Is there a term for this type of ambiguous sentence? I think it's called a "Garden Path sentence"?
Coastal Bank breached its loan commitment to the owner and the contractor threatened to terminate its performance.
Halfway through the sentence, many readers assume that the conjunction "and" joins "owner" to "the contractor." Thus, on encountering "the contractor," those readers conclude for a fraction of a second that the bank owed its loan commitment to the contractor as well as to the owner. By the time they reach the verb "threatened," they realize from context that "the contractor" is the subject of a new independent clause rather than the sec- ond in a series of two objects of the prepositional phrase "to the." By that time, however, the ambiguity in sentence structure has caused readers to hesitate for a moment and perhaps even to regress by rereading part of the sentence. This momentary confusion may be even more pronounced in a more complicated compound sentence.
You can see this at middle of scanned page 201 below.
Charles Calleros, Kimberly Holst. Legal Method and Writing I: Predictive Writing (Aspen Coursebook Series) (8 edn 2018). p 201.