What happens when one party fails to fulfill the terms of a contract?

When one party fails to fulfill the terms of a contract, it is referred to as a breach of contract. This occurs when either a party does not perform their agreed-upon obligations or fails to meet certain conditions stipulated in the contract. A breach can be either material, which significantly impacts the outcome of the contract, or minor, which does not substantially interfere with the contract's purpose.

In the legal context, a breach of contract typically gives the non-breaching party the right to seek remedies. These remedies can include damages, specific performance, or cancellation of the contract. Understanding breach of contract is crucial in business law, as it lays the groundwork for the legal rights and remedies available when contractual obligations are not met.

Other options, while relevant aspects of contract law, do not directly describe the specific scenario of one party failing to fulfill the terms. For instance, contractual obligation refers to the responsibilities that each party has under the contract, and contract termination refers to the cancellation of the contract itself, which may occur after a breach is acknowledged. Contract modification involves altering the terms of the contract by mutual agreement but does not address the consequences of a failure to fulfill the original terms.