Material vs. Non-Material Breach of Contract: What’s the Difference?
If you want to sue your contractor for breach of contract, the first thing you need to do is determine if the breach you are claiming is at least a material breach. This means that a judge or a jury would find that the failure to perform all or part of the contract is significant enough to call the contract breached or terminated. Read this article to learn more about the differences between a material and non-material breach and the legal ramifications of both.
If your contractor breaches your contract, the first step is determining if the breach is material to the contract.
What is a material breach?
When a breach is substantial enough that the contract’s main purpose is not met, it can be considered a material breach. Essentially, the breach strikes so deeply at the “heart” of the agreement that it renders the contract irreparably broken.
When determining whether there has been a material breach, a Colorado judge will consider:
- how much the injured party (you) could still benefit from the contract, and
- whether the available damages will adequately compensate you for the breach. Interbank Invs., L.L.C. v. Vail Valley Consol. Water Dist., 12 P.3d 1224, 1227 (Colo. App. 2000)
Example of a Material Breach Case in Colorado
Paul and Brenda Frederiksen hired Gravina Siding & Windows Co. to replace the cedar siding of their Douglas County home with steel siding. The parties signed a $42,116 contract in November 2017, with the Frederiksens putting down $10,000.
Gravina told the Frederiksens that it could start work within 10 to 14 weeks, estimating that the project would take four weeks to complete. Instead, Gravina did not begin work until late March 2018.
The project remained incomplete in August 2018, when the Frederiksens received a bill from Gravina requesting final payment. The Frederiksens terminated the contract and denied Gravina further access to their property.
The contractors sued the Frederiksens, alleging, among other claims, that the couple had breached the contract. The Frederiksens countersued.
Court Finds a Material Breach of Contract
During a three-day bench trial, the court learned that Gravina’s first subcontractor had quit within his first week on the job. Its second subcontractor started work near the originally estimated completion date, worked for a month, and only completed about 30 percent of the job, much of which was “unacceptable.” A third subcontractor began work about two months after the originally estimated completion date. Two months later, he had finished siding only about half of the Frederiksens’ home.
The court found that Gravina had materially breached the contract:
Delays understandably happen in construction, but a four-month extension on a one-month job — even then completing only part of the work — is indicative of a project gone wrong. Gravina Siding & Windows Co. v. Gravina, 2022 COA 50, ¶ 25, 516 P.3d 37, 44
What are the legal consequences for a material breach?
Keep in mind, each contract is different. However, if your contractor materially breaches the contract, you may be legally excused from holding up your end of the bargain. For example, you could refuse to pay the contractor until the breach is fixed. In some cases, you may even be within your legal rights to terminate the contract altogether.
Of all the reasons you should hire a real estate attorney before taking any legal action, this is perhaps the most important. If you stop paying, and a judge later determines the breach was not a material one, you could open yourself up to being sued for breach of contract.
Non-material breaches are minor and do not change the nature of an agreement. For instance, let’s say you hired a contractor to install red wires in your home. The contractors instead install black wires. However, the black wires are of the same quality as the red ones. Further, the wires are not visible after installation because they are sealed behind a wall. This is considered a breach, but a non-material breach because the project’s outcome is the same.
Are There Legal Consequences for a Non-Material Breach?
Yes. When a breach is minor, you are still required to perform under the contract. However, you may also recover damages resulting from the breach.
Breach of Contract Remedies
If there is a breach, you can usually recover monetary damages. Usually these are actual damages, which are meant to put you in a position as if the contract had been performed.
Let Us Help You Today
It can be frustrating when a contractor fails to live up to the promises they made you. Still, you should always consult a real estate attorney before you stop paying your contractor. The attorneys at Robinson & Henry can help ensure you are made whole without exposing yourself to a lawsuit. Call 303-688-0944 today to begin your free case assessment.