Theme 3: 4 Breach of Contract
Forms of Breach of Contract • Party fails to honour his contractual obligations in the form of: • Mora debitoris • Mora creditoris • Positive malperformance • Repudiation • Prevention of performance
Mora debitoris (delay by debtor) • Debtor does not perform timeously in terms of the contract. • Requirements: • Performance must still be possible • If performance is impossible due to late performance it would not be breach in terms of moradebitoris, but prevention of performance. • Debtor fails to perform timeously • If date and time of performance is stipulated, debtor is automatically in moraif he does not perform on time. • in mora ex re : no request for performance by creditor required • If date and time of performance is not stipulated, the creditor must request performance, by delivering a notice of demand, to place the debtor in mora. • in mora persona: Time set must be reasonable. If the debtor fails to perform he is set in mora. • Performance already due and enforceable • If performance is impossible due to late performance it would not be breach in terms of moradebitoris, but prevention of performance. • Delay due to the debtor’s fault • Failure to perform must be intentional or negligent. Not performing due to circumstances beyond his control will not be breach of contract.
Consequences of moradebitoris: • Legal obligation between the parties perpetuates. • Legal tie is not terminated unless performance becomes impossible without the fault of the parties. • The debtor bears the risk that the performance could become impossible while he is in moraand will not be excused for that.
Mora creditoris (delay by creditor) • Creditor fails to accept proper performance by the debtor or does not co-operate in order to enable debtor to perform. • Requirements: • Performance must still be possible • If performance is impossible due failure to co-operate it would not be breach in terms of moracreditoris, but prevention of performance. • Impossibility without fault is not breach of contract. • Creditor delays performance • Only possible where co-operation of the creditor is required. • Performance due and enforceable • No obligation exists to accept performance prior to arranged date and time. • Performance can be rejected if it is subject to a suspensive condition. • Proper performance offered by debtor • Refusal to accept performance substantially defective does not constitute moracreditoris. • Delay due to creditor’s fault • Defective performance my be rejected. Intentional or negligent failure to accept performance will result in breach of contract.
Consequences of moracreditoris: • Debtor not excused from performing • Debtor still has to perform unless performance becomes impossible without fault of the debtor. • Mora debitoriscancelled • Mora debitorisand moracreditoriscannot exist simultaneously. • Debtor’s duty to take care of the object diminished • Debtor now only liable for damage caused intentionally or by gross negligence. • Obligation perpetuated • The creditor bears the risk that the performance could become impossible while he is in moraand will not be excused for that.
Positive Malperformance • Refers to the contents or the quality of the performance. • Requirements: • Positive duty • If defective performance is delivered the debtor is guilty of positive malperformance. • Negative duty • Person must refrain from doing something, dut does it anyway. • Fault • Fault is not required. Liability can be avoided eg. Act of God • Consequences of positive malperformance • Creditor can rely on contractual remedies: • Cancellation • Specific performance • Damages
Repudiation • A party to the contract communicates his intention to no longer be bound to his obligations in terms of the contract, without lawful justification. • Requirements: • An act • Words or conduct / Expressly or tacitly • Notice of cancellation / malperformance / no performance / etc. • Intention to repudiate • Objective test is applied: Would the reasonable man have come to the conclusion that the contract is repudiated? • Consequences of repudiation • Acceptance of repudiation is not required to constitute breach of contract. • Contract is not automatically terminated, the prejudiced party has the choice to accept or reject the repudiation.
Prevention of performance Forms of impossibility: • Initial impossibility: • No contract comes into being. • It must be clear that the performance is objectively impossible, difficulty or inconvenience to perform is not sufficient. • Subsequent impossibility: • Contract comes into being but is terminated due to impossibility. • Performance rendered impossible through culpable conduct: • Contract is valid and enforceable • Requirements: • Fault
Consequences of prevention of performance • Debtor prevents performance, creditor may... • Cancel contract, reclaim performance and claim damages • Uphold contract, claim performance and damages. • Creditor renders performance impossible, debtor may... • Cancel contract, return performance and claim damages • Uphold contract, claim counter-performance and damages.