Dictionary

  • Fundamental breach (in the context of contract)

    A fundamental or material breach is a breach of contract of such seriousness that an exclusion clause cannot be construed to cover it; i.e. a breach that goes to the very root of the contract. Upon the occurrence of a fundamental breach, the contract will be deemed to have ended and the non-breaching party will be able to claim remedies, namely damages.

    A fundamental breach can be distinguished from a minor, anticipatory, or actual breach as the most serious type of breach of contract.

    A fundamental breach requires the breach of one more conditions, as opposed to warranties or intermediate terms contained within the contract. A term can be classified as a condition “if it appears, as evident by the objective intentions of the party, that the party considers it so important that it would not have entered the contract without being assured of strict performance of it” (Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd).

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