FORT LAUDERDALE BUSINESS LITIGATION: MATERIAL BREACH OF CONTRACT

Not all contractual breaches are treated equally. Some breaches are material, while other breaches are not. Materiality matters because a material breach relieves the non-breaching party of his or her duties to perform under the contract. JF & LN, LLC v. Royal Oldsmobile-GMC Trucks Co., 292 So. 3d 500 (Fla. 2d DCA 2020) (“…[N]ot every breach permits the nonbreaching party to cease performance. Instead, the failure to perform the contractual obligation must be central to the contract or, in other words, material.”). Material breaches occur when the breach “go[es] to the essence of the contract; it must be the type of breach that would discharge the injured party from further contractual duty on his part.” Eclectic Synergy, LLC v. Seredin, 347 So. 3d 27 (Fla. 4th DCA 2022). However, “trivial noncompliance and minor failings do not constitute material breaches.” Burlington & Rockenbach, P.A. v. Law Offices of E. Clay Parker, 160 So. 3d 955 (Fla. 5th DCA 2015). By extension, trivial breaches do not relieve the non-breaching party from performing. See DK Arena, Inc. v. EB Acquisitions I, LLC, 121 So. 3d 634 (Fla. 4th DCA 2013) (The “failure of the appellee to cause the release of the escrow deposit was a non-material breach of contract, [because n]othing in the contract or addendum obligated appellee to take any action to cause the deposit to be released.”). Peter Mavrick is a Fort Lauderdale business litigation attorney. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

A “time is of the essence” provision can transform an immaterial breach into a material breach. Imagine a scenario where a seller agrees to sell a widget to a buyer for a specific price to be paid by January 1. Then imagine the buyer does not pay the full purchase price until January 2. Many would argue a one-day tardiness in payment is trivial and immaterial. However, a “time is of the essence provision” can make the buyer’s late payment a material breach relieving the seller of his obligation to sell the widget. In fact, “time is of the essence provisions” where created for this very purpose. Rybovich Boat Works, Inc. v. Atkins, 587 So. 2d 519 (Fla. 4th DCA 1991) (A “time is of the essence provision” is “intended to give the sellers an immediate right to cancel the contract if the buyer were unable to timely demonstrate an ability to purchase.”). For example, in Rybovich Boat Works, Inc., 587 So. 2d 519, the court granted summary judgment in favor of the seller because the buyer failed to set a closing date and failed to close by the latest date called for in the agreement despite the “time is of the essence” provision. Id.

“Time is of the essence” provisions are not always enforced. In equitable proceedings, “time is of the essence” provisions are only given effect when the party seeking enforcement demonstrates clear applicability to the relevant contract requirement. Jackson v. Holmes, 307 So. 2d 470, 472 (Fla. 2d DCA 1975) (A “‘time is of the essence’ provision will be given effect in an equitable proceeding probided [sic] it is shown to be clearly applicable to the contract requirement against which it is sought to be applied.”). Court do not want to “‘achieve [a] result by merely putting into the contract the words time is of the essence….’” Jackson v. Holmes, 307 So.2d 470 (Fla. 2d DCA 1975) (quoting 3A Corbin, Contracts § 715 (1960)). Therefore, “time is of the essence” provisions may be rejected in equitable proceedings when applied to matters of minimal consequence. Arvilla Motel, Inc. v. Shriver, 889 So. 2d 887 (Fla. 2d DCA 2004) (cautioning courts “not to apply a general provision that time is of the essence to all of the many ‘promises for sundry performance, varying in amount and importance,’ because parties often insert the provision in the contract without any realization of its significance.”) (quoting 3A Corbin, Contracts § 715 (1960)).

Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.