BUSL6222 LU8
BUSL6222 LU8 – Breach of
Contract
Chapter 11 – Remedies for breach of contract
11.1 What is a legal remedy?
= what the law allows a harmed/aggrieved party to be awarded for the
inappropriate behaviour of another party, which caused the harm.
11.2 When and why to use legal remedies
When one contracting party breaches a contract, the law provides remedies by
which the other party can try to rectify the situation. Without such remedies,
there would be no way to enforce contracts and no real reason for contracting
parties to keep their side of the contract
11.3 Types of remedies
The remedies available in the event of a breach of contract can be categorised
into the following:
those that enforce the contract
those that cancel the contract
those that compensate the harmed party for the breach, damages and
penalty clauses
11.3.1 Enforcing a contract
Enforcing a contract means getting the court to make the defaulting party do
what they originally promised. There are three enforcement remedies:
1. An order for specific performance
2. An Interdict
3. The innocent party withholding their own performance
A court will not enforce a contract that is illegal, impossible, or against public
policy. In those cases, the contract is invalid and no one can enforce it.
Order for Specific Performance
This is a court order telling the defaulting party to perform exactly what they
agreed to.
The court will grant this when the person can perform but chooses not to.
The court can also refuse the order if:
Performance is impossible.
Performance will cause too much suffering
1
, BUSL6222 LU8
The cost for the defendant is too high.
The debtor is insolvent.
If the court refuses specific performance, the innocent party can claim damages
instead. Sometimes the court can award both specific performance and
damages.
Interdict
An interdict is a court order stopping someone from doing something they’ve
contracted not to do (a prohibitory interdict). It’s usually urgent.
It prevents or stops a breach, and is treated as an enforcement remedy similar to
specific performance.
Withholding the Innocent Party’s Performance
If the guilty party was supposed to perform first and they don’t, the innocent
party may refuse to perform their side of the deal.
Example: if the builder does poor work, the customer may refuse to pay until it’s
fixed.
The court may still require the innocent party to pay part of the price if they’re
using the performance (like living in a cottage).
This remedy is basically a pressure tactic to force the guilty party to perform
properly.
11.3.2 Cancelling the contract
Cancellation is another remedy for breach. The breach itself does not end the
contract — the innocent party must actively cancel it. Once cancelled, the
innocent party no longer has to perform.
If there is no cancellation clause, cancellation is still possible, but only if the
breach is material (a serious, central part of the contract). Courts are strict about
this because contracts should normally be honoured.
Courts look at reasons for cancellation and results of the cancellation
Reasons for Cancellation
Cancellation depends on the type of breach and how serious it is.
Cancellation Because of Lateness
A late performance only justifies cancellation if timing is critical. If the timing
isn’t naturally critical, the innocent party can set a reasonable deadline and
warn that failure will lead to cancellation.
Cancellation Due to Breach Other Than Lateness
2
BUSL6222 LU8 – Breach of
Contract
Chapter 11 – Remedies for breach of contract
11.1 What is a legal remedy?
= what the law allows a harmed/aggrieved party to be awarded for the
inappropriate behaviour of another party, which caused the harm.
11.2 When and why to use legal remedies
When one contracting party breaches a contract, the law provides remedies by
which the other party can try to rectify the situation. Without such remedies,
there would be no way to enforce contracts and no real reason for contracting
parties to keep their side of the contract
11.3 Types of remedies
The remedies available in the event of a breach of contract can be categorised
into the following:
those that enforce the contract
those that cancel the contract
those that compensate the harmed party for the breach, damages and
penalty clauses
11.3.1 Enforcing a contract
Enforcing a contract means getting the court to make the defaulting party do
what they originally promised. There are three enforcement remedies:
1. An order for specific performance
2. An Interdict
3. The innocent party withholding their own performance
A court will not enforce a contract that is illegal, impossible, or against public
policy. In those cases, the contract is invalid and no one can enforce it.
Order for Specific Performance
This is a court order telling the defaulting party to perform exactly what they
agreed to.
The court will grant this when the person can perform but chooses not to.
The court can also refuse the order if:
Performance is impossible.
Performance will cause too much suffering
1
, BUSL6222 LU8
The cost for the defendant is too high.
The debtor is insolvent.
If the court refuses specific performance, the innocent party can claim damages
instead. Sometimes the court can award both specific performance and
damages.
Interdict
An interdict is a court order stopping someone from doing something they’ve
contracted not to do (a prohibitory interdict). It’s usually urgent.
It prevents or stops a breach, and is treated as an enforcement remedy similar to
specific performance.
Withholding the Innocent Party’s Performance
If the guilty party was supposed to perform first and they don’t, the innocent
party may refuse to perform their side of the deal.
Example: if the builder does poor work, the customer may refuse to pay until it’s
fixed.
The court may still require the innocent party to pay part of the price if they’re
using the performance (like living in a cottage).
This remedy is basically a pressure tactic to force the guilty party to perform
properly.
11.3.2 Cancelling the contract
Cancellation is another remedy for breach. The breach itself does not end the
contract — the innocent party must actively cancel it. Once cancelled, the
innocent party no longer has to perform.
If there is no cancellation clause, cancellation is still possible, but only if the
breach is material (a serious, central part of the contract). Courts are strict about
this because contracts should normally be honoured.
Courts look at reasons for cancellation and results of the cancellation
Reasons for Cancellation
Cancellation depends on the type of breach and how serious it is.
Cancellation Because of Lateness
A late performance only justifies cancellation if timing is critical. If the timing
isn’t naturally critical, the innocent party can set a reasonable deadline and
warn that failure will lead to cancellation.
Cancellation Due to Breach Other Than Lateness
2
