Material

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Material means important information, generally significant enough to determine an issue. It can be used in the following contexts:

  • In the context of 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. An issue of material fact precludes summary judgment because the issue is relevant and consequential.
  • In the context of evidence law, relevant evidence must be material, i.e. influencing the determination of the action, and probative, i.e. having a tendency to make a fact more or less probable. To illustrate, issues affecting a witness’ credibility are generally always relevant, and they are material because if their testimony cannot be believed then the development of facts will be significantly altered. 
  • In the context of contract law, material refers to an event that significantly impacts the parties’ expectations under the contract. For example, the term “material adverse effect” is used to describe events which alter the parties’ expectations so significantly that the event extinguishes the parties’ obligations under the contract. As another 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
  • In the context of securities fraud, any misrepresentation must be material to give rise to liability. In Basic v. Levinson, 485 U.S. 224 (1988), the U.S. Supreme Court stated that 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. In Litwin v. Blackstone Group, 634 F.3d 706 (2nd Cir. 2011), the Second Circuit described the following qualitative considerations as to whether a misrepresentation was material: 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.

[Last updated in December of 2021 by the Wex Definitions Team]