We all come across and enter into more contracts than we are aware. Contracts are a big part of our lives, whether you buy a loaf of bread, go out for dinner or buy a house you enter into a contract. A contract is a binding agreement between two or more parties to do or in some cases not do something and most contracts are enforceable by Law. The moment that one party to the contract fails to honour the terms of the contract in some way or another, that person (the defaulting party) commits a breach of contract and so violates the sanctity of the contract.
A contract can be breached in many ways but the most common form of breach of contract occurs when one party to the contract fails to perform an obligation according to the terms set out in the contract, or when a party performs incompletely or in a defective manner (positive malperformance). Another form of breach is repudiation. This is when a party indicates that it has no intention to honour the contract. The last form of breach is prevention of performance. This is when either of the parties makes it impossible for the other party to perform its contractual obligations.
It is important to act in good faith at all times and this includes communicating when you foresee or anticipate not being able to perform your contractual obligations and asking for an extension of the deadline. It is essential to put all of this in writing and have the parties to the original contract agree and consent to the new term as this can prevent breach of the contract and its subsequent cancellation.
Generally, if a breach occurs, the innocent party has the following rights:
1) Right to claim performance;
2) Right to claim damages; and
3) Right to rescind (cancel) the contract.
However, it is important to be clear on how the breach occurs because that dictates how the agreement can be cancelled and if it should be cancelled. It is important to read what the contract says as each contract should contain what happens in each breach scenario. The moment a contract has been breached, then it’s time to seek the advice and assistance of Attorneys. In fact, you should seek advice before you even sign a contract but breach is a good time as well.
Can I only breach my contract a little?
Fundamentally a breach of a contract is breach of a contract regardless of how big or small the breach is. A minor breach, also called a partial breach, is when a party performs its main obligation but with a few incorrect details. For example: delivering something in the wrong colour or size. This is usually easy to correct so that there is no longer any breach.
A major breach, properly known as a material breach, is committed when a party fails to perform an obligation which is very important, such as within a specific time period or a specific detail which is fundamental to the agreement. In these instances what could be seen as a minor detail (or a minor breach) can be very important. Generally, if a party does not perform its obligations at all, this is a material breach. Material breaches usually see the contract being cancelled and the innocent party suing for damages.
Disputes which arise from contracts are a highly specialised part of Law and it is important to see to it that if you find yourself in this unfortunate position that you seek proper legal assistance.
For any queries regarding the above please contact Myers Attorneys on 011 346 2422 or reception@myersattorneys.co.za
You can also visit our website www.myersattorneys.co.za