General
Principles of
Contract
Breach of Contract &
Remedies
Dr P Magau
Learning
Outcomes
By the end of this study theme, you
should be able to:
•
Distinguish between and identify
the five forms of breach of
contract; ie mora debitoris, mora
creditoris, positive
malperformance, repudiation and
prevention of performance.
•
Critically discuss the five forms of
breach of contract and apply to
factual situations
Resources
Business Law
See Chapter - 4
Introduction
Breach of Contract is explained as:
• When one (or both) of the parties fails to honour his/her
contractual obligations.
• Conduct that amounts to failure to honour contractual
obligations without lawful excuse (pacta sunt servanda).
• When a party refuses or fails to perform as he or she agreed
to, the contract has been breached. Further, if a party by
their actions, omission and without lawful excuse fails to
honour his/her contractual obligations, he or she commits a
breach of contract.
Forms of Breach of Contract
Mora debitoris
Where there is late performance or failure to perform the contract
timeously or within the proper time, the debtor is in mora (in delay).
Requirements
• Performance must still be possible
• The debt must be due and enforceable;
• The debtor must have failed to perform timeously; and
• Fault is not required – mere delay by the debtor constitutes
breach.
Forms of Breach of Contract
Mora creditoris
The creditor delays the due performance by the debtor in circumstances
where the debtor requires the assistance of the creditor – acceptance of
proper performance.
Requirements
• Performance must still be possible.
• Creditor delays performance by failure to cooperate timeously.
• Performance must be due and enforceable;
• The debtor must have taken steps to perform timeously without
cooperation from the creditor; and
• The creditor’s failure to accept does not have to be caused by his fault.
Forms of Breach of Contract
Positive Malperformance
Positive malperformance occurs when the debtor duly performs but
poorly or incompletely or defectively (carpenter uses inferior
wood).
Requirements
• Positive duty – the debtor must have performed (defective)
• Negative duty;
• Fault (not a requirement where the debtor proves force majeure)
Forms of Breach of Contract
Repudiation
Where a party to the contract commits the breach, by his words or
conduct and without lawful cause, the contracting party indicates to
the other party that he or she is no longer bound by the contract
and or that he or she will no longer perform the obligations
under the contract
Requirements
• Conduct or action – debtor communicates his intention not to
perform
• Intention to repudiate – must be made objectively.
Forms of Breach of Contract
Performance rendered impossible // Prevention of performance
Where either party to the contract renders his own or the other
party’s performance impossible through his culpable conduct
after the conclusion of the contract. The party who culpably renders
performance impossible is guilty of breach of contract.
Requirements
• The only requirement is an act accompanied by fault (intent or
negligence).
• See page 67 for some examples.
Forms of Breach of Contract
Example
There is an agreement that A should deliver a kangaroo to B on 1 December:
1. If A has not delivered the kangaroo by 2 December he is breaching the contract
by way of late performance
 Mora debitoris
2. B travels to another country and does not make any arrangements
deliver the kangaroo on 1 December
for A to
 Mora creditoris
3. A delivers the kangaroo on time, but the kangaroo is very
ill
 Positive malperformance
4. Before 1 December, A tells B that he has changed his mind and will not
deliver the kangaroo
Repudiation
5. Before delivery of the kangaroo, A shoots the kangaroo
 Prevention of performance
in a fit of rage
Remedies for Breach of Contract
Specific performance (primary remedy: upholding/fulfilling the
contract)
Specific performance happens when a court orders the person who broke the
contract to do what he or she promised unless it is impossible to do what was
promised or it would be unreasonable to do so.
Example – the court is less likely to order for the continued maintenance of a
close or personal relationship such as a partnership or employment contract
where the relationship has deteriorated to such an extent that it would be
impractical to continue the relationship.
Remedies for Breach of Contract
Cancellation (extraordinary remedy and have right to cancel:
rescinding/ending the contract). Cancellation causes all obligations to
end. No party will claim performance from another. There must be restitution.
An innocent party may cancel the contract if the wrongdoing party failed to carry out
an important part of the contract and reclaim payments.
Usually applies in mora breaches where time is of essence.
For positive malperformance, it is only where the malperfomance is material or
substantial.
Also applies for repudiation and prevention of performance.
Remedies for Breach of Contract
Contractual
damages
for
financial
loss
suffered
(additional/combination remedy to specific
performance
or
cancellation).
An innocent party may sue for damages when financial loss is suffered as a
result of the contract not being carried out properly such as loss of value or
loss of profit.
The purpose of claim for damages is usually to place the injured party in a
position they would have been in had the breach not occurred.
Remedies for Breach of Contract
Interdict
An interdict is a court order preventing the wrongdoing party from
breaching the contract
An interdict is an order of court which the innocent part can use to restrain the
wrongdoing party from performing a prohibited act or where he is ordered to undo
what he/she has already done in contravention of contractual obligations.
An interdict is one of the common law remedies for breach of contract.
Example: the lessor may prevent the lessee from sub letting a property in
contravention of his/her contract with the lessor.
For Consideration
It is important to know how to critically discuss the five forms of
breach of contract and apply to factual situations
It is also important to know which remedy applies for which form of
breach of contract.
Next Class –
Termination of
Contractual
Relationships
THE END