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Breach of Contract! What Now?
Introduction
It is extremely frustrating when a contracting party isn’t keeping up with their end of the deal.
Simply put, a breach of contract, means an unjustifiable failure or refusal to perform in terms of an agreement. When this happens, the innocent party may be entitled to either cancellation of the agreement and claim damages, alternatively demand specific performance. The strategy and forum you choose at this stage is key in terms of cost-efficiency and overall risk management.
The point of departure here is to determine what the exact terms of the contract are, be it verbal or in writing, you need to be careful when reviewing and or recalling its terms.
Generally, written agreements contain breach provisions, clearly setting out what needs to happen next. If the agreement has a cancellation clause, the non-defaulting party will be able to cancel the contract in the event of a breach of the terms thereto.
The non-defaulting party must however take care not to cancel the agreement incorrectly. If cancelled incorrectly, the party in breach may interpret the cancellation as a repudiation of the agreement, in which case the party in breach will also have the right to cancel the agreement and claim damages.
The cancellation terms generally require the non-defaulting party to send a written notice to the defaulting party demanding the defaulting party to rectify the breach. Failure to rectify the breach within the time periods contemplated, will give the non-defaulting party the right to then cancel and claim damages.
In the scenario where the non-defaulting party do not want to cancel but want the defaulting party to deliver or perform in terms of the agreement, the non-defaulting party may then opt to sue for specific performance instead of cancellation and damages.
An important aspect to consider is that where the agreement provides for notice to be given to the defaulting party, any summons that precedes this notice could be succesfully defended on the basis that the non-defaulting party hasn’t provided the required notice.
Accepting that each situation, dispute and factual scenario may be judged and interpreted differently, we advise you to obtain professional advice before cancelling an agreement or instituting action against a defaulting party.
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