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What is a Material Breach of Contract?

A breach of contract refers to the failure of one party to perform the obligations specified in a binding agreement with another party. When a contract is breached, the person at fault may face legal consequences. But not all breaches are the same.

A material breach occurs when someone fails to fulfill a significant promise in the contract, like not delivering the product at all, non-payment for delivered goods/services, or providing goods that are below agreed-upon quality standards. Material breaches are determined based on the impact they have on the core purpose and integrity of the contract, but it may also depend on the specific wording of the contract. 

A material breach is substantial enough that the non-breaching party can't receive the benefits they expected to receive from the contract. Material breaches can lead to more serious consequences and may give the non-breaching party the right to terminate the contract.

In many cases, contracts contain specific provisions outlining the consequences of a Material Breach and mechanisms for dispute resolution (like mediation or negotiation) to address these breaches without resorting to costly litigation. Your contract management software should be able to help you track and act on these provisions.

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