1. Contracts-Breach & Remedies
B Com Business Law
Contracts-Breach & Remedies

2. Breach of Contract Default by the debtor Default by the creditor
Positive malperformance
Repudiation
Prevention of performance

3. Default by Debtor Mora Debitoris
◦When the debtor fails to perform at the agreed time
Two Requirements
◦Performance must be delayed
◦Delay must be the debtors fault

4. Failure to Perform on Time
Mora ex re – where a time for performance has been set and debtor fails to perform, he is automatically in mora
Mora ex persona – where no time for performance has been set & creditor then demands performance within a reasonable time & debtor fails to perform

5. Delay due to fault of Debtor
The delay must be due to the debtors fault
Can be intentional or negligent

6. Default by the Creditor
Mora Creditoris
When the Creditor causes the debtor’s performance to be delayed

7. Requirements of mora creditoris
Performance must be dischargeable
Debtor must tender performance
Creditor must fail to co-operate & thereby delay performance
Default must be due to the fault of the creditor

8. Consequences of Default
Default by Debtor
Default by Creditor
Creditor entitled to remedies for breach of contract
Debtor’s duty of care is reduced
Debtor entitled to any counter performance due by creditor

9. Positive Malperformance
When debtor performs contrary to the agreement
Debtor tenders defective or improper performance, or;
Debtors does something not allowed in terms of the agreement

10. Repudiation
Behaviour by a party which indicates that they do not intend to honour their agreement
Eg, where party denies the existence of the agreement or acts as if agreement does not exist

11. Prevention of Performance
Debtor does something to prevent his own performance
Creditor does something to prevent the debtor’s performance

12. Remedies – Types & Availability
Specific Performance
Cancellation
Interdict
Damages

13. Specific performance Generally not granted
Where impossible for debtor to perform
Where damages would be adequate remedy
Where it would be unfair to defendant
Where performance would involve personal relationship

14. Cancellation If breach material – may cancel and claim damages
Where breach not material – damages only, no cancellation
Measure of damages the same in both cases – put plaintiff in position he would have been if contract had been properly performed

15. Proving damages
Loss must have been a natural & direct consequence of the breach
Liability limited to loss that would have reasonably been forseen
Loss must be measurable in money
Loss incurred or gain not made
Plaintiff must prove his damages

16. Duty to mitigate
The injured party has a duty to mitigate their damages

17. Contract for benefit of 3rd party
General rule – persons can only bind themselves
3rd party can only acquire an obligation if contract may for the benefit of the 3rd party
Stipulatio alteri
3rd party can also acquire obligations under a contract through cession, assignment or delegation

18. Stipulatio Alteri
Contract for the benefit of a third party

19. Cession, Assignment, Delegation
Cession – substitutes third party in place of creditor
Assignment – substitution of third party as both debtor & creditor
Delegation – substitutes third party in place of debtor

20. Cession
The transfer of rights from one party (Cedent) to another (Cessionary)
No formalities required except agreement between Cedent & Cessionary
Sometimes it is necessary to obtain debtor’s consent
Eg: employment
Certain rights may not be ceded (see pg 41)
Debtor has same defences against cessionary as were available against cedent

21. Cession Example: A opens an account at Woolworths
Woolworths cedes his account to Absa
Effect:
A owes the money to Absa
Woolworths does not need his permission

22. Assignment Substitutes a third (new) party as both debtor and creditor
Consent of all (3) parties needed
New contract comes into being

23. Assignment
Example:
A enters into an agreement with B to lease B’s house
A assigns the lease to C
A, B & C must agree
C moves into the house (creditor) and must pay the rent (debtor)

24. Delegation Third party takes over as debtor
Consent of all (3) parties needed
New contract comes into being
Called a Novation

25. Delegation
Example:
A enters into an agreement with B to lease B’s house
A delegates the duty to pay the rent to C
A, B & C must agree to this
New agreement comes into place between A, B & C

26. Termination of a contract
Performance
Prescription
Set-Off
Merger
Agreement
Waiver
Novation
Insolvency
Death
Impossibility of Performance – Vis Major or causus fortuitis

27. Prescription Debts become unenforceable after passing of time
Prescription Act 68 of 1969
Normal debt – 3 years
Negotiable instrument – 6 years
Tax, judgment debts, mortgage bonds – 30 years
Prescription begins to run as soon as debt due
Prescription interrupted by acknowledgement of debt or summons
Prescription suspended in certain cases (see pg 47-48)

28. Payment General rule – payment in cash Legal tender – notes & coins
R50 where coins of the denomination of one rand or higher are so tendered;
R5 where coin of denominations of ten cents up to and including fifty cents are so tendered;
50c, where coin of the denomination of five cents or less are so tendered
Cheque acceptable
Limits imposed by Reserve Bank – R
EFT acceptable
He who alleges payment must prove
Can insist upon receipt if cash