Why Corporate Lawyers Get "Confused" When You Try To Escape Contract Over Material Adverse Changes

Now we know why cellphone companies have been giving customers such a hassle when they try to cancel over material changes to the contract: there’s two possible definitions. Ken Adams, an experienced corporate lawyer who drafts a lot of contracts, says:

According to Black’s Law Dictionary, one meaning of material is “of such a nature that knowledge of the item would affect a person’s decision-making process.”

Another meaning of material is “significant,” in other words “important enough to merit attention.”

Price, for one, is historically know to affect a person’s mind when buying.

Sometimes a cellphone company will try, for instance, to argue that changing a text message rate from .10 to .15 isn’t a big deal, especially if you haven’t used “a lot” of that particular kind of text message. Adams suggests that lawyers use “non-trivial” if they intend the second meaning.

We agree. The more precisely legal definition should be used when lawyers draft a legal contract.

Otherwise, why not use definition 11 (dictionary.com), “pertaining to or characterized by an undue interest in corporeal things; unspiritual,” and argue that there’s no voiding, as the contract is still a celibate? — BEN POPKEN

Rethinking “Material” and “Material Adverse Change” [AdamsDrafting] (Thanks to Peter!)

UPDATE: Scans of Black’s Law Dictionary definition for “material,” inside…



Verizon Keeps Making Up Contract law To Prevent Customers From Cancelling Without Penalty
T-Mobile Confirms You Can Cancel Without Fee Over Texting Price Increase
Verizon Redefines “Materially Adverse” To Prevent Customer Cancellations
Verizon: 34 Txt Msgs= Material Adverse Effect
Verizon Makes Canceling Over Their Txt Msg Hike Impossible

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.