LAW OF CONTRACT

1. LAW OF CONTRACT PART III BREACH OF CONTRACT

2. INTRODUCTION: • Breach of contract was originally described as “malperformance”. • Breach of promise to perform. • Includes late performance (negative malperformance), • defective performance (positive malperformance).

3. Breach can be committed by debtor or creditor. • Ex: If creditor has a duty to assist debtor in rendering his performance. • The above can occur in the form of negative malperformance or repudiation.

4. The 5 forms of breach of contract: • 1. Mora debitoris(negative malperformance by debtor). • 2. moracreditoris(negative malperformance by creditor). • 3. repudiation. • 4. prevention of performance. • 5. positive malperformance.

5. Unit 12 Mora debitoris

7. Learning outcomes: • Provide a critical introduction to the nature of breach of contract, and also shortly mention the forms and divisions of breach of contract and what they entail. • Discuss the nature and forms of moradebitoris. • List and critically discuss the requirements for moradebitoris. • Distinguish between the terms mora ex re and mora ex persona. • Distinguish between moradebitoris and other forms of breach of contract in general. • Analyze the aspect of cancellation on the ground of moradebitoris with specific reference to the case of KraggaKamma Estates CC v Flanagan 1995 (2) SA 367 (A).

8. Cases: • Ponisammy v Versailles Estates 1973 1 SA 372 (A) • Nel v Cloete 1972 (2) SA 150 (A) • Willowdene Landowners v St Martin’s Trust 1971 (1) SA 302 (T) • South African Forestry Co Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) • KraggaKamma Estates CC v Flanagan 1995 (2) SA 367 (A)

9. Study: • Hutchison et al Chapter 12 pp. 291-297.

10. Nature and forms: • The wrongful failure by the debtor to perform timeously. • Mora: Fails to perform timeously OR timeously renders defective performance. • Mora debitoris: Debtor does not perform at all: negative malperformance by debtor.

11. Mora = delay. • Mora can only occur if performance remains possible. • Sometimes it would be meaningless to perform after the due date of performance: See example of photographer on p. 101.

12. Mora is of a continuous nature. • If debtor performs late, he is not omitted from his previous breach. • Such a debtor will still be liable to the creditor for any damages. • The mora/delay will come to an end, however.

13. REQUIREMENTS:

14. I. Debtor must be in mora. • Ponisammy v Versailles Estates: • Facts: • Contract contained the following clause: • “Payment of the purchase price shall be secured by a banker’s guarantee to be furnished within thirty (30) days after approval of the diagrams of the property sold by the Surveyor-General”

15. Contract of sale contained no cancellation clause. • 24 September 1970 the Surveyor-General approved required diagram. • Appellant was only informed towards the end of November of the approval.

16. This meant that the 30 days for the delivery of a guarantee had already expired when the appellant received knowledge of approval. • On 24 November 1970 the appellant’s attorney wrote a letter to the respondent compelling the latter to deliver the guarantee by 23 December 1970.

17. Early in December 1970 the respondent informed the appellant that he would not be able to deliver guarantee by 23 December 1970. • Parties then agreed that respondent would pay R200 and deliver the guarantee by 23 January 1971. • On 21 January 1971 the respondent informed the appellant that he was still unable to deliver the guarantee.

19. Appellant then cancelled the agreement and sold the property to another person. • Respondent claimed that there were no grounds for the cancellation of the agreement, and then finally delivered the guarantee. • Court a quo decided that property had to be transferred to the respondent.

20. Appellant argued that he had place the respondent in mora. • Effect: “Notice of rescission” if respondent would refuse to perform.

21. Decision: • Although the appellant had placed the respondent in mora, the placing of someone in mora cannot bring about cancellation of a contract. • Court a quo’s decision upheld.

22. Ratio decidendi: • Where time is not of the essence of the contract, but one of the contracting parties elects to make it so, giving a notice of rescission (a unilateral act), he should at least take care that the notice is clear and unequivocal, so that the other contracting party is aware of the consequences of a failure on his part to perform timeously.

23. Mora ex re: • Sometimes parties do not agree on a specific time of performance. • If they do, however, failure to perform by that date would be prima facie wrongful.

24. Creditor is not required to claim performance from the debtor. • Dies interpellat pro homine. • “The day demands from the person” • Contract must contain an exact date.

25. Mora ex persona • Contract does not stipulate date of performance. • Creditor must place debtor in mora. • Demand/notice.

26. Purpose of demand: to inform the debtor when he must perform. • Demand must indicate the debt and set a reasonable time for performance. • Must be unequivocal and unconditional.

27. Reasonableness of time of performance is determined by circumstances. • If demand does not expressly state a time for performance: performance required immediately.

28. Willowdene landowners V ST. MARTIN’S TRUST: • “THE TIME GIVEN FOR PERFORMANCE MUST BE REASONABLE IN THE CIRCUMSTANCES. IF THIS IS NOT THE CASE THE NOTICE IS OF NO EFFECT.”

29. II. Performance must be due and enforceable: • Performance does not become due and enforceable before a reasonable period has lapsed.

30. III. Delay must be caused by the debtor and/or his workforce. • IV. The performance must remain possible notwithstanding the failure to perform.

31. Consequences: • Perpetuates the obligation. • Contract can be cancelled (see p. 106). • Interest a temporaemorae: Interest on the loss of income. • Interest in duplum: Interest may never exceed capital debt. • Contract of sale: All risk passes from seller to purchaser on date which contract becomes perfecta.