A breach of contract occurs when two or more parties have an enforceable contract and one of those parties fails to fulfill their part of the contract. The breach may be minor or fundamental. Depending on the severity of the breach, it may result on the contract being unenforceable or terminated.
What Is a Fundamental Breach of a Contract?
A fundamental, or material, breach occurs when one party has failed to adequately satisfy a term of the contract. The term is so vital to the contract that the breach of it makes continuing with the fulfillment of the contract impossible. The wronged party can terminate their own performance of the contract without breaching it themselves.
Does a Fundamental Breach Give You the Right to Anything Else?
Yes. The wronged party can sue the breaching party for damages incurred as a result of the breach.
Is a Fundamental Breach the Same as an Anticipatory Repudiation?
No. Anticipatory repudiation happens when one party stops acting in accordance with the contract. The other party is lead to believe the party has decided to breach the contract and decides to stop acting on the contract. For example, a contractor may not show up to work on a house for weeks without notice. The homeowners may believe the contractor has decided to no longer work on the house.
A fundamental breach is different because there is no belief that the party will not fulfill the rest of their part of the contract. Instead, an important term is not satisfied, even though the breaching party may continue to fulfill other parts of the contract.
Is a Fundamental Breach Similar to a Minor Breach?
A minor breach, or non-material breach, is a failure to complete a minor term of a contract. The failure does not change the outcome of the contract. When a fundamental term is not completed, that failure to complete changes the outcome of the contract.
What Type of Relief Is Awarded in a Fundamental Breach?
Damages for a fundamental breach can include a monetary award, such as compensatory or punitive damages. The non-breaching party may also be absolved of any obligations they may still face under the contract.
Should I Contact a Business Attorney about a Fundamental Breach?
A fundamental breach can result in the dissolution of a contract, which can have a serious impact on you and any contractual obligations you may have. Thus, it is in your best interest to contact a business attorney if you suspect that the other party has breached a fundamental term of your contract.