SU11- Breach of contract

Question 1

Define Breach of Contract

Answer 1

occurs where either party, by an act or omission and without a lawful excuse, fails in any way to honour his/ her contractual obligations

Question 2

True or False: Unitary breach is accepted in SA law

Answer 2

True

Question 3

Distinguish b/w a debtor and a creditor

Answer 3

A debtor is someone who has to perform an obligation
A creditor is someone entitled to the performance

Question 4

Recognised forms of breach of contract

Answer 4

1. Mora debitoris
2. Mora creditoris
3. Positive malperformance
4. Repudiation
5. Prevention of performance

Question 5

1. Mora debitoris

Answer 5

Debtor fails to make timeous performance
Mora: delay without lawful excuse of the performance of contractual duty or a wrongful failure to perform timeously.
❖ Only applicable with a positive obligation that is due and enforceable and that the debtor is still able to perform despite the failure.
❖ With a negative obligation, it is positive malperformance.

Question 6

Requirements of Mora debitoris

Answer 6

a. Debt is due and enforceable
b. Debtor has failed to perform timeously
c. Failure must be unlawful and unjustified.

Question 7

A. Debt is due and enforceable

Answer 7

1. Debt must be physically, practicable and reasonably capable of being performed.
2. Creditor may demand performance immediately or whenever reasonably practical
   ➢ Exception: Debt is not due until any related suspensive condition is fulfilled, or if parties agreed on a time of performance***

Question 8

B. Debtor has failed to perform timeously

Answer 8

1. Mora ex re: Debtor is automatically in mora when he/ she does not perform by the date or time specified.
2. Mora ex lege: As prescribed by law -S19(2) of the CPA
3. Mora ex persona: Only after letter of demand is sent the debtor will be in mora. A reasonable time must be given for the debtor to perform.

Question 9

Define Pacta sunt servanda

Answer 9

Parties must honour their agreements

Question 10

Elements of the failure that must be justified

Answer 10

There is no mora where: (Onus is on debtor to prove)
1. Debtor is reasonably ignorant of the nature of the performance owed.
2. Ignorant of the fact that the performance is due
3. Delay was caused by the creditor
4. Delay was beyond the control of the debtor
❖ Scoin Trading Ltd v Bernstein 2011: Executor had to stand in the place of the gold coin collector and pay the debt that was due.

Question 11

Consequences of breach by Mora Debitoris

Answer 11

Perpetuatio obligationis
Damages
Cancellation
Specific performance

Question 12

MD: Perpetuatio obligationis

Answer 12

Impossibility of performance without fault by any of the parties, terminates contract
Exception: Where debtor was in mora- Obligation is not discharged, unless the debtor can show that the result would have been the same even if performance was on time.

Question 13

MD: Damages

Answer 13

Debtor liable for losses suffered as a result of the delay
*Interest payable
* Mora interest
* Prescribed rate of interest act

Question 14

MD: Cancellation/Rescind

Answer 14

• Creditor may rescind if time is of the essence
• Nel v Cloete 1972- time is of the essence
  *Where there is an express lex commissoria
  *Where there is a tacit lex commissoria
  Where the creditor has made time of the essence by sending debtor a notice of rescission
  //Alfred McAlpine v TPA 1977 4 SA 310 (T)

Question 15

MD: Specific performance

Answer 15

When debt is due and enforceable. Mora need not be proven

Question 16

2. Mora Creditoris

Answer 16

creditors is required to cooperate and he culpably fails to do so.

Question 17

Requirements of Mora Creditors

Answer 17

a. Obligation to make performance by the debtor
b. Cooperation by the creditor
c. Tender of performance by the debtor
d. Delay by the creditor
e. Fault by the creditor

Question 18

a. Obligation to make performance by the debtor

Answer 18

The debt does not have to be (1) due or (2) enforceable.
Creditor can refuse performance on the basis of a condition not fulfilled

Question 19

b. Cooperation by the creditor

Answer 19

The cooperation of the creditor is necessary for the debtor to perform his/her obligations.
Therefore, no mora creditoris can exist in respect of:
*Negative obligation (obligatio non faciendi)
*Positive obligation that does not require cooperation.
Example: A person undertakes to keep her boundary wall well maintained in order to support her neighbour’s garden

Question 20

c. Tender of performance by the debtor

Answer 20

Debtor must take all possible steps up to the point where the creditors performance is necessary.

Question 21

d. Delay by the creditor

Answer 21

Eg: Not being present to receive the performance.
*Dies offert pro homine: If time for performance is fixed, then mora creditoris arises automatically when the creditor is in the wrong (default).
Case law: Ranch International Pipelines v LMG Construction city: There is no right to unilaterally cancel a contract based on a tacit agreement

Question 22

e. Fault by the creditor

Answer 22

The delay must be due to the fault of the creditor

Question 23

Consequences of breach by Mora Creditoris

Answer 23

Cancellation
Damages- Costs/ loss or interest
Specific performance: Compel the creditor to perform
Counter performance- Tactical for the debtor to sue.
Effect on security: Release of sureties
Discharge of debt: Prescription/ Impossibility of performance

Question 24

MC: Cancellation

Answer 24

Clause/’time of essence

Question 25

MC: Damages

Answer 25

Costs/ loss or interest

Question 26

MC: Specific performance

Answer 26

Compel creditor to perform

Question 27

MC: Counter-performance

Answer 27

Tactical for the debtor to sue

Question 28

MC: Effect on security

Answer 28

Release of sureties

Question 29

MC: Discharge of debt

Answer 29

Impossibilty of performance/prescription

Question 30

Define Positive malperformance

Answer 30

Occurs when debtor duly performs but in incomplete or defective manner (Obligatio faciendi) or does the act that he/she is bound to refrain from doing (Obligatio non faciendi)

Question 31

Remedies for Positive Malperformance

Answer 31

a. Cancellation
b. Fulfilment
c. Damages

Question 32

PM: Cancellation

Answer 32

No cancelation clause=can only cancel if breach is sufficiently serious
Objective test: Can it be reasonably expected from the creditor to abide by the contract and be satisfied with the damages alone?
*
Case law: Singh v McCarthy Retail

Question 33

PM: Fulfilment

Answer 33

Creditor elects to abide by the contract
*Accepts the defective part and claims for the difference.
*Rejects the defective performance and claims specific performance.
*Where there is repeated defective performance, notice must be given before cancelation.
Case law: Specific performance –
Santos Professional Football Club v Igesund

Question 34

PM: Damages

Answer 34

*Must show loss suffered
Can recover consequential damages in addition to election to rescind or abide by the contract
//Consequential damages – flow from the breach of the contract
*Surrogate damages- awarded in place of the performance that would have been completed

Question 35

Prevention of performance: Consequences

Answer 35

Rejection Can Prevent Co-operation
1. Reject defective performance
2. Cancellation
3. Performance by creditor
4. Cooperation by creditor