De minimis: Overview, definition and example
What does de minimis mean?
De minimis is a Latin term meaning “about minimal things.” It refers to something so small or insignificant that it’s not worth legal or practical consideration. In business or legal contexts, de minimis often applies to minor issues or amounts that don’t justify action, like negligible contract breaches or tiny tax discrepancies.
For example, if a contract requires delivery of 1,000 units of a product, but only 999 are delivered, the shortfall might be considered de minimis—too minor to trigger a dispute.
Why is de minimis important?
De minimis is important because it prevents parties from wasting time, energy, and resources on trivial matters. It recognizes that not every minor deviation or issue is worth pursuing, especially if it doesn’t significantly affect the outcome of an agreement or legal situation.
For businesses, understanding de minimis can help avoid unnecessary disputes and focus attention on meaningful issues. It also plays a role in tax law, employment regulations, and compliance, where minor infractions may be excused as de minimis.
Understanding de minimis through an example
Imagine a supplier agrees to deliver 1,000 widgets to a manufacturer by a specific date. Due to a minor error, the shipment is delayed by one hour. This delay is unlikely to cause any real harm to the manufacturer’s operations and could be considered de minimis, meaning it wouldn’t justify a legal claim or penalty.
In another case, a company’s tax filing shows a rounding error of a few cents. Tax authorities might consider this de minimis and choose not to pursue it, as the error is too minor to matter.
An example of a de minimis clause
Here’s how a de minimis clause might look in a contract:
“Any deviations from the terms of this Agreement that are de minimis in nature shall not constitute a breach, provided they do not materially affect the performance or outcome of the Agreement.”
Conclusion
De minimis refers to issues or deviations that are so minor they’re not worth legal or practical action. It ensures that time and resources are focused on meaningful matters rather than trivial concerns.
By understanding and applying de minimis in contracts and business dealings, companies can avoid unnecessary disputes and maintain smoother operations. It’s a practical concept that emphasizes efficiency and common sense in both legal and professional contexts.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.