LAW OF CONTRACT IN SOUTH
AFRICA
YEAR ONE SEMESTER ONE 2024/2025
DUE APRIL 2025
, THE LAW OF CONTRACT
Case Study
Case Study: Smith v. Jones Enterprises
Background: In March 2024, Alice Smith, a freelance graphic designer, entered into a contract
with Jones Enterprises, a marketing firm, to design a new logo for their rebranding campaign.
The contract stipulated that Alice would deliver the final logo by June 1, 2024, in exchange for
R50,000.
During the project, Alice encountered unexpected software issues, causing a delay. She notified
Jones Enterprises about the delay in early May, proposing a new deadline of June 15, 2024.
Jones Enterprises agreed to the new deadline, and Alice continued working on the logo.
However, on June 5, 2024, Jones Enterprises informed Alice that they no longer required her
services as they had decided to go with a different designer. They also refused to pay Alice for
the work she had completed up to that point, stating that since the final product was not
delivered by the original deadline, they were not obligated to make any payment.
Alice sued Jones Enterprises for breach of contract, claiming that they had acted in bad faith by
terminating the agreement and refusing to pay for the work done.
Questions and Answers:
1. Question: Was Jones Enterprises entitled to terminate the contract with Alice
Smith?
Answer: No, Jones Enterprises was not entitled to terminate the contract unilaterally
without a valid reason. According to South African contract law, a party can only
terminate a contract if there is a material breach by the other party or if the contract
provides for termination under specific conditions. In this case, although there was a
delay in delivery, it was not a fundamental breach of the contract. Alice had
communicated the delay and offered a revised deadline, which Jones Enterprises had
accepted. Thus, Jones Enterprises did not have grounds to terminate the contract
without compensating Alice for the work done.
2. Question: What remedy can Alice Smith seek in this situation?
Answer: Alice Smith can seek damages for breach of contract. Since Jones Enterprises
terminated the contract without a valid reason and refused to pay for the completed
work, Alice is entitled to compensation. The damages would generally cover the value of
the work completed up to the point of termination, which in this case would be the
amount agreed upon in the contract (R50,000), less any costs that Alice might have
saved due to the early termination.
3. Question: What role does the concept of "material breach" play in this case?
Answer: A material breach is a significant violation of the contract that justifies
termination. In South African law, if a breach is deemed material, it impacts the
fundamental purpose of the contract. In this case, the delay in delivery was not a
material breach, especially since Alice had communicated and negotiated a new
deadline with Jones Enterprises. The breach would only be material if it had
AFRICA
YEAR ONE SEMESTER ONE 2024/2025
DUE APRIL 2025
, THE LAW OF CONTRACT
Case Study
Case Study: Smith v. Jones Enterprises
Background: In March 2024, Alice Smith, a freelance graphic designer, entered into a contract
with Jones Enterprises, a marketing firm, to design a new logo for their rebranding campaign.
The contract stipulated that Alice would deliver the final logo by June 1, 2024, in exchange for
R50,000.
During the project, Alice encountered unexpected software issues, causing a delay. She notified
Jones Enterprises about the delay in early May, proposing a new deadline of June 15, 2024.
Jones Enterprises agreed to the new deadline, and Alice continued working on the logo.
However, on June 5, 2024, Jones Enterprises informed Alice that they no longer required her
services as they had decided to go with a different designer. They also refused to pay Alice for
the work she had completed up to that point, stating that since the final product was not
delivered by the original deadline, they were not obligated to make any payment.
Alice sued Jones Enterprises for breach of contract, claiming that they had acted in bad faith by
terminating the agreement and refusing to pay for the work done.
Questions and Answers:
1. Question: Was Jones Enterprises entitled to terminate the contract with Alice
Smith?
Answer: No, Jones Enterprises was not entitled to terminate the contract unilaterally
without a valid reason. According to South African contract law, a party can only
terminate a contract if there is a material breach by the other party or if the contract
provides for termination under specific conditions. In this case, although there was a
delay in delivery, it was not a fundamental breach of the contract. Alice had
communicated the delay and offered a revised deadline, which Jones Enterprises had
accepted. Thus, Jones Enterprises did not have grounds to terminate the contract
without compensating Alice for the work done.
2. Question: What remedy can Alice Smith seek in this situation?
Answer: Alice Smith can seek damages for breach of contract. Since Jones Enterprises
terminated the contract without a valid reason and refused to pay for the completed
work, Alice is entitled to compensation. The damages would generally cover the value of
the work completed up to the point of termination, which in this case would be the
amount agreed upon in the contract (R50,000), less any costs that Alice might have
saved due to the early termination.
3. Question: What role does the concept of "material breach" play in this case?
Answer: A material breach is a significant violation of the contract that justifies
termination. In South African law, if a breach is deemed material, it impacts the
fundamental purpose of the contract. In this case, the delay in delivery was not a
material breach, especially since Alice had communicated and negotiated a new
deadline with Jones Enterprises. The breach would only be material if it had
