A party to a contract can sue the other party for damages based upon non-performance of a minor constituent to the contract, or based upon non-performance that extends to the core of the contractual agreement. When a breach of contract goes to the heart of the agreement, courts may find that there has been a material breach of contract, which could have a bearing on the right to terminate the contract.

Contract Performance

A contract may include words indicating the sequence of performance. One party to a contract may be required to perform his obligations before the other party has a duty to perform. With many contracts, one party is not obligated to perform unless the other party has performed; this often occurs when each party must perform simultaneously.

Good Faith

Each party to a contract has a duty to perform in good faith. Under basic principles of contract law, good faith refers to each party’s obligation to apply honesty, fairness and reasonableness in performing his contractual obligations. The good faith duty imposed on each party to a contract is an implied condition with all enforceable contracts, when a party has discretion to perform pursuant to the contract.

Breach of Contract

One party to a contract may seek remedies in court when there is a breach of contract by the other party. The non-breaching party may seek remedies such as monetary payments or termination of the contract. Based upon the terms of the contract and the extent of the breach, the non-breaching party may have rights to terminate the contract due to nonperformance.

Material or Minor Breach

Courts consider the facts in each case to determine if there has been a material or minor breach of contract. They consider the extent of the breach, the cause of the breach, the benefits to the non-breaching party despite the breach, and the hardship imposed on the non-breaching party. A material breach of contract goes to the essence of the contract and may excuse the non-breaching party’s duty to continue performance under the contract. A minor breach of contract may entitle the non-breaching party to damages in court, but courts usually do not terminate a contract based upon a minor breach. When a material breach occurs, the non-breaching party may sue the breaching party for damages and continue the contract or terminate the entire contract.