You might be wondering…

“Who decides whether it’s a material breach?” “Can I always choose to withdraw if the goods don’t meet my expectations?” “What if the defect is only minor?”

My clients often ask…

“I bought equipment that couldn’t be used, but the seller only offered repair. Do I have to accept that?” “The supplier delivered fewer items than agreed but claims it’s a non-material breach. Is that correct?”

What the law says in a nutshell

• § 2106 Civil Code: In the case of a material breach, the buyer has a choice – they can demand delivery of a new item, repair, a price reduction, or withdrawal from the contract. The choice must be communicated immediately when notifying the defect.

• § 2107 Civil Code: In the case of a non-material breach, the buyer can demand repair or a price reduction. Withdrawal is only possible if the seller fails to repair in time or refuses to repair.

Practical significance of the distinction

Whether a breach is material or not has a fundamental impact on the buyer’s position. A material breach gives the buyer stronger rights, including the option to terminate the contract. With a non-material breach, the contract remains valid, and the buyer is limited to repair or reduction of the price. Courts assess the seriousness of the defect based on whether the buyer would have concluded the contract had they known about the defect. If not, it is material.

Common mistakes in practice

A frequent mistake by buyers is assuming that every defect is automatically material. They sometimes withdraw from the contract prematurely, leading to disputes because the breach was only non-material. Sellers often underestimate the duty to respond quickly and effectively – but if they fail to repair in time, they risk allowing the buyer to withdraw even for a non-material breach.

How to proceed correctly

When making a claim, the buyer should clearly state what remedy they are choosing. In the case of a material breach, they may choose withdrawal. In the case of a non-material breach, they are limited to repair or a price reduction. Sellers should always react promptly and provide a remedy; otherwise, they risk escalation to contract termination.

Practical examples

• A consumer bought a laptop that would not turn on at all. This was a material breach – the buyer had the right to withdraw and get a refund.

• A business received a delivery with several items missing, but the goods were otherwise usable. This was a non-material breach – the buyer had the right to demand completion of the delivery or a price reduction, not withdrawal.

• A seller refused to fix a cosmetic defect on a door. By failing to repair, they allowed the buyer to withdraw, even though the defect would otherwise be considered non-material.

Why relying on impressions is risky

Distinguishing between material and non-material breach is not always intuitive. It depends on the circumstances, the significance of the defect for the buyer, and whether they would have contracted at all had they known about it. That is why proper legal assessment is essential, rather than relying on gut feeling.

Lawyer’s recommendation

As a lawyer, I recommend buyers always specify which remedy they are choosing in their claim and be prepared with evidence why they consider the defect material. For sellers, my advice is to remove defects as quickly as possible – this avoids the risk of buyers terminating the contract.

FAQ

Who decides if it’s a material breach?
The key test is objective: whether the buyer would have entered the contract if they had known about the defect.

Can the buyer always withdraw from the contract?
No. Withdrawal is only possible in the case of a material breach, or in a non-material breach if the seller fails to repair in time.

What if the buyer doesn’t specify their chosen remedy?
Then their rights are limited – by law, if the choice is not made in time, they are treated as having the remedies for non-material breach under § 2107.