Law Of Contract Notes

® May’s Production © Misrepresentation Representation which is not made bona fide, true, honest, etc. Statement made by one party of the contract (presenter) to the other party (presentee) which is not ----- in term of contract yet is one of the reasons that includes the presentee into the contract. Three Categories: Fraudulent – presentation involves elements of fraud (latent defect). Negligent – presentation involves elements of negligence (reckless). Innocent – presentation involves elements of innocence. Latent defect – what you cannot see Patent defect – what you can easily see Effects and Elements: 1. Statement or fact must be false 2. Statement or fact must be wrongful/unlawful 3. Misrepresentation must be made to the other party of contract Effects of fraudulent presentation: If the aggrieved party can proof these elements then there is no “consensus ad idem”  no contract. Remedies of Fraudulent Misrepresentation: 1. Abide by the contract and seek damages (any wasted costs) 2. Cancellation/Rescission of the contract *One cannot seek both remedies at once Contractual Damages

Delictual Damages

Contract Positive approach Position you are in if contract is performed

Delict Negative approach Position you are in prior to the performance

Phame (Pty) Ltd v Praize Whether or not a person can seek remedies on the grounds of innocent misrepresentation? Aedilitian Remedies (all contract of sale). Roman law

The merx one is selling has a “latent defect” One can apply Aedilitian Remedies: 1. Actio Redhibiyorian 2. Actio quanti minoris Buyer must firstly cancel the contract and then apply restitution in integram (put both parties in the position in which they both were in before the sale). Secondly, one should give the real value of the merx. Abatement of the purchase price.

® May’s Production © `~~~~~~~~~~~~~~~~~~~~~~`

Duress & Undue Influence Elements of Duress: (1) Actual violence or reasonable fear. (2) The fear must be caused by the threat of some considerable evil to the party or his family. (3) It must be the threat of an imminent or inevitable evil. (4) The threat or intimidation must be contra bonos mores. (5) The moral pressure used must have caused damages. The reasonableness of the fear The test for reasonable fear is one of objectiveness. Therefore, it can be said that the fear must be sufficient to affect the mind of a person of ordinary firmness. The object of the threat The party himself and his family can be threatened. It is also accepted that both property (goods) and economic duress are valid. In recent years, English law has come to recognize “economic duress”. The first principles are (a) that a contract induced by threat sufficient to overcome the resistance of a person of ordinary firmness should not be allowed to stand, and (b) that no one should be permitted to profit from his own wrong. The difference between duress of a person and duress of goods is that the latter requires protest. One should protest before consenting. Vis Absoluta  no need for protest (eg: when someone holds gun to your head). Vis Compulsa  need for protest (eg: when there is room for protesting) The imminence of the threat A narrow question is asked: whether a person of ordinary firmness would have resisted the threat? Meaning whether, assuming the threat was sufficiently serious to affect the mind of such a person, he could not have averted it by some method other than agreeing to the contract. How much time was available to him to choose his method of averting the threat? The threat must be unlawful or contra bonos mores Contra bonos mores  against good morals. 

Arend v Astra Furnishers

1974 1 SA 298

® May’s Production © CASE

(Elements above set out in this case) 

Hedricks v Barnett

1975 1 SA 765

Undue Influence In English law undue influence can be regarded as the relationship between lawyer & client, doctor & patient, mother & daughter According to Roman-Dutch law, there is no presumption, but it was later accepted in RDL. Elements: (1) The one party must have exercised influence over the other party (2) The influence must have weakened his power of resistance and made his will pliable. (3) Without that influence, the other party would not have entered into the contract. CASE

Preller v Jordaan

1956 (1) SA 483



`~~~~~~~~~~~~~~~~~~~~~~

Illegality (Unlawfulness) Legality of contract: whether a contract is enforceable. Statutory Illegality – whether the contract is against the statute. Legality/illegality under the common law. Statutory Illegality a. Void, unenforceable and the crime is committed Eg: racial crime – people enter into a contract to fix the other race (black/white). b. Void, (contract against the statute) but no crime is committed Eg: selling a commercial farm to a private individual instead of offering it to the governments for consideration first. c. Where a crime is committed but the contract is enforceable Eg: when a business is opened in an area zoned for residential use only, the business will be operating illegally, yet the contracts that the business has made with his customers is still valid.

® May’s Production © Legality/illegality under Common Law If a person enters into a contract against the provisions: 1. Ex turpi causa – contract will be void and unenforceable. 2. Par delictum post es condition possidentis/defendenis If parties are at equal guilt, the possessor/ defendant is at a stronger position CASE



Jajbhay v Cassim 1939 AD 537

“Ex turpi causa non oritur actio”  [Latin] No action can be based on a disreputable cause: the principle that the court may refuse to enforce a claim arising out of the claimant’s own illegal or immoral conduct or transaction. Hence parties who have knowingly entered into an *illegal contract may not be able to enforce it and a person injured by a fellow-criminal while they are jointly committing the crime may not be able to sue for damages for the injury. (Party seeking enforcement) A contract is illegal when it goes against the statutory law and Common law. - Statue law - public policy (Contra bonos mores) Par delictum (can be bent) - If two parties have performed the contract, they are equally guilty. - Court will not be able to recover your loss; it is an illegal contract. The loss remains where it falls. - But it is not an absolute rule; it can be banned in the interest of natural justice, in order to avoid unjust enrichment. It is flexible. - (party seeking release from its operation) Restraint is an agreement by which someone is restricted in his freedom to carry on his trade, his profession, his business or other economic activity. RDL approach: (Book v Davidson) (1) A contract in restraint is valid and therefore enforceable by Courts, just like any other term of contract. (2) However, if that contract is against public policy, it will not be enforced. (3) The onus is one the party to prove the enforceability of the contract. (4) If it is proven that the contract is unreasonable and against public policy, the court will not enforce the contract.

® May’s Production © (5) When a court is faced with restraint of trade, to decide whether a contract is against public policy or not, it has to look at the circumstances prevailing at the time of the hearing, not the time that the contract was concluded. (6) Courts have the power to enforce parts of the contract which are not against public policy  part of contract which is reasonable.

CASE



Magna Alloys v Ellis

`~~~~~~~~~~~~~~~~~~~~~~

Distinction between Condition and Term The terms of a contract are the promises agreed upon by the parties which together make up the contract. A condition is a major term of a contract. It is frequently described as a term that goes to the roots of the contract or is of the essence of the contract. Condition of a contract is also knows as a provision Conditions affect the nature (existence) of an obligation; it determines whether or not there is a contract, therefore whether or not there is a liability. A term of contract does not relate to the existence of a contract or the obligation, but rather it regulates or modifies the obligations to the parties of a concluded contract. A contract is either fulfilled or not, according to a proscribed event that does or does not take place. A contract must be “future” and “uncertain”. If a contract is fulfilled it has an automatic effect: either creating or canceling a contractual obligation. Implied terms: a provision of a contract not agreed by the parties in words but either regarded by the courts as necessary to give effect to their presumed intentions or introduced into the contract by statutes (as in the case of contract of sale). An implied term may constitute either a condition of the contract or warranty; if it is introduced by statute it often cannot be expressly excluded. Tacit/Express terms: a provision of a contract, agreed to by the parties, that is either written or spoken. Such a provision may be classified as a *condition, a *warranty, or an innominate term. 

Alfred McAlpine & Son v TPA 1974 3 506 `~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Conditions of a contract

® May’s Production © Conditions: Positive (affirmative) and Negative conditions Casual and Potestative conditions Suspensive (precedent) & Resolutive (subsequent) conditions – NB!!! Suspensive – contract is only valid when the 3rd party approves. Eg: A – B, if FNB approves of loan to B, a contract will come into existence. The contract will be suspended until the conditions are fulfilled. -

If B applies for financing from FNB, yet does not want to buy the house from A, fictional fulfillment occurs. B uses the finance from FNB for something else, he is undermining the conditions of the contract. The Court will assume that the contract is already binding.

Suspensive conditions, which suspends the obligation until the conditions are fulfilled. Until the happening of the event contemplated, there is no obligation until the happening of the even in the future = no creditor, no debtor There is no obligation, only “Spes” [Latin]  Legitimate expectation (hope). Resolutive – contract is already in existence, but will lapse if the date has passed. There are only two parties and the contract will be discharged if the party fails to perform at the set date. “Resolutive time clause” – affects the validity of the contract.

Suspensive Conditions No contract Contract suspended Involves 3rd party

Resolutive Conditions Existent contract Obligation to perform Only 2 parties involved

`~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ *Time Clause – a certain set date given to the parties to a contract to perform a term of contract, which qualifies an obligation with reference to a certain moment in the future. * Provisions in contract that relate to the time within which acts are to be performed. The question often arises whether or not a time provision constitutes a condition of the contract. If it does, it is said that time is of the essence. CASE:

Bernitz v Euvrard 1943 AD 595

‘ `~~~~~~~~~~~~~~~~~~~~~~~~~~~~ *Fictional Fulfillment:

® May’s Production © When a party to a contract in bridge of his duty prevents the fulfillment of the conditions until the happening if which one will become bound in obligation, and does so with intention of frustrating it, the unfulfilled conditions will be considered to have been fulfilled against him. The doctrine of fictional fulfillment protects this spes/legitimate expectation by applying the equitable rule that a party cannot take advantage of his own default to the loss or injury of another. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Warranties A warranty is a term or promise in a contract, breach of which will entitle the innocent party to damages but not to treat the contract as discharged. Warranties – if there is a breach, you will have to make up for it (fix it). -- In case of problem occurring, you will repair it. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Exemption A term in a contract purporting to exclude or restrict the liability for breach of obligation of one of the parties in specified circumstances. If such a clause is ambiguous, the court will interpret it narrowly rather than widely. If an exclusion or restriction is not recited in a formal contract but is specified or referred to in an informal document, such as a ticket or a notice display in a hotel, it will not even be treated as a term of the contract unless reasonable steps were taken to bring it to the notice of the person affected at the time of contracting. Exemptions – can be given by parties or emanate from law - running away from obligation (eg: parking at own risk) Exemption Clauses - Mostly used by parties in stronger bargaining positions. - Can be put in contract by either of the parties. It is first necessary to establish an existence of the exemption clause, and a customer who has suffered injury or loss from the supplier’s wrongful act may elect whether to sue in contract or delict. If he sues in contract, the onus of proving there is no exemption clause is on him, but if he sues in delict the onus of proving the clause will be on the supplier. Interpretation of the Exemption Clause 1. Our courts  if there is no consensus between both parties, the Court will strike contract down. 2. If there is consensus, exemption clause will be avoided when one of the parties to a contract has abused the other party’s circumstances to such an extent that consensus can be said to be obtained in an improper manner.

® May’s Production © 3. If an exemption clause is framed (written) so widely then the court will assume that there is an obligation to perform on the part who framed the exemption clause. 4. An Exemption Clause may also be struck down if it opposes public policy. CASE:

Wells v South Africa Alumenite Company 1927 AD 69 Stocks & Stocks v T J Daly & Sons 1979 3 SA 754

 

~~~~~~~~~~~~~~~~~~~~~~~~~

Ticket cases ~ Notice/Display There is a fold test: (1) Whether or not the person receiving the ticket knew that there were writings/printings on the ticket. (2) Whether the person receiving the ticket knew the writings/printings form part of the contract as binding. If the answer is “yes” to the 2 questions, then the writings/printings will form part of the contract and will be binding. If the answer is “No”, then one proceeds to the next question. (3) Did the party issuing the ticket take necessary steps to bring the terms/references relating to the terms of contract to the notice of the other party? “Mutatis Mutandis”  same applies with necessary change `~~~~~~~~~~~~~~~~~~~~~~~~~~`

Stipulatio Alteri Stipulatio alteri means a contract in favor of a third party (benefit of the third party).

C is not a party between discussion of A and B. A is no longer in the party once contract is concluded. The contract will exist between B and C.

® May’s Production ©

Difference between agent (representation) and stipulatio alteri: A – Agent B – Principal

C – 3rd Party

A acts on behalf of B

If the sale is concluded, there is a contract between B and C, because A acts on behalf of B. Duties/obligations of an agent: - They act in good faith and in the interest of the “principal”. - If the agent does not act in good faith, then the principal is capable of suing him. Authority – expressed or implied, authority to represent a person or company. Authority can be written on a piece of paper. (Expressed authority). `~~~~~~~~~~~~~~~~~~~~~~~

Termination/Discharge of Contract 1. Performance Contract comes to an end when: - Performed: both parties bound by obligation - Who to perform? - What to perform? - How to perform? - When to perform? Debtor and Creditor A letter of demand or Summon (issued from the Court) is sent to the debtor. If creditor sends debtor a Summon, and debtor fails to perform, the debtor is said to be in “Mora”, to place the debtor in mora. Mora ex re When the contract fixes the time for performance, mora is said to arise from the contract itself and no demand is necessary to place the debtor in mora. The principles of law which

® May’s Production © applies when a debtor undertakes to discharge an obligation on a specific date, the creditor need not make demand. Therefore a debtor is in mora if he fails to pay on the appointed day. Mora ex persona The general rule of law is that of obligation for performance of which no definite time is specified are enforceable forthwith  without delay, but the rule is subject to the qualification that performance cannot be demanded unreasonably so as to defeat the object of the contract or to allow an insufficient time for compliance. Who is to perform? Debtors(s) – more than one part  joint debtors Each debtor will perform pro rata (his portion) obligation. Joint and Several - Husband and wife, if one fails to pay a loan, the creditor can sue either one of the spouse to pay. - Company with many debtors who are jointly and severally liable. If one debtor pays the loan back, the rest of the debtors will be discharged of all liabilities. `~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

2. Set Off (Compensatio) A set-off is an extinction of debts (reciprocally or to each other) by two persons. If the debts are equal, both debts are discharged. If they are unequal, the smaller is discharged, the larger remaining in force for the balance or excess only. Set-off is equivalent to payment and it consequently operates ipso facto & ipso jure or automatically as it partially or totally discharges the debts in question. A monetary cross-claim that is also a defence to the claim made in the action by the claimant. The deduction of monies owed against sums due to be paid. Many commercial contracts contain express terms prohibiting set-offs. Set-off has 4 requirements: 1. Both debts must be of the same nature (both in $$$ or property, etc) 2. Both debts must be liquidated (capable of being put in a monitory value) 3. Both debts must be fully due. 4. Both debts must be payable by and to the same person in the same capacity.

3. Merger (Confusio) A merger is the concurrence in the same person of the capacity of a creditor and debtor in respect of the same obligation. The consequence of merging is that the debt of ipso facto

® May’s Production © discharges. Eg: when a lessee becomes the owner of the leased property, the lease is at an end.

4. Novation Novation comes from the word “novus” which means new.  A new contract replacing the old one. 1. 2. 3. 4. 5.

Novatio proper Delegation Assignment Compromise Cession

Novation means a new contract which extinguishes the original obligation between the parties and replaces it with a new/fresh obligation. There are 3 types of Novation, namely: Novation proper, Delegation and Assignment. Novation Proper A new contract between original parties to an existing contract which extinguishes the original obligation and substitutes a fresh one in its place. A novation depends on a justa cause, meaning good ground, and if the original contract is invalid, it follows that the novation is equally invalid. The effect of novation proper is to discharge not only the original obligation but also all accessory to it. A new obligation must be created which contains some elements not found in the earlier contract. Eg: where a money debt is changed into an obligation to transfer a property. (A novatio can be voluntary or compulsory.)

5. Compromise Compromise is a form of novation. It is an agreement between the parties to an obligation, the terms of which are dispute or between the parties to a law suit. The issue of which is uncertain, settling the matter in dispute, each party moving back (receding) or forth from his previous position and conceding something, either dismissing his claim or increasing his liability  negotiating between the parties.

6. Delegation A new contact whereby the original debtor provides a 3rd party who is accepted by the creditor in his place as a new “debtor”. As soon as the new contract is concluded, the creditor no longer has any rights against the original debtor (the original debtor is discharged). For a delegation to be effective, the consent of the creditor is necessary~!

® May’s Production © 7. Assignment The making over of both rights and obligations of the parties to a contract to a 3 rd person called an “assignee”. The result is that the assignee steps into the shoes of the assigner. The original contract is terminated as a result of the assignment. The main requirement of an assignment is self evident, namely the consent of 3 parties: original 2 parties and the consent by the new party (assignee).

Cession

When A transfers his personal rights to C, B will have to pay C. Cession is used to signify the transfer personal rights following from a contract. The creditor making the cession is called the “cedent” and the person to whom the cession is make is called the “cessionary”. Generally, a contractual right may be ceded by the creditor to a 3 rd party without the consent of the debtor. Exception Rules: 1. where the obligation is of a personal nature, the debtor must be advised (notified) eg: contract rendering services (employment) the debtor cannot be obliged to render them (services) to someone other than the creditor himself. 2. Where there has been an expressed agreement that the creditor shall not transfer his rights. 3. Where a portion of the debt is only ceded to a 3rd party. Formation of Cession: Cession is affected by an agreement between the cedent and the cessionary that the contractual rights are transferred/ceded by the former to the latter. If consent of debtor is not necessary, then the notice to him is not required in order to vest the rights into the cessionary. The cessionary should always give a notice to the debtor because if the latter (debtor) in ignorance of the cession, he pays the cedent, the debtor is discharged. C cannot sue B, it is C’s duty/responsibility to inform B of the cession. If on the other hand, the debtor with the notice of the cession still pays the original creditor, he remains liable to the cessionary.

8. Supervening Impossibility (Vis Major / Casus Fortuitus)  Acts of God.

® May’s Production © This should not be caused by the debtor, the causes should be beyond your control. Where performance of the obligation of the debtor becomes impossible (physically or legally) after the contract has been made, the debtor is discharged from liability if he is prevented from performing his obligation from vis major / casus fortuitus (unforeseen accident). Exemption of this is the contract of Sale – Passing of Risk as soon as contract is concluded. Eg: you buy a car, and sign the contract of sale, on the way of the car being transported to you house, an accident occurs. You will not be able to get a new car, the company will not be liable to the damages nor will they pay.

9. Release Release is a discharge or a quittance of an obligation either gratuitously or value. A release can be made expressly or tacitly. One of the promises by the creditor not to sue the debtor. (Pactum de non petendo). The release by a creditor of one of the two co-debtors discharges the other co-debtor. A mutual release of each other by both parties to a contract constitutes a rescission of that contract. `~~~~~~~~~~~~~~~~~~~~~~~~

Breach of Contract -

failure to perform negative performance (mora ex re) material breach (affects whole contract) Repudiation/Anticipatory breach Preventive performance Positive mal performance

Forfeiture Clause also known as the cancellation clause. If a person does not meet the requirement/fail to perform the requirements, the contract will be cancelled. Lex Commissoria – contract may contain a forfeiture clause or lex commissoria, empowering the creditor to cancel the contact if the debtor fails to perform by the time fixed for performance. Whether a specific breach has been committed is just a matter of interpretation of contract. North Vaal Mineral Co v Lovasz 1961 (3) SA 606 The investigation whether the right to cancel came into existence is purely. Investigation whether the condition emerging from the language of the contract has in fact been fulfilled.

Material Breach It is universally accepted that a sufficiently serious breach will justify cancellation without the necessity of proving the intention to repudiate. According to the well-known principles the decision of a contract is only permissible when/ if a breach occurred of a term which goes to the roots of the contract.

® May’s Production © A minor breach of an essential term will not always justify cancellation. If a contract contains an expressed forfeiture clause permitting the cancellation for a specific breach, the court will not investigate the materiality or otherwise of the breach. CASE: Oatarian Property (Ltd) v Maroum 1973 (3) SA 779 Singh v McCarthy Retail Ltd 2000 (4) SA 795

Repudiation/Anticipatory Breach  Definition  Test  Consequences The test is to look at the act and intention of the parties. A repudiation refers to any conduct of a party to a contract from which a reasonable person in the position of the innocent contractant that, the first contractant (party) does not intend to comply with his duties, for instance: where a contractant denies the validity of a contract. In the case of Tuckers Land, it was held that what takes place in a case of anticipatory breach is the breach of an ex lege obligation derived from the requirement of good faith (bona fides) which forms part of every contract and which prohibits anticipatory breach. Repudiation need not take place in so many words, any conduct which indicates with reasonable certainty that a performance which is owing will not be rendered when it becomes due is sufficient. Eg: to deny the existence of the contract To dispute the terms of the contract To attempt to cancel the contract without good grounds. TEST: whether it can be reasonably inferred from the repudiators conduct that mal performance takes place in the future. CASE: Data Color International (Pty) Ltd v Intermarket 2001 (2) SA 284

Breach of Contract by the Creditor Breach of contract can be committed not only by debtors, but also by creditors who act in a wrongful way. This may arise where there is a duty on the creditor to co-operate towards the discharge of the obligation by the debtor, and the creditor does not comply with its duty. In such a case, the debtor is bound to deliver a thing to the creditor, he needs the co-operation. A creditor is also under a duty not to interfere with the execution of the debtor’s duties. Mora Creditoris applies to mora debitoris mutatis mutandis. Mora creditoris relates to the time of compliance with the creditor’s duty to co-operate. It occurs where the creditor wrongfully fails to render his co-operation as has been fixed by the contract to enable the debtor to perform. Where a creditor is expected to perform/co-operate

® May’s Production © with the debtor. Before performance is tendered (given) and the time for his co-operation has been fixed in the contract, the creditor must give his co-operation at the required time, otherwise he will be in mora (mora creditoris/more ex re). If no time has been fixed for cooperation, or if the debtor wants to perform before or after the time set for performance, the debtor must demand the creditor’s co-operation in order to place him in mora. CASE:



Ranch International Pipeline `~~~~~~~~~~~~~~~~~~~~~~~

Remedies for Breach of Contract 1. Specific performance 2. Damages 3. Cancellation / Rescission

Specific Performance Interdict is the opposite of specific performance. Interdict is when on rectifies the wrong of another person. Eg: intervening in another person’s work, the court can order you to stop the contract. Case: Benson v SA Mutual Life Insurance 1984 (1) SA 776 SP is an order to perform a specific act in pursuance of a contractual obligation. Our law is clearer, the plaintiff is always entitled to claim SP and his claim will be granted subject to the court’s discretion. In the following instances SP is not possible: a. Where damages will adequately compensate the plaintiff. b. Where it is difficult for the court to enforce its decree (for SP) c. Where the subject matter (merx) can be easily bought from else where d. Where SP entails (involves) the rendering of services of a personal nature e. Where an order from SP would operate unreasonably hardly on the defendant. Defence of SP that some can raise:

Y ------- X Sale: 1 Price 2 Consensus 3 Merx Y is the seller of a house, X is the buyer. They agree on the price. It is Y’s duty to transfer the merx and X’s obligation to pay the price. “Reciprocal Obligation”. If X fails to pay, Y can take X to court.

® May’s Production © A defence called Exceptio non adimpletic contractus is a defence which applies in cases of reciprocal obligation. Reciprocal contract is a contract in which parties create reciprocal obligation. This reciprocal contract arises when the respective performances are undertaken, specifically one in exchange for the other. Whether reciprocal obligation ares, it will depend on the intention of the parties of the contract. Following contracts (contract of sale, contract lease) always involve the doctrine of reciprocity. The principle of reciprocity entails that a party is not entitled to performance unless he has himself performed completely or has tendered proper performance. CASE



BK Toolings v Scope Precision Engineering

Cancellation as a remedy Restitution as a requirement for cancellation: if a party to a contract of sale breaches the contract, you can cancel the contract, but you have to give back what you have received in the performance of the other party. Both parties return to their original positions. This rule is subject to exemption such as the returning of a defective thing (eg: one cannot return rotten eggs, soap). One does not benefit from it. But if the other party benefits the court will ask it to pay back the amount owed. The requirement is of restitution comes into place/existence where a party to a contract, seeking to cancel the contract has received performance in terms of reciprocal obligation. In principle such a party must be able to return or restore what he has received otherwise he cannot reside from the contract. The ability to make restitution is a integral part of the process of cancellation and is regarded as a suspensive conditions for lawful cancellation. Restitution is required for cancellation only if it is equitable (rules of natural justice). In general a party whose inability to restore is not due to his own fault will be still allowed or entitled to cancel the contract, provided that he dies not gain an advantage from the performance that has been delivered. According to Harper v Webster, a party who is responsible for the inability to make restitution is nevertheless entitled to the return of his performance if he can still substantially return what he has received and make good any shortfall by means of monetary payment. Case: Marks Ltd v Laughton 1920 AD 12 SA Oil and Fat Industry v Park… 1916 AD 400

Damages as a remedy Contractual damages: they should place the innocent party in the position that it should of been if the contract had been performed. It is a positive approach, sometimes also know as the profit approach.

® May’s Production © CASE

 

Holmdene Brickworks v Roberts Construction (general damages) Shatz Investment (Pty) Ltd v Kalovyans (special damages)

Special Damages: loss of profit and loss of “good will”. How does on know the difference between general damages and special damages? GD: flowing directly from the contract (such as in the Holmdene Brickworks case), the expenses were made directly from the breach of the contract (latent defect). SD: damages which are too remote to be foreseeable at the time of contract. Too remote to be recoverable, but if one can convince the court that the breach of contract caused the loss, damages will be recoverable. CASE:



Novick v Benjamin 1972 2 SA 842 (involves repudiation)

*Assessment of damages for anticipatory breach/repudiation: one starts from the time when the obligation is to be performed.