219008787

AMAHLE MDUNGE

CATCH UP ASSESSMENT

SECTION C

QUESTION 1

Mora debitoris, as a type of contract breach, is defined as a debtor's unjustifiable failure to

perform on time in relation to a positive obligation that is both enforceable and due.
Furthermore, the performance must still be possible; in other words, the obligation to perform
must be capable of fulfilment despite the debtor's failure. The time for performance may be
fixed by agreement in the contract itself, or unilaterally by a subsequent demand for
performance. The general rule is that the performance could also be demanded either
immediately or as soon as reasonably expected after such a breach occurs. Where it's before
the agreed suspensive condition being fulfilled or where the time for the performance failed
to arrive yet, the debtor can then not comprise mora.2. Failure to perform timeously. The
second requirement is that the debtor did not make performance timeously. Importantly,
certainty in reference to the performance is presupposed in respect of timeous performance.
Moreover, the parties are required to mend a date for such performance (mora – in delay or
default).Such time for performance can either be fixed unilaterally by way of a subsequent
demand for such performance or by way of agreement which is fixed A distinction is
accordingly drawn between two forms of mora debitoris: mora ex re and mora ex persona.
Mora ex persona is therein relevant. In the matter of Nel v Cloete the courts considered-
where the period for performance is unreasonable, the demand will not give rise to mora,
even if it is approaching the end of a truly reasonable period. Furthermore, if the time for
performance is not expressly specified in a demand, it may be interpreted to mean that the
performance is essentially required immediately.

Furthermore, while such a demand may be reasonable in cases of monetary debt, it does not
apply in all other cases involving monetary debt. The court ruled that when making a demand
for performance, the creditor must specify a date or time that allows for a reasonable period
during which the debtor can perform. Furthermore, the debtor has no right to remain inactive
or silent after the contract is signed on the assumption that when called to perform, he or she
will still have the benefit of a full reasonable period for initial performance. In the case of
Willowdene Landowners v St Martin's Trust, neither a right to cancel the agreement nor a
time limit for performance were stipulated.

It was held, however, that one party may place the other party in mora by providing a
reasonable time for performance to be made to the other party, and if such performance was
not made, there would be no right of cancellation that could ensue. Furthermore, if the time
period was not reasonable, the notice would be ineffective. Furthermore, in this case, the
contractant provided an insufficient time period for performance, and the mora was deemed
ineffective as a result. According to Van der Merwe et al, the debtor is required to prove the
absence of fault through an excusatio a mora. When the creditor causes the delay in
performance, the situation is called mora creditoris. The court held in Scoin Trading (pty) Ltd
v Bernstein that fault is not a requirement – this was confirmed in the Administrator, Natal v
Edouard case. In light of this, it is unclear whether or not fault is required. However, if fault
is proven, it would support the claim that there is a type of breach as such. The requirement is
that the performance is requirement to be possible despite and albeit the failure of such
performance. However, where the performance ultimately becomes impossible, one is then
dealing with impossibility. Positive malperformance refers to situations in which the debtor
effectively affects performance but does so in an ineffective manner. In cases where the
performance is prevented, the performance is no longer possible, and thus no delay to
performance can exist. Due to the fact that a delay in performance will not justify a
reasonable conclusion that future performance will be defective or will not occur, such a
delay in performance does not amount to repudiation.

Specific performance is the first remedy for a breach of contract in our law and is applicable
in this instance. A plaintiff is often entitled to an order of specific performance. However,
specific performance is a discretionary remedy and therefore courts possess a general
equitable discretion to refuse to grant such an order on grounds of equity or public policy.
This was elaborated in Benson v SA Mutual Life Assurance Society. Certain exceptional
circumstances are recognized within which it's likely that an order for specific performance
will not be granted by a court (Haynes v King Williamstown Municipality). These include
circumstances where the granting of such an order will cause undue hardship to the breaching
party or a third, the difficulty of the court enforcing the order and whether the order requires a
personal service to be rendered such as in personal services or employment contracts.
However, while these circumstances function a guide on when specific performance may be
granted, it's been reaffirmed that they are doing not form rigid rules and therefore the courts
retain their equitable discretion in determining when execution will serve as an appropriate
remedy. In light of the given case various circumstances make the urgency of performance
apparent. Illustratively, where performance is of a commercial or speculative nature, where
the performance could relate to fashion or food along with particular attractiveness or
durability within the market as well as where the performance is subject to fluctuations in
respect of the price. It is agreeable that Andiswa’s need was in fact time sensitive- a
consideration Leandro ought to have measured. In my opinion (in substantiality to the above
law) there is a grave breach on Leandro’s part.

As a result, common remedies for breach may be available to Andiswa. Examples of such
remedies include: the right to sue for damages- Perpetuatio obligationis. Furthermore,
regardless of whether the debtor eventually performs or not, he or she is obligated to
compensate the creditor in the form of damages if the creditor suffered any losses as a result
of the delay as discussed in Nel v Cloete case. The right to rescind in limited circumstances.
The right to claim specific performance where the debt eventually becomes both due and
enforceable and is not dependent on the proof of mora – Nel v Cloete case. As a result,
specific performance can only be claimed if a debt is owed.

QUESTION 2

The Supreme Court of Appeal ruled authoritatively in Thoroughbred Breeders' Association v

Price Waterhouse that the Apportionment of Damages Act does not apply to a claim for
contractual damages. Thus, where the plaintiff's loss in a contractual claim is caused in part
by the other party's breach of contract and in part by the plaintiff's own fault, there can be no
apportionment or reduction of damages. Even if the plaintiff's fault was the dominant or pre-
eminent cause of the loss, the party in breach is liable for the entire amount of the loss.

The person who bears the onus of proving the excessiveness or otherwise of the penalty
stipulation: The onus is on the debtor to prove that the penalty is out of proportion to the
prejudice suffered by the creditor & that it should consequently be reduced. Once the debtor
has made out a prima facie case that the penalty is excessive, there is an onus on the creditor
to lead evidence in rebuttal of the debtor’s prima facie case. The law allows only two
claims: specific performance proper (in the sense that you ask for the performance that was
originally agreed to in the contract) or damages proper in the sense of the losses you sustain
because of the breach of contract.
The court stated in Victoria Falls and Transvaal Power Co Ltd v Consolidated Langlaagte
Mines Ltd the mitigation rule authoritatively: where a breach of contract occurs, the innocent
party cannot simply sit back and allow his or her losses to accumulate; the party must take
reasonable positive steps to prevent the occurrence or accumulation of losses. If the innocent
party fails to take such steps, the party in breach may raise the mitigation defence in response
to the innocent party's claim for damages. If it is proven that the innocent party failed to
mitigate losses, his or her claim for damages will be reduced or even eliminated, depending
on whether such alleged action would have reduced or prevented such losses.

In order to alleviate the practical difficulties of a claim for damages and to ensure strict
compliance with the terms of the contract, a contract often contains clauses that enable quick
and easily verifiable redress in the event of a breach of contract. in the following way: Pre-
estimate of damage. To overcome the difficulty of determining the amount of damage caused
by default, the parties will often dictate that, in the event of default, the culprit pays the
innocent a predetermined amount of money. This amount is intended to provide a rough
estimate of the harm the innocent person is likely to suffer from the crime. Penalty Clauses-
These clauses provide for the payment of a contractual penalty for non-compliance. Its
primary purpose is not to make a preliminary estimate of the harm that may result from the
violation, but rather as a prevention to the violation. Forfeiture clauses- These clauses
stipulate that in the event of cancellation due to non-performance, the offender loses the right
to reimbursement of a service already rendered, the innocent party on the basis of the
contract. The clause should function in respect of a breach of an act or omission in battle with
a contractual duty.

A withdrawal in terms of provision isn't always a breach of contract, however instead the
exercise of a right conferred through the contract. The clause must either impose a duty at the
defaulting party to ‘pay an amount of money or to deliver for the gain of some other person’
or should offer for a forfeiture of the type discussed by section 4. The best forfeiture
expressly covered through that segment is one in respect of ‘the right to assert restitution of
something done through the defaulting party in terms of the agreement’. The courts have held
that a clause supplying for a forfeiture of a right to fee earned, or of a proper to
reimbursement for improvements made to immovable belongings sold on instalment, does
now no longer fall in the scope of the Act. The clause functions ‘both through way of penalty
and as liquidated damages. Cancellation is an extraordinary remedy available only when a
breach is sufficiently serious or material – unless the parties have included a cancellation
clause in their agreement (a lex commissoria), in which case the agreement supersedes
common-law rules. If an innocent party chooses to cancel the contract, the other party must
be notified. The cancellation notice must be clear and unequivocal. If an innocent party
expressly or implicitly expresses a willingness to uphold the contract despite the breach, the
right to cancel due to the breach is waived. The primary obligations of the parties are
extinguished when a contract is cancelled. Upon cancellation, each party is obligated to
return to the other party any performance received.

QUESTION 3

The effect of cession is to divest the cedent of the right and vest it in the cessionary, who also
acquires the right to proceed against the debtor's surety. The surety's liability to the
cessionary is limited to the amount of the debt actually ceded. Only the cessionary has the
authority to exercise and enforce the ceded right. Cessionary retains right against debtor if
debtor pays cedent after being notified of cession.

The cessionary has no enrichment claim against the cedent because the debtor, not the
cessionary, is enriched. Cession, therefore, doesn't amount to a contract but rather may be a
transfer agreement. Unlike traditio, a cession doesn't entail physical delivery nor does it, thus,
hold a physical element. This was substantiated in Botha v Fick 1995 (2) SA 750 (A).
However, what's essentially being transferred is that of an incorporeal thing and also the
transfer is effected by way of an underlying obligationary agreement between the cessionary
and cedent. This particular transfer agreement comprises of or encompasses the concurring
intentions of both the cedent to transfer the proper, which of the cessionary to require transfer
of it, and is that the identical exact equivalent of the mental element encompassed in
tradition.

In light of this, it is imperative to notice that where cession takes place, the debtor isn't
required to be notified thereof neither is such a debtor’s consent required so on effect a
legitimate cession of rights. Various rules were developed by the law so on make sure that no
prejudice is suffered by the debtor in respect of cession. Northern Estate and Trust
Administrators (Pty) Ltd v Agricultural and Rural Development Corporation [2014] All SA
655 (SCA), ARDC sold company shares to Boyes, but the parties later agreed to cancel the
sale tacitly.
Prior to entering into this agreement, Boyes relinquished his right to transfer the shares to the
appellant. The appellant claimed that the shares had been transferred from ARDC. ARDC
was not aware of the cession when it signed the cancellation agreement, which had the effect
of relieving ARDC of its obligation to transfer the shares. The courts decided a debtor is
protected if he or she deals with a cedent unexpectedly of a discharged cession debt and pays
the cedent in ignorance of the debt. it's imperative to notice that specific requirement must be
met so as for a cession to essentially take or have legal effect.

These requirements are inclusive of; 1) A transfer agreement; A cession is basically a two-
sided act wherein the exchange of a individual right takes put by way of an assertion. In this
way, it requires the assembly of minds of the parties. In light of this, it is evident that that the
cedent is required to have the intention to exchange the right, known as animus transferendi
and the cessionary is at that point required to have a concurring intention to require such
exchange of the right, known as animus acquirendi. This concurrence of intentions sums to a
essential mental component for a substantial cession to require place. 2) The capacity of the
personal right to be ceded; In terms of the requirement that the personal right ought to be
capable of being ceded or of cession, there is a general rule which provides all personal rights
are considered to be freely cedable. Nonetheless, this general rule has a number of exceptions
such as contingent rights; future rights; rights too personal to be ceded and delectus personae.

3) An entitlement by the cedent to dispose of the personal right; In respect of the requirement
that the cedent ought to be entitled as well as have the capacity so as to disposed of the
personal right in question, the nemo plus iuris ad alium transferre potest quam haberet rule
finds application ( which means that no person may transfer more rights than he or she has).
This rule finds application in respect of the transfer of all rights which is inclusive of those
which are personal. 4) Formalities- there are essentially no prescribed formalities required for
a valid cession to take effect. Thus, the parties to the cession may express their concurring
intentions in whichever manner they deem fit. Again, the debtor is not required to be notified
of the cession nor is his or her consent thereto required. Cession may thus take place devoid
of any publicity whatsoever.

5) The absence of prejudice to the debtor. 6) Legality In respect of the necessity of legality,
a cession is required to be lawful therein it's not prohibited by nor contravenes common law,
a statute, the boni mores of the community or public policy. Where a cession does contravene
or is prohibited by the abovementioned, it'd be deemed unlawful. A cession’s illegality could
relate to its implementation, its underlying purpose or its conclusion. A cession’s legality is
independently judged or separately from the underlying causa’s legality. Furthermore, there's
no numerus clausus in respect of illegal cessions.

Another requirement for cession is for the debtor to not be prejudiced by such cession. The
fact that a debtor’s consent isn't required for cession neither is such a debtor required to be
told of such cession might be arguably seen as prejudicial. However, there are particular rules
alive with the aim of protecting a debtor against prejudice in respect of cession. The loss of a
contractual right has no bearing on the cedent's contractual obligations.

Insofar as the ceded right is concerned, cession effectively substitutes the cessionary as
creditor, but the cedent remains the debtor insofar as his contractual obligations are
concerned. Unless he has already discharged those obligations by the time the cession occurs,
he remains obligated to perform them.