Chapter 15 Flashcards
(25 cards)
Obligations are terminated by:
1) Performance.
2) Agreement.
3) Operation of law.
4) Cancellation due to a breach serious enough to warrant such.
5) Unilateral act in the case of a voidable contract
Termination by performance
1) An obligation under a contract is typically terminated through full and proper
performance by the debtor.
2) Only full performance as agreed upon in the contract will extinguish the
obligation.
3) Remember: Improper or defective performance does not terminate the obligation.
Required performance:
1) Full and proper performance requires the debtor to meet all agreed terms.
2) If the creditor refuses improper performance, the obligation remains.
3) The creditor may accept a different performance, such as a datio in solutum, but if defective, they can sue on the original obligation or for defects in the substitute
performance
Performances by a third party:
1) Generally, the person who agreed to perform must do so.
2) However, a third party may perform on behalf of the debtor if it does not prejudice
the creditor and is effective.
3) The third party performing must have the intention to fulfil the debtor’s obligation, and the creditor cannot refuse unless it’s a personal obligation requiring delectus personae.
The person to whom the performance must be made:
1) Performance must ordinarily be made to the creditor, but they can appoint a third
party to receive it.
2) An ‘adjectus solutionis causa’ is a third party entitled to receive performance
without claiming it.
3) If the debtor and creditor agree, the debtor may perform to the third party unless the creditor has a valid objection
Place of performance:
1) Performance must be made at a place agreed upon by the parties.
2) If not explicitly stated, courts consider factors such as -
2.1) Usage,
2.2) The place of contracting,
2.3) Where the goods are located (for sale), and
2.4) The nature of the performance determines the place.
Time of performance
1) Performance timing can be expressly or tacitly agreed upon.
2) Without an agreement, the creditor can demand immediate performance, but
the debtor must have a reasonable time to perform.
3) Remember: The rules on mora debitoris apply to ensure the timely fulfilment of
obligations
Termination by agreement:
1) Parties may mutually agree to terminate an obligation through mechanisms such as
release, waiver, and novation.
2) Each method has specific requirements and implications for the involved parties.
Release
1) Release is an agreement, either express or tacit, freeing the debtor from
obligations.
2) It may be total or partial, affecting current and future obligations.
3) Formalities are required for partial releases, which alter the contract.
Waiver
1) Involves a party abandoning a right or remedy, typically requiring proof of
knowledge and deliberate abandonment.
2) Courts are cautious in declaring waivers ; a delay in performance is not an
indicator but a factor in considering evidence.
Novation:
1) Novation replaces an existing obligation with a new one, extinguishing the original.
2) Accessory obligations to the original debt (pledge or suretyship) are
distinguished by an agreement to novate the debt.
3) Novation can involve substituting the debtor with a third party, requiring all parties’ agreement.
4) In this instance, we refer to this as novation by delegation.
Compromise:
1) A compromise settles disputes or uncertainties by creating new obligations and extinguishing existing ones.
2) It does not require a valid old debt, focusing instead on resolving doubts and
achieving a final settlement
Effluxion of time:
1) If the contract fixes a specific period for its duration, it terminates automatically at
the end of such period.
Section 14(2) of the Consumer Protection Act:
1) Provides that if a consumer agreement is for a fixed term, that term must not
exceed the maximum period, if any, prescribed by the Minister with respect to
that category of agreement
Notice:
1.1) Contracts may include provisions for termination by notice.
1.2) Whether a tacit term exists that a contract of unspecified duration is terminable upon notice is a matter of construction
2.1) A lease contract that does not stipulate a lease period will be regarded as a lease for an indefinite period, terminable upon reasonable notice by either party.
2.2) However, public policy may impact the right to terminate.
2.3) See Malan v City of Cape Town and Beadica 231 CC v Trustees.
Termination by operation of law:
1) Obligations can be terminated by operation of law: set-off, insolvency, death,
supervening impossibility of performance, and prescription.
2) Each method has unique legal implications and requirements
Set-off:
1) Set-off may occur when two parties have claims against each other.
When the requirements for set-off are met, both debts are extinguished when
they are for the same amount:
1) Same parties and capacities,
2) Same nature of debts,
3) Debts due and enforceable, and
4) Debts liquidated
Standard Bank v Echo Petroleum:
1) The Supreme Court of Appeal confirms that set-off operates automatically once conditions are met
Merger:
1) A merger occurs when one person becomes both a creditor and a debtor regarding a certain debt.
2) The merger extinguishes the obligations
Supervening impossibility of performance:
1) When performance becomes objectively impossible due to unavoidable events, the
obligation is extinguished.
2) Legal implications vary based on the nature of impossibility (partial, temporary) and the debtor’s responsibility
Supervening impossibility of performance
Requirements include:
1) The performance must be objectively impossible and
2) The impossibility must be unavoidable.
Prescription:
1) Prescription extinguishes debts over time, as regulated by the Prescription Act.
2) Each debt has its own unique timeline, known as the prescription period.
3) Judicial and express acknowledgements of liability interrupt prescription, while
certain conditions delay it
4) Makate v Vodacom (Pty) Ltd: The Constitutional Court clarifies that only obligations to perform (pay money, deliver goods, render services) are prescribed
Insolvency:
1) Insolvency affects contractual obligations based on the contract type.
2) The Insolvency Act gives trustees or liquidators discretion to continue or
terminate executory contracts, impact specific performance, and allow damage
claims against the estate
