FORMS OF BREACH OF

CONTRCT
 2

INTRODUCTION
• General requirement: contracts must be concluded in good faith.
• A breach of contract occurs when a party to a contract fails, without a
lawful excuse, to fulfil their obligations in terms of such a contract.
• Forms of breach:

1. Mora debitoris (debtor’s default)

2. Mora creditoris (creditor’s default)
3. Positive malperformance (defective or incomplete performance)
4. Repudiation (denial of contract or intention not to be bound by
contract)
5. Prevention of performance
 MORA DEBITORIS

• Mora debitoris occurs when a debtor unlawfully

fails to timeously perform his or her obligations:

 Due and enforceable - Debtor is at fault –

performance capable of fulfilment
 MORA DEBITORIS - REQUIREMENTS

1. Debt must be due and enforceable:

- The general rule is that the performance may be demanded either immediately after the conclusion of the
contract or as soon as reasonably expected after such a breach occurs.

2. Fixed timeframe for performance:

- fix a date for performance & must have arrived
- Forms: of mora debitoris: mora ex re and mora ex persona

Mora ex re mora ex persona

Time for performance stipulated (express or Time for performance not stipulated
tacit) – passing of time is sufficient
Suspensive conditions have been fulfilled yet Debtor must be placed in mora – demand
debtor still in mora- demand performance performance
 MORA DEBITORIS – REQUIREMENTS

3. Fault
- No lawful excuse
- Onus on debtor to prove legal justification (e.g. delay of creditor / third party,
impossibility of performance –temporary & not due to debtor’s fault)
 MORA DEBITORIS - CONSEQUENCES

The creditor has the following remedies:

1. Perpetuation of the obligation :

- Usually, supervening impossibility of performance that cannot be attributed to the fault of either party terminates the contract. If,
however, performance becomes impossible while the debtor is already in mora, performance will still be due unless the debtor can show
(where there is a duty to deliver) that even had he/she made timeous performance, the same fate would have resulted in the hands of
the creditor.

2. Damages:

- Not subject to debtors performance.

- Creditor must be compensated for any loses suffered due to delay.
 MORA DEBITORIS - CONSEQUENCES
3. Rescission:

- Not an automatic right.

- Time is of the essence .
- Nel v Cloete:
1. Express lex commissoria 2. Tacit Lex commissoria 3. Notice of rescission
On agreement between the The parties have tacitly come In the absence of such
parties that, in the event of the to such an agreement - agreement, the creditor can
debtor failing to perform common intention make time to be of the
timeously, the creditor has the essence by sending the debtor
right to rescind the contract a notice of rescission
Notice is given cancelling Notice does not cancel
contract - creditor reserves the
right
to rescind
- No performance after date
lapses, contract will only
terminate once the debtor is
informed of such termination.
(exception automatic recission)
 MORA DEBITORIS - CONSEQUENCES

4. Specific performance:

- Arises as soon as the debt is due and enforceable.

- Court order compelling the other party to fulfil their contractual obligations.
 MORA CREDITORIS

• Mora creditoris occurs when a creditor unlawfully

fails to timeously cooperate with the debtor to
enable the debtor to perform his/her obligation.

• Two forms:

 Accept performance
 Perform acts
 MORA CREDITORIS - REQUIREMENTS
1. Obligation to make performance:
- Obligation to perform: debt need not be due and enforceable.
- Exception: suspensive condition

2. Cooperation:
- Debtors performance must be subject to the creditors cooperation.

3. Tender of performance
- Debtor tenders perfect and full performance – debtor must take reasonable steps towards performance - creditors cooperation

4. Delay
- delay in accepting performance / cooperating.

5. Fault
- Creditors fault.
- No legal justification for delay - supervening impossibility.
 MORA CREDITORIS - CONSEQUENCES
1. Cancellation of contract:

- Contract may cancel the contract:

 Time is of the essence (express / implied cancellation clause / lex commissoria)

 Notice of rescission

2. Damages:
- Damages for loses suffered as result of mora (debtor cancels / upholds).

3. Specific Performance
- Uphold contract – obtain court order.

4. Effect on security
- Releases sureties
 MORA CREDITORIS - CONSEQUENCES
5. Counter-performance (for reciprocal contracts)

- The creditor’s delay in receiving the debtor’s performance does not relieve the creditor of the duty to make his counter-
performance.
- Sue counter performance when uncooperative

6. Care of article and supervening impossibility

- Usually the debtor is liable for damages caused to the article by his/her negligence. Once mora credtories intervenes, the
debtor’s responsibility is limited to intent and gross negligence.
- The creditor henceforth bears the risk of supervening impossibility of performance brought about, even through negligence of
the debtor.

7. Discharge of debt
- Uncertain how the debtor can discharge the debt without having to wait until the period of prescription has run or until
performance has become impossible.
- Contract validly cancelled
- Order compelling cooperation
 POSITIVE MALPERFORMANCE

• Positive malperformance relates to the content of the performance. It is primarily dependant on

whether or not the performance which was made essentially complies with the contract’s terms.

• It occurs when:

 debtor performs but performance is incomplete / defective

 the debtor does the act that he/she is bound to refrain from doing

• The debtor can avoid liability by showing that the malperformance was caused by factors
beyond his/her control and for which he or she is not to blame.

• General rule: A party who agrees, expressly or by implication, to be responsible for making a
certain performance, irrespective of fault, is bound by that agreement. The absence of fault is
no excuse for malperformance if a party has guaranteed/warranted that his performance will be
of a particular type or standard.
 POSITIVE MALPERFORMANCE - REMEDIES

1. Rescission
• If there is a cancellation clause the creditor may cancel the contract, due to malperformance,
even if the breach is not a serious or material one.

• General rule: A party who agrees, expressly or by implication, to be responsible for making a
certain performance, irrespective of fault, is bound by that agreement. The absence of fault is
no excuse for malperformance if a party has guaranteed/warranted that his performance will be
of a particular type or standard.

• In the absence of an applicable cancellation clause: The creditor may cancel the contract only if
the malperformance is sufficiently serious:

 The breach must be so serious that one cannot reasonably expect the creditor to abide by
the contract and be satisfied with damages alone
 POSITIVE MALPERFORMANCE - REMEDIES

2. Acceptance of partial performance

• Creditor may accept the defective or incomplete performance as partial performance of the
contractual obligation and claim as fulfilment of the contract damages that are the difference in
value between proper performance and the performance actually rendered.

3. Rejection of defective performance

• The creditor may reject the defective performance and demand either specific
performance/damages instead of the performance….
 REPUDIATION
• Repudiation occurs when a party to a contract, without a lawful excuse and who, either by way of conduct or words, makes an
indication in respect of an unequivocal intention to no longer be bound by the contract or an obligation forming part of the
contract.

• A mere delay in making or receiving performance should not be construed as a repudiation of the contract, at least some
positive conduct is required.

• Repudiation can take many forms such as :

 the refusal to either accept performance or to perform

 denying the contract is in existence
 a notification in respect of an inability to perform
 where insufficient notice is given in relation to the termination of contracts which have a continuing nature
 an employer’s unjustified refusal to provide allowance for an employee to perform his or her work.

• It can be construed that repudiation is an implied offer by the repudiator to rescind the contract which the innocent party could
either accept or reject.

• The breach is fully constituted or completed only when the repudiation is accepted by the innocent party, and if rejected, the
repudiation is nullity with no legal effect.
 EFFECTS OF REPUDIATION
1. Rescission of the contract (acceptance of the repudiation)

• The repudiation must be of sufficiently serious nature to merit rescission.

• The innocent party must exercise their right to cancel within a reasonable time and must inform the other party.

• Once the innocent party elects to cancel, such cancellation becomes final.

• Where a party repudiates a part of a divisible performance, the other party may rescind that part only.

• The right to rescind depends on the nature and gravity of the non-performance/malperformance threatened by the repudiation. If
that breach were to materialise, and it would merit rescission of the contract , then the innocent party may rescind on account of the
repudiation.

• Where the innocent party accepts the repudiation: contract comes to an end upon communication of this decision to the other party,
and the usual consequences of rescission ensue.

2. Upholding the contract

• The innocent party is not obliged to accept the repudiation. The innocent party may ignore or reject it and hold the other party to the
agreement.
 PREVENTION OF PERFORMANCE
• Prevention of performance occurs when either party renders performance impossible.

• This is where, after the contract is concluded, that performance becomes impossible
due to the fault of either the debtor or the creditor.

• Prevention of performance may occur either after or before the performance’s set
date.

Fault:

• Fault is an essential element of the breach: in its absence supervening impossibility

will terminate the contract. The onus rests on the debtor in all cases to prove his/her
inability to perform is not due to his fault.
 PREVENTION OF PERFORMANCE - REMEDIES

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

1. Cancelling the contract:

• cancel the contract and recover any performance + damages

2. Uphold contract

• Debtor is wrong: creditor must perform his/her obligations then claim for damages
from the debtor.
• Creditor is wrong: debtor can claim counter- performance from creditor, subject to a
reduction of the claim by the amount that the debtor saves by not having to perform. .
 PREVENTION OF PERFORMANCE

Partial impossibility:
• Where performance is rendered only partially impossible through the fault of the debtor, the position of the creditor
depends on the materiality of the breach.

• Impossibility attaches to a minor aspect of the performance: (substantial performance remains possible) the
contract as a whole may not be rescinded. The only relief available to the creditor is a reduction in his counter-
performance/a claim for damages instead of the missing part of the debtor’s performance.

Temporary Impossibility
• Where the contract is of an ongoing nature (i.e. service) temporary impossibility of performance amounts to partial

• If performance is no longer possible at all or the nature of the obligation is such that performance is worthless, the
impossibility is permanent and the form of breach is prevention of performance.

• If it is clear well in advance of the time for performance that, due to the fault of either party, the debtor will not be
able to perform on time: the innocent party need not wait for the mora.
THANK
YOU
Mathabo Phathwa
[email protected]