Most businesses engage in contracts in order to accomplish specific business goals, whether the ultimate one is to produce and release a product or to provide a service on a timely basis. In some cases, disputes arise between companies over the contracts they have signed, with one company alleging the other committed a breach of the contract’s provisions. Contract breaches occasionally do occur, and the remedies available to the aggrieved party will often depend upon whether the breach was a minor or a material one.
Courts determine whether a contract breach was minor or material by examining a number of factors. The court will consider how much work the breaching company performed prior to the breach, whether the contract violation was due to negligence or if it was instead intentional and whether the company that committed the breach will be able to complete performance of the contract’s remaining portions. Judges will also consider the amount of benefit already received by the party that has suffered the breach, how much the aggrieved party can be compensated and the effect that finding a material breach would have on the breaching company.