People breaching contracts is a common occurrence, ranging from the simplest of everyday situations right up to high-level management and business enterprises. Often people or entities enter into agreements and contract to offer some form of performance (for example, to pay something or to repay someone), only to be unable to do so. This usually results in a breach of contract. If you are a creditor to a contract and want to know how to proceed as well as some important factors to consider, the following will be useful to you.
A breach of contract can occur either in terms of firstly, positive malperformance whereby a contracting party performs but does not do so in line with the contract (the terms of the contract need to be clear and understood by the parties for the contract to be valid), or if the party does something which he agreed not to do – a classic example being where a lessee contracts not to sublet but sublets in any event to someone else without the required permission of the lessor) and secondly, in terms of negative malperformance.
Negative malperformance as the breach of contract by a debtor is known as mora debitoris. This can take the form of the debtor failing to deliver their performance on time as stipulated in the contract, or where they offer performance on time which is then rejected by the creditor who has a valid and lawful reason for rejection.
The requirements for mora debitoris are as follows:
- The performance which is due by the debtor musts still be possible despite the delay in performance of the debtor;
- The debt must be due and enforceable in that a debt cannot be due if the date, for example, has not arrived by when the debtor must perform. Secondly, in the case of a suspensive condition (something which suspends the operation of a contract before a certain future event);
- The delay in the performance of the debtor must be wrongful which is generally defined and relates to public policy; and
- The delay of the debtor must be due to the debtor themselves.
If you are a creditor and want to enforce your contractual claim against someone or want to know more about your prospective contractual rights in these situations, do not hesitate to contact us to assist you.