Legal Definitions - Material

In legal terms, material refers to something that is significant, important, or consequential enough to influence a decision, outcome, or the understanding of a situation. If information, a fact, or an event is deemed 'material,' it means it holds enough weight that its presence or absence could change the course of events or the judgment reached in a legal matter.

The concept of "materiality" is crucial across various areas of law, determining what information is relevant, what facts need to be proven, and what breaches or misrepresentations are serious enough to warrant legal action.

• In the context of Civil Procedure (Material Fact):

  A "material fact" is a crucial piece of information that, if disputed, needs to be proven at trial because it could directly affect the legal outcome of a case. When there's a genuine dispute over a material fact, a judge cannot simply decide the case without a trial; a jury or judge must hear evidence and determine what actually happened.

  • Example 1: In a lawsuit following a bicycle accident, the plaintiff claims the defendant driver was texting while driving, causing them to swerve and hit the cyclist. The defendant denies texting and claims the cyclist suddenly veered into their lane. Whether the driver was texting is a material fact because it directly relates to negligence and could determine who is at fault for the accident. A court would need to hear evidence to resolve this dispute.

  • Example 2: Two neighbors are in a dispute over property boundaries. One neighbor claims a fence was built three feet onto their land, while the other insists the fence is on the correct property line according to an old survey. The exact location of the property line is a material fact that must be established to determine if trespassing or encroachment has occurred and to resolve the dispute.

• In the context of Contract Law (Material Breach or Event):

  When discussing contracts, "material" refers to an event or a breach of the agreement that is so significant it fundamentally alters the contract's purpose, defeats the expectations of the parties, or substantially deprives one party of the benefit they were meant to receive. A material breach can excuse the non-breaching party from their obligations or entitle them to significant remedies.

  • Example 1: A company contracts with a web developer to build an e-commerce website with specific functionalities, including secure payment processing and inventory management. The developer delivers a site that lacks the payment processing feature entirely, making it impossible for the company to sell products online. This is a material breach because it deprives the company of the core purpose of the website, fundamentally undermining the contract.

  • Example 2: A restaurant chain signs a contract with a supplier for daily delivery of fresh organic produce. Due to an unexpected global supply chain crisis, the supplier informs the restaurant that they can only provide non-organic produce, and only twice a week. This change represents a material adverse event because it fundamentally alters the quality and frequency of delivery, which were essential terms for the restaurant's business model, potentially allowing the restaurant to terminate the contract.

• In the context of Securities Law (Material Misrepresentation or Omission):

  In the world of investments and financial markets, a "material" misrepresentation (a false statement) or omission (failure to disclose information) is one that would likely be considered important by a reasonable investor when making a decision to buy, sell, or hold a security (like a stock or bond). If a company makes a material misstatement or hides material information, it can lead to liability for securities fraud.

  • Example 1: A publicly traded pharmaceutical company announces that its new drug has successfully completed clinical trials and is highly effective, leading to a significant jump in its stock price. Later, it's revealed that the company deliberately withheld data showing severe side effects in a substantial portion of trial participants. This omission of critical safety data is a material omission because a reasonable investor would have considered this information vital when deciding whether to invest in the company.

  • Example 2: The CEO of a tech startup, seeking to attract investors, publicly states that the company has secured a major contract with a Fortune 500 client, which would guarantee substantial revenue for years. In reality, no such contract exists, and the company is struggling financially. This false statement about a significant revenue source is a material misrepresentation because it would heavily influence an investor's decision to fund the startup.