Breach of contract: The doctrine of election and the doctrine of repentance

12 Jan 2022

1. Lawyers are, in some respects, a rather biblical lot, seeking divine inspiration to solve the problems of humanity, calling Judges Lords and, more latterly, resorting to the concept of repentance in the law of contract.
2. It is fundamental that when an innocent party is faced with a breach of contract by another party, the innocent party has a right to make an election whether to reject the breach and hold the defaulting party to the contract or to accept the breach, cancel the agreement and claim damages.
3. The “doctrine of election” as it is called dates back at least to the decision in Segal v. Mazzur 1920 CPD 634 at 644 – 5 where Watermeyer AJ (as he then was) held that the aggrieved party “… has a choice of two courses. He can either elect to take advantage of the event or he can elect not to do so. He is entitled to a reasonable time in which to make up his mind but when once he has made his election he is bound by that election and cannot afterwards change his mind.”
4. However what is the innocent party to do if, having made an election to hold the defaulting party to the contract, the defaulting party continues to default, or, to put it more biblically what does the innocent party do if the defaulting party fails to repent?
5. This question faced the Court in Sandown Travel (Pty) Ltd v Cricket South Africa 2013(2) SA 502 (GSJ) and, more recently, in the matter of Primat v. Nelson Mandela Bay Municipality 2017 (5) SA 420 (SCA).
6. In Sandown, Wepener J reviewed the history of the doctrine of election as confirmed in a line of cases but referred to the matter of Cohen v. Orlowski 1930 SWA 125 where the innocent party refused to accept the repudiation of the agreement by the defaulting party and stated “he thereby allowed the Defendant to repent of his repudiation and gave him an opportunity to carry out his portion of the bargain, but when the Defendant nevertheless persisted in his repudiation, the Plaintiff was entitled to change his mind and notify the Defendant that he would no longer treat the agreement as existing, but that he would now regard it as rescinded and sue for damages.”
7. This concept, of repentance, or lack thereof, again found expression in the matter of Culverwell and Another v. Brown 1990 (1) SA (A) at 17 E – F as follows: … “and where the injured party refuses to accept the repudiation and thereby allows the defaulting party to repent of his repudiation and gives him an opportunity to carry out his portion of the bargain, and the defaulting party nevertheless persists in his repudiation, the injured party is entitled to change his mind and notify the other party that he would no longer treat the agreement as existing but that he would now regard it as rescinded and sue for damages.”
8. The particular issue that arose for decision in the Primat matter was whether, in order for the repentance principle to come into operation, a further act of repudiation or breach was required by the defaulting party after the exercise of the initial election by the innocent party.
9. In Primat, the full Court Grahamstown (per Lowe J, Chetty J and Ndzondo AJ) held that as there had been no further separate distinguishable act of repudiation or breach, Primat could not change its mind, or change its election to sue for damages.
10. On appeal to the SCA, per Lewis JA, in a unanimous judgment, referred to the “so-called double-barrelled procedure” sanctioned in Custom Credit Corporation (Pty) Ltd v. Shembe 1972 (3) SA 462 A which allowed an aggrieved party to claim in one action, first performance, and in the alternative, if that is not forthcoming, cancellation and damages.
11. Lewis JA held at 426 C – D as follows: “Where the defaulting party is clearly determined not to purge the breach, and shows an unequivocal intention not to be bound by the contract, the aggrieved party may abandon his or her futile attempt to claim performance and change the election, claiming cancellation and damages. This is the view taken by GB Bradfield in Christies Law of Contract in South Africa 7 ed (2016) at 639 where it suggested that ‘persistence’ should be understood ‘as a further indication of intention to repudiate after having been given an opportunity to reconsider’ in which case ‘what is involved is an election to cancel based on repeated breach rather than a change of mind.’
12. Perhaps the so-called doctrine of repentance should more appropriately be called the doctrine of non-repentance, allowing the innocent party to claim damages after already having exercised an election to hold the defaulting party to the contract. It is obvious and logical that by refusing to rectify a breach, the defaulting party is in a permanent and continuous state of breach and the failure to rectify is all that is required for the innocent party to change his or her mind.

See also:

• Considerations when negotiating and enforcing commercial contracts
• Limiting the Pacta Sunt Servanda?
• Understanding contracts and dealing with contractual disputes
• Contract – Claim for payment

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)