A Broken item is any Artifact with a "use" effect but cannot be used. An item's broken status is represented by a large red X covering its icon in the Adept's inventory.
Some equipment Artifacts can be used in battle like normal items to activate a special ability. These items do not need to be equipped in order to use their effects, but they can only be used by Adepts who can equip the item. However, every time these items are used there is a chance they might break. Broken items cannot have their "use effect" activated, but they can still be equipped for their statistical benefits.
Broken items can be repaired at any vendor for one-fourth their purchase value, regardless of whether or not that particular shopkeeper sells that kind of item. Broken items can also be sold for one-half their purchase value, at which point they are automatically repaired (items normally sell for three-fourths their buy value, meaning the repair cost of a broken item is deducted from its sell cost).