What is a Material Breach of a Contract?

Often a party will sue on a contract for a material breach. However, just because a party to a contract did not fulfill every obligation within the contract does not mean there is a material breach. A material breach occurs when a party fails to perform a contractual obligation that goes to the essence or root of the contract, thereby defeating the purpose of the agreement. Restatement (Second) of Contracts § 241. To determine whether a breach is material, one must look at “(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected, (b) the extent to which the injured party can be adequately compensated for the part of the benefit of which he will deprived; (c) the extent to which the party failing to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; and (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.” Stallworth Timber Co. v. Triad Bldg. Supply, 968 F. Supp 279, 282 (V.I. 1997) quoting Restatement (Second) of Contracts § 241. In essence, in order for there to be a finding of a material breach, it must go to the heart of the contract.

In Florida, to determine whether a breach is material, one must look at the language in the contract and evaluate the breaching party’s failure to perform. See JF & LN, LLC v. Royal Oldsmobile-GMC Trucks Company, 292 So.3d 500, 509 (Fla. 2d DCA 2020). Once again, the breach has to go to the essence of the contract, and it must be the type of breach that would discharge the injured party from any further contractual duty on its part. Id. A party’s failure to perform a minor part of a contract obligation is not defined as a material breach. Id. Even if a party breaches a contract, it does not mean that the party is going to pay damages. There must be a thorough review of the contract’s terms and the performance of each of the parties to determine if there was a material breach. Without a material breach, a lawsuit is unlikely to be successful.