A fundamental breach of contract occurs when one of the parties fails to meet the obligations they have agreed to upon entering into a legal contract, whether it is orally agreed upon or written and signed.

Breach of Contract

A breach of contract occurs when one of the parties involved in either an oral or written contract fails to meet their obligations under the agreement they have entered into with one another. There are a number of ways a breach of contract may occur including, but not necessarily limited to, the following:  

  • Failing to deliver expected services or goods  
  • Failing to complete a job  
  • Failing to pay in a timely manner  
  • Providing services or goods that do not meet the standards and expectations of other parties involved

In simple terms, a breach of contract occurs when one party breaks a legally binding promise they have made to another. The formal definition of a breach of contract is an unjustified failure to honor the agreed upon terms of the contract in question. This is a violation of the agreement and can happen either when a party fails to meet their obligations or interferes with the ability of others to do the same.

Types of Breach of Contract

There are a number of ways in which a breach of contract may occur. The most common include:

  • A fundamental breach of contract
  • A partial breach of contract
  • An anticipatory breach of contract

Established laws provide a number of ways to remedy a breach of contract that are specifically designed to make things right for the injured party. These court orders are not meant to act as punishment for the party guilty of the breach. Instead, they are designed to restore the injured party the state they would have found themselves in had a breach not occurred. 

A fundamental breach of contract happens when one of the parties involved in a contract fails to meet obligations that were so fundamental to the execution of the contract that another party is prevented from upholding their end of the deal. This is not a subtle breach and is usually grounds for the injured party to completely cancel the contract. 

A fundamental breach of contract is a breach by a contractually obligated party if it results in detriment such as substantially depriving them of things they're entitled to receive according to the contract. However, if the breaching party did not foresee these issues and a reasonable person in a similar situation would have been able to foresee a similar result, it may be determined that a fundamental breach of contract did not actually occur. 

Say, for example, that one person (party A) makes a deal with two other people (parties B and C). Party B wants to buy a pizza from party A. Party A agrees to make the pizza but isn't able to deliver it. Party C decides to help out and agrees to deliver the pizza to Party B. However, party A never made the pizza. Because party A failed to execute his or her part of the agreement, party C is unable to deliver the pizza, and party B is unable to offer payment. Since party B failed to honor a basic premise of the original agreement, neither of the other involved parties is able to fulfill their obligations either.

Party C is subject to losses that are greater than the cost of the pizza since Party C is now also losing the money he or she would have made for delivering it. This gives party C grounds to sue for sustained damages. 

While this may be a bit extreme in the case of a simple pizza, when you're talking about a deal that may involve significantly large amounts of money, pursuing legal action may be the best course of action for party C to try to recoup any losses. Likewise, party B has the right to cancel the agreement altogether and buy pizza elsewhere.

In comparison, a partial breach of contract may still provide grounds for injured parties to pursue legal action, but they'll only be able to sue for "actual damages" that have been sustained as a result of the partial breach.

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