South African Forms of breach Contract by Mike

Forms of Breach of contract

1. Forms of Breach of Contract Shackleton & Mohapi Attorneys

2. REVISION: WHAT ARE THE ESSENTIAL ELEMENTS TO FORM A CONTRACT? Shackleton & Mohapi Attorneys - CAPACITY - POSSIBILITY - CERTAINTY - FORMALITIES - LEGALITY

3. TYPES OF BREACH 1. Late performance or mora 2. Repudiation 3. Prevention of performance 4. Defective performance Shackleton & Mohapi Attorneys

4. A BREACH OCCURS WHEN A PARTY DOES NOT ACT IN GOOD FAITH Definition of bad faith: Lack of honesty in dealing with other people.

5. Late performance or mora Shackleton & Mohapi Attorneys A party is in mora when: the debt is due and enforceable, but performance is not delivered on time; the breach is due to their fault; and the performance remains objectively possible.

6. REPUDIATION Shackleton & Mohapi Attorneys Repudiation is behaviour by a party that clearly and unequivocally indicates that the party is not going to honour its obligations under the contract and does not intend to be bound by the contract.

7. Repudiation occurs when: there is conduct indicating a refusal to perform; there is no justification for a refusal to perform; and the other party has performed. Shackleton & Mohapi Attorneys

8. Shackleton & Mohapi Attorneys The innocent party must then make an election as to whether it intends to accept the repudiation and cancel the contract, or to hold the breaching party to the contract (in which case the innocent party will also need to indicate that it is willing to perform). the innocent party may also claim for any damage it has suffered, regardless of this election.

9. PREVENTION OF PERFORMANCE This breach occurs in instances where a party makes performance of the obligations under the contract impossible. The requirements for such a breach are: the performance must be objectively impossible; and the breaching party must be at fault. Shackleton & Mohapi Attorneys

10. DEFECTIVE PERFORMANCE This occurs when defective performance is delivered by a party to the contract. The party alleging that a breach has occurred bears the onus of proving, on a balance of probabilities, that the other party has breached the contract. Shackleton & Mohapi Attorneys

11. Can I only breach my contract a little? Fundamentally a breach of a contract is breach of a contract regardless of how big or small the breach is. A minor breach, also called a partial breach, is when a party performs its main obligation but with a few incorrect details. For example: delivering something in the wrong colour or size. This is usually easy to correct so that there is no longer any breach . Shackleton & Mohapi Attorneys

12. A major breach, properly known as a material breach, is committed when a party fails to perform an obligation which is very important, such as within a specific time period or a specific detail which is fundamental to the agreement. In these instances what could be seen as a minor detail (or a minor breach) can be very important. Generally, if a party does not perform its obligations at all, this is a material breach. Material breaches usually see the contract being cancelled and the innocent party suing for damages. Shackleton & Mohapi Attorneys

13. 3 GENERAL REMEDIES Specific Performance Contractual Damages Cancellation of the Contract Shackleton & Mohapi Attorneys

14. Specific Performance Specific performance is a remedy which calls upon the breaching party to perform in terms of its contractual obligations. There are number of considerations when attempting to utilise this remedy which include: whether or not it is possible for the breaching party to perform its contractual obligations, whether claiming for damages would be a more appropriate remedy and whether the contractual relationship between the parties can still be rescued, amongst others. Specific performance as a remedy for breach is ordinarily not available for service related or employment contracts. Shackleton & Mohapi Attorneys

15. Contractual Damages The innocent party to a contract may claim contractual damages from the breaching party. The innocent party must be able to prove that a contract existed between the parties, that the other party breached the contract and that it has suffered damages as a result of such breach. The innocent party must be able to prove or quantify the damages it has incurred as a result of the breach. Shackleton & Mohapi Attorneys

16. Cancellation of the Contract Cancellation of a contract is an extremely drastic remedy. It may be utilised when a breach is sufficiently serious in nature or where the parties have agreed to a right to cancel in the contract. It is a difficult remedy to implement and is often the last resort in instances of breach. Shackleton & Mohapi Attorneys

17. Contracts may contain provisions for instances of breach. Ordinarily these provisions will dictate certain chosen remedies and may also indicate a specific process which needs to be followed if a breach occurs. Shackleton & Mohapi Attorneys

18. Shackleton & Mohapi Attorneys Often these clauses will provide arrangements for notice and the opportunity for the breaching party to remedy their breach. If a contract does not provide for a breach clause then common law principles may apply.

19. CASE LAW Shackleton & Mohapi Attorneys Basson and Others v Hanna (37/2016) [2016] ZASCA 198; [2017] 1 All SA 669 (SCA); 2017 (3) SA 22 (SCA) (6 December 2016) Mohabed’s Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd (183/17) [2017] ZASCA 176 (1 December 2017) Namasthethu Electrical (Pty) Ltd v City of Cape Town and Another (case no: 201/2019) [2020] ZASCA 74 (29 June 2020) Magopeni v Acacia mining (SA) (Pty) Limited and Others (16878/18) [2020] ZAGPPHC 300 (30 March 2020) Do we have any volunteers to study and present at the next class and tell the class what these cases are about?

20. ANY FURTHER QUESTIONS ? Than k You Shackleton & Mohapi Attorneys