What happens when a breach is considered fundamental?

When a breach is considered fundamental, it fundamentally undermines the contract, permitting the injured party to treat the contract as terminated. This means that the injured party has the right to cease their obligations under the contract because the breach is significant enough to invalidate the overall purpose of the agreement.

In legal terms, a fundamental breach usually arises when one party’s failure to meet their contractual obligations disproportionately affects the other party's ability to realize the benefits of the agreement. By treating the contract as terminated, the injured party can also seek any damages that might be associated with the breach, including compensation for any losses suffered as a result of the breach.

In contrast, an automatic voiding of the contract does not occur, as contracts require an action or decision by the injured party to terminate them. Furthermore, the injured party is not required to continue performing their obligations when faced with a fundamental breach, as it is the nature of such a breach to release them from their contractual duties. Lastly, while damages may certainly be claimed, a fundamental breach allows for termination of the contract rather than solely pursuing damages.