As a Connecticut business person, contracts constitute one of the necessary evils of your life. When you stop to consider all the contracts you have with your customers, distributors, suppliers and employees, the number of outstanding contracts you are currently working under becomes somewhat staggering.

If you view yourself as a prudent business person, you make sure that all of your contracts are signed, written ones that will, if necessary, stand up in a court of law should you find yourself in the position of having to sue someone for breach of contract. Keep in mind, however, that as FindLaw explains, contract breaches come in two varieties: material and immaterial. The former type of breach occurs when the other party to one of your contracts fails to perform the contract in the manner (s)he agreed to and you consequently suffer substantial damage because of it. Conversely, an immaterial breach causes you little or no damage and therefore you generally cannot recover these damages in a breach of contract suit.

Examples

A contract breach can be material or immaterial depending on how and when it occurs. Suppose, for example, that you run a furniture business and your inventory of sofas becomes depleted. You, therefore, order 50 new sofas from your favorite sofa supplier for delivery in one week. (S)he, however, fails to deliver the sofas on time and instead delivers them four days late. Whether or not this constitutes a material breach depends on the purpose of your contract.

If the only reason you ordered the sofas was to sell them in your regular course of business, it is doubtful that a four-delay in your receiving them damaged you all that much. On the other hand, if you ordered them delivered in one week so you could put them on display in time for your semiannual weekend sofa sale for which you took out print and TV advertising, this is an entirely different matter. Due to the specific reason you ordered the sofas, you created a “time is of the essence” situation. Under these circumstances, your supplier’s four-day delivery failure becomes very material indeed.

Since the sofas did not arrive in time for your advertised sale, you likely ran out of sofas before it ended. Consequently, you probably suffered considerable damages, not only in lost sales, but also damage to your reputation as an ethical furniture salesman. You therefore almost certainly will recover your damages from the supplier when you sue him or her for breach of contract.

This is general educational information and not intended to provide legal advice.