Cancellation

Exceptions: clauses that apply after cancellation

(1) Arbitration= where the contract is cancelled the matter will be referred to arbitration (2) Penalty (3) Restraint of trade (4) independent right to claim performance has accrued and was due & payable before cancellation

(1) What happens when an election to cancel/not cancel has been made? (2) When does cancellation occur after election thereof (3) When does cancellation occur if there is no notice of cancellation

(1) Final & irrevocable unless the other party consents to the reversal or breaches again (2) They must notify the party of their decision (notice f cancellation- clear&unequivocal). Cancellation occurs when it has been communicated to the other party. If the contract prescribes steps the innocent party must follow those steps for cancellation to be valid (3) Service of summons or notice of motion

When does cancellation occur? + authority

Data colour: Notify the other party & it will be effective when the recipient RECEIVES the notice of cancellation(can be indirectly- e.g. through a circulation of info to customers)

1. Suppose a contract contains a lex commissoria which allows either party to immediately cancel the contract for breach of any of the obligations therein by the other party. Suppose that a fairly minor breach occurs as a result of which the aggrieved party purports to cancel the contract. May the breaching party argue that the aggrieved party did not exercise the right to cancel in a fair and just manner and that a court should therefore set aside the cancellation?

If either party commits a material breach, the other may cancel immediately. Additionally, whether it is material or not, either may cancel if they gave notice to remedy the breach.

Provide an example for an independent right to claim performance has accrued and was due & payable before cancellation

In the case of a lease agreed & entered into on 1 Jan. The lessee payed every month until August, & failed to pay August, September and October so the Lessor cancels the lease. Lessor canc claim for SP for those months which accrued before cancellation, because it is a distinct right that accrued before cancellation and became due and payable, and is a cause of action independent of the executory part of the contract

Does one need a court order to validly cancel a contract?

No

Is it a requirement for the validity of a notice of cancellation that the aggrieved party tenders restitution?

Not a requirement in the notice BUT if they cancelling party cannot give back what they performed (and don't have an excuse) the cancellation is invalid

Legal effect of cancellation: divisible performance

Only the parts of the obligation that still need to be performed are terminated, the rest stays intact. A right to performance that carried before the cancellation can still be enforced If it is independent from the executory part of the contract Example: landlord cancels the lease at the end of June, he is still entitled to claim the unpaid rent from the month of June

What happens if there is a breach after the date of performance but the party performs before cancellation

The creditor must accept the late performance (otherwise it is breach) Exception: where there is a lex commissoria (party doesn't lose right to cancel)

Suppose that, in accordance with a lex commissoria in the contract, Seller (who sold a house on instalments) sends the Buyer (breaching party) a notice that he will cancel the contract if they do not pay the outstanding instalments within 30 days. In the meantime, 5 months lapsed and the buyer was still in the house. The seller then confirms to the buyer that he considered the contract cancelled after the 30 days, that his lawyer also confirmed to him that the contract could be considered cancelled, and that he now intends to apply for an eviction order. The breaching party alleges that because of this time lapse the contract was not properly cancelled. What is the legal position?

There is no rule that the right to cancel lapses after a reasonable time has not been exercised However, the delay may be considered when the court looks at if there was an election to uphold rather than cancel the contract

What is the difference, if any, between a defence that the aggrieved party waived the right to cancel and a defence that the aggrieved party is estopped from asserting that he intended to cancel the contract and validly did so?

Waived: party actually decides NOT to cancel (express or tacit). Requires knowledge of the right to cancel Estopped: No actual choice not the cancel. Aggrieved parties conduct created the reasonable impression in the mind of the breaching party that the aggrieved party did not want to cancel

Suppose the aggrieved party has a right to cancel on a particular ground, but in his notice of cancellation he refers to another reason which is in fact not a valid ground for cancellation. Is the cancellation valid?

Yes it is valid

Can you cancel if repudiation is retracted?

data colour obiter: no longer a right to cancel

Legal effect of cancellation: indivisible performance + example

the obligation is extinguished in its entirety Example: delivery of a car