Remedies for breach of contract in South Africa

Abstract

If a contracting party fails to fulfil its obligations it is in breach of the contract. The innocent party may sue the defaulting party for breach of contract. Our law recognises a unitary concept of breach which encompasses specific forms of breach i.e., mora debitoris, mora creditoris, positive malperformance, repudiation, and prevention of performance. For each form of breach, remedies for breach are the same.

There are five remedies for breach, specific performance, declaration of rights, damages, interdict and cancellation. Each remedy has its requirements and consequences on the position of a defaulting party. Certain remedies may be claimed in combination or in the alternative as they are mutually exclusive.

Interpretation of a contract requires an in-depth knowledge of substantive law and case law. As our courts are tasked with interpreting the law and thus guidance for interpreting remedy clauses may be sought from decided cases. In interpreting remedies for breach, normal rules of interpretation apply. This involves attributing meaning to words contained in a contract by giving words their ordinary grammatical meaning as used in everyday sense. Thus, interpretation of a contract involves ascertaining what the language in the contract means. Express words take precedence over tacit or implied words.

To give effect to the principle of equity underlying the law of contract, Roman law recognised the need for certain presumptions from which interpretation could proceed. For example, it is presumed that contracts are performed ‘in forma specifica.’ Whether there must be performance ‘in forma specifica’ a court will be careful to apply the legal notion of de minimis non curat lex.

Drafting of remedy clauses require an in-depth knowledge of substantive and case law to ensure that drafted remedy clauses are enforceable. Whilst there are no rules for drafting of contractual remedies, specific ways of drafting contractual clauses are preferred more than others.

This study firstly explores substantive law overlaying contractual remedies. Secondly, the study investigates the rules of interpretation of contractual remedies. Lastly, the study applies substantive law and rules of interpretation to redraft certain precedents for remedy clauses.