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Termination of a Contract
A contract is a spoken or written agreement intended to be enforceable by law
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. A contract
brings about rights and duties between the parties which arise from a contractual relationship. In
this case the contract was entered into on the 6
th
of December 2011 and it provided in Clause 12
for termination of the agreement. Clause 12 provides that Either Party may terminate this
agreement at any time after the expiration of one year from the date of this agreement by giving
the other party three months notice in writing sent by courier or hand delivered to the other
partys address. The one party Barep Investments proceeded to terminate the contract by
rendering notice on the 4
th
December 2012. In the current case the issue is whether the contract
was properly terminated. There are various ways in which Parties may terminate a contract, and
these will be looked at briefly below.
1. Fulfilment
This is the most obvious mode of termination of a contract. A contract maybe terminated when
the terms of the contract have been fulfilled.
2. Impossibility of performance
A contract may be terminated when the performance of the contract is rendered impossible by
some event or occurrence. In this situation either party may terminate the contract. This type of
termination is called impossibility of performance.
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3. Fraud, Misrepresentation, Mistake
In instances were one party to the contract acts in an improper manner through fraud, the
contract may be terminated. In a situation where one party misrepresents their capacity (e.g. if
they are minors, or mentally incapable) to enter into the contract or where the one party is
mistaken about a material term of the contract the contract may be terminated through
rescission.
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1
Concise Oxford Dictionary 10
th
ed
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Reasons to End or Terminate Contracts. http://contracts.lawyers.com/contracts/Reasons-to-End-or-Terminate-
Contracts.html accessed 13 February 2013
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Note 2
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4. Prior Agreement
A contract may be terminated by prior agreement, for example should either party give notice of
termination, or any other condition specified in the contract.
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The parties may also agree that the
contract terminates on the occurrence of an event or occurrence.
5. Breach
A contract may be terminated were one party breaches the contract. Breaches occur in instances
were one party refuses to render performance under the contract (e.g. refusal to deliver goods in
a sale of goods) or does something prohibited under the contract, or obstructs the other party
from discharging their duties under the contract. In these circumstances the other may terminate
the contract and sue for breach of contract provided that the breach was material or a
fundamental breach.
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A material breach of a contract is a breach that concerns the main
purpose of the contract. For example where the contract concerns the delivery of river sand to a
construction site on a specified date, should the other party deliver gravel or bricks to the
construction site instead then that constitutes a material breach of the contract. In a number of
case a material of fundamental breach is described as a breach going to the root of the
contract
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in the case of Transport And Crane Hire (Pvt) Ltd v Hubert Davies & Co (Pvt)
Ltd 1991 (4) SA 150 (ZS)at 158 the court held a fundamental breach included where
performance was useless for its intended purpose.
An immaterial breach is may not render the contract void, for instance in the above example the
delivery of river sand is made a day after the due date.
Application
In the current case the contract in Clause 12 clearly provides for termination by way of prior
agreement. However the one party Barep Investments may have breached this clause by
purporting to terminate the contract before the stipulated year was up. This is because the
agreement was entered into on the 6
th
of December 2011 and Barep Investments purported to

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Note 2
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Note 2
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Transport And Crane Hire (Pvt) Ltd v Hubert Davies & Co (Pvt) Ltd 1991 (4) SA 150 (ZS) at pg 156
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terminate the contract by giving notice on the 4
th
of December 2012. This was two days before
the year stipulated was up.
The next issue is whether the early termination of the contract constitutes a breach of the
contract, which would allow the other party to sue for breach of contract.
As has been discussed above a breach must be a material breach in order to sue for breach of
contract. A material breach must go to the root of the contract. In the present case the purported
early termination is a breach however it constitutes an immaterial breach because it would not
have changed the termination of the contract but would have merely postponed it for two days.
Conclusion
It is my opinion that the contract was breached by Barep Investments by the early termination.
However, the breach is immaterial because the contract provided for the termination of the
contract in the manner which Barep Investments terminated the contract. Furthermore an order of
specific performance would not have prevented Barep Investments from terminating the contract.
The termination would have been merely postponed for two days.