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Remedies for breach of contract

Remedies for breach of contract. Possibilities upon breach: abandoning the contract, re-negotiating contractual terms with the defaulter or suing the defaulter Circumstances and desired outcome to influence election Possible to claim more than one remedy: consistency

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Remedies for breach of contract

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  1. Remedies for breach of contract • Possibilities upon breach: abandoning the contract, re-negotiating contractual terms with the defaulter or suing the defaulter • Circumstances and desired outcome to influence election • Possible to claim more than one remedy: consistency • May also claim in the alternative • Main remedies: specific performance, cancellation or damages • Additional remedy: declaration of rights

  2. Remedies for breach of contract Declaration of rights (declarator) • High court may enquire existence of a right • Usually sought in interdicts or specific performance claims Specific performance • Order requires defaulter to perform as promised • Usually obtained through an interdict: prevents a breach or threatened breach • Two forms of interdict: > Mandatory interdict > Prohibitory interdict

  3. Remedies for breach of contract Specific performance (CNTND) • Both forms may be sought at the same time e.g sale of a same house twice • Court has a discretion • Applicant to prove: > a clear right > an injury or well founded fear that it will occur > No other remedy exists • Confusion between an interdict & an order of specific performance

  4. Remedies for breach of contract Principles of specific performance • Courts’ discretion to grant an order • May decline if: > performance is inappropriate > performance contrary to public good > where order would cause undue hardship to the debtor or where the cost to the defendant is out of proportion to the corresponding benefit to the plaintiff e.g NB Haynes v King Williamstown Municipality 1951 p 112 • English law rule that specific performance of contracts of personal service will not be enforced because of their personal nature not part of SA law e.g Santos FC v Igesund and another p 113

  5. Remedies for breach of contract • Aggrieved party may always claim damages if specific performance is refused Specific performance and reciprocal obligations • Aggrieved party can only claim specific performance if willing to perform reciprocal obligation • Defective reciprocal obligation> court may grant reduced performance to plaintiff

  6. Remedies for breach of contract Cancellation • May always be agreed upon • Unilateral cancellation as a remedy for breach > May be sought in the event of material breach or if provided for in the contract • Cancellation an election & never an obligation • Defaulting party to be notified of cancellation • Conduct may sometimes be sufficient • Effect: contract ceases to exist • Restitution to take place

  7. Remedies for breach of contract Circumstances where cancellation is a competent remedy: (i) Fundamental breach of a material term: see p 115  examples: repudiation, prevention of performance, or positive malperformance • mora debitoris (only IF)  otherwise to be in mora dos not entitle one to cancel  creditor may make time to be in essence by sending a demand with time stipulated & intention to cancel shown (ii) Contract provides for cancellation  cancellation clause may require aggrieved party to give notice of breach and demanding performance within a specific period

  8. Remedies for breach of contract (ii) Contract provides for cancellation (CNTND)  failure to indicate cancellation within reasonable time may give rise to argument that AG has waived right to cancel Damages • Objective: put AG in the financial position he would have been Damages in breach of contract and damages in contract • See court’s explanation on p 116 • Main difference> contractual claims limited to financial loss & delictual claims also include non-financial loss such as emotional pain and suffering • But aggrieved party may sometimes claim under both

  9. Remedies for breach of contract Quantifying damages for breach • Court to take in into account loss which was foreseen by the parties when entering the contract: > Gains not made > Loss actually suffered e.g p 116 • loss for breach of contract to be sound in money NB Jockie v Meyer 1945 (A) (Chinese Naval Officer) p 117

  10. Remedies for breach of contract Quantifying damages for breach (CNTND) Principles limiting amount potentially recoverable: (i) The loss must be one which was reasonably foreseeable or one which was actually within the contemplation of the parties: see p 117 for explanation The objective: protection of the debtor (ii) Innocent party must attempt to mitigate loss  losses which could reasonably have been avoided not recoverable  AG only to take reasonable steps to mitigate loss  Defaulting party to prove failure by the AG to take such steps Coming soon…additional remedies for specific contracts

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