Failure to communicate the decision to treat a contract as at an end to repudiating party

Dave Pretorius v Kenneth Bedwell (659/2020) [2022] ZASCA

The parties were brothers-in-law. Bedwell owned a property in Oyster Bay in the Eastern Cape. He needed money to complete a guesthouse project. He sold the property to Pretorius in exchange for a loan to complete the project, it being understood that Bedwell would continue to occupy the property and would remain liable to maintain it at his own cost and pay rates and taxes. As soon as Bedwell could pay back the loan, Pretorius would transfer the property back to him.

There was a falling out between the brothers-in-law and Pretorius sold the property to a third party. Bedwell sued Pretorius for damages on the basis of the repudiation of the contract. Pretorius argued that the claim had prescribed. The court had to decide two separate issues, namely the questions of prescription and repudiation.

Regarding repudiation, the court stated:

It is settled law that repudiation of a contract occurs where one party to a contract, without lawful grounds, indicates to the other party, whether by words or conduct, a deliberate and unequivocal intention to no longer be bound by the contract. Then the innocent party will be entitled to either: (i) reject the repudiation and claim specific performance; or (ii) accept the repudiation, cancel the contract and claim damages. If he or she elects to accept the repudiation, the contract comes to an end upon the communication of the acceptance of the repudiation to the party who has repudiated. Only then does a claim for damages arise. Accordingly, prescription commences to run from that date.

Regarding prescription, the court held that as Bedwell did not accept the repudiation, prescription did not start running from the date of repudiation of the contract.

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