Breach of Contract Details and Consequences

1. 2. 3. 4. 5. Default of the debtor (Mora Debitoris) Default of the creditor (Mora Creditoris) Positive malperformance Repudiation Prevention of performance (rendering performance impossible) Default of the debtor (Mora Debitoris) Any obligation under a contract has a time limit for its performance, be it an agreed fixed period or in the absence thereof a reasonable period. If the debtor neglects or fails to perform timeously, he/she commits breach of contract. Lawyers then say that he/she is in mora and this form of breach of contract is known as mora debitoris (failure of the debtor to perform on time or timeously).

Example: Mr Price Home Procurement Department orders 50 000 Christmas trees from Fairland Xmas Sales Department on 31/10/2012. The buyer informs the supplier that the Christmas trees are to be sold during the month of November up until 25/12/2012 (Christmas). The supplier delivers the Christmas trees on 28/12/2012. The facts clearly reveal that the Christmas trees have no use for Mr Price Home on 28/12/2012, and in these circumstances Mr Price Home will probably be entitled to resile from the contract. Legal remedies of the creditor in the case of Mora Debitoris include the following: 1.

The creditor can demand fulfillment of the contract on the grounds of the content of the contract. 2. 3. The creditor can cancel the contract in the circumstances set out above. The creditor can claim damages if he/she suffered damage due to the breach and can prove such damage. Default of the creditor (Mora Creditoris) Where the cooperation of the creditor is necessary for the fulfillment of the obligations of the debtor, the creditor is guilty of a breach of contract in the form of mora creditoris if he, without justification, delays the fulfillment of the debtor’s performance, where performance is tendered.

Example: Mr Price Home Procurement Department orders 50 000 Christmas trees from Fairland Xmas Sales Department on 31/10/2012. The buyer informs the supplier that the Christmas trees are to be sold during the month of November up until 25/12/2012 (Christmas). Mr Price Home is aware that delivery was not included and failed to collect merchandise from Fairland Xmas. Legal remedies of the debtor in the case of mora creditoris include the following: 1. The appropriate legal remedies in this case are similar to the legal remedies at the disposal of the creditor in the case of mora debitoris.

2. The debtor is entitled, inter alia, to claim for damages suffered because of the creditor’s refusal to accept performance. Positive malperformance There are two basic forms of positive malperformance: 1. 2. Where the debtor (supplier) tenders faulty or defective performance. Debtor does something that is not permitted in terms of the agreement. Example: 1. 2. Supplying Mr Price Home with Christmas trees that fail to satisfy the requirements. Where a supplier, contrary to a clause in the contract, delivers supplies to the wrong department at Mr Price Home over a long weekend.

Legal remedies for positive malperformance are the following: 1. 2. 3. The creditor may retain the defective performance and sue for damages. The creditor may reject the defective performance and claim proper performance. The creditor may cancel the agreement if they had reserved a right of cancellation, or if the defect is serious that can’t reasonably be expected to uphold the contract. Repudiation Repudiation means turning one’s back on an agreement. The conduct of the guilty party must clearly indicate an intention not to perform, such as denial of liability, or communication of his intention not to continue with the contract.

The unilateral cancellation of a purchasing order amounts to repudiation, and is a breach of contract unless specific provision is made for such a cancellation in the contract. Example: Mr Price Home Procurement Department orders 50 000 Christmas trees from Fairland Xmas Sales Department, after manufacturing of the Christmas trees by the supplier Fairland Xmas, Mr Price Home sends a notification that they no longer want the merchandise. Legal remedies for positive malperformance are the following: 1.

The innocent party can either ignore the repudiation or view it as breach of contract and take action accordingly. 2. The innocent party can claim fulfillment of the contract or, if repudiation of a material obligation is involved, choose to cancel the contract. 3. If the innocent party suffered damages, he/she may recover it from the guilty party. Prevention of performance (Rendering performance impossible) Here we can distinguish between two situations: 1. Absolute or objective prevention of performance which means that the performance is prevented permanently and rendered impossible for everyone.

2. Relative or subjective prevention of performance where performance only becomes impossible or difficult for the debtor (supplier). This is actually a case of repudiation in so far as it is reasonably clear and certain that the debtor will not perform. We shall therefore confine ourselves to the first situation. Legal remedies for positive prevention of performance are the following: 1. 2. The innocent party may cancel the contract and claim damages. The innocent party may uphold the contract and claim damages. Generally speaking, it is obvious that specific performance cannot be claimed.