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Theme 2 Breach of contract - Coggle Diagram
Theme 2 Breach of contract
2.1 General
Types of breach
Malperformance
Positive malperformance
Deals with the "what" aspect of your performance
Negative malperformance (mora)
Deals with the "when" aspect of performance
Anticipatory breach
Repudiation
Your conduct indicates that you do not intend to abide by the terms of the contract
Prevention of performance
When a party makes their own or the other contracting party's performance impossible
Remedies
Cancellation
This remedy goes against the notion of agreement must be enforced - you are doing the opposite here you want the agreement to be cancelled
Damages
Together with specific performance or cancellation or independently
Financial compensation
Specific performance
You are claiming that the party who has committed breach of contract must perform according to what the contract stipulates
2.2 Positive malperformance
Requirements
Deficient or defective
Not in accordance with the contract
Defect does not have to be material, just not trivial
Fault
Situations where fault is not a requirement or where fault is presumed
Where you have undertaken as a debtor a results obligation - you are undertaking to receive a particular result with your performance. The onus rests on the debtor to prove that what appeared to be positive malperformance occurred through no fault of their own
Best efforts obligation - typically arises in a contract of mandate. Give someone an instruction to do something.
Performance
It is only when performance has occurred that the creditor can find out that there is something wrong with the performance
Right to cure
The debtor has no automatic right to cur their defective performance
Exceptions
Term in contract which gives right to cure - expressly or tacitly
Trade usage or custom which grants an automatic right to cure your defective performance - e.g., someone making false teeth
2 forms of positive malperformance
Positive duty
Duty on the debtor to do or give something but then he does so defectively
Negative duty
Arises where a debtor acts in contravention of a contractual prohibition. You are acting even though you have a duty not to act
Remedies
Specific performance
Keep performance, but require repair - only available where proper performance is still possible
Reject performance and require performance de novo (from scratch) - only if substantial - the contract remains in tact
Cancellation
If you have a cancellation clause (lex commissoria) you have a right to cancel the contract
If the breach is material (serious)
A reasonable person cannot be expected in the light of the particular breach to uphold the contract and to be satisfied with a claim for damages
NOT by means of a notice of intended rescission
If divisible can only cancel that part of the contract which related to performance which has been defectively performed and so seriously that it is material - rest of the contract remains in tact
Damages
The amount which you can claim depends on the extent to which you have already made use of the other remedies
If you have used another remedy the amount will be less because you have already received some type of performance
2.3 Mora debitoris
Requirements
Failure to perform timeously
You can only hold someone liable for a delay if they know when they are required to perform
2 possibilitieis
Specific date set in the contract - if the debtor does not perform on that day they are guilty of mora ex re
No date set in the contract, the creditor must demand performance (written or orally) - if the debtor does not perform they are guilty of mora ex persona
Fault
There is a presumption of fault on the part of the debtor unless that debtor can show that the delay in his / her own performance was through no fault of their own
Performance must be due and enforceable
Suspensive condition - obligation to which it relates only becomes enforceable when that condition is fulfilled
Suspensive time clause - only becomes enforceable on the date stipulated in the contract
Consequences
Increase and extension of the debtor's liability
Where the supervening impossibility has rendered the creditor's performance impossible, our debtor who is in mora, is still required to counter perform even though he gets nothing
Where supervening impossibility has rendered the debtor's own performance impossible, he is still required to pay damages to the creditor as a substitute for performance
Other consequences
Specific performance
Enforcing the content of the contract
Damages
Money debts - monetary interest
Financial compensation
Cancellation
Contract contains an express lex commissoria
Tacit lex commissoria, the court will read it in in certain situations
Contract has price fluctuations
Products have limited durability or limited time of attractiveness
Where the creditor needs performance in order to perform himself
Notice of intended rescission
Requirements
Clear and unequivocal / unambiguous
Vital and important term not a trivial term
Reasonable time for performance
Any special formalities in terms of legislation
CPA
S19 - stipulates that unless the parties have agreed expressly on a specific time and date for performance supplier must perform within a reasonable time where a supplier has not performed on the agreed date and time or alternatively failed to perform within a reasonable time then the consumer has an automatic right to cancel
Termination
If contract is not cancelled yet, the debtor has a right to perform and the mora will be terminated. Unless the contract has already been cancelled
Creditor is obliged to accept performance provided in accordance with the contract. Unless there is a cancellation clause in the contract, even though you have not yet exercised your right to cancel
2 forms of mora debitoris
Where the debtor doesn't perform or offer to perform on time
Where the debtor tender's performance on time, but the creditor rejects that offer because the performance is defective
Problematic cases
Broderick Properties and Federal Tobacco Works
Performance must be demanded from a debtor who knows the performance is urgent - why should he be protected by a demand if he does not deserve it
2.4 Making performance impossible
Characteristics
Types of impossibility
Physically impossibility
Physical possibility but economical infeasibility
Can occur at any time before, on or after date of performance
Positive / negative conduct can lead to impossibility
Presumption of fault but the debtor is entitled to raise a defence
Consequences
Damages
Uphold the contract and create your own counter-performance and claim damages - compensate you for not receiving the performance initially agreed on even if performance is totally impossible
Compensates you for the situation you would have been in had you received performance from the debtor
Cancellation
Total impossibility
Always serious enough for the aggrieved to cancel the contract. If the aggrieved party has already performed, they can cancel and claim performance back and damages for any wasted expenses
Partial impossibility
If breach is material - if reasonable person would uphold the contract and be satisfied with a claim for damages
Performance divisible or indivisible
Divisible
Contract only cancelled in relation to that part that is impossible.
The aggrieved's duty to counter performance is either
Performance is pro rata reduced
Can make a shortfall good with a claim for damages
Indivisible
Party may cancel entire contract and claim for damages or accept what remains possible to perform and claim damages for the shortfall
Specific performance
Total impossibility
Entire performance is impossible - excludes a claim for specific performance
Partial impossiblity
Part of the performance becomes impossible so claim specific performance and damages for the short fall
Distinguish
Supervening impossibility
Performance is impossible
Through no fault of the parties involved
After contract conclusion
Terminates the obligations
Debtor through own acts makes performance impossible
Amounts to a breach of contract
Initial impossibility
At contract conclusion
Performance impossible
2.6 Mora creditoris
Requirements
necessary to cooperate
It must be necessary for the creditor to cooperate
Delay on the part of the creditor to cooperate
You can only hold someone liable for a delay if they know when they are supposed to perform
Proper tender of performance
If the debtor gives defective performance our creditor is always entitled to reject it
The debtor must take all steps that he can, that do not require the cooperation of the creditor, that do not require the cooperation of the creditor, once all those steps have been completed, only then will an offer of performance be a proper offer of performance
Obligation to make performance on part of the debtor
The debtor is entitled to perform prior to date for performnace
Fault
If the creditor does not cooperate timeously, it can be excluded in certain exceptions like supervening impossibility
Consequences
Special consequences
Debtor's duty to perform is relaxed. The innocent party's duty to perform is relaxed provided that they remain willing and able to perform and they inform the creditor of that fact
Consignatio - entitled to make relevant performance to a court - deliver goods or money to the court and you are free from the obligation - not recognised in Modern SA law
Other consequences
Damages
Cancellation
Time is of the essence
Specific performance
2.5 Repudiation
Requirements
Fault
Breach with regards to substantial part of the contract or important part of the contract
Create impression that you are not going to perform, or will not perform properly in terms of the contract - objective test
Examples
Say the contract is void due to other parties reasonable and material mistake
Premature cancellation
Dispute the terms in the contract
Offer defective performance as complete performance
Deny existence of a valid contract
Debtor indicating in advance that they cannot perform because they do not have the necessary finances
Origin
English Law
Acceptance fulfilled 2 functions
Completed breach
Acted as terminating the contract
If offer to repudiate was not accepted there was no breach
First case recognised repudiation as a substantive form of breach through offer and acceptance construction
SA Law
Repudiation does not require offer and acceptance
It is immediate breach based on implied (ex lege) obligations to not commit anticipatory breach
Based on good faith
Consequences
Innocent party's duty to perform suspended provided willing and able to perform
Other consequences
Cancellation
You can cancel a contract where a party repudiates the entire contract
Look at when you can cancel for positive malperformance and mora
Damages
Particularly where repudiation occurs prior to the date set for performance
Specific performance
If the repudiation occurs on or after the date set for performance, a claim for specific performance is automatically enforceable
Doctrine of repentance - innocent party can claim specific performance and then if the guilty party fails to repent their performance then in that instance our innocent party may then change his mind and then cancel.