Legal Definitions - Material

Definition: Material means important information that is significant enough to determine an issue. It can be used in various contexts:

• Civil Procedure: A general issue of material fact refers to an actual, plausible issue of fact that must be decided by a jury or judge. This issue is relevant and consequential, and it precludes summary judgment.
• Evidence Law:Relevant evidence must be material, meaning it influences the determination of the action and is probative, meaning it has a tendency to make a fact more or less probable. For example, issues affecting a witness’ credibility are generally always relevant and material because if their testimony cannot be believed, then the development of facts will be significantly altered.
• Contract Law: Material refers to an event that significantly impacts the parties’ expectations under the contract. For example, a material breach of contract refers to a court finding that a party failed to satisfy their obligations significantly enough to where the aggrieved party is entitled to a remedy.
• Securities Fraud: Any misrepresentation must be material to give rise to liability. The test for whether a company’s decision not to disclose an event was material is a balance of the probability that the event would have occurred and the magnitude of the event. Qualitative considerations include whether the fact related to a significant aspect of the company’s business, whether it masked a change in earnings or trends, whether it impacted managerial compensation, or whether there was a market reaction to eventual disclosure.

For example, in a contract between two parties, if one party fails to fulfill their obligations significantly enough to where the other party is entitled to a remedy, it is considered a material breach of contract. In securities fraud, if a company fails to disclose an event that would have significantly impacted their business, it is considered a material misrepresentation.