TERMINATION OF CONTRACTS AND REMEDIES
Contractual agreements can be terminated in a variety of ways:
Operation of law
Termination Through Breach
Breach can be through a variety of ways but it simply involves conducts, which are inconsistent with proper performance of the agreement. It’s a violation of a material aspect of the agreement – an aspect that goes to the root of the contract.
Where the debtor (the person to whom performance is due) shows a clear intention to be no longer bound e.g. a house that has been let to A by the lessee is re-let to B, or a situation of double sale of a car. The creditor could accept repudiation and sue when the time of performance is due. Alternatively he can refuse the repudiation and sue for specific/exact performance originally envisaged in the contract by the parties.
Damages are the monetary equivalents to performance. They constitute the surrogate to specific performance. Specific performance is usually given at the discretion of the courts – on the basis of specific consideration the courts may refuse to grant specific performance.
Apart from repudiation there is also mora – delaying performance without lawful excuse where time is a material aspect of performance e.g. if the time within which performance is clearly defined (within 7 days). Commercial agreements are accompanied by lex commissoria (foreclosure or forfeiture). A forfeiture clause is a penalty clause, inasmuch as a foreclosure. Whereas a lex commissoria is also a penalty clause in an agreement, which empowers to cancel the agreement and impose a penalty, in the event of breach of contract e.g. delivery dates.
Apart from the defined time of performance the debtor can also be in mora if time is of essence – when it is clear to a reasonable person that performance has to be rendered without undue delay e.g. Munashe telephones Cannan a plumber to fix a leaking tap at his house. Cannan comes after a week, he is in mora. Or Mr. Gushungo in panic telephones the ambulance to come as his wife is in labour and the ambulance comes two weeks later.
Broderick Properties V Rood
Facts: Broderick Properties borrowed from a bank on first mortgage R220,000 – the money to be available only upon registration of the bond, but interest at 7.5% to be payable in any event from 16 November 1959. on 20 October 1959, Broderick Properties instructed Rood – a conveyancer – to register the bond, but it was in fact only registered on 11 February 1960. Consequently, Broderick Properties only received the R220,000 after having already paid interest amounting to R3,899 – covering an approximate three months period during which Broderick Properties did not have use of the capital sum. Broderick Properties therefore sued Rood for this amount. But Rood countered by claiming that, since time had not been fixed and Broderick Properties had made no prior demand setting a date for performance, he was not in mora. Court: Ruled in favour of Broderick Properties on the grounds that there is no inflexible rule that “where there is no date specified in the contract there must be interpellatio (prior demand by the creditor for performance by a reasonable date) before there can be mora (liability for a default in performance on the part of the debtor)….”. Rood was quite in mora and that the receipt and use of the money by Broderick Properties was dependent upon Rood’s expeditions and implementation of the undertaking. Rood was to attend to the matter without delay.
When the debtor under-performs either in terms of quality or quantity e.g. Kudzai, a butcher is supposed to deliver to a city café 100kg of high quality beef but delivers 50kg, or she delivers 100kg of offal.
Termination Through Agreement
This is an amicable way of terminating a contract. It involves the consensus of both the creditor and debtor....
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