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Summary Remedies for Breach of Contract
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These are comprehensive notes on the kinds of remedies that an innocent party has concerning a breach of the agreement.
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Remedies for Breach Natural way for a contract to terminate – full performance on both sides or in
accordance with the provisions regulating the life of the agreement. However, breach
of contract by one of the parties may interfere with its natural life + result in its early
termination.
- Breach entitles innocent party to various remedies, incl. cancellation.
Whether the innocent party accepts or rejects the other party’s breach + cancels the
contract, or they force the other party to comply, they will also have a claim for
damages if, despite the performance or cancellation of the contract, they are left
worse off than they would have been had there been no breach.
Claim for performance – natural remedy for breach – aimed at the fulfilment of the
contract. Cancellation – extraordinary remedy – aimed at undoing the whole
transaction.
Parties may insert provisions into their contract to regulate the consequences of a
breach:
- Cancellation clause (lex commissoria) – right to cancel even for a minor breach,
provided certain procedures are followed (usually a written notice)
- Penalty clause
- An acceleration clause – making the outstanding balance of the debt immediately
due + payable
- An interest clause – regulating the amount or rate of interest payable if the debtor
defaults
- A restitution clause, regulating what has to be restored if the agreement is
cancelled.
Choices, Alternatives, and Concurrence of Remedies
Different types of remedy
Remedies aimed at keeping the contract alive
Exceptio non adimpleti contractus: innocent party is entitled to refuse to render their
own performance until such time as the breaching party has performed in full.
Claim for specific performance – innocent party asks for a court order forcing the
breaching party to render their performance; and
Interdict – innocent party asks the court for an order to prevent a breach of contract
that hasn’t happened, but which is threatening or imminent. Can be seen as a
specific type of remedy to ensure specific performance, although specific
performance may also be enforced by normal action procedures.
Remedies aimed at cancelling the agreement
Party is entitled to cancel the contract in certain circumstances – agreement is
summarily terminated.
,Remedies aimed at compensating the innocent party for loss or harm caused by the breach
A claim for contractual or delictual damages
A claim for interest on amounts owing (although mora interest for late payment is a
species of damages, it’s usually calculated + claimed separately from other species
of damages in the pleadings).
Enforcement and Cancellation Mutually Exclusive
Remedies for enforcement + the remedies for termination are mutually exclusive
- However, it’s possible to plead the remedies in the alternative.
- I.e. if a party wants to cancel the agreement but isn’t sure that they are entitled to
do so, they may claim the cancellation of the agreement, + in the alternative,
specific performance should they not be entitled to do so.
Damages and Interest cumulative to other remedies
Claims for damages + interest are cumulative to the other remedies, provided that
the innocent party can prove that they have suffered damage or is entitled to interest.
A party can thus claim cancellation of the agreement, plus damages, plus interest on
the amount owing (including interest on the damages)
Similarly, a party can claim specific performance, plus damages, plus interest.
Contract or Delict
Breach of contract – an unlawful infringement of the other party’s rights arising from
the contract.
Breach of contract may simultaneously constitute a delict
The possible delictual claim after a breach of contract must be distinguished from the
delictual claim arising from pre-contractual misstatements re misrepresentation.
If the misrepresentation constitutes a delict + was also incorporated into the contract
as a warranty, the innocent party may choose to sue either in delict or contract – 2
distinct causes of action.
Claim for damages based on a breach of contract is limited to patrimonial loss.
- Any claim i.r.o. non-patrimonial losses caused by the breach (i.e. pain + suffering,
loss of amenities etc.) will thus have to be framed as a separate delictual claim.
It seems that the innocent party who suffers a patrimonial loss caused by a breach of
contract has a choice of remedies where the loss flows from injury to their person.
, Where an outside 3rd party wrongfully + intentionally interfered with the contractual
rights of a party to a contract, the latter may have a claim in delict against the 3rd
party.
Remedies aimed at Keeping the Contract Alive
Two remedies aimed at the enforcement of the contract: exceptio non adimpleti
contractus + an order for specific performance.
- The interdict is a specific form of the order for specific performance. It’s a remedy
that can be claimed speedily through application procedure to prevent a breach
of contract.
Exceptio is essentially a self-help remedy for cases where the performances of the
parties are reciprocal – innocent party is entitled to refuse to perform until such time
as the other party has performed in full.
- Thus proper performance that is tendered late cannot then be refused because
the remedy aims to force the other party to perform.
Claim for specific performance – a claim requesting the court make an order forcing
the other party to comply with their contractual obligations.
- Court has discretion to refuse specific performance in exceptional circumstances
Exceptio non adimpleti contractus
Aimed at securing specific performance from the other party
- ‘If you wont perform then I won’t.’
Requirements
The two performances must be reciprocal to each other
The other party must be obliged to perform first, or at least simultaneously with the
party raising the exceptio.
The exceptio may also be used where a party has performed incompletely.
Reciprocity of obligations
BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk, AD: reciprocal
obligations: obligations that have been created in exchange foreach other. A contract
containing such obligations – a reciprocal contract.
The distinguishing factor of a reciprocal contract: it’s essentially aimed at
accomplishing an exchange of performances. The one performance must thus be
given or promised in exchange for the other.
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