![]() ![]() Assume that Party One materially breaches the contract first, and fails to cure its breach. Whether a breach was material or non-material can also make a pivotal difference in cases where both parties have completely performed their respective obligations. DEFINE MATERIAL BREACH FULLThe hypothetical situations discussed above involved contracts where one or both parties had not completed doing what they had agreed to do, i.e., they had not rendered full performance. If a court later determines that Party One's breach was non-material, it is Party Two which will probably be held liable to Party One for stopping its performance. This risk may exist even if Party One has not cured its breach. If that is not the case, Party Two may be taking a risk if it refuses to perform its obligations. In some situations, it may be clear that Party One's breach was material. ![]() If Party One cures its breach, even if the breach was material, then Party Two is obligated to do what it agreed to do. There is an important exception to the hypothetical situation just discussed: In many contract situations (maybe most), before Party Two can stop its performance, Party One must be given the chance to cure its material breach. Party Two can even bring suit and recover for the damages caused to it by Party One's material breach. Let's assume that there is a contract between "Party One" and "Party Two." If Party One breaches the contract in some material way (commits a material breach), then Party Two can refuse to perform its part of the contract without liability to Party One. In most cases, only when a party has committed a material breach of the contract will the law excuse the non-breaching party from doing what it agreed to do. Generally speaking, the law does not relieve a party to a contract of its obligation to render its agreed performance under a contract just because the other party has not performed its end of the deal perfectly. It is important for lawyers and business people to understand the law about material and non-material breaches because, in many contracts (maybe most), the parties will not perform their respective obligations perfectly. If one of the parties to a contract breaches the parties' agreement, what difference does it make whether the breach was material rather than non-material? It could make the difference between who wins and who loses a subsequent lawsuit. In Tennessee, like every other state, there is a difference between a material breach of a contract and a non-material breach of a contract. ![]()
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