When reviewing a contract, two questions should always be front of mind: Is this clause material? And is it enforceable? These aren’t just legal trivia — the answers can decide whether a deal holds together or falls apart in court.
What Does “Material” Mean?
In contract law, “material” means important enough that the clause impacts the core of the agreement. If a material clause is breached, the wronged party can usually terminate the contract or sue for damages. Non-material clauses, while still legally binding, usually don’t justify blowing up the whole deal.
Examples of material clauses:
- Payment terms
- Delivery obligations
- Ownership of intellectual property
Examples of non-material clauses:
- Minor reporting requirements
- Housekeeping details like how notices are sent
Key test: Ask yourself, “If this clause were violated, would it defeat the purpose of the contract?”
What Makes a Clause Enforceable?
Not every clause in a contract is enforceable. Courts won’t uphold clauses that are illegal, vague, unconscionable, or against public policy. Common traps include:
- Overly broad non-competes
- Unreasonable penalty clauses
- Clauses that violate consumer protection laws
Checklist for enforceability:
- Clear and specific language?
- Legal under the governing law?
- Fair to both sides?
- Supported by consideration (both parties getting something of value)?
If a clause flunks one of these tests, a judge might strike it down.
Practical Steps When Reviewing a Contract
- Identify all key clauses. Which ones go to the heart of the deal?
- Assess materiality. Would breaching this clause seriously harm one party’s core expectations?
- Test enforceability. Is the clause legally sound, clear, and fair?
- Negotiate wisely. Push hard on material clauses. Don’t spend all your leverage fighting over minor ones.
Bottom Line
Not every clause is created equal. Some clauses are critical (material), and some will actually stand up in court (enforceable). Your job when reviewing or negotiating a contract is to know which is which — and to act accordingly.
Pro tip: If you’re not sure whether a clause is material or enforceable, get legal advice before signing. It’s cheaper than a lawsuit later.
