The Law Handbook 2024

686 Section 7: Consumers, contracts, the internet and copyright B. If, a couple of days before the delivery (i.e. the performance) is due, A tells B that he has run out of those goods and will not be able to deliver them within the seven-day period, A is in anticipatory breach of the contract. Once the delivery is due, A is in actual breach of the contract. Remedies for breach of contract There are three main remedies for breach of contract that you can obtain from a court: 1 Damages: A breach of contract – whether it is a breach of a condition, or an intermediate term, or a warranty – entitles the wronged party to damages, regardless of whether or not the breach has caused loss. If no loss can be proven, the wronged party is still entitled to ‘nominal damages’ (recent case law suggests this is approximately $100). 2 Specific performance: A wronged party can seek orders from a court compelling the party who breached the contract to perform the contract. For example, if A is in breach of a contract by failing to attend settlement to transfer land to B, B can seek a court order forcing A to attend settlement and transfer the land to B. 3 Termination: A breach may entitle the wronged party to terminate the contract in the following circumstances: – where the contract provides a right to terminate in the case of such a breach; – where the breach constitutes ‘repudiation’, which is when a party shows an intention to no longer be bound by the contract, or to only perform it in a matter that is substantially inconsistent with their obligations; – where a party breaches a condition and fails to perform an obligation that is considered an essential term of the contract; – where a party breaches an intermediate term and fails to perform an obligation that causes substantial loss of benefit to the wronged party. For more information about what you can do if you are seeking a remedy for a breach of contract, see Chapter 7.4: Taking action as a consumer. For information about loan contracts, see Chapter 5.9: Credit reporting. Ending a contract A contract may be concluded in the following ways: • performance; • agreement between the parties; • termination by frustration; • breach of contract. Performance When the parties to the contract completely fulfil their obligations to one another, whether by payment of money or by doing something as agreed in the contract, the contract comes to an end. Agreement between the parties A contract, being the result of agreement, may be terminated by further agreement between the parties to end their contractual relationship. Further, the parties may agree that the contract is automatically terminated if a ‘contingent condition’ is not fulfilled. For example, two parties agree to purchase property, subject only to A obtaining finance from the bank. If A is unable to obtain finance, then the contract is at an end. As the clause was a contingent condition, as opposed to a promise, A has not breached the contract. Termination by frustration If something happens after a contract has been made that makes the performance of the contract futile or impossible, without fault of either party, the contract will be automatically terminated. Simple lack of ability of one of the parties to perform the contract is not sufficient. The impossibility must be something that renders performance totally impossible or something unexpected that changes the circumstances so radically that the contract would have to become fundamentally different from the original contract. A very apt example of this is where a couple enters into a contract to hire a wedding venue. However, due to the COVID-19 pandemic, a lockdown is announced, and weddings are no longer allowed to take place on that date. In this situation, the contract (subject to any terms to the contrary) may arguably be terminated by frustration.