Law for TourismStudy Unit 4

Performing Contractual Obligations

The outcomes for this learning unit are that you should be in a position to:◦ Discuss Agency◦ Discuss the nature of performance◦ Discuss contractual breach

Outcomes

The essential, residual & incidental terms of a contract

Express and implied terms

Conditions◦ The suspensive and resolutive condition

Valid, void & voidable contracts◦ Duress, Misrepresentation & undue influence

Recap of Study Unit 3

AGENCY

…When one person, with the necessary authority to do so, conducts a juristic act for and on behalf of another in such a manner that he obtains rights and obligations for the other person without him acquiring any rights or becoming accountable

Fouché (2007) pg 244

What is Agency?

One person acts on behalf of another The act is a juristic act The act is authorised The action results in a legal tie between two

people, one of which was not involved in the original action

The elements of agency

By agreement By operation of law Through estoppel By ratification

How does agency arise?

By agreement Principal gives Agent authority to act on his behalf

No formalities required Can be by way of written Power of

Attorney

Authority by Agreement

Where one party in absence of agreement has authority by law to represent another

Eg:◦Guardian representing a minor◦Curator acting for mentally insane◦Partner representing a partnership or other partners

Authority by Operation of Law

Where a person creates the false impression that another person may act on his behalf and a third party acts on the strength of that (mis)representation, the “principal” can be bound by the false impression he created.

Authority by Operation of Estoppel

Where the “principal” gives his consent or authority after the representation has taken place

Unilateral act by principal

Authority by Ratification

The legal bond will exist between the principal and the third party.

The agent does not acquire any rights or duties

The Effects of Representation

To perform in accordance with the principal’s instructions

Act honestly and in good faith Display care, skill & diligence Account to the principal

Duties of the Agent

To pay the agreed remuneration To account To reimburse the agent for all expenses

necessarily incurred by him To indemnify the agent for all losses or

liabilities incurred in performing the authorised act

Duties of the Principal

Where the agent acts on behalf of a pricipal without disclosing the fact.

Requirements◦ Agent must be authorised to act for principal◦ Agent must have intended to contract on behalf

of principal◦ Agent must fail to disclose agency at all

Third party can sue principal or agent but not both

The Doctrine of the Undisclosed Principal

Principal (not agent) liable if agent guilty of misrepresentation or duress

Agent liable if he acts outside of his authority◦ Third party may claim damages for

Breach of contract Delictual damages for misrepresentation Damages for breach of implied warranty

Agent liable for any guarantees he has given (eg: that the principal will pay etc…)

Liability of the Agent

On fulfilment of the mandate By expiry of agreed time period Supervening impossibility of performance Death of the agent or principal By agreement

Termination of Agency

PERFORMANCE OF

CONTRACTUAL

OBLIGATIONS

Form and manner of performance

Form and manner of performance should be as specified in contract between the parties unless it is clear that equivalent type of performance acceptable

If date and or time for performance has been agreed upon, debtor has until then to perform

If no agreement performance should be immediate or within reasonable time depending upon the individual circumstances

Time of performance

Performance should occur at place specified in contract

If no place specified, then debtor has to seek out the creditor to perform

Place of performance

Unless it is clear from the contract that the debtor himself must perform personally, it is acceptable for an agent of the debtor or even a third party to perform

Performance must be tendered to the creditor◦ Creditor can nominate an agent to receive

performance

Who must perform?

In legal tender Debtor must stipulate what payment is for if

multiple debts – other wise creditor may nominate

If party alleges performance, they bear onus of proof

If creditor refuses or frustrates properly tendered performance – breach by creditor

Payment & Proof of Performance

Mora debitoris Mora creditoris Positive malperformance Repudiation Prevention of performance

Breach of Contract

Mora Debitoris◦ When the debtor fails to perform at the agreed

time Two Requirements

◦ Performance must be delayed◦ Delay must be the debtors fault

Default by the debtor

Mora ex re – where a time for performance has been set and debtor fails to perform, he is automatically in mora

Mora ex persona – where no time for performance has been set & creditor then demands performance within a reasonable time & debtor fails to perform

Failure to perform on time

Mora Creditoris◦ When the Creditor causes the debtor’s

performance to be delayed

Default by the creditor

Performance must be dischargeable Debtor must tender performance Creditor must fail to co-operate & thereby

delay performance Default must be due to the fault of the

creditor

Requirements for mora creditoris

Default by Creditor Default by DebtorDebtor’s duty of care reduced

Creditor entitled to remedies for breach of contract

Debtor entitled to any counter-performance due by creditor

Consequences of default

When debtor performs contrary to the agreement◦ Debtor tenders defective or improper

performance, or;◦ Debtors does something not allowed in terms of

the agreement

Positive Malperformance

Behaviour by a party which indicates that they do not intend to honour their agreement◦ Eg, where party denies the existence of the

agreement or

Repudiation

Specific performance Damages Cancellation Penalty clause (roukoop etc)

Remedies for breach of contract