SU11- Breach of contract Flashcards
Define Breach of Contract
occurs where either party, by an act or omission and without a lawful excuse, fails in any way to honour his/ her contractual obligations
True or False: Unitary breach is accepted in SA law
True
Distinguish b/w a debtor and a creditor
A debtor is someone who has to perform an obligation
A creditor is someone entitled to the performance
Recognised forms of breach of contract
- Mora debitoris
- Mora creditoris
- Positive malperformance
- Repudiation
- Prevention of performance
- Mora debitoris
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.
Requirements of Mora debitoris
a. Debt is due and enforceable
b. Debtor has failed to perform timeously
c. Failure must be unlawful and unjustified.
A. Debt is due and enforceable
- Debt must be physically, practicable and reasonably capable of being performed.
- 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***
B. Debtor has failed to perform timeously
- Mora ex re: Debtor is automatically in mora when he/ she does not perform by the date or time specified.
- Mora ex lege: As prescribed by law -S19(2) of the CPA
- 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.
Define Pacta sunt servanda
Parties must honour their agreements
Elements of the failure that must be justified
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.
Consequences of breach by Mora Debitoris
Perpetuatio obligationis
Damages
Cancellation
Specific performance
MD: Perpetuatio obligationis
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.
MD: Damages
Debtor liable for losses suffered as a result of the delay
*Interest payable
* Mora interest
* Prescribed rate of interest act
MD: Cancellation/Rescind
- 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)
MD: Specific performance
When debt is due and enforceable. Mora need not be proven
- Mora Creditoris
creditors is required to cooperate and he culpably fails to do so.
Requirements of Mora Creditors
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
a. Obligation to make performance by the debtor
The debt does not have to be (1) due or (2) enforceable.
Creditor can refuse performance on the basis of a condition not fulfilled
b. Cooperation by the creditor
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
c. Tender of performance by the debtor
Debtor must take all possible steps up to the point where the creditors performance is necessary.
d. Delay by the creditor
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
e. Fault by the creditor
The delay must be due to the fault of the creditor
Consequences of breach by Mora Creditoris
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
MC: Cancellation
Clause/’time of essence
MC: Damages
Costs/ loss or interest
MC: Specific performance
Compel creditor to perform
MC: Counter-performance
Tactical for the debtor to sue
MC: Effect on security
Release of sureties
MC: Discharge of debt
Impossibilty of performance/prescription
Define Positive malperformance
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)
Remedies for Positive Malperformance
a. Cancellation
b. Fulfilment
c. Damages
PM: Cancellation
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
PM: Fulfilment
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
PM: Damages
*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
Prevention of performance: Consequences
Rejection Can Prevent Co-operation
1. Reject defective performance
2. Cancellation
3. Performance by creditor
4. Cooperation by creditor
