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What's the difference between a material and immaterial breach?

When two parties make a contract, there are often a lot of different provisions and terms that are included. Many of those terms have to do with procedural issues (like how payments are to be made and how often updates are supposed to be given on a project). Other provisions may involve details and plans for a project, including things like design and delivery agreements.

Generally speaking, once you sign a contract, you're bound by all of its terms. You can't pick and choose. Any failure to meet the obligations spelled out in the document -- whether that contract is just two pages or hundreds -- is considered a breach of contract.

However, not all breaches of a contract are built alike. Some are considered minor oversights -- or immaterial breaches -- while others are considered major material failures.

What's the difference? In essence, it comes down to one very important question: Was the purpose of the contract fulfilled? If it wasn't, that's a material breach. A material breach by the other party relieves you of all of your obligations under the contract, while an immaterial breach does not.

For example, imagine that you sign a contract to have your manufacturer construct and deliver 100 of your new toys no later than Dec. 1, in anticipation of your Christmas rush. Your manufacturer experiences some problems and the toys don't get delivered until Dec. 23, which doesn't give you enough time to sell them before the holiday. That's probably going to be considered a material breach and you will likely be justified in refusing to pay.

On the other hand, if the manufacturer gets the toys to you by Dec. 2, you still have plenty of time to sell them before the holiday. This means the breach is probably not material. You may have other remedies available, if you experience any losses from the delay, but you still have to pay for the shipment of toys.

As you can imagine, it isn't always easy for two parties to agree on what constitutes a "material" breach of contract. An experienced attorney can help you evaluate your situation and make an educated decision on how to proceed.

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