Rather than relying on the courts to assist in defining the term “material” breach, contract drafters may choose to provide a definition of the breaches which would be considered ‘material’ in the context of that particular contract – this is often done where a contractual provision is of particular importance or concern to a client. The impact on the parties of a material breach is potentially significant and where a dispute cannot be resolved, the court will be asked to rule on whether or not a material breach has occurred. In reality, contractual parties often have different views on what constitutes a material breach. The courts have ruled that a series of minor breaches of a contract could constitute material breach. When considering whether there has been a material breach, the parties’ primary focus must be on the character and gravity of the breach and its overall impact on the innocent party.Ī material breach will generally be a breach that is substantial and serious, rather than a matter of little consequence. Another judgment has stated that a material breach “connotes a breach of contract which is more than trivial, but need not be repudiatory” (a breach is repudiatory when it is so serious that it allows the contract to be terminated by the innocent party – analysis is required on a case by case basis in respect of the seriousness of the issues experienced in the context of the contractual arrangement). One judgement held that a breach may be ‘material’ if it is “serious in the wide sense of having a serious effect on the benefit which the innocent party would otherwise derive”. Over the years the courts have given guidance in commercial cases. Otherwise the meaning in a particular case will be decided by the courts taking in to account factors including the intention of the parties who have used the expression in an agreement. The phrase ‘material breach’ has no set legal meaning unless given one in a contract. The commercial team at Herrington Carmichael LLP solicitors are highly experienced in drafting and interpreting contract clauses. CDC reserves all its rights and remedies against BDSI and its officers and directors, including with respect to breaches not enumerated.What is a ‘material’ breach of contract by a party to a commercial contract? This is a critical issue regularly considered by the courts – and one that exercises clients and lawyers alike in the course of their work. Section 10.5 of the CDLA, including its obligations to transfer the specified assets and rights to CDC. Obtaining informed patient consents, which failures are in violation of, inter alia, Sections 4.1 and 4.5 of the CDLA.īDSI failed until August 22, 2006 to notify CDC of the failures to comply identified in item 2 above, in violation of, inter alia, Section 4.5ĬDC hereby demands that BDSI immediately comply with its obligations under On July 26, 2006, BDSI was notified by the Research Advisory Panel of California that BDSI had failed to comply with applicable laws and protocols in On August 15 2006, BDSI submitted to the United States Food and Drug Administration ( FDA), without CDCs approval, an amendedĪgenda that changed the protocols and end-point of the clinical trials in violation of, inter alia, Sections 2.1 and 2.3 of the CDLA. The natures of BDSIs defaults are as follows: If one or more of these breaches are subject to cure, then this Notice of Breach and Termination ( Notice) also serves as a notice for purposes of starting any applicable cure period under the BDSIs breaches are not curable, such that the termination of theĬDLA is effective immediately. (such agreement, as amended, the CDLA).ĬDC hereby gives notice to BDSI that (i) BDSI is in material breach of the CDLA and (ii) CDC is terminating the CDLA pursuant to Section 10.2 of the CDLA. Development and License Agreement dated as of July 14, 2005 among BioDelivery Sciences International, Inc, ( BDSI), Clinical Development Capital LLC (together with its successors and assigns,
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