A material breach is a significant violation or failure to perform a fundamental aspect of a contract, undermining the contract's purpose and potentially excusing the non-breaching party from fulfilling their own obligations. This type of breach often provides grounds for the non-breaching party to seek damages or terminate the contract entirely.
Under the IPTSA, which was filed by Cogent in its May 1, 2023 8-K as Exhibit 10.2 (with some redactions), either Cogent or T-Mobile may terminate the IPTSA if the other party is in Material Breach and fails to cure the Material Breach within 30 days after receipt of written notice. Material Breach for T-Mobile is defined as (i) the failure to make any undisputed payment under the terms of the IPTSA within 5 days from date of receipt of notice of non-payment; or (ii) a breach of any material provision. Material Breach for Cogent is defined as a breach of any material provision in the IPTSA which (x) results in greater than 20% of the Cogent Network being unavailable for 30 consecutive days and (y) is a result of gross negligence or willful misconduct by Cogent.
In the event that a Party asserts a Material Breach in a written notice to the other Party, the dispute shall proceed as specified in Section 2.5 of Appendix A, provided, however, that (i) no matters other than the existence of such Material Breach (and counterclaims and defenses directly related to the conduct or circumstances underlying the asserted Material Breach) shall be submitted to or determined by the arbitral tribunal; (ii) the Parties shall use their respective reasonable best efforts to complete and finalize the Terms of Reference within [***] following such assertion of Material Breach; and (iii) the Parties shall instruct the arbitral tribunal, with the full assistance and cooperation of the Parties, to endeavor to submit its draft award on the existence of the Material Breach to the Court of Arbitration of the ICC for approval within [***] following the effective date of the Terms of Reference, provided, that any failure to issue an award in such time period shall not be considered a defense or objection to the enforcement of such award. The Parties agree to attempt in good faith to resolve any potential claim for Material Breach.”
Remedies for Material Breach In the event of any Material Breach (to be defined in the MSDA) where as a direct or indirect consequence of such Material Breach William Hill is delayed for a period in excess of 60 days in development of any material WH Features, William Hill will notify NeoGames of such Material Breach and NeoGames shall have 30 days to remedy such Material Breach and put William Hill in the same position as envisaged by the MSDA Rolling Plan or as if the Material Breach had not occurred. In the event that NeoGames fails to remedy the Material Breach to the reasonable satisfaction of William Hill within the specified time period, then William Hill will, at its entire discretion, be entitled to either of the following remedies (a) liquidated damages at a daily rate to be specified the MSDA until the Material Breach is remedied to the reasonable satisfaction of William Hill, which the parties agree is a reasonable and proportionate amount necessary to protect WH’s legitimate interests in the performance of the terms of the MSDA (the "Liquidated Damages"); (b) WH will be entitled to assert temporary control over the business, governance and affairs of the WH Team, utilising resources, facilities and processes to be agreed in order that William Hill may direct the WH Team and, as may be reasonably required, such additional NeoGames developers as William Hill may reasonably require to remedy such Material Breach, such temporary control to endure until such Material Breach is remedied to the reasonable satisfaction of William Hill; (c) William Hill will be entitled to retain the services of third party developers, at NeoGames’ sole cost and expense, to remedy such Material Breach; or (d) William Hill will be entitled to terminate the MSDA and, subject to the payment of the Software License Fee, exercise the Licence, whereupon NeoGames shall be obliged to comply with the transitional arrangements outlined above.
Material Breach. Metuchen shall have the right to terminate this Agreement, upon written notice to VIVUS if VIVUS, after receiving written notice from Metuchen identifying a material breach by VIVUS of its obligations under this Agreement, fails to cure (or if not curable within such time period, adopt a plan for cure during such time period) such material breach within [***] from the date of such notice (or, in the case of payment obligations, [***] from the date of such notice); provided, however, that in the event the VIVUS contests any such asserted breach in good faith and diligently pursues the dispute resolution procedures set forth in ARTICLE 13, such [***] cure period shall be tolled or suspended until the final resolution of such dispute pursuant to the terms of, and in accordance with, the terms and provisions of ARTICLE 13, subject to any exercise by MTPC of its right of termination of the MTPC Agreement due to any material breach of the provisions or conditions of the MTPC Agreement by VIVUS arising from the facts or circumstances that resulted in the material breach by VIVUS hereunder. For the avoidance of doubt (and without limiting VIVUS’ remedies for any other breaches by Licensee), Licensee’s failure to pay the amounts set forth in Section 7.1 by the deadlines set forth therein shall each be deemed to be a material breach of this Agreement.
Material Breach. A. Material Breach. Any of the following actions taken directly or indirectly by or on behalf of Merchant will constitute a “Material Breach,” without any prior notice from Purchaser: (i) The breach of any representation, warranty, covenant or agreement of Merchant set forth in this Agreement; (ii) Merchant interferes with Purchaser’s right to collect the Amount Sold, including without limitation by any act prohibited under this Agreement; (iii) Except as expressly otherwise provided herein, Merchant becomes subject to any material judgment or garnishment after the Effective Date that is not disclosed to Purchaser; (iv) Merchant takes any affirmative steps (including, without limitation, executing a term sheet or definitive documentation) or threatens to take any action prohibited by this Agreement that, if effected, would constitute a Material Breach.
Limitations on Material Breach. Notwithstanding any other provision of this Agreement, (i) If the aggregate Receivables remitted to Purchaser pursuant to this Agreement are less than the stated Amount Sold, despite Merchant’s best efforts to operate its business in compliance with this Agreement in good faith, and Merchant has not violated any other provision of this Agreement, such diminution of Receivables shall not in itself be deemed a Material Breach. (ii) The filing for bankruptcy or insolvency of Merchant is not in itself a Material Breach of this Agreement.
Purchaser Remedies upon Material Breach. Merchant agrees that, upon the occurrence of a Material Breach, Purchaser may, and Merchant hereby authorizes Purchaser to, pursue any and all of the following remedies, to the extent permitted by law, without prior notice to Merchant: (a) Purchaser shall be entitled to receive all Contract Damages (as defined) from Merchant. (b) Purchaser will be entitled to recover from Merchant all Costs of Collection. (c) Purchaser may withdraw funds from any of Merchant’s bank accounts, including any Approved Account, by ACH, up to an amount equal any Amount Sold, plus unpaid fees and charges under this Agreement, if any, and Purchaser’s costs and expenses relating to this Agreement (including without limitation, all Costs of Collection). (d) Purchaser may exercise any and all remedies available, including but not limited to remedies under the Uniform Commercial Code (the “UCC”) of the applicable jurisdiction including without limitation: (1) notifying customers and other third parties (including without limitation credit card processors) of Purchaser’s rights to Receivables in Approved Accounts, (2) levying or foreclosing on Approved Accounts, and (3) seizing Collateral in any Approved Account or at the business location of Merchant or any Other Business, Successor Company or Guarantor, as applicable, including seizure by local sheriff and/or marshal. (e) Purchaser shall also be entitled to all remedies available to it at law or in equity, including without limitation to initiate any legal or equitable action, administrative proceeding, arbitration or mediation or other collection activities, as further specified below. (f) Notwithstanding the foregoing, Purchaser agrees that it will not enforce any remedy under this Agreement while a reconciliation under Section 5 is in process.
Material Breach. (a)Right to Terminate. If either Party believes that the other Party is in Material Breach, then in addition to any other right and remedy such Party may have, such Party may deliver a Termination Notice. With regard to any Material Breach by such other Party, the breaching Party shall have the Notice Period following the receipt of such Termination Notice to cure such Material Breach, provided that for all Material Breaches other than a payment breach, if such breach cannot be reasonably cured during such [***] period but is capable of cure within [***], then the breaching Party may submit to the non-breaching Party a reasonable cure plan to remedy such Material Breach that is reasonably acceptable to the non-breaching Party, and upon such submission, the applicable cure period will automatically be extended for so long as the breaching Party continues to use commercially reasonable efforts to cure such Material Breach in accordance with such cure plan, but for no more than [***] from receipt of such Termination Notice (subject to the dispute resolution procedures set forth in Section 4.3.2(b) (Disputes Regarding Material Breach) below).
Disputes Regarding Material Breach. The allegedly breaching Party may dispute the occurrence of a Material Breach, and in such case the allegedly breaching Party shall give written notice of such dispute no later than [***] after its receipt of the Termination Notice and the issue of whether the applicable Party may properly terminate this Agreement on expiration of the applicable cure period will be resolved in accordance with Section 13.2 (Dispute Resolution) of the Biohaven Collaboration Agreement as referenced in Section 5.2 (Miscellaneous Provisions). If as a result of such dispute resolution process, it is determined that the allegedly breaching Party committed a Material Breach and the allegedly breaching Party does not cure such Material Breach within the Additional Cure Period, then such termination will be effective as of the expiration of the Additional Cure Period. This Agreement will remain in full force and effect during the pendency of any such dispute resolution proceeding and the cure periods set forth in this Section 4.3.2(b) (Disputes Regarding Material Breach), and any Additional Cure Period, in each case, will be tolled during any such dispute resolution proceeding, such proceeding will not suspend any obligations of either Party hereunder, and each Party will use reasonable efforts to mitigate any damage. If as a result of such dispute resolution proceeding it is determined that the allegedly breaching Party did not commit a Material Breach, then no termination will be effective, and this Agreement will continue in full force and effect.
A material breach is a substantial violation or failure to fulfill a contractual obligation that allows the aggrieved party to terminate the contract and seek damages. It is considered significant enough to undermine the contract’s core purpose, thus affecting the overall relationship between the involved parties. Not every breach qualifies as material; it must meet the criteria of severity and impact.
You should invoke a material breach when there is a serious violation of the contract that fundamentally disrupts the agreement’s intended outcome. Consider using this when:
When drafting a contract or communicating a material breach, clarity and specificity are crucial. Here are the key components to include:
Clearly Identify the Breach:
State Impact:
Cite Contractual Terms:
Propose Consequences:
Example:
“Due to your failure to deliver ingredients that meet the quality standards outlined in Section 4.2 of our agreement, which were to be met by March 1, 2023, we consider this a material breach. This has significantly disrupted our production schedule and affected our ability to meet customer orders. Consequently, we are terminating the contract effective immediately, as per the termination clause in Section 9.”
Material breaches can be specified in various types of contracts, particularly those where the obligations of the parties are significant and complex. Some common types of contracts include:
These contracts often contain clauses that outline what constitutes a material breach, along with associated remedies or steps to resolve the issue.
Try our AI contract analysis and extract important clauses and information from existing contracts.
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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
A merger clause, also known as an integration clause, stipulates that the written contract represents the complete and final agreement between the parties, superseding all prior negotiations, representations, or agreements. This clause ensures that no external documents or verbal agreements can alter the contract's terms, providing clarity and preventing disputes over prior statements or understandings.
A milestone payment schedule is a financial agreement in which payments are made incrementally as specific project milestones or deliverables are achieved. This structure helps manage cash flow and ensures progress by tying compensation to the completion of defined stages within a project.
A Minimum Commitment clause in a contract obligates a party, typically a buyer, to purchase or use a specified minimum quantity or level of services within a defined period. This clause ensures a baseline level of engagement or business for the provider, and often involves financial penalties or adjustments if the commitment is not met.
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