SU 2 Chapter 12 - Remedies for breach of contract

Question 1

What is specific performance?

Answer 1

An order that debtor must perform in accordance with contract, if not debtor in contempt of court. (Primary remedy in SA)

Question 2

With regards to specific performance what is an alternative.

Answer 2

Damages. Specific performance cannot be granted in Mag court without an alternative claim for damages. (ensures fairness, and easy to enforce due to limited enforcement mechanisisms of mag court)

Question 3

In what circumstances will specific performance not be provided? (4)

Answer 3

1. Where performance is impossible.
2. If it causes undue detriment to the debtor or public in comparison to the benefits for the creditor.
3. When it has to do with forcing an employee to go back to employer due to the personal nature of the relationship.
4. Where performance is not clearly defined to extent it is impossible to determine wether performance has taken place.

Question 3

What are the requirements for cancellation? (2)

Answer 3

1. The contract makes a provision for cancellation in the event of any specific type of breach.
2. Breach is sufficiently serious or material (Depends on type of breach)

Question 4

Where breach regarding mora occurs, what remedies can the innocent party claim?

Answer 4

Cancellation or specific performance.

Question 4

What is needed to cancel contract due to positive malperformance breach?

Answer 4

For breach to be so serious or go to root of contract that is cannot be expected of creditor to be bound to the contract.

Question 4

What is needed to cancel contract due to Repudiation and prevention of performance?

Answer 4

If only part of contract becomes impossible or is repudiated, question is whether debtor can reasonably be expected to abide by contract.

Question 4

What is needed to cancel contract due to mora? (3)

Answer 4

1. Contract needs to allow for cancellation.
2. Time of the essence.
3. If time is made of the essence (innocent party gives notice they are going to cancel contract if performance doesn’t take place within a given time, so long as it is reasonable.

Question 5

What has to be given to other party before cancellation becomes effective?

Answer 5

Notice

Question 6

What are the consequences of cancellation? (2)

Answer 6

Duties are extinguished
Restitution must be made of all performances already rendered.

Question 7

Can damages still be claimed if contract is cancelled?

Answer 7

Yes, so long as there is a breach of contract.

Question 7

What are some considerations when claiming contractual damages? (3)

Answer 7

Only pecuniary losses may be claimed, can’t claim for damages suffered to your name.
Breach must be factual cause of the harm suffered. (Determined by but for test)
Innocent party may not sit back and wait for damages to accumulate.

Question 8

What is the difference between special and general damages?

Answer 8

General: Damages that normally flow from a particular transaction with breach or wrongful act and may be claimed in all instances.
Special: Extraordinary damages that flow from a particular contract that must be proven and require evidence of financial harm.

Question 9

What does the “but for” test ask?

Answer 9

But for the breach, would the damage (loss suffered) have occurred. If no, then breach is cause of damage.

Question 10

When can special damages only be claimed?

Answer 10

If it was within the contemplation of the parties at conclusion of contract that such damages could flow from a particular breach.

Question 11

What is a penalty clause?

Answer 11

Clause that states if party breaches contract, they should pay fixed amount of money in the form of damages to the innocent party on breach.

Question 11

Why is a penalty clause used?

Answer 11

It is sometimes difficult to prove damages and saves creditor trouble of proving the exact amount.

Question 12

What does Sec 2(1) of the Conventional Penalties Act entail?

Answer 12

If contract provides for penalty, innocent party must claim penalty unless contract specifically allows for damages or penalty. (Can’t claim both)

Question 13

What does Sec 2(2) of the Conventional Penalties Act entail?

Answer 13

Where defective or late performance was made and accepted, a penalty may only be claimed if it was specifically determined for this type of situation.

Question 14

What happens in a reciprocal contract in which performance is simultaneous with regards to Exceptio non adimpieti contractus?

Answer 14

Where payment and delivery happen at same time, a party can refuse to perform, until other party tenders their counter-performance.

Question 14

What does Sec 3 of the Conventional Penalties Act entail?

Answer 14

Court is empowered to reduce a claim if it is out of proportion in relation to damage.

Question 14

What is Exceptio non adimpieti contractus?

Answer 14

Remedy which allows party to withhold performance until the other party performs first.

Question 15

What happens in a reciprocal contract in which performance by one party is required first with regards to Exceptio non adimpieti contractus?

Answer 15

The other party cannot refuse performance unless there is a valid reason.

Question 16

What does the Exceptio ensure?

Answer 16

Proper performance.

Question 17

What are the requirements for a reduced contract price with regards to defective performance under the Execptio? (3)

Answer 17

1. Defective performance is utilized by creditor, or he received some benefit from it. 2. If it would be fair for court to exercise its discretion in favour of the debtor. 3. If debtor can show amount with which claim should be reduced because of the defect.