Utah Material Breach of Contract Law Generally

In the law, a significant breach of a contract is considered a “material” breach.  A less significant breach is “immaterial.”

Not every breach of contract is a material breach.  For example, if you hired a taxi to take you to the airport at a certain time, there is a significant difference between a taxi that is 10 seconds late in picking you up and a taxi that is 10 hours late in picking you up.  One breach is of little consequence; the other breach likely destroys the benefit of ordering a taxi.  Whether or not a breach is material affects the application of the first-breach rule, the remedy option of rescission, and other legal rights.

Factors Weighed to Determine Materiality

In determining materiality, the relevant inquiry is not whether the breach goes to the heart of the provision breached, but whether it goes to the heart of the contract itself:

“Generally, such nonperformance will attain this level of materiality only when it goes to the root, heart or essence of the contract or is of such a nature as to defeat the object of the parties in making the contract, or … when the covenant not performed is of such importance that the contract would not have been made without it. Therefore, whether a breach is material is a question of degree. It turns on a number of factors:

(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;

(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;

(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;

(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances;

(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.” Cache County v. Beus, 1999 UT App 134, ¶ 37 (Utah Ct. App. 2007) [quoting Restatement (Second) of Contracts § 241 (1981)].

Other Appellate Guidelines

In Utah, a breach of contract is material “if a party fails to perform an obligation that was important to fulfilling the purpose of the contract[.]”  Tooele Associates Ltd. Partnership v. Tooele City, 284 P.3d 709, ¶18 (Utah App. 2012).  A breach is not material “if the party’s failure was minor and could be fixed without difficulty.” Id.  Even if a breach is not material, the non-breaching party “may still be entitled to compensation for the breach.” Id.  While determining whether a breach is material is not always clear, “certainly a failure of performance which ‘defeats the very object of the contract’ or is of such prime importance that the contract would not have been made if default in that particular had been contemplated is a material failure.”  Polyglycoat Corp. v. Holcomb, 591 P.2d 449, 451 (Utah 1979).

            As always, if you have any questions about your situation, you are welcome to contact one of Whiting & Jardine’s breach of contract lawyers for legal advice.

For more specific information about this particular subject, please call my office at 801-691-7770 for a free consultation or see the following web pages:

  1. Whiting & Jardine, LLC Home Page: www.WhitingJardine.com.
  2. Breach of Contract Litigation: http://whitingjardine.com/practice_areas.php?part=breach
  3. Contract Negotiation and Drafting: http://whitingjardine.com/practice_areas.php?part=contract

Disclaimer: This blog is for general information and educational purposes only.  Nothing in this blog should be construed as legal advice for any particular situation.  The statements in this blog may be generalized, contain speculation, be based on opinion, or be made inaccurate by updates or clarifications to the law.  No attorney-client relationship is created by virtue of this blog.  To receive competent legal advice for your situation, you should seek competent, licensed legal counsel in the appropriate jurisdiction and practice area.

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