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A material breach of contract may justify a failure to act

Contractual breaches come in all shapes and sizes. A breach may be small and not critical to the success of a project, or it may be huge and threaten the life of the entire undertaking. In some extreme cases, a significant contractual breach may excuse a Moorestown party from completing the party's responsibilities under the contract; when such monumental breaches occur, they are often called material breaches.

A material breach is one that makes further performance on the contract impossible or unnecessary due to the losses sustained by the injured party. A party that suffers a material breach of contract can generally sue the harming party for its losses. However, as each contract is different parties should look to their own agreements to see what remedies they have contracted for in their document terms.

In order to determine if a breach is material or not, several considerations can be made. First, a court may look at how much, or if at all, a breaching party has performed under the contract. A court may also examine if the breaching party's failure to act was the result of a mistake, negligence or an intentional act.

Second, a court could look at whether a non-breaching party has received any benefits from the performance that the breaching party has completed. This evaluation, along with an assessment of whether the non-breaching party can actually be compensated, can help determine how much recovery an injured party can secure.

Other factors can be considered in the evaluation of a material breach of contract. Generally, however, in many cases a party that suffers a material breach of contract may cease performance on the contract in order to protect itself from further losses. When a breaching party demonstrates its unwillingness or inability to perform under an agreement, then the non-breaching party can sometimes be excused from further work while the contract dispute is remedied.

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