Contract b Notes

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CONTRACT B NOTES Breach Note: four types of breach  Positive malperfomance/ordinary breach (debtor performs but in a defective or incomplete manner)  Repudiation and anticipatory breach (either party indicates an unequivocal intention not to honour the agreement)  Mora or negative malperfomance (mora debitoris -debtor culpably fails to make timeous performance of his or her obligations and mora creditoris -the creditor culpably fails t
  CONTRACT B NOTES Breach  Note: four types of breach    Positive malperfomance/ordinary breach (debtor performs but in a defective or incomplete manner)    Repudiation and anticipatory breach (either party indicates an unequivocal intention not to honour the agreement)    Mora or negative malperfomance ( mora debitoris  -debtor culpably fails to make timeous  performance of his or her obligations and mora creditoris  -the creditor culpably fails to cooperate timeously with the debtor so that the later may perform his or her obligations) Ordinary breach or positive malperfomance Kerr 601 If without lawful excuse a party fails to do what he has contracted to do, or does what he has contracted not to do, an ordinary breach of a contract is said to have occurred. It relates to the content of the performance made. It may take either two forms, depending on whether the duty in question is positive or negative    Where the duty to do something, positive malperfomance occurs when the debtor duly  performs but in an incomplete or defective manner.    In the case of obligatio non faciendi , positive malperfomance occurs when the debtor does the act that he or she is bound to refrain from doing Requirements    The debtor must have performed    The performance rendered must be defective or improper or not to the standard required (see Holmdene brickworks v Roberts (facts). Holmdene facts (a) During June and July 1971 it purchased from appellant some 212 000 bricks, most of which were of the variety known as fair face and the remainder being what are known as stock bricks, for use in the erection of certain factory buildings at Standerton for Nestlé (S.A.) Ltd. ( Nestlé ); (b)these bricks were delivered to respondent at the construction site in a number of loads over the period 1 July to 30 November 1971 and were in fact used in the erection of the factory buildings; (c) that in January 1972, after the completion of all the brickwork, it was found that a substantial proportion of the bricks so used were defective in that they manifested a condition known as efflorescence and were beginning to crumble and decompose; (d) That in order to remedy the position respondent demolished the walls containing the defective bricks and rebuilt them with other bricks obtained from a different source (the cost of such demolition and reinstatement being assessed by the trial Court at R27086, 24); and (e) That appellant, as the manufacturer and seller of bricks containing a latent defect, was  bound to compensate respondent for the consequential loss suffered in the aforementioned sum of R27 086, 24.  Fault is irrelevant or assumed Loureiro (negative breach) did what he was refrained from doing Mr Loureiro entered into an oral agreement with iMvula Quality Protection (Pty) Ltd (IMvula) for a 24-hour armed security guard service at his home. He instructed iMvula not to allow anyone onto the premises without his prior authorisation. In January 2009, robbers masquerading as police officers approached the home and demanded entry. When iMvula‟s security guard on d uty was not able to communicate over the intercom with the men seeking entry, he opened the pedestrian gate without first checking their identity or business. The robbers then accosted the Loureiros and their household staff, and stole items worth millions of Rands.The Loureiro family was successful in the High Court, which held iMvula contractually and delictually liable. On appeal, a majority of the Supreme Court of Appeal overturned the High Court‟s decision, while a minority would have upheld it. In a unanimous judgment, written by Van der Westhuizen J, the Constitutional Court granted leave to appeal and found in favour of the Loureiro family. The Court held that iMvula is liable for breach of contract. By allowing access to the imposters, a strict term of the contract was contravened. The Court also found iMvula vicariously liable in delict. The Court held that, in its conclusion on wrongfulness, the majority in the Supreme Court of Appeal failed to have regard to weighty normative and constitutional considerations. Wrongfulness was established because iMvula‟s e mployee opened the gate for the robbers. There is a great public interest in ensuring that private security companies and their guards, in taking on the remunerated role of crime prevention, succeed in thwarting avoidable harm. iMvula‟s employee further  more acted negligently by failing to foresee the possibility that an unauthorised person might try to gain access by purporting to be someone he is not; and by failing to take the fairly simple precautions a reasonable person in his position would have taken to guard against the harm. The amount of the claim (quantum) is to be determined by the High Court in separate proceedings. Ordinary breach is about strict liability Prevention of performance    Where performance to a contract becomes impossible due to the fault of one of the contracting parties. Rare and often categorised under one of the other forms of breach.    It is not necessary that the performance should be objectively impossible in order for the  breach to arise; subjective intention must suffice. In other words, the breach is committed even when the impossibility attaches only to a particular debtor.    In theory there is a difference between prevention of performance and repudiation, namely the former can be created negligently, whereas repudiation requires an unequivocal intention to repudiate.    Performance may be rendered impossible not only by the debtor but also by the creditor.    Performance may be rendered impossible not only after the date of performance but even long  before such time, in which the innocent party need not wait until the inevitable non- performance on due date before invoking the appropriate remedies he or she may take action immediately.    Fault is required as an essential element of breach since in its absence supervening impossibility will terminate the contract.    The onus rests on the debtor to prove that his or her inability to perform is not due to his or her fault, the fault must be on the side of the creditor. Repudiation and anticipatory breach     A party to a contract commits the breach of repudiation when by words or conduct (or both) and without lawful excuse, he or she manifests an unequivocal intention no longer bound by the contract or by any obligation forming part of the contract.    There would be refusal to perform at all of which evidence would be indicating that there is a contract    Also making excuses to try and get away from the contract    Repudiation unlike other forms of breach may occur before the time stipulated for  performance in which it is known as anticipatory breach of the contract.    The anticipatory breach not only in the sense that it predates the time for performance but also in that it anticipates or predicts the other form of breach. A party who indicates in advance of the due date that he or she will not make or accept the stipulated performance, or that  performance will be late, defective or incomplete, thereby gives notice that he or she will later commit mora debitoris, mora creditoris or positive malperfomance, as the case may be.    Anticipatory breach “Where the consideration for one person‟s promise is an executory  promise by the other party, of such a character that it goes to the root of the contract, it is an implied condition that the first party‟s obligation should be voidable by him if the second  party before or during, the time of performance, declares his intention of not performing, or continuing to perform his promise, or disables himself from doing so. It is usually said, in such circumstances, that the obligation is discharged by an anticipatory breach on the part of the defaulting party.”      Repudiation may also occur on or after the due date for performance, in which case it will often merely reinforce one of the other forms of breach. A mere delay in making or receiving  performance should not be construed as a repudiation of the contract, at least positive conduct is needed Requirements datacolor    Intention not to be bound must be communicated in some way either when the obligation is owing or prior to the obligation coming into force (anticipatory breach i.e in anticipation of the time of performance) datacolor “Repudiation is accordingly not a matter of intention, it is a matter of perception. The perception is that of a reasonable person placed in the position of the aggrieved party. The test is whether such notional reasonable person would conclude that  proper performance [in accordance with the true interpretation of the agreement] will not be forthcoming….      By words or conduct (or both)    The test is objective (the test being whether the party accused of repudiation has acted in such a manner as to lead a reasonable person to believe that he or she does not intend to fulfil, or completely fulfil, his or her part of the contract.    Must be a major breach Tucker’s Land and Development Corporation v Hovis 1980   Respondent had bought two properties from appellant (developer). Contract of sale was suspensive: subject to the successful demarcation of the township. Respondent had made certain payments already, but became aware later that the appellant had run into some difficulty proclaiming the said township. Because of the above fact, the appellant drew up a new plan for the township. The two properties purchased by the respondent did not appear on the new plan. Respondent viewed this omission as an act of repudiation, and cancelled the contract. Question: Would the appe llant‟s action have lead a reasonable person to believe that the appellant did not intend to honour the contract?  Court decided that the appellant had committed repudiation. Respondent was allowed to rescind from the contract and claim compensation. Jansen JA refrained from using the terms “offer” and “acceptance”, but said that repudiation was a choice. Jansen JA‟s decision was viewed as a “new approach” to repudiation.  Repudiation occurs at the place where the innocent party is notified of it and not at the place where the repudiating party is informed of the acceptance of the repudiation. Reason: Otherwise it would come down to the principles of offer and acceptance. Stewart Wrightson (pty) (Ltd) v Thorpe 1977 The respondent had been the director of B Company and a managing director of another of appellant‟s company. These two companies merged with another company and the respondent was not happy with it and decided to resign. He submitted a letter of resignation, giving the required period of six months‟ notice . M, the director of the merging company, instructed the respondent to leave forthwith subject to a payment of salary and commanded him to absent himself from work. Thus they were denying the respondent of work and use of his office and to leave. Appellant an insurance broking company had sued the respondent for damages alleging that while in its employ, and in breach of his contract of employment, he had canvassed for and had obtained an insurance business to the T Company of which he was the director. The respondent‟s defence was that the appellant had repudiated the agreement of employment and the respondent had elected to regard the agreement as terminated. The court decided that it were the respondents who had repudiated the contract by denying the respondent‟s work and use of his office and to demand him to leave forthwith. They stated that the appellant, through M, had committed a fundamental breach of the service of contract. Also stated that the resp ondent‟s position as director and manager, as also the special relationship between insurance broker and client and that denial of work and the use of office did amount to a fundamental breach of contract, as being not only prejudicial to his future  prospects, but also to the degradation of his status. The court also noted that the test for fundamental breach is objective not subjective The question the court had to deal it also was whether the respondent effectively elect to terminate the contract. The court decided that indeed the respondent had elected to terminate the contract as noted when he claimed a month‟s salary plus certain accrued benefits as of r    Negative malperfomance Mora G.A Mulligan „MORA‟ 1952 69 SALJ 276  In the law of contract, mora means delay without any lawful excuse, of the performance of a contractual duty, or a wrongful failure to perform timeously.  Mora debitoris  and mora creditoris . Mora debitoris    Mora debitoris is the unjustifiable failure  of a debtor  to make a timeous performance  of a positive obligation  that is due and enforceable and still capable of performance in spite of such failure.

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Jul 23, 2017
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