Chapter 12 PT 4

Question 1

De Wet & Van Wyk: Test(s) to determine the level of seriousness:

Answer 1

1) The creditor may rescind only if the breach is so serious that one cannot reasonably expect them to abide by the contract and be satisfied with damages alone.

2) The test is objective and entails the court exercising a value judgment. The court must
balance the competing interests of the parties in a manner that is fair and reasonable in the circumstances, bearing in mind that rescission is an extraordinary remedy

Question 2

Where the malperformance relates only to a part of a divisible contract:

Answer 2

1) The creditor may cancel only that part of the contract that has been improperly performed.

Question 3

In the case of an instalment contract:

Answer 3

1) The entire contract may be cancelled if all the instalments made to date have been defective.
2) It is reasonable to assume that future
instalments will also be defective.

Question 4

1) Remedies aimed at fulfilment of the contract:

If the creditor abides by the contract either because the breach is not serious enough to warrant rescission or the creditor prefers not to rescind the contract, then the following
remedies are available:

Answer 4

1) The creditor may accept the defective or incomplete performance as partial performance of the contractual obligation and claim as fulfilment of the contract surrogate damages that are the difference in value between proper performance and the performance actually rendered.

2) The creditor may reject the defective performance and demand either specific
performance or damages in lieu of performance.

Question 5

Repudiation

Answer 5

1) A party commits a breach of repudiation when, by words or conduct without lawful
excuse, they manifest (anticipatory breach) an unequivocal intention not to be
bound to the contract or to perform any obligation forming part of the contract.

2) A mere delay in making or receiving performance should not be construed as a
repudiation of the contract - some positive conduct is required.

3) Elements: Conduct leads to reasonable belief of non-performance (judged
objectively).

Question 6

Intention to repudiate:

Answer 6

1) The intention to repudiate is judged objectively.

2) The Test:
The party accused of repudiation has acted in such a manner as to lead a reasonable
person to believe that they do not intend to fulfil, or completely fulfil, their part of the
contract.

3) An intention to cancel the contract, mala fide actions or fault is not required; a person can innocently repudiate a contract. However, these elements will often be present.

Question 7

Occurrence of repudiation:

Answer 7

1) This expression of intent not to fulfil the contract terms is a serious violation and
fundamentally undermines the basis of the agreement.

Question 8

Occurrence of repudiation:

Answer 8

1) Repudiation may occur before the time stipulated for performance: in which case it
is known as an anticipatory breach of contract.

2) 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 just mentioned.

Question 9

Examples of Occurrence of repudiation:

Answer 9

1) Improper/unjustified attempt to cancel.
2) Deny contract’s existence.
3) Refusal to perform or accept performance.
4) Notification of inability to perform.
5) Offer of incomplete/improper performance.
6) Insufficient notice of termination.
7) Refusal of employer to allow employee to work.
8) Unjustified stoppage of contractor’s work

Question 10

Effect of repudiation:
Rescission of the contract (acceptance of repudiation):

Answer 10

1) The non-breaching party chooses to accept the repudiating party’s decision not to perform their contractual obligations.

2) By accepting the repudiation, the non-breaching party treats the contract as terminated and is no longer obligated to perform their part of the agreement

Question 11

Affirmation of the contract (rejection of the repudiation):

Answer 11

1) The non-breaching party decides to reject the repudiation and insists on the continuation of the contract

Question 12

Prevention of Performance

Answer 12

1) Where performance becomes impossible due to the fault of either the creditor
or debtor, the contract is not terminated, and that party is guilty of breach of
contract.

2) Elements: performance is rendered impossible; breach of contract through
prevention of performance.

Question 12

It is not necessary for the performance to be objectively impossible in order for a
breach to arise - subjective impossibility will suffice.

Answer 12

1) Meaning, does not need to be objective (where no one could perform the
obligation), but can be subjective (specific party involved cannot perform,
even if others might be able to).

Question 13

Fault:

Answer 13

1) Fault is an essential element and is required because if there is no fault, then supervening impossibility will terminate the contract.

2) Why?

2.1) This form of breach holds that one party has actively or negligently done something that obstructs the contract’s fulfilment or failed to do something necessary for the other party to perform their obligations.

Question 14

The only standard for fault is that the care that could be expected from an ordinary,
reasonable person in the circumstances must be shown.

Answer 14

1) The onus rests on the debtor to prove that the inability to perform is not due to his fault.

2) If the debtor culpably renders their performance impossible while already in mora, the breach merely undergoes a change of form

Question 15

Remedies:

Answer 15

1) The remedies available to the innocent party follow the usual pattern for breach, except that specific performance is excluded.

2) On the assumption that the inability to perform is TOTAL, the breach will always be
sufficiently serious to merit rescission

Question 16

The innocent party may either:

Answer 16

1) Cancel the contract, recover any performance already made on their side, and claim damages for losses suffered due to non-fulfilment of the contract, such as wasted expenses and loss of profit.

2) Abide by the contract, perform their side of the agreement and claim damages in lieu
of performance.

Question 17

Partial Impossibility:

Answer 17

1) The debtor’s fault plays a crucial role in cases where performance is rendered only partially impossible.

2) The position of the creditor, in the first instance, hinges on the materiality of the
breach.

Question 18

If it is material, then the party may cancel the entire contract, but if it is immaterial -

Answer 18

1) The contract continues, and the only relief available to the creditor is a reduction in counter-performance or a claim for damages in lieu of the missing part of the debtor’s performance

Question 19

Where the impossibility is for a minor aspect of the contract -

Answer 19

1) If the impossibility attaches only to a minor, relatively insignificant aspect of the performance, substantial performance remains possible.

2) The test for the materiality of the breach is the same as for positive malperformance.