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How do non-material and material contract breaches differ?

If you are in the construction industry here in Miami, it is important for you to understand the difference between a non-material and material contract breach. A non-material breach occurs when something in the contract is changed without approval, but the change can be rectified in some way. This may involve fixing the faulty work or paying the difference in costs. For example, if you install a brand of drywall other than the one in the specifications, even though the substitution performs equally well, you have a non-material breach. Therefore, you would probably pay the owner the difference in the value of the two types of drywall.

According to the Finishing Contractors Association publication Contract Insight, a material breach of contract involves a more substantial issue. Using the above example, if the contract specifications call for water-resistant drywall, but you install regular drywall, which can warp in high humidity, it affects the integrity of the project. A material breach is determined based on the specifics of the situation, and considerations include the following:

  •           Will the injured party lose expected benefits?
  •          Can the injured party be compensated for the breach?
  •          Did the breaching party act in good faith?

Typically, a breach is material when the injured party would not have agreed to the contract if the lack of performance had been foreseen. For example, a job is time-sensitive and you do not follow the contractual schedule. This action causes delays that compromise the project and could be considered a material breach since you would not be able to fix it. In such a case, you, as the breaching party, might be required to pay damages and the other party may be able to legally terminate the contract. The information in this article is purely for educational value and should not be viewed as legal advice.

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