Breach of Contract
Introduction
Breach, in South African Law, consists of four main categories and happens when a party fails to
perform in terms of his obligations. These four categories are:
1. Mora
2. Repudiation
3. Prevention of Performance
4. Positive Malperformance
These categories fall into two main categories:
Anticipatory breach: the breach can take place before the performance becomes due.
Malperformance: where the breach can only take place after the performance becomes due.
Performance is due when it has to be delivered. There will usually be a time which is stipulated
by the contract, if not, then there are legal rules which stipulate this. The breach is usually
performed by the debtor, however, in certain cases; the creditor can also commit a breach.
Mora Debitoris
Distinguishing Mora from Other Forms of Breach
Mora exists when a performance is not made on time. This can be distinguished from positive
malperformance in which performance takes place on time, but is defective. Mora therefore
relates to the time of the performance.
Mora can also be distinguished from making performances impossible because one of the
requirements for mora is that the performance remains possible.
Mora debitoris is the late performance by the debtor where the performance is due,
enforceable and possible.
Requirements for Mora Debitoris
THE DELAY IN PERFORMANCE MUST BE AS A RESULT OF THE FAULT OF THE DEBTOR
This means that the delay in performance must not be as a result of a third party who is not a
party to the contract. It should also not be because of the creditor’s failure to accept the
performance.
,The onus is on the debtor to prove that he is not at fault.
THE PERFORMANCE MUST REMAIN POSSIBLE
Where as a result of the delay or other factors, the performance becomes impossible then one
is not dealing with mora but possibly with prevention of performance or supervening
impossibility.
THE DEBT MUST BE ENFORCEABLE
Before a performance can be late, it must first be due; therefore the time for performance
must have arrived.
Mora ex re
If the contract mentions on which date the performance is due, then the debtor is in mora if he
has not performed by this date. If the contract does not contain a date then it is possible to
interpret the terms of the contract to determine the date of performance or to establish that
there was a tacit term.
More ex persona
If there is no tact term and interpretation is impossible then the creditor must place the debtor
in mora by way of an interpellatio.
This is a demand calling upon the debtor to perform on a particular day and indicating that if
she fails to perform on this day, he will be in mora.
The requirements for a valid interpellatio are:
It must stipulate a specific time for performance
It must be clear and unambiguous
It cannot require immediate performance
Reasonable time depends on the circumstances of each case
Nel v Cloete
A contract for the sale of a house did not contain the date upon which the property should be
transferred to the buyer. A part of the purchase price was to be furnished by a bank. Transfer of
the property took a long time because the title deeds of the property could not be found and the
attorney who acted for the seller eventually decided to request a duplicate title deed. Nine
months after the conclusion of the sale the buyer sent an interpellatio to the seller, giving him 2
months to affect transfer, failing which, the buyer indicated that he would cancel the contract.
,When the transfer had not yet taken place on the due date, and when he found out the bank
had cancelled his loan as a result of the long delay, the buyer canned the contract.
The seller argued, inter alia, that the interpellatio did not give him reasonable time to effect
transfer of the property.
The court held that two months was a reasonable time to affect transfer, especially in the light
of the fact that such a long time had already elapsed since the conclusion of the contract. In
allowing the debtor a reasonable time to perform, the creditor did not need to take account of
the extraordinary circumstances.
In addition, it was admissible for the creditor to state in his interpellatio, that failure to perform
by the due date would entitle him to cancel the contract (notice of rescission).
Time is of the essence?
If the debtor knows that the performance is urgently required then there are two views which
deal with this. The first is where the courts developed a doctrine of ‘time is of the essence’’
which stipulated that in urgent situations the creditor does not have to stipulate a time for
performance or place the debtor in mora, but automatically obtains the right to cancel if
performance is not rendered soon.
The second and more accepted view is that the doctrine should not be applied to the question
of whether or not a –party is in mora. Rather, it relates to the right to cancel which arises when
the other party is already in mora. However in the situation of a tow-truck or ambulance it can
be argued that there is a tacit term that performance should take place immediately.
Consequences of Mora Debitoris
Mora Debitoris Perpetuates the Obligation
Mora is a form of ongoing breach of contract which means that when a debtor fails to perform
on time then he will in mora until he performs. If the debtor or creditor’s performances
become impossible at the time when the debtor is in mora then the normal rules for
impossibility of performance are suspended and the remains liable even if his performance is
impossible. Failure to perform will result in a breach of contract and he will have to pay
damages.
Right to Specific Performance
When the debtor is in mora, the creditor can insist on proper performance even though it is
late.
, Right to Damages
If the creditor has suffered damages due to the debtor’s mora then the debtor must
compensate for those damages. The creditor is entitled to so called mora interest if the debtor
has to pay money at a rate set in the contract, determined by trade usage or prescribed by the
Minister.
Right to Cancel on the Basis of Mora
There is no automatic right for the creditor to cancel a contract on the basis of the debtor’s
mora. Cancellation is an extra-ordinary remedy and in order to obtain a right to cancel, certain
special factors are necessary.
A lex commissoria (cancellation clause)
This is a clause in a contract which gives the creditor the right to cancel if the other party should
commit a breach of contract. If there is such a clause and the debtor is in mora, the creditor can
cancel on the basis of the lex commissoria.
A notice of rescission
If there is no lex commissoria then the creditor may obtain the right to cancel by sending the
debtor a notice indicating that he is in mora and stating that unless he performs within a
specific period of time the creditor will cancel. Must be distinguished from a notice of
cancellation. This only serves to acquire the right to cancel. It does not mean that the contract is
cancelled; the creditor still has a choice. The interpellatio, notice of rescission and notice of cancellation
can be given in the same document.
Time is of the essence
If the debtor is in mora and the need for performance is urgent then this rule indicates that the creditor
automatically obtains a right to cancel. This cannot place the debtor in mora. The debtor must be in
mora because of an express or tacit date which has not been fulfilled.
Mora Creditoris
Nature of Mora Creditoris
A creditor has an obligation to co-operate with the debtor to ensure that the debtor is able to
deliver performance. This may take the form of accepting the performance or supplying the
debtor with information which will enable him to perform.
Requirements for Mora Creditoris
Introduction
Breach, in South African Law, consists of four main categories and happens when a party fails to
perform in terms of his obligations. These four categories are:
1. Mora
2. Repudiation
3. Prevention of Performance
4. Positive Malperformance
These categories fall into two main categories:
Anticipatory breach: the breach can take place before the performance becomes due.
Malperformance: where the breach can only take place after the performance becomes due.
Performance is due when it has to be delivered. There will usually be a time which is stipulated
by the contract, if not, then there are legal rules which stipulate this. The breach is usually
performed by the debtor, however, in certain cases; the creditor can also commit a breach.
Mora Debitoris
Distinguishing Mora from Other Forms of Breach
Mora exists when a performance is not made on time. This can be distinguished from positive
malperformance in which performance takes place on time, but is defective. Mora therefore
relates to the time of the performance.
Mora can also be distinguished from making performances impossible because one of the
requirements for mora is that the performance remains possible.
Mora debitoris is the late performance by the debtor where the performance is due,
enforceable and possible.
Requirements for Mora Debitoris
THE DELAY IN PERFORMANCE MUST BE AS A RESULT OF THE FAULT OF THE DEBTOR
This means that the delay in performance must not be as a result of a third party who is not a
party to the contract. It should also not be because of the creditor’s failure to accept the
performance.
,The onus is on the debtor to prove that he is not at fault.
THE PERFORMANCE MUST REMAIN POSSIBLE
Where as a result of the delay or other factors, the performance becomes impossible then one
is not dealing with mora but possibly with prevention of performance or supervening
impossibility.
THE DEBT MUST BE ENFORCEABLE
Before a performance can be late, it must first be due; therefore the time for performance
must have arrived.
Mora ex re
If the contract mentions on which date the performance is due, then the debtor is in mora if he
has not performed by this date. If the contract does not contain a date then it is possible to
interpret the terms of the contract to determine the date of performance or to establish that
there was a tacit term.
More ex persona
If there is no tact term and interpretation is impossible then the creditor must place the debtor
in mora by way of an interpellatio.
This is a demand calling upon the debtor to perform on a particular day and indicating that if
she fails to perform on this day, he will be in mora.
The requirements for a valid interpellatio are:
It must stipulate a specific time for performance
It must be clear and unambiguous
It cannot require immediate performance
Reasonable time depends on the circumstances of each case
Nel v Cloete
A contract for the sale of a house did not contain the date upon which the property should be
transferred to the buyer. A part of the purchase price was to be furnished by a bank. Transfer of
the property took a long time because the title deeds of the property could not be found and the
attorney who acted for the seller eventually decided to request a duplicate title deed. Nine
months after the conclusion of the sale the buyer sent an interpellatio to the seller, giving him 2
months to affect transfer, failing which, the buyer indicated that he would cancel the contract.
,When the transfer had not yet taken place on the due date, and when he found out the bank
had cancelled his loan as a result of the long delay, the buyer canned the contract.
The seller argued, inter alia, that the interpellatio did not give him reasonable time to effect
transfer of the property.
The court held that two months was a reasonable time to affect transfer, especially in the light
of the fact that such a long time had already elapsed since the conclusion of the contract. In
allowing the debtor a reasonable time to perform, the creditor did not need to take account of
the extraordinary circumstances.
In addition, it was admissible for the creditor to state in his interpellatio, that failure to perform
by the due date would entitle him to cancel the contract (notice of rescission).
Time is of the essence?
If the debtor knows that the performance is urgently required then there are two views which
deal with this. The first is where the courts developed a doctrine of ‘time is of the essence’’
which stipulated that in urgent situations the creditor does not have to stipulate a time for
performance or place the debtor in mora, but automatically obtains the right to cancel if
performance is not rendered soon.
The second and more accepted view is that the doctrine should not be applied to the question
of whether or not a –party is in mora. Rather, it relates to the right to cancel which arises when
the other party is already in mora. However in the situation of a tow-truck or ambulance it can
be argued that there is a tacit term that performance should take place immediately.
Consequences of Mora Debitoris
Mora Debitoris Perpetuates the Obligation
Mora is a form of ongoing breach of contract which means that when a debtor fails to perform
on time then he will in mora until he performs. If the debtor or creditor’s performances
become impossible at the time when the debtor is in mora then the normal rules for
impossibility of performance are suspended and the remains liable even if his performance is
impossible. Failure to perform will result in a breach of contract and he will have to pay
damages.
Right to Specific Performance
When the debtor is in mora, the creditor can insist on proper performance even though it is
late.
, Right to Damages
If the creditor has suffered damages due to the debtor’s mora then the debtor must
compensate for those damages. The creditor is entitled to so called mora interest if the debtor
has to pay money at a rate set in the contract, determined by trade usage or prescribed by the
Minister.
Right to Cancel on the Basis of Mora
There is no automatic right for the creditor to cancel a contract on the basis of the debtor’s
mora. Cancellation is an extra-ordinary remedy and in order to obtain a right to cancel, certain
special factors are necessary.
A lex commissoria (cancellation clause)
This is a clause in a contract which gives the creditor the right to cancel if the other party should
commit a breach of contract. If there is such a clause and the debtor is in mora, the creditor can
cancel on the basis of the lex commissoria.
A notice of rescission
If there is no lex commissoria then the creditor may obtain the right to cancel by sending the
debtor a notice indicating that he is in mora and stating that unless he performs within a
specific period of time the creditor will cancel. Must be distinguished from a notice of
cancellation. This only serves to acquire the right to cancel. It does not mean that the contract is
cancelled; the creditor still has a choice. The interpellatio, notice of rescission and notice of cancellation
can be given in the same document.
Time is of the essence
If the debtor is in mora and the need for performance is urgent then this rule indicates that the creditor
automatically obtains a right to cancel. This cannot place the debtor in mora. The debtor must be in
mora because of an express or tacit date which has not been fulfilled.
Mora Creditoris
Nature of Mora Creditoris
A creditor has an obligation to co-operate with the debtor to ensure that the debtor is able to
deliver performance. This may take the form of accepting the performance or supplying the
debtor with information which will enable him to perform.
Requirements for Mora Creditoris
