Presentation on theme: "Theme 3: 4 Breach of Contract. Party fails to honour his contractual obligations in the form of: Mora debitoris Mora creditoris Positive malperformance."— Presentation transcript:
Theme 3: 4 Breach of Contract
Party fails to honour his contractual obligations in the form of: Mora debitoris Mora creditoris Positive malperformance Repudiation Prevention of performance
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 mora debitoris, but prevention of performance. Debtor fails to perform timeously If date and time of performance is stipulated, debtor is automatically in mora if 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 mora debitoris, but prevention of performance. Delay due to the debtors 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 mora debitoris: 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 mora and will not be excused for that.
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 mora creditoris, 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 mora creditoris. Delay due to creditors fault Defective performance my be rejected. Intentional or negligent failure to accept performance will result in breach of contract.
Consequences of mora creditoris: Debtor not excused from performing Debtor still has to perform unless performance becomes impossible without fault of the debtor. Mora debitoris cancelled Mora debitoris and mora creditoris cannot exist simultaneously. Debtors 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 mora and will not be excused for that.
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
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.
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.