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,Termination by operation of law: Supervenieng impossibility: Performance becomes objectively impossible after contract conclusion,
Set-off:= Arises where two parties have claims against each other for the same amount and reqs for without fault on part of debtor, as result of unavoidable occurrence
set-off have been met those 2 claims will be extinguished General rule according to MV Snow Crystal
Where 2 claims are not for same amount, but reqs for set off have been met, then the smaller ‘as a general rule impossibility of performance brought by vis major or casus fortuitus will excuse
amount will be extinghuished and the larger amount will be reduced pro rata performance of contract. But it will not always do so.” REQ:
Why does law allow this? Promotes efficiency, and avoids litigation 1) Performance objectively impossible: Performance must be impossible for anybody to make (not just for
REQ for set off: the particular debtor = subjective impossibility, only one person cannot perfrom, which is breach &
1) Debts to which claim relates, must exist between the same persons in the same capacity prevention of performance) Box Shoe Centre case: could not deliver shoes because those shoes have
[A owes B R400 and B as executor of C’s estate owes A R400 → this first req have not been been stolen. [Performance must be factually impossible or where although performance is factually
met, as these parties are not of the same capacity] possible, in an economic sense, it would be unreasonable to expect a party to perform (e.g. ring in the
2) Debts must be of the same type: Normally set-off occurs with monetary debts, but can ocean)]
also operate in relation to debts relating to things other than money. [Money for money, 2) Occurrence of event must be unavoidable by a reasonable person: This event, which leads to
thing for a thing, but can't be money for delivery of a thing] impossibility of performance, must have been unavoidable by a reasonable person. [Implicit in the req
3) Due and enforceable: Debts must not be subject to suspensive conditions or the exceptio that impossibility occurred through no fault of parties themselves e.g. vis major, casus fortuitis (man
non adimpleti contractus made events outside of control of parties e.g. theft, acts by the state)
- Where one of the debts are subject to a condition or time clause, or subject of - Issue is not foreseeability or lack thereof → issue is even if you did foresee event from occurring, could you
excepti non adempleti contractus = both debts are not due and enforceable. have taken steps to avoid it happening Baily case → judge said lighting strikes are common in Witwatersrand,
4) Both debts must be liquid: A debt is liquid when it is capable of speedy and easy proof so it is foreseeable that object will be struck, BUT there is no way you can prevent it. so it is foreseeable, but a
- Remember ordinarily (unless dealing with penalty clause) a common law claim for reasonable person cannot avoid it.
damages are not regardedas a liquid claim. Khalahari Saltworks case →A common law 3) impossibility must be actually or reasonably unforeseeable: Important here: specific foreseeability
claim for damages is ordinarily not a liquid claim - not capable of easy and speedy proof - Bob’s show centre v heneways freight services: Allegations that there was problem with
5) must not against public policy: If one set off is not to pay maintenance, that has to be documentation and bc of that it created circumstances under which shoes could be stolen – court
paid. Too personal, that claim can not be set off against another said no.
Operation of set off: whether set-off operates automatically (without the parties having to do - South African Forestry Co Ltd v York Timbers: Prevention of performance is a form of self-created
anything) or whether it is necessary for a party to rely on set-off in order for it to occur ) impossibility, but there are instances of self-created impossibility that do not amount to breach of
Standard Bank v Echo Petroleum: still uncertainty as, bt seems no automatic “although set-off contract e.g. SAFCOL.
occurs automatically by operation of law, it only operates retrospectively if and when the Consequences of supervening impossibility of performance
debtor elects to rely on it” - Obligations terminate: Generally, performance itself and reciprocal counter-performance is
extinguished because supervening impossibility of performance is a recognised way to terminate
obligations
Extinctive prescription: Exstinction of obligations through the lapse of time
- Duties of restitution: unjustified enrichement
S 10: a debt is extinguished after lapse of relevant period - Performances and counter-performance extinguished
S 11: prescription periods for certain kinds of obligations (debt) Exceptions: (in relation to the debtor’s duty to perform, the general rule is that supervening impossibility will
S 11(d): unless act of parliament provides otherwise render that obligation terminated, but not where) POD: supervening impossibly terminates obligations
S 12(1): prescription commences to run as soon as debt is due unless:
1. Where debtor takes the impossibility on themselves: Wilson v Smith talks about Hersman v
Shapiro (has party taken risk of impossibility on themselves→ also applies ito supervening
impossibility
2. Where someone remains liable even though obligations become impossible-Mora:: Mora creates
a perpetual obligation. So if the debtor is in mora and during that time the debtor’s performance
becomes impossible, the debtor’s duty to perform will not be terminated – will not be able to
deliver the literal performance but he will have to pay damages
- Creditor is responsible for making the other party’s duty to perform impossible (prevention
of performance): in this case the creditor is obliged to make counter-performance even
though he will receive nothing from the party
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, Novation: agreement whereby original obligations extinguished and replaced with new Termination by exercising a right of termination: (rescission/ cancellation).
obligations Right of termination may arise from contractual term → Unilateral exercise of right to terminate Typically
REQ for valid novation: contract where parties don’t want to bind themselves for a certain period of time (eg. two year contract)
1. Animus novandi (intention to novate)[ specifically this purpose of replacing existing Rouwkoop clause: gives party right to terminate contract if there is a breach of contract (not automatic right to
obligation with new one] terminate)
2. Valid preceding obligation: Cannot novate nothing – if no obligation in place -= no Does the law allow you to have this right to terminate (eg on 30 days notice) even if there is no breach?
novation possible If orginal obligation was void, then subsequent novation is also void Limitation on exersixing the right: Bredenkamp + Beadica
Acknowledgement of debt – that doesn’t necessarily novate but gives additional ground on which - Courts may refuse valid term if it is against public policy
to proceed. May on some exceptional case rely directly on constitutional rights to prevent you on exercising your right to
CESSION: substitution of creditors cancel:
Delegation: substitution od debtors - AB v Pridwin case: Majority: private school – relying on right to termination. Right could have arisen
- Said in our law that this is effected by novation from contract ito common law. School relying on right to termination, but the way in which it was
- Terminate old obligation with debtor 1 and gets a new obligation with debtor 2 exercised was so offensive and contrary to right to education it was a direct violation of Constitution.
- But you can completely replace a party – one seller with another [Here you transfer rights Right may arise from the contract itelf or common law
and duties – in this case you don’t have to terminate original obligations (replacement of - CL: contract of indefinite duration. Either parties give notice and that would be a CL right to terminate.
parties need not involve novation] Right if termination arising from statute:
Compromise: Agreement in terms of which parties settle/ terminate a dispute or some - S14 CPA: termination of fixed term contract: (by giving notice to supplier)
uncertainty about the content of their legal relationship – new obligations are created and old Remember full release of debtor, from all obligations of contract, is nothing more than just termination of a
obligations are terminated. contract → but this is CONSENSUAL so BOTH agree.
- Two parties in dispute – wish to bring it to an end = settlement S17 CPA: consumer has general right to cancel any advance booking, reservation or order for any goods or
- New obligations are created and old obligations are terminated and Old obligations: if any, services to be supplied. Gives consumer general right to cancel booking/reservation (terminate relationship)
are terminated. Can be tough on the supplier…
BUT supplier may: Eg. book venue for wedding but closer to
- Difference of novation: original obligations don’t exist = no novation
(i) require reasonable deposit wedding you cancel booking.
Compromise: doesn’t matter if original obligations are there or not.
REQ for compromise: (ii) impose reasonable charge for cancellation
1. Need a dispute/ uncertaint Charge can be deducted from deposit.
2. Need not be an prior obligation (could be) The closer the date of cancellation to booking – the higher the charge.
3.consensus
4. Legality
5. Capacity •Court a quo: even if it were an offer to compromise, actual consensus was required between the parties to
Courts don’t have discretion to enquire/change terms of settlement agreement! effect the offer to compromise. As respondent rejected the offer to compromise, there was no consensus and no
Effect of partial payment “in full and final settlement”? Offer to compromise or merely partial settlement had been achieved.
payment of debt: BE BOB A LULA MANUFACTURING % PRINTING v KINGTEX MARKETING: •(actual consensus or reasonable reliance = dual basis for contractual liability)
Appellant ordered a large amount of T-shirts from the respondents, which they were planning on •SCA: disagreed with the a quo conclusion. On the basis that contractual liability is not only based on consensus
selling to Adidas. T-shirts were delivered late and were defective. Appellant had to put in lots of but also on reasonable reliance – on the appearance of consensus. So while the respondent may have initially
effort to remedy the defects (unsuccessfully), meaning they had to sell shirts at a reduced price to rejected the offer to compromise, the payments of the proceeds of the cheque into the attorneys trust fund
Adidas. Appellant communicated to respondent the loss it had suffered as result of reduced price, creates a reasonable reliance on the part of the appellant that the respondent had in fact accepted the offer to
and was subtracting that amount from the outstanding amount which it had to pay for the T-shirts. compromise. Specifically because those funds were not held in the trust account for the interests of both parties
Appellant further sent a cheque for an amount far less than the outstanding amount and indicated but rather/in addition those funds were used in the interest of the respondent to pay its legal fees. [ordinary
on the cheque that it was being made “in full and final settlement”. When respondent became principles of offer and acceptance applicable, and whether you can infer the intention]
aware of payment “in full and final settlement”, it rejected the payment and asked the appellant to Court concluded that the appellant had intended to conclude an offer to compromise. Both inferred from the
stop payment of the cheque – failing which the cheque would be held by the respondent’s attorneys cheque (full and final settlement) together with two other letters that made it clear that the appellant was of the
in a trust. Appellant was unable to stop the cheque. Respondent’s attorneys used the money to pay intention/opinion that it was not required the full outstanding amount because of the respondent’s outstanding
the legal fees that the respondent owed to its attorneys. performance.
•Court a quo: issue was whether partial payment was an offer to compromise or merely partial •When it is not possible to determine a particular intention – offer is ambiguous – the offer is going to be
payment of a debt. Both court a quo and SCA agreed that the answer to the question depends on interpreted contra proferentem (against the person who made the offer). When there not dealing with an offer
the ordinary principles governing offer and acceptance. to compromise, the creditor can still claim the outstanding amount.
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