Understanding a breach clause in a contract

Understanding a breach clause in a contract

Most agreements have a breach clause. This clause is meant to protect a party against the other party’s failure to perform. How does it work and when can it be used? What does it mean to place a party in breach?

Some contracts do not have a breach clause and failure to perform is addressed through common-law principles.

Let’s see how breach works and when we can rely on it.

What is a breach?

  • A breach is a failure to observe a provision of a contract. This also includes when an obligation is not completed on time.
  • There are two types of breach:
What is a breach?

How to invoke a breach clause

  • The general rule is that a material breach had to have occurred before remedies can be applied.
  • A material breach must be proven
  • Notice of breach must be given in accordance with the stipulated period in the clause. The party who did not perform has the opportunity to rectify the breach during this period.
  • Only if the breach is not rectified within the timeframe, can a remedy be applied.

Remedies for breach

  • A remedy is a recourse you are legally entitled to if the other party breaches the contract.
  • You usually have a choice:
Remedies for breach

What if there was no breach clause

  • The principles of breach applies even if your contract does not cover it specifically.
  • You still need to give reasonable notice of the breach to the other party and allow them a reasonable opportunity to rectify the breach.
  • Only thereafter can you claim for a remedy through legal processes.

How can we help

  • We can help you draft a breach clause that protects you and one that is tailor made for the business relationship you are about to enter into;
  • We are able to assist you with ensuring that you correctly claim for breach of contract and that the correct steps for the claim are followed so you can recover either specific performance or damages.

Contact us at info@bizarmour.co.za

010 140 6251

The information shared on this article/blog/vlog should be read and understood within the current legal framework of South Africa. It is meant purely for educational discussion and does not amount to legal advice. For specific legal advice, please consult a legal practitioner prior to application.

Posted in Contractual.