Linear degrading based on character skill, sometimes hidden from the player, and spontaneous break as a result.
How you use and maintain, or fail to use and maintain equipment (weapons, armor, shields, tools) would be an important factor. In combat, how poorly you use weapon/shield/armor against an opponent who uses his/her weapon proficiently against your weapon/shield/armor, your skill against his, would obviously speed up the process of degrading, as well as using tools poorly on or against quality stuff also would.
If you can't handle and use any given equipment properly, proficiently, it could degrade faster than otherwise. You, being inexperienced, probably wouldn't notice this, or you'd notice <i>some</i> degrading, but can't tell its actual condition, and when you least expect it, it's broken. Or horribly chipped, or stuck, unusable etc. No "Oh, it's 5/99, so I better get it repaired soon). If you neglect it, be prepared for the worst. Character skill is the key.
Micromanagement is terribly boring, though, so I'd add relevant options to the rest/sleep/travel menu. Options for whether to check & do maintenance for equipment, which costs extra resting time or slowed down travel, along other options irrelevant to the subject (whether to camp properly, hastily or at all; with or without fire, to eat, to gather & hunt, to sleep taking turns in case of a party or companions, to travel cautiously (more apt to notice ambushes, traps, tracks and other points of interest) or recklessly (the oppopsite) etc.).
Depending on the setting and the specific details, there could even be a separate skill that covers weapon maintenance, along with some other basic stuff.
For a present day / PA setting, I would add basic training skill or perk for firearms, that deals with fundamentals, maintenance and mechanics behind firearms and and maybe small blades (kind of like police/army training, I guess), so with a basic training skill or perk, you'd better equipped to maintain, fix and modify weapons.
The same could be done with a swords setting as well (for instance, I didn't always know that people with plate armor back when it was the shit among the rich or the talented with sponsors, they carried the sets buried in sand in barrels or the pieces would corrode, degrade etc. Just an example). Either as a separate/complimentary skill or a perk as part of various skills.