While a party’s prior material breach of contract may serve as a complete defense to a breach of contract lawsuit, proving that the previous breach was material is crucial. A previous material breach of contract may excuse the other party’s future performance of his or her duties under the contract. When a party raises the defense of a prior material breach by the other party in a breach of contract action, the judge, jury, or arbitrator will determine whether the previous breach was material. If the previous breach is not raised correctly, the defense may fail.
When two parties enter into a contract and one fails to perform his or her duties or obligations as outlined, that party has committed a breach of the contract. Some breaches are immaterial while others are material. A material breach is so severe that it irreparably breaks the contract and prevents the parties from continuing under its provisions. While damages may be recoverable in any type of breach, a material breach may also allow the other party to end its performance of its contractual duties and to terminate the contract.
Determining whether a breach of contract was material is important when a party bases its decision to stop performance on the breach. If the breach is not found to be material, the party that stopped performing its duties under the contract may be found to have committed a material breach of the contract himself or herself. The wrongful termination of a contract also ends the breaching party’s contractual rights and subjects him or her to a potential order to pay damages.
A breach of contract that does not defeat the contract’s purpose is considered to be immaterial and may not trigger a party’s right to end his or her performance of the contractual duties. Before a party decides to stop performing under a contract, he or she may want to consult an attorney to determine whether the other party’s breach was material or immaterial. If the breach was something that could be remedied so that both parties could continue performing under the contract, it will not provide a basis for stopping performance. If a party stops performance and terminates the contract and is subsequently sued for breach of contract, he or she must raise the affirmative defense of prior material breach before it will be considered.