In North Carolina, as in other states, courts typically classify breaches as either material or minor when assessing contract disputes. But what do these terms mean, and why does this classification matter?
Material vs. minor breach of contract
A material breach is a serious violation that goes to the heart of the agreement. It deprives your business of the benefits it sought from the contract, whether that’s specific goods, services or financial returns. Because of this, it can usually serve as grounds for you to end the agreement and seek compensation through legal channels.
A minor breach is a less severe violation of the contract terms. Since it doesn’t substantially impact the overall value or purpose of the contract, your contract typically remains in force. However, you may still seek compensation for any losses, depending on the specific terms of your contract and the extent of the damages incurred.
Factors to consider
Courts don’t have a one-size-fits-all rule for determining whether a breach is material or minor. Instead, they consider several factors:
- How much the breach deprived the other party of what they expected
- Whether the breach can be easily fixed or compensated for
- The likelihood that the breaching party will fix the problem
- The extent to which the breaching party failed to meet their obligations
- How much hardship the breach caused the non-breaching party
It’s important to note that each situation is unique, and courts look at the specific circumstances of each case. Moreover, to protect your interests, it’s vital to address potential breaches without delay. North Carolina law typically allows a three-year window from the breach date to file a contract dispute claim. Failing to act within this timeframe could result in losing your right to seek legal remedies.
Know what you’re dealing with
While the concepts of material and minor breaches might seem straightforward, their application can be complex. If you find yourself in a situation involving a potential breach of contract, it’s always best to consult with an attorney who can provide guidance based on your specific contract and situation.