A materiality qualifier is wording that limits a warranty so the seller is only liable for breaches that pass a materiality threshold. Small or trivial matters that would technically breach an unqualified warranty are filtered out before the buyer can claim.
Technically, it is a contractual carve-out by which a warranty is qualified by reference to a materiality threshold, defined either qualitatively (material to the business taken as a whole) or quantitatively (a dollar figure, or a percentage of revenue, EBITDA, or net assets).
The buyer wants materiality qualifiers stripped out wherever the warranty is considered fundamental and, where unavoidable, defined at low per-item dollar thresholds. The seller wants materiality qualifiers across operational warranties and defined at the business-as-a-whole level so only genuinely consequential breaches give rise to liability.
The qualifier interacts with the indemnity basket. If the warranty is already qualified by materiality and the basket then filters small claims out again, the seller has a double layer of protection. Buyers will often try to negotiate one or the other, not both, and may push for a “materiality scrape” that disregards materiality qualifiers for the purpose of calculating damages once breach is established.
What you as a seller should push back on: materiality scrapes (whether full or limited to damages calculation), per-item dollar definitions of materiality where business-as-a-whole is defensible, and removal of materiality from operational warranties where the buyer is offering only the basket as a filter.