What are my options when a party has breached our contract?
We have often been asked what rights a person has when another breaches a term of the agreement between the two parties. There is no "one size fits all" approach when dealing with breaches of agreement- each instance of breach should be considered on a case by case basis, and carefully dealt with so as not to have a situation where one takes the law into his/her own hands, or when one acts contrary to what the contract says- in either situation, the consequences could be dire. We explain how breaches of written agreement are typically dealt with, below, and why it is important to ensure that you are complying with the agreement, even when the other party isn't.
What are my options?
If you are trying to determine what your rights are against a party who has breached your agreement, you will firstly need to consider the agreement between the two of you. The agreement might have a breach clause, which will set out how any breach of the agreement should be remedied. In a typical breach clause, for example, it may say that a party affected by a breach should notify the other party (who has committed the breach) to remedy the breach or to perform in a certain way, within a certain period of time (for example, 7 days) failing which the party affected may have the right to possibly demand specific performance, cancel the agreement or possibly go to court to have a court enforce compliance on the part of the party in breach.
That's not all, however. You should also be aware of how notice of such breach should be served, and what the agreement says about this so that you can ensure that the notice is served correctly. For example, if the agreement says that any document or notice in the agreement has to be served by post to the other party, and does not provide for any other method, you would be obliged to do so (which might not be the most practical and efficient method in the 21st century, when we have ease of access to email, which may very well be a more suitable method to use, provided it is listed as a means for service in the agreement. In a usual scenario, if a party does not perform, we would send the other party a letter of demand, demanding that the party perform as provided for in the agreement (for example, do a certain thing, pay etc).
If the other party does not comply in terms of the demand made within the timeframe afforded, and provided that such party was entitled to make that demand and such demand was carried out in terms of the contract, then the party affected could possibly cancel the agreement, or demand specific performance, or go to court to demand that the other person perform. It is possible that the party affected could also claim damages against the other party- again, depending on what rights in terms of the contract and rights in terms of law that the affected party has.
Other important considerations
It is of utmost importance that the party who is affected, performs his/her side of the contract, and that he/she does not take the law into his/her own hands. For example, if a landlord does not receive payment of rent, he cannot take the law into his own hands by switching off the electricity or by refusing to pay the municipal accounts. The landlord in this example would need to ensure that he performs in terms of the agreement, and does not end up in breach of it, as the tenant could in such an example have a claim against the landlord for breaching the agreement. The courts also generally do not look kindly upon a person taking the law into his/her own hands. A person must therefore ensure that they follow what the contract says, whilst also complying with what the law says about that specific arrangement- for example, in the rental scenario for residential leases, one would need to ensure compliance with the Rental Housing Act 50 of 1999, as well as the Consumer Protection Act 68 of 2008. Of course, all circumstances of the breach need to be considered, and therefore as mentioned earlier, there is no "one-size fits all" approach.
When dealing with breaches of agreement, it is essential to obtain legal advice. We are not fans of heading to court unless all alternative options have been explored, including mediation. One should go to court as a last resort, in order to avoid delays and litigation expenses. It is also important to consider what the agreement says about breaches, and the process to follow in the event of a breach, as failure to do so may result in the affected party limiting his/her rights or remedies in the circumstances. If you need assistance in considering what your rights are in terms of an agreement, or you need assistance in enforcing your rights in terms of an agreement, we can assist with dispute resolution and litigation, as well as provide advice on what your rights are.
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Disclaimer: This article contains general information and should not be regarded as legal advice. Spence Attorneys will not be held liable under any circumstance for any person acting on any content contained herein. Seek legal advice in all situations to ensure you receive the correct and case appropriate advice.