The Protean Concept of Materiality in Contract Law

Materiality is a pervasive concept in contract law, and it plays a central role in many contract doctrines. The question of whether a term or matter is material is a crucial factor in the determination of rights, obligations, or remedies in many contract disputes.1 Courts and commentators agree on the broad, nonspecific meaning of materiality in contract law: A term or matter is material if it is fundamentally important to the contract and goes to its very basis. The word “essential” is often used synonymously with “material” to denote such crucial importance.2 However, this general definition is just a starting point in the determination of materiality—it is not refined or specific enough to provide anything more than a rough impression and offers no guidance into the complex set of considerations that often go into the decision on whether or not a term or matter is material. Materiality cannot be adequately defined in the abstract because the inquiry into materiality is heavily reliant on the facts of each case and the interpretation of the contract in its context. This context includes not only the factual circumstances that are commonly taken into account in interpreting meaning but extends to the goal and purpose of the materiality inquiry in the specific contract dispute. Materiality analysis plays different roles under the myriad doctrines that call for an assessment of it. For example, the determination of materiality in relation to a claim of breach of contract has a different purpose than it has in resolving the question of, say, whether a contract was formed at all, or whether it can be avoided on grounds of misrepresentation or mistake