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What constitutes a material breach of contract?

As the owner or manager of a business in Las Vegas, you probably have several contracts in place. These contracts may be with your own employees, with suppliers or with other companies who provide services to your business. When the terms of a contract are violated by you or the other party, the breach may be termed a minor breach or a material one.

The National Paralegal College states that there are guidelines the court uses to determine whether the breaching of a contract is material. For example, if the contract is for a service, the court will look at how much of the service has already been provided. If the other party has fulfilled most of the contract requirements, than the court may decide that the breach is not a material one. However, if the other party has only partially delivered on that contract and their breach caused you financial damages, then the court might rule that the breach is material.

In addition to the amount of service, the court will also look at the intent of the party that committed the breach of contract. If it is determined that the party intentionally failed to abide by the terms of the contract, then the court is more apt to classify it as a material breach. For instance, you sign a contract with a company to deliver lumber to your site so that you can use it for the building of your product. You also specify in the contract that the lumber needs to be delivered by a certain date so that you can meet internal deadlines. The company then ignores your directives and delivers the material late, thereby causing a delay on your end and costing you money.

Other factors considered by the court in a contract dispute of this type, include whether the other party will continue to fulfill the contract, the effect of the breach on the other party if you were given legal freedom to cancel the contract or void it, and how much compensation would cover your damages. This information is only to be used as a basic understanding, as every case is different, and therefore not as any form of legal advice.

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