Proving Material Breach of Contract: Buckle Your Business Belt

Declaring a contract in material breach is a big step. In doing so, you (as the business owner) claim that the actions of another party to the agreement are so egregious that the deal is broken beyond repair. Nothing will fix it, and legally speaking, you can end the contract immediately and file suit to claim damages in civil court. Saying a contract is broken, is much different from it actually being totally unsalvageable. Our business contract lawyers explain the details of material breach of contract, and what you can do as a business owner, if you find yourself in a situation where such a problem has occurred.

Examining the Meat of the Agreement

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A breach of contract is only material if one party’s actions deprive the other of what they’d signed the agreement to receive. For example, if you sign a contract of sale for the purchase of the actual uniform worn by William Shatner in Star Trek, and you receive a dingy yellow washcloth instead, there’s been a material breach. You paid expecting to get Captain Kirk’s jumpsuit; you should (in theory) obtain such item upon payment. The breach is material because you did not enter into the agreement for any uniform, but one specific uniform – and only that singular item can satisfy the contract.

Are You Sure We Can Fix This?

Throwing money at a problem is an easy way to fix a contract and avoid a material breach. If a vendor promises your company X amount of materials and fails to deliver, if all it takes is a subsequent delivery or infusion of capital to fix the issue, then the contract isn’t broken. Jumping the gun on declaring the contract in material breach, when an easy patch exists, can damage business relationships in the same permanent fashion you thought happened with the agreement.

Can You Hold Up Your End?

In pursuing damages for a breach of this nature, the court will want to see if you’re able to fulfill your half of the agreement. If your company doesn’t have the capacity or ability to implement your phase of the deal, the courts will more than likely rule against you in considering the contract in breach. In a legal sense, the contract never substantively existed because neither party was able to fulfill their obligations.

Signs of Bad Faith Dealing

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Entering into a contractual agreement requires good faith negotiating and implementation by both parties. If the other side engages in bad faith by willfully refusing to perform their signed duties or operating negligently, the court is more likely to consider the contract in material breach and rule in your business’s favor.

Proving breach of contract can be a difficult process depending on the language of a given agreement. If your business is in the midst of a contentious contract battle, give our Pennsylvania attorneys a call today. We’ve helped thousands of business owners across the state resolve contractual matters efficiently and effectively. We have something in common – we both want what’s best for your growing company.