Breach of Contract - Law of Contract - Lecture Slides, Slides of Contract Law

Download Breach of Contract - Law of Contract - Lecture Slides and more Slides Contract Law in PDF only on Docsity! 1 Breach of Contract and Remedies Docsity.com 2 Breach of contract • Breach of contract may take 5 forms: – Mora debitoris – Mora creditoris – Repudiation – Positive malperformance – Prevention of performance Docsity.com 5 Mora creditoris • Occurs when creditor delays in giving assistance to debtor where this is required for him to perform. • A creditor who obstructs performance is in mora if: 1. Performance is due – If no time for performance has been agreed upon, the creditor must be given reasonable notice to accept performance. Docsity.com 6 Mora creditoris contd… 2. The debtor tenders proper performance – Debtor must tender performance in terms of contract to creditor, who must be given opportunity to accept it. • The creditor’s mora does not excuse the debtor from performing • When the creditor is in mora, she cannot argue that debtor’s failure to perform was breach of contract. Docsity.com 7 Positive malperformance • Occurs when debtor performs, but performance is defective or contrary to terms of the contract. • 2 forms of positive malperformance exist: – Debtor’s performance is incomplete or defective. (Positive obligation) – Debtor does something which contract prohibits him from doing. (Negative obligation) Docsity.com 10 Prevention of performance • Occurs when there is an inability to perform as a result of the actions of one of the parties. • May result from the actions of the creditor or the debtor. Docsity.com 11 Remedies for breach of contract • The major remedies for breach of contract are: – Specific performance – Cancellation – Damages • In addition a party may ask for a “declaration of rights”. Docsity.com 12 Declaration of rights • Where there is confusion about a right or obligation in a contract, either party may apply to the High Court for an interpretation of that right or obligation. • A party who seeks an interdict or specific performance will often seek a declaration of rights in addition. – Santos Professional Football Club (Pty) Ltd v Igesund 2003 (5) SA 73 (C) Docsity.com 15 General principles of specific performance • Generally there is a right to specific performance. • The court has a discretion whether to award S.P., however, and may refuse. Particularly where: – Performance is inappropriate (debtor is insolvent) – Performance is contrary to public good – It would be unduly harsh to expect the debtor to perform Docsity.com 16 General principles contd… • S.P. may also be refused where cost of compliance to defendant is out of proportion to benefit to plaintiff. • Cases where S.P. was refused: – Haynes v King William’s Town Municipality 1951 (2) SA 371 (A) – York Timbers v Minister of Water Affairs and Forestry 2003 (4) SA 477 (T) Docsity.com 17 General principles contd… • In South Africa courts may enforce S.P. on a contract of personal service. – Santos Professional Football Club v Igesund • If a court refuses to award S.P., the aggrieved party may still seek damages. Docsity.com 20 Cancellation • Parties may at any time agree to cancel a contract. • Here we deal with unilateral cancellation. This may only be done: – For material breach – In terms of a cancellation clause • Aggrieved party has election whether to cancel contract or uphold it (and claim S.P.). Docsity.com 21 Cancellation contd… • If a party elects to cancel the contract, he must notify the defaulting party. – In some circumstances conduct may be sufficient notification of cancellation. • Effect of cancellation: – Contract ceases to exist – Restitution must occur (to extent possible) Docsity.com 22 Cancellation contd… • Cancellation may occur where: – There has been a material breach – There is a cancellation clause • If on breach, the aggrieved party does not cancel within a reasonable period of time, in the circumstances of the contract it may be argued that he has waived the right to cancel. Docsity.com 25 Quantifying damages for breach of contract • Court must determine what the financial position of the plaintiff would have been had there been no breach. • Court will take into account loss which was foreseen by the parties: – Gains not made – Loss actually suffered • Eg. Sale of a painting guaranteed to be a Picasso Docsity.com 26 Quantifying damages contd… • In a claim for breach of contract one may not claim non-patrimonial (eg. emotional) loss. – Jockie v Meyer 1945 AD 354 – Administrator, Natal v Edouard 1990 (3) SA 581 (A) Docsity.com 27 Quantifying damages contd… • Two important principles limit the amount recoverable by a plaintiff for breach of contract: – Damages must be reasonably foreseeable as likely to flow from the type of breach in question. (General damages) – Damages which are usually regarded as too remote may be claimable if parties (in the circumstances of the contract) actually contemplated that type of harm occurring. (Special damages) • The relevant time for determining whether a party foresaw or contemplated loss is the time of conclusion of the contract. Docsity.com