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Material Contract Breach

What is a Material Breach of Contract?

In general, a breach of contract occurs if one party fails to uphold its part of the deal, violating contractual terms and provisions. Contract violations can vary, leading to two types of breaches: material and non-material (immaterial). The material breach affects the essence of the contract, questioning its integrity and existence. In case of material breach, the complying party does not have to perform their obligation under the contract. Breach of contract gives the non-breaching party several options: they can seek damages, restitution, and contract rescission. Because of the gravity of the material breach, the complying party cannot ask for subsequent performance.

How to Determine If There Was a Material Breach?

There is no unique formula for determining whether the non-complying party committed a material or non-material breach of contract. However, courts in Florida use different methods for evaluating the degree of violation. The judges consider various factors, including the parties’ conduct, their intent, and the extent of the injury.

Commercial vs. Industrial Real Estate

Industrial real estate is a sub-category of commercial real estate. Unlike commercial real estate, which meets the needs of retail and office activities, the industrial property provides space for manufacturing, storage, research, and distribution. Furthermore, commercial property interacts with everyday customers, while industrial real estate deals with large enterprises. In addition, industrial real estate is subject to special zoning regulations.
  • Conduct. Determining whether the breach is material or immaterial, the courts examine the behavior. Sometimes the failure to fulfill the contractual obligation occurs despite the non-complying party acting in good faith. If they take additional measures to minimize the damage to the other party, the court may deem it a non-material breach. In contrast, a material breach is usually a reckless act where the breaching party does not care about the interests of the other party.
  • Intent. The intent is another crucial element for evaluating the degree of materiality. Intentional violations of contractual terms always constitute a material breach. On the other hand, non-intentional breaches are typically immaterial.
  • The extent of the injury. Finally, the gravity of the injury can determine the nature of the breach, regardless of the intent or conduct. If the damages are significant, the judge will almost always classify such a violation as a material breach of contract.

Examples of Material Breach

As mentioned above, a material breach disrupts the purpose of the contract. The gravity of the violation compromises the integrity of the agreement, affecting its essence. That means that the complying party has no interest in upholding the contract.

Some of the most typical examples of material breach include:

  1. Weeks-long delay in delivery. Delaying a delivery day or two does not affect the integrity of the contract. Contrarily, failing to deliver goods or services for several weeks is a grave violation, constituting a material breach of contract. The complying party may not be interested in upholding the agreement, or the fulfillment is impossible.
  2. Failure to pay the rent. The essence of the landlord-tenant relationship is the rent payment. Failing to pay the rent on time is a breach of contract, but landlord rarely sues their tenants in case of a two or three days delay. On the contrary, refusing the pay the rent compromises the purpose of the lease, constituting a material breach of contract.
  3. Non-payment for the goods. Not paying for goods or services is a grave violation of contractual terms. Refusing to fulfill the essential contract obligation constitutes a material breach of the contract because achieving its purpose is no longer possible.

Remedies for a Material Breach of Contract in Florida

When a material breach of contract occurs, the non-breaching party can seek damages, restitution, and contract rescission.

  1. Damages. A material breach of contract often means the complying party cannot seek performance because achieving its initial purpose is impossible. The only opinion left is compensation. The plaintiff can seek compensatory or special damages. Compensatory damages aim at putting the plaintiff in a position before the breach. Special damages serve to compensate indirect losses resulting from the breach of contract.
  2. Restitution. Restitution means refunding the injured party in an unenforceable contract. Unlike compensation (that calculates incurred losses), the restitution amount depends on how much the non-complying party gained due to the breach of contract.
  3. Contract rescission. Rescission is the mutual or unilateral cancellation of the contract. Courts can order the rescission in the absence of other remedies, relieving the parties from their obligations. It applies to material breaches, particularly in cases that involve fraud.

Mediating Material Breach of Contract Dispute

Meditating material breach of contract disputes is the most effective dispute resolution method. Unlike adversarial litigation, mediation offers multiple advantages, including voluntariness, neutrality, confidentiality, and a reconciliatory approach.

David L. John Can Help

An established Florida mediator with decades of experience, David L. John can help you resolve contract disputes in a friendly and non-adversarial environment. Facilitating your negotiations, Mr. John can help you and your contractual partner resume successful business cooperation.

Reach out today to schedule your free consultation.

David John

David L. John

My experience of over 30 years of actual hands-on business experience in manufacturing, professional engineering consulting, construction, commercial & residential real-estate transactions and general business.

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