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Can a contract be cancelled if mostly paid?


Patrick Bracher | Partner | Norton Rose Fulbright South Africamail me |

The cancellation of a contract will not be justified where most of the price already paid and restitution unlikely.

In the case of Louw & others v Davids & others, the court refused to uphold cancellation of an agreement of sale for a members’ interest in a close corporation because only a total of R160,000 out of a purchase price of R4 million (96%) was outstanding and three of the appellants had been paid in full.

In addition, restitution of the amount already paid was doubtful and no tender to restore these payments was alleged.

The court held that cancellation of the agreement was not justified.

Generally speaking a party to a contract may cancel it if it has been breached by the other contracting party and the breach is material. What is involved is a value-judgment that seeks to be fair to both parties and to balance competing interests.

The question is whether the breach is so serious that it is fair to allow the innocent party to cancel the contract and undo all its consequences.



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