breached your contract will depend on the type of breach. This article will explain the difference between a minor breach and a material breach of a contract, and discuss the remedies available for both.
Minor Breach
A minor breach is typically something insignificant such as a failure to fulfil a small detail of the contract. However, the remainder of the contract may continue without altering the purpose of the contract.
For example, suppose you purchase a computer from a retailer. They supply you with the computer, but the user manual was missing. This is likely a minor breach. The main aim of the contract was to supply you with a computer, which you have received. Whilst you may compel the retailer to provide you with a user manual, you will still need to pay the retailer for the computer.
Material Breach
In contrast, a material breach, otherwise known as a fundamental breach, is a substantial breach that goes to the heart of the contract. If, as a result of the breach, the parties can no longer fulfil the purpose of the contract, this may constitute a material breach. Typically, a material breach involves a failure to perform an important and essential element of the contract as agreed.
Take a contract for the supply of goods, for example. Suppose you engage a supplier to provide you with 100 computer screens. When the delivery arrives, and they deliver 100 keypads and no computer screens. This is likely to constitute a material breach.
Continue reading this article below the formFactors to Consider
When determining whether there has been a material breach or a minor breach of the contract, the courts will have regard to a number of factors, including:
- how much of the contract the breaching party has performed;
- whether the breach was intentional, negligent or accidental;
- the chances the breaching party will fix things;
- how much benefit the innocent party receives despite the breach;
- whether the innocent party be compensated for their loss as a result of the breach;
- whether the innocent party is “ready, willing and able” to perform their own obligations under the contract; and
- the consequences on the breaching party if determines that the breach is material, and the innocent party has no further obligation to fulfil their end of the contract.
Remedies Available
The remedies available for a breach of contract will depend on the type of breach.
This is in contrast to a minor breach. Here, the innocent party may receive compensation if they suffer a loss. Alternatively, a court may compel the breaching party to perform their obligations. Additionally, they may find the minor breach does not excuse the innocent party from performing their own obligations.
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Key Takeaways
A major breach is one which involves a failure to perform an essential obligation under a contract. Thus, the arrangement between the parties is often irreparable. In contrast, a minor breach is when a party breaches a non-essential obligation under the contract. However, the parties may still perform the majority of the contract to achieve the desired result. The remedies that are available for a material breach are different to those that are available for a minor breach. Typically, where there has been a material breach, the innocent party may withdraw from performing their obligations under the contract. However, in the case of a minor breach, the innocent party may only receive damages whilst still fulfilling their contractual obligations.
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Frequently Asked Questions
A material breach is where a party fails to perform an essential obligation under a contract such that the purpose of the contract can no longer be achieved. In the case of a material breach, the innocent party may be able to terminate the contract without being required to perform their obligations.
A minor breach is a breach of a non-essential obligation under a contract such that the breach does not materially affect the contract. Therefore the purpose of the contract is still able to be achieved. In the case of a minor breach, the innocent party may be able to recover damages but is likely to still be required to fulfil their own obligations under the contract.
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