What constitutes a “material breach” of contract?

A “material breach” of contract occurs when one party fails to fulfill essential contractual obligations, significantly undermining the contract's purpose and the other party's ability to benefit from it. This type of breach is so serious that it permits the non-breaching party to either terminate the contract or seek damages. For instance, if a contractor fails to complete critical work specified in a construction agreement, this would be classified as a material breach as it directly affects the project’s completion and the client's reliance on the contractor’s performance.

In contrast, fulfilling some obligations but delaying payments or experiencing minor delays in project completion may not rise to the level of material breach since they don't necessarily prevent the other party from receiving the primary benefits of the contract. Similarly, miscommunication about terms, while it can lead to issues, often does not constitute a material breach unless it results in a failure to perform primary contractual duties. Only a failure to fulfill essential obligations, directly affecting the overall agreement, qualifies as a material breach.