If there is a material breach, the non-breaching party is excused from performance.

• A. The non-breaching party must continue
• B. The non-breaching party is excused from performing
• C. The contract immediately terminates with no remedies
• D. The other party may demand specific performance

Answer: (B)

When a breach is material, the non-breaching party is excused from performing. A material breach goes to the heart of the contract, undermining its essential purpose, so requiring the innocent party to continue performing would be unfair and impracticable. In this situation, the non-breaching party may suspend performance and sue for damages, and they may also elect to terminate the contract depending on the severity of the breach. This differs from a minor breach, where performance must continue while damages are pursued. Specific performance is not a guaranteed consequence of a material breach; it’s an equitable remedy used in particular circumstances where monetary damages are insufficient.