Breach and REMEDY

Question 1

What are the remedies for a breach of contract? [4]

Answer 1

1. Specific performance
2. Damages
3. Cancellation
4. Penalties.

Question 2

What is specific performance and when can you claim SP?

Answer 2

The party who is not in breach gets a court order forcing the defaulting party to do what
they undertook to do in terms of the contract. You can only claim SP if you have
performed your obligation or tendered performance.

Question 3

The innocent party has a _______ facie right to specific performance. This right does not depend upon whether ____________ are an adequate remedy in lieu of _____________.

Answer 3

prima
damages
performance

Question 4

Is the right to specific performance absolute? [2]

Answer 4

But this right to specific performance is not an absolute one:
* A court might not be in a position to grant this order; and
* In other instances, the court may use its discretion not to award this remedy.

Question 5

When will the court not order specific performance? [3]

Answer 5

1. Where the breach is prevention of performance
2. Where the effect would be unjust or against public policy
3. If the agreement is of a personal nature. (For example engagement.)

Question 6

When will Specific performance not be granted?

Answer 6

If performance is impossible

Question 7

When can specific performance be refused? [4]

Answer 7

1. Where the performance is rendering personal services in the context of a break
   down in the relationship
2. Where co-operation is required and there is little hope of harmony
3. Where specific performance may well lead to further disputes
4. May cause extreme hardship to the defaulter or third parties

Question 8

When is a cancellation or rescission of contract allowed? [2]

Answer 8

1. If the court orders cancellation both parties must make restitution (restoration)
2. Because it is an extreme remedy the court will only order cancellation for breach if
   there is a cancellation clause or the breach is material

Question 9

What are the inadequate grounds for refusing specific performance? [3]

Answer 9

• Contract not profitable for the defaulter
• Court unable to supervise the execution of its order
• Likelihood that defaulter will frustrate performance

Question 10

What are the factors fro favoring specific performance? [2]

Answer 10

1. Aggravated breach
2. Damages are recognized as being an inadequate remedy:

Question 11

When are the damages recognised as being inadequate? [4]

Answer 11

• The loss can’t be quantified in monetary terms;
• The precise extent of the plaintiff’s loss will be very difficult to assess or prove;
• The debtor will be unable to pay the amount of the damages to which the plaintiff is entitled; or
• It is impossible for the creditor to obtain an acceptable substitute.

Question 12

When are the damages recognised as being inadequate? [4]

Answer 12

• The loss can’t be quantified in monetary terms;
• The precise extent of the plaintiff’s loss will be very difficult to assess or prove;
• The debtor will be unable to pay the amount of the damages to which the plaintiff is entitled; or
• It is impossible for the creditor to obtain an acceptable substitute.

Question 13

When will damages be awarded in terms of specific performance failure? [3]

Answer 13

• Where a court refuses specific performance it may award damages to recover the benefit of the bargain;
• Even with specific performance this may not be complete redress for the defaulter’s
  breach;
• Additional losses might also be recovered via damages claims

Question 14

What happens if there is a late payment and thus failure for specific performance?

Answer 14

Where the default relates to late payment the innocent party is entitled to claim
interest a temporare mora – the rate is determined in the government gazette.

Question 15

When is the breach material?

Answer 15

Mora Creditoris And Mora Debitoris:
when a time for performance was stipulated in the contract or the demand for
performance AND time is of the essence i.e. important.

Question 16

What is the test for positive malperformance?

Answer 16

Is the breach so serious that you cannot expect the creditor to abide by the
contract and be satisfied with damages alone?

Question 17

When can you cancel a contract under prevention of performance or repudiation (means rejection) ?

Answer 17

If the inability to perform or repudiation is of the whole or substantial part of the contract then you can cancel BUT if only related to a minor or unimportant part of the contract, then you can’t.

Question 18

What are contractual damages different from?

Answer 18

Contractual damages are different from delictual damages.

Question 19

What is the purpose of contractual damages?

Answer 19

Purpose of contractual damages is to put the person in the (financial) position that
they would have been in had the breach not occurred/if the contract had been
properly performed.

Question 20

What would the calculation for contractual damages include ?

Answer 20

This calculation would include wasted costs and lost of profit and interest

Question 21

What are the requirements for calculation of damages? [4]

Answer 21

1. Loss must be financial (not emotional)
2. Loss must have been caused by the other party’s breach
3. Loss must have been reasonably foreseeable.
4. Non-defaulting party has to mitigate/minimise his loss

Question 22

Who creates the demand for performance and what are the requirement’s for demand [2]?

Answer 22

The creditor and (can in written or verbal) must be unambiguous and specify a definite time

Question 23

What are the two forms of causation? [2]

Answer 23

Factual causation
Legal causation.

Question 24

What is factual causation?

Answer 24

The link must be between the breach and the loss

Question 25

What is the test for factual damages?

Answer 25

The test is causa sine qua non’ – if not but for test

Question 26

What is legal causation?

Answer 26

The inquiry here is whether the loss was sufficiently closely connected – to the breach – to be recoverable.

Question 27

What are general damages? [3]

Answer 27

Losses which arise
1. naturally in the ordinary course of things from the breach and which
2. the law presumes the parties contemplated
3. as a probable result of the breach.

Question 28

What are special damages? [3]

Answer 28

Losses which, in the specific circumstances at the
1. conclusion of the contract, may reasonably be supposed to have been
2. within the contemplation of the parties
3. as a probable result of the breach .

Question 29

What is the rule for specific damages?

Answer 29

The contemplation principle

Question 30

What factors are relevant for specific damages using the contemplation principle? [3]

Answer 30

1. The parties only need to contemplate the kind of loss – and not the exact extent of the loss.
2. This ‘contemplation’ must take place when contracting – and not when breach occurs
3. The party claiming specific damages must allege and prove that the facts relied upon – as the basis for arguing the parties did or ought reasonably to have contemplated the loss.

Question 31

What is the mitigation of loss rule?

Answer 31

It states that a party cannot recover damages for loss which could of ‘reasonably’ been avoided but onus on the defaulter to prove that the innocent party could of ‘reasonably’ mitigated the loss

Question 32

When does a cancelation lead to a breach?

Answer 32

It is only where the innocent party cancels the contract on account of the breach that it comes to an end.

Question 33

When will cancellation be competent? [2]

Answer 33

1. Where the parties have incorporated a cancellation clause into the contract itself.
2. Where the breach is of a sufficiently serious nature

Question 34

What can be issued making time of the essence in a contract?

Answer 34

a ‘notice of recission’ can be issued making time of the essence and introducing the remedy of cancellation.

Question 35

What are the various ‘tests’/requirements for cancellation? [3]

Answer 35

1. Breach must be material
2. Breach must be root of contract
3. Has the defaulter substantially failed to perform

Question 36

What happens if the defaulter repudiates the whole contract ?

Answer 36

it is accepted this is sufficiently grave for cancellation

Question 37

What happens if the defaulter repudiates ‘part’ of the contract ?

Answer 37

one must ask whether the in the context it is reasonable to expect
the innocent party to abide by the contract.

Question 38

When might the parties agree to a penalty clause/stipulation? [2]

Answer 38

In order to reduce the:
1.difficulty and
2.cost of proving a claim for damages

Question 39

Section 1 of the Conventional Penalties Act, 1962:
‘(1) A stipulation, hereinafter referred to as a penalty stipulation, whereby it is provided
that any person shall, in respect of an act or omission in ____________ with a contractual
obligation, be liable to pay a sum of __________ or to deliver or perform anything for the benefit of any other person, hereinafter referred to as a creditor, either by way of a penalty or as liquidated ________, shall, subject to the provisions of this Act, be capable of being enforced in any competent court.
(2) Any sum of money for the payment of which or anything for the delivery or
__________________ of which a person may so become ______, is in this Act referred to as a penalty.

Answer 39

conflict
money
damages
performance
liable

Question 40

Section 2 of the Conventional Penalties Act, 1962:
(1) A creditor shall not be entitled to __________ in respect of an act or omission which is
the subject of a penalty stipulation, both the penalty and __________, or, except where the relevant contract expressly so provides, to recover damages in lieu of the penalty.
(2) A person who accepts or is obliged to accept _________ or non-timeous performance
shall not be entitled to recover a __________ in respect of the defect or __________, unless the penalty was expressly stipulated for in respect of that defect or delay.

Answer 40

entitled
damages
defective
penalty
delay

Question 41

In terms of Section 3 of the Conventional Penalties Act, 1962:
If upon the hearing of a claim for a penalty, it appears to the court that such
penalty is out of _____________ to the prejudice suffered by the creditor by reason
of the act or omission in respect of which the penalty was stipulated, the court
may _________ the penalty to such extent as it may consider equitable in the
circumstances: Provided that in determining the extent of such prejudice the
court shall take into consideration not only the creditor’s proprietary interest,
but every other rightful interest which may be affected by the act or omission
in question.

Answer 41

proportion
REDUCE