BLUMO TRADING (PVT) LTD v NELMAH MILLING CO (PVT) LTD & ANOR 2011 (1) ZLR 196 (H)

Flynote

Contract — breach — anticipatory breach entitling innocent party to repudiate contract — what is — how such breach may be determined — remedies for breach — right of innocent party to cancel contract — right to claim damages — right to claim restitution

Headnote

It is a fundamental premiss of every contract that both parties will duly carry out their respective obligations. There is a presumption that in every bilateral contract, i.e. one in which each party undertakes obligations towards the other, the common intention is that neither should be entitled to enforce the contract unless he has performed or is ready to perform his own obligations. Conversely, a party who has caused the other to commit a breach cannot found a claim on the breach. Acquiescence by one party in non-compliance by the other would mean that the first party is estopped from raising the non-compliance as a defence to a claim by the second party.

The test for determining whether a contract has been repudiated by way of anticipatory breach is not the repudiating party's state of mind, but on what someone in the position of the innocent party would think he intended to do. Repudiation is accordingly not a matter of intention, but one of perception. The perception is that of a reasonable person placed in the position of the aggrieved party. The test is whether such a notional reasonable person would conclude that proper performance (in accordance with a true interpretation of the agreement) will not be forthcoming. The inferred intention accordingly serves as the criterion for determining the nature of the threatened actual breach. Due to the repudiation, the innocent party is excused from any steps that he must

A take in preparation for his own performance and will not fall into mora by failing to tender performance as long as he signifies his willingness to perform.

At common law, an anticipatory breach ordinarily entitles the innocent contractor to cancel the contract. Repudiation before the due date for performance by a party prospectively in default constitutes anticipatory breach of contract on which the aggrieved party may take action if he so elects.

An aggrieved contractor is entitled to claim damages arising from his co-contractor's breach of contract, including any breach of warranty. Special damages are ordinarily regarded in law as being too remote to be recoverable unless, in the special circumstances attending the conclusion of the contract, it can be deduced that the parties actually or presumptively foresaw that they would probably flow from its breach (and thus, that it was within their contemplation). To ascertain what the parties actually contemplated, or may be supposed to have contemplated, the court may look to (a) the subject matter and terms of the contract itself; (b) the special circumstances known to both parties at the time they contracted.

In the event of non-delivery of goods sold under a contract, the right of the aggrieved party to claim restitution from the defaulting party is ordinarily unchallengeable. Whether the wrongful act arises out of contract or tort, where there has been actual pecuniary loss which is capable of precise quantification, the rule which the law adopts is restitutio in integrum: the injured party is entitled to claim to be placed back in the same position as he would have been in had it not been for the defendant's wrongful act.