Contract Basics: What are Material Terms?

By Rebecca Belenky | August 4, 2022

This YouTube video has Anton Kaminsky discussing what are material terms and what does the term “material terms” mean when entering into a contract. The video focuses on material terms and how they may impact a contract. This is a continuation of our “Legal Ease” segment which also has a video about the Differences between Mediation, Arbitration, and Litigation.

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One of the biggest questions we often hear is, “Does my agreement need to be in writing?”.

Well…do you know the answer?

What are material terms in a contract and what does "material terms" mean?

Statue of Frauds

In certain circumstances, there is a rule in place that will immediately tell you whether your agreement must be in writing. The Statute of Frauds states that there must be an agreement in writing for the sale of goods worth more than $500.00 and for the sale of real estate. For our purposes, a written agreement is a document that will contain the material terms of the parties mutual understanding.

What are Material Terms?

Here we go, another definition.

Material terms are the terms of an agreement that go to the essence of the bargain. They are terms that are important to the deal, whereas immaterial terms (subordinate terms) are terms that are not as important. Some examples of material terms are as follows:

  • Identification of the parties
  • Item, property, or service being exchanged
  • Amount of payment and terms of payment
  • Time and place of performance

For a further explanation, the Cornell Law School does a great job providing the legal definition of material. Make sure that you know when we say material we do not mean the material that your shoes are made out of!

So what’s the answer – Does it need to be in writing?

The best answer is not always. Whether or not you need an agreement in writing will be best answered on a case to case basis.

It is always better to have an agreement in writing so that there is something to reference when discussing the material terms of the agreement. When there is a document that you can reference the typical “he said, she said” conversation is eliminated. Don’t end up like the winner of a Toy-Yoda that we talked about in our YouTube video here.

Kaminsky Law is always happy to represent you in a business dispute or help you get together the needed documents and information to have a proper agreement. If you have specific questions about material terms or the basics of a contract, call us at 215-876-0800 or fill out a contact form.


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