What happens if the seller and I simply can't agree whether a problem is big enough to count as a breach?
This kind of disagreement is common, and it often turns on how the purchase agreement itself defines materiality for the specific representation, condition, or covenant at issue. Some agreements set out a specific dollar threshold or materiality standard for exactly this purpose, while others simply leave "material" to be assessed against its ordinary legal meaning — something genuinely significant to the business, not a trivial or technical issue.
Courts assessing a dispute like this generally look at the actual impact on the value or operation of the business, not simply how strongly either side feels about it. Because disagreements like this are so predictable, purchase agreements often route them to a defined resolution process — referral to an independent accountant for financial disagreements, or negotiation, mediation, or litigation for other kinds — rather than leaving it to be settled purely by argument between the parties. Checking what mechanism your specific agreement provides for this kind of dispute is the practical first step before assuming either side's position is automatically right.
Key takeaways
- Materiality disagreements often turn on how the agreement itself defines the standard.
- Courts generally focus on actual impact on the business, not how strongly either side feels.
- Purchase agreements often specify a resolution process for exactly this kind of dispute.
- Check your agreement's defined process before assuming either position is automatically correct.