A breach of contract may be “material” (i.e., an important breach) or “immaterial” (a relatively unimportant breach). When a breach is material, the party not in breach can terminate the contract and will be excused from further performance of the contract. An immaterial breach may give rise to a right to sue for breach of contract to seek damages, but an immaterial breach does not excuse performance by the party not in breach of the contract.
Examples of Excused and/or Immaterial Breaches of Contract
Assume that on June 23rd, Joe agrees to sell his used car to Jim for $15,000 with the exchange (of the payment and of the car) to be contemporaneous, to occur at Joe’s house on July 1st.
Immaterial Breach: Assume further that on June 30th, Jim tells Joe that Jim cannot deliver the check on July 1st but can deliver it on July 2d. Jim has breached the contract. But (unless time was agreed to be of the essence) Jim’s breach is immaterial. So long as Jim makes the payment on July 2d, Joe should deliver the car to Jim on July 2nd.
Material Breach: Assume instead that on June 30th, Jim tells Joe that Jim can only pay
$10,000 on July 1st and he wants to take possession of the car on July 1st and pay the $5,000 balance on July 30th. Jim has materially breached the contract. Joe has the right to tell Jim that Joe won’t sell the car to Jim at all and that Joe may sue Jim for his breach.