What is Fundamental Breach of Contract: Everything You Need to Know
A fundamental breach of contract is generally known to occur when a previously agreed upon contract is canceled entirely, due to the other party’s actions (or, inactions, in some cases).3 min read
A fundamental breach of contract is generally known to occur when a previously agreed upon contract is canceled entirely, due to the other party’s actions (or, inactions, in some cases). While with most breaches of contract, the early termination could be considered a breach of contract, that is not the case with a fundamental breach and therefore, does not provide both parties the right to take legal recourse; that right exists only to the wronged party. Due to the serious nature and legal implications of a fundamental breach of contract, it is advisable to seek guidance from an attorney who specializes in business law, should you find yourself in such a position.
A fundamental breach of contract may also be referred to as a material breach of contract or a repudiatory breach of contract.
Should you find yourself as the victim of a fundamental breach of contract, you are legally entitled to seek damages. These damages can be both compensatory or punitive, and serve as means for you to recoup any monies that were lost as a result of the breach of contract. Additionally, you may be able to seek compensation from the breaching party for the cost of your legal fees.
Fundamental Breach vs. Anticipatory Breach
On the surface, it may seem like a fundamental breach of contract and an anticipatory breach of contract are essentially the same thing. However, that is not the case. The key differences between a fundamental breach of contract and an anticipatory breach of contract include:
- An anticipatory breach is essentially the result of one of the parties involved stops acting in accordance with the terms of the contract. Basically, the other party has assumed that the breaching party has stopped doing whatever work was required on their end. Often times, however, there may be the belief that the terms of the contract will still be met, just not at the originally agreed upon time.
- A fundamental breach of contract basically leaves the non-breaching party with the belief that the breaching party will never complete their part of the contract, or an important term within the contract was not completed.
With either of these types of a breach of contract, the non-breaching party is entitled to take legal action against the breaching party for damages. However, with an anticipatory breach of contract, the non-breaching party cannot sue for the entire value of the contract, but rather for whatever monies were lost from the time of the anticipatory breach. Additionally, either type of breach of contract may also result in a judgement being made that requires the breaching party to complete the job for which they were originally hired.
Additionally, there exists what is known as a minor breach or non-material breach of contract. A non-material breach of contract occurs when only a minor part of the contract has not been met, which does not necessarily affect the overall contract or the terms thereof. Were it a fundamental breach of contract, the overall outcome of the contract would be affected. For example, a fundamental breach of contract may be if the wedding photographer whom you hired simply does not show up to your wedding without explanation or without sending another photographer in his or her place. Meanwhile, a minor or non-material breach, using that same example, may occur if the photographer does not provide you with the proofs of your photographs on the date that had been agreed upon.
Basic Information Regarding a Breach of Contract
Regardless of the type, a breach of contract can occur through a number of different ways, including:
- A failure to deliver agreed upon goods or services.
- Not paying on time, or in full, for services rendered.
- Only completing a portion of the job for which you were hired.
- Doing an inferior job than what was expected or agreed upon.
It is worth noting that when taking legal action, any judgments that are handed down are not meant to penalize the breaching party as much as they are meant to provide compensation to the non-breaching party for monies or income lost; essentially, it is meant to serve as a means of making the non-breaching party whole again.
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