We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. If the contract is however silent on cancellation, the innocent party … 2 0. Please consult one of our lawyers on any specific legal problem or matter. Please refer to the full terms and conditions on the website. Sign in Register; Hide. The defaulting contractor cannot be left to guess whether the cancellation clause is being invoked or not. Set-Offs 5. The second, alternative ground for cancellation, was that the contractor’s conduct exhibited a deliberate and unequivocal intention not to be bound by the agreement - conduct that constituted repudiation of the agreement. Although the plaintiff can elect to claim specific performance from the defendant, the court has a discretion to grant or decline the order of specific performance. Both the first and second notice fell short of the requirements of the cancellation clause which required the contractor first to be given 14 days to remedy, and then a further 7 days’ notice prior to cancellation. ÙìÒ¦À¦#[X³‰„‡äY€c»-´ˆÇ³¾nAkcX\,?5Ç One of the parties to the contract is in breach; the other party (the victim or the aggrieved party) is entitled to a contractual remedy or remedies. For permission to reproduce an article or publication, please contact us cliffedekkerhofmeyr@cdhlegal.com. The first is what can be referred to as a “normal” breach, where a term, agreed to and set out in the agreement is breached by one of the parties either not performing at all or performing defectively. A few months after the commencement of the works, the employer delivered a written notice to the contractor (first notice) recording its defaults and informing it that unless it took practical steps to remedy the defaults within a period of 7 days, the employer would cancel the agreement. Copyright © 2020 Cliffe Dekker Hofmeyr. On the second alternative ground for cancellation, the court held that the first and second notice conveyed an unclear message to the contractor because the notices complied substantially with the cancellation clause but the time periods did not comply with the time periods stipulated. To stay up to date on the latest legal developments that may potentially impact your business, subscribe to our alerts, seminar and webinar invitations by completing this form. Terminating a contract may not always be the commercially sensible remedy for breach of contract as it may further delay the completion of the project, increase the project cost and even expose a contracting party to liability. Terminating a contract may not always be the commercially sensible remedy for breach of contract as it may further delay the completion of the project, increase the project cost and even expose a contracting party to … Remedies for Breach of Contract. A summary of containing the remedies for cancellation and the decision to uphold the above... View more. South African contract law is ‘essentially a modernized version of the Roman-Dutch law of contract’, which is itself rooted in canon and Roman laws. The grounds for cancellation put forward by the employer were twofold: (i)    the first notice constituted an offer to the contractor to remedy its default and not a notice in terms of the cancellation clause therefore the time frame to remedy the breach did not matter; and. Cla1501 - chapter 11 - remedies for breach of contract. A breach of contract by either party entitles the other party to either accept the breach or sue for damages, or to reject it and sue for specific performance. quantum meruit . The principles and provisions forming decisions to cancel, discharge and avoid contracts need to be discussed and debated using selected landmark cases in order to establish which systems have robust mechanism to deal with breach of contract. 2 Common Law Remedies for Breach of the Contract of ... 2.2 Application of Common Law Principles in South Africa 7 2.3 Common Law Remedies 9 2.4 The South African Contract of Employment 12 2.4.1 Interaction between the BCEA and Law of Contracts 14 2.4.2 Non-compliance of Terms and Conditions of the Contract of Employment 17 3 Section 77 of the BCEA as an Enforcement Mechanism 19 4 … The temptation to terminate a construction contract out of pure frustration can be difficult to resist. â…SÞÚÔÞµiNk[8ܺ´¬qÁÑGpBKk°ºv”OkUíßZq«dVÁ+jÆöËÇÞ3¶-ÈϬló3«ëkw؜YSS¸RÒ8¶®­ÊjwkVEX…Qd"#zªBƨÕ÷í3¶I+Õi-ßÜΙf3JgÍí It provides to the innocent party choice of remedies, which will vary according to the nature and seriousness of the breach. Suit for . Can South African employers impose mandatory COVID-19 vaccination policies as a pre-requisite to return to work or as a precondition for employment? Generally speaking, this will entitle the counter-party to certain remedies for breach of contract, including specific performance and damages or cancellation and damages. This will help me in the future when I want to start up my own business and needs to get contracts in place. Cancellation of a contract is usually the last sought remedy as it is regarded as an extraordinary remedy which is only available in certain circumstances. ‚Ó ¡ Mg%ÆÒ,Çî,o The employer argued. Excluding misrepresentationas a re… Specific performance is a primary remedy for breach of contract available for the aggrieved party. University. {±°“=AØ ˜bŸÂ„ªe>NSQ]Ú»ºjj³^ðí®ËÂT› Ô×Fó°÷ës&¢Þ8F˜ÇE757‰q°H­hkșÐ\‡i+;D• ÑDôï5ʵ6b:¢Q3ž  Ö~2ÑMuѺ. In the case of a major breach of contract, the aggrieved party is entitled to terminate the contract by cancelling it, although he is not obliged to do so. A money damage award includes a sum of money that is given as compensation for financial losses caused by a breach of contract. Although contracts must be honoured, the circumstances may change after the contract has b een made. On this second ground, the court narrowed its inquiry to not deal with whether there was a valid repudiation by the contractor, but rather whether the employer forfeited his entitlement to rely on the repudiation as a ground for cancellation because he elected to invoke the terms of the cancellation clause (by delivering a first and second notice). It is important to remember that cancelling a contract is an extreme remedy that is only available in exceptional circumstances, namely where there is a cancellation clause or where the breach of contract is material or serious. It is trite that the alternative remedies for a fundamental breach of contract are that, the plaintiff may accept therepudiatory breach and sue for damages, or may call upon the party in breach to remedy the breach upon tender of counter-performance by the plaintiff. Specific performance means that the contract must continue as it stands. Injunctions 4. In favour of prolonging the life of a contract, an aggrieved party may opt to offer a contractor an opportunity to remedy the breach and then in the event of non-compliance, cancellation and damages. Chapter 13 remedies - Summary The Law of Contract in South Africa. The law regards breach of a contract as a wrongful act in itself which allows the innocent party to cancel the contract. Immovable property transfers are governed by South African legislation - the Land Alienation Act soon to be replaced by the Property Transactions Bill - to protect all the parties involved. ËÒ‚o‡Ô–•…ç†c Vñ©uâiÁ(Ç%8v Nelson Mandela University. This case endorses and gives guidance in regard to the fundamental principles of the right to cancel as it pertains to the process that aggrieved parties should follow to enforce their right to cancel a contract against defaulting/repudiating parties where there is a governing cancellation clause. We support our clients’ strategic and operational needs by offering innovative, integrated and high quality thought leadership. When a party has done some work under a contract, and the other party repudiates the contract or somehow the full performance of the contract becomes impossible, then the party who has done the work can claim remuneration for the work under a suit for quantum meruit. It all starts with the project falling behind schedule, an aggrieved party granting an extension to complete the works, only for the extension to be insufficient for the contractor to meet the new deadlines and the project costs increasing day by day. Breach of contract is a wrongful act that affords an innocent party with certain remedies. Ten days after the delivery of the first notice, the employer delivered another notice (second notice) informing the contractor that he was cancelling the agreement. The breach would have to be serious and the guilty party must receive notice of the cancellation. The logic endorsed by the court is as follows: When a contract contains a cancellation clause which covers repudiation by the contractor and allows an employer to offer to the contractor to remedy its default and entitles an aggrieved party to issue a notice to cancel following a failure to remedy the default, the aggrieved party must follow the clear route for cancellation prescribed by the cancellation clause. Specific performance, interdict, declaration of rights, cancellation, damages. Is a simple majority sufficient to amend a business rescue plan or to adjourn a meeting? A material breach of contract constitutes repudiation where it evinces an intention on the part of the guilty party not to continue with the contract. In terms of South African law, a breach of contract in itself does not bring the contract to an end. chapter 11 execution of contract determined nature seriouness of breach of contract terms of contract legal remedies at disposal of innocent party damages. Business Rescue, Restructuring & Insolvency Newsletter, Approval of special resolution by court - Condonation for non-compliance with 10 day cut-off period, Still going down – another drop in the prescribed interest rate, Cession in security: Casting the net too widely, Professional indemnity insurance amidst COVID-19, The long and winding road | SCA hears appeal in a long battle for citizenship by two of our pro bono clients, POPIA: De-mystifying the role of an information officer, 1 Protea Place, Sandton, Johannesburg, 2196, 14 Louw Street, Stellenbosch Central, Stellenbosch, 7600, https://www.cliffedekkerhofmeyr.com/en/en/news/publications/2019/Dispute/dispute-resolution-alert-9-october-careful-how-you-cancel-a-strict-approach-to-following-cancellation-clauses-in-construction-contracts.html. Indemnities, to enhance damages claims 4. The first ground was premised on the contractor failing to remedy the breaches set out in the first notice within a 7-day period and within the 14-day period contemplated in the cancellation clause. Subscribe NOW. Examples include a reduction in status, the non-payment of remuneration etc. When one party commits breach of contract, soon the other party is entitled to the following remedies. The information and material published on this website is provided for general purposes only and does not constitute legal advice. Contract Law Remedies for Breach Welcome to the Official Law Sessions Youtube Channel. Comments. Mercantile Law: Remedies For Breach Of Contract 35 . 4 2010 (3) SA 601 (SCA); (2010) 31 ILJ 529 (SCA) 5 At 550, para [43] On the first ground for cancellation the court found that an aggrieved party cannot expect a defaulting party to read the first notice as if it conferred 14 days to remedy the breach instead of 7 days as stated in the first notice. Specific performance The parties can also agree to reduce, expand or changethe remedies available for breach of contract with, for example: 1. Helpful? The case of Hodgkinson v K2011104122 (Pty) Ltd and another [2019] 2 All SA 754 (WCC) (Hodgkinson) is a caution to parties employing contractors to pause and carefully consider the cancellation clause contained in the construction contract before acting on the impulse to cancel. Damages: The Money Remedy 3. The central facts in Hodgkinson were that the plaintiff (Hodgkinson) employed the first defendant as a contractor to complete certain construction works on the terms and conditions set out in an agreement entered into between the two parties. The five basic remedies for breach of contract include the following: money damages, restitution, rescission, reformation, and specific performance. Remedies for Anticipatory Breach of Contract LLM Thesis Martin Fischer 15 September 2015 Supervisor: Professor Tjakie Naudé. In South African law, the topic of punitive damages may be relevant in terms of the law of delict, the law of contract and copyright law. Attorney Fees and Costs The prevailing party in a breach of contract claim may be able to collect attorney fees and costs that he or she incurred in order to bring about legal action. Commercial Law (CLA1503) Academic year. ìx\ZVµÜÇd5Ü%^C¨ƒúAFÍ)/ŠTÑ´d¼/«.‹Òoɓ>'jÝc¢ûüêШ¶PŸ@ÙÜÒxP§úø ã½ýò8‹øÑÂ(çxY¤æ`妠Í$ž¢'eÓµÁ¹Áº æPxZ­ðMÄZ{¾ÕÁŠÊúZíiÇgIÍA9*/¢\”e¡Xf”ÌÁò´ƒÕ­¢ó`¼CÀ The court has the discretion to … But situation arises where one of the parties to a contract may break the contract by refusing to perform his promise. The court found that in the face of a defective letter of demand it would be “untenable” to allow the employer to fall back on the claim that he had in fact intended to allow the contractor an opportunity to remedy the default and if the response was unsatisfactory change his election and cancel the agreement. Termination of the contract 2. University of South Africa. In terms of South African law of contract, there are two types of breaches that can occur where a party defaults in terms of its obligations. University. Share. Opinions expressed and conclusions arrived at, are those of the author and are not necessarily to be attributed to the NRF. In this video, we will explain some of the remedies most commonly used for breach of contract cases. According to the employer, it did not matter that the period given to remedy the breach (7 days) was shorter than 14 days because the contractor in any event failed to remedy the default within the 14 day period. The rules and regulations that protect This is what is called breach of contract. The contractor failed to remedy the defaults within 7 days. Course. Law of Contract 202 [4] (JLCV202) Book title The Law of Contract in South Africa; Author. 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