A material breach is a violation of the terms of a contract, which is serious enough to destroy the value of the contract. This breach may be for a violation that is spelled out in the contract as being serious enough to void the contract, or may be implied based on the provisions in the contract. Not all breaches of contract may represent a material breach. Parties that feel such a violation has taken place can seek a remedy for the situation in court.
For a material breach to be proven, the first thing an aggrieved party must do is show that a violation has occurred. If this fact is in dispute, this may be the hardest element to prove. Those making such an accusation should document the breach as thoroughly as possible, and be prepared to submit that information to the court. The court may have several options to remedy the situation.
Once the party has proven a material breach did occur, the next step is for the court to determine the value of the breach. For example, if a contract called for providing 10 automobiles for a government agency, and the money was paid but only five cars were delivered, the value of the material breach may be half of the total contract. Other monetary compensation could be included for inconvenience and court proceedings as well.
After determining the value of the material breach, the court usually has a couple of options. One of those is to compel the party in breach to fulfill the terms of the contract. If that is not possible or practical, the court may order the party at fault to provide the other party with monetary compensation. This compensation could include both actual damages and punitive damages, meant to punish a company for wrong doing.
Generally, after the court remedy for a material breach has been completed, the contract is void. If the contract covers provisions or services over a longer period of time, it could be up to the parties whether they wish to continue the relationship. Attorneys may ask the court to specifically address the status of the contract in the order the judge issues.
Those claiming a material breach should also be prepared for a number of different defenses. Among the most common are that the accusing party defrauded the other side, that the contract was signed under pressure, that the parties agreed to change the contract, or that other situations made it impossible to fulfill the terms of the contract. The burden of proof for the defendant is the same as the burden of proof for the plaintiff.