Also known as: material breaches
Written by attorneys · grounded in primary & secondary sources — see below
A failure of performance that substantially deprives the injured party of the benefit reasonably expected under the contract. The injured party may treat the contract as discharged and pursue remedies for total breach.
Musa Mensah, an officer at Morgan Financial, learns that an employee diverted corporate funds for personal use in violation of the employment contract. Mensah believes the diversion constitutes a material breach. He must inform his superior officer or the board of directors under the governing statute.
Dairy Queen franchisees fell behind on required minimum annual payments tied to sales. The franchisor sent notice claiming a material breach and terminated the trademark license. The franchisees continued operations, prompting litigation over whether the payment default justified immediate termination.
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Drew entered an online contract containing explicit behavioral restrictions. She repeatedly violated those terms by creating fake profiles to harass a classmate. The platform treated the violations as a material breach and terminated her account, leading to criminal charges that turned on the contractual breach finding.
Courts examine the extent to which the injured party is deprived of the benefit reasonably expected under the contract. They also consider the likelihood of cure, the good faith of the breaching party, and whether the breach goes to the essence of the exchange.
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The non-breaching party may treat its remaining duties as discharged and sue for total breach. It may also recover expectation damages, cover, or other remedies that would not be available for a minor breach.
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Yes, once the breach is material and uncured, the injured party's remaining duties are discharged. A minor breach merely gives rise to damages and does not excuse counter-performance.
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Cure is possible if the injured party's duties have not yet been discharged. Once discharge occurs, the breaching party remains liable for damages even if it later tenders performance.
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…receipts. In August 1960, the respondents wrote petitioner a letter in which they claimed that petitioner had committed "a material breach of that contract" by defaulting on the contract's payment provisions and notified petitioner of the termination of the contract and the cancellation of petitioner's right to use the…