Primat Construction CC v Nelson Mandela Bay Metropolitan Municipality

In 2010, Primat Construction CC (the appellant) concluded a contract with the Nelson Mandela Bay Metropolitan Municipality (the respondent) for the upgrade of roads in Motherwell, Port Elizabeth. The work was scheduled to commence in April 2010 and end in November 2010, later extended to November 2011. Numerous delays occurred, caused by storm damage, late insurance payments, and non-payment by the Municipality against monthly payment certificates. On 10 November 2011, Primat advised it was unable to proceed due to financial difficulties. On 17 January 2012, the Municipality purportedly terminated the contract with immediate effect (which was procedurally incorrect and amounted to repudiation). Primat responded on 19 January 2012, indicating the termination was procedurally incorrect and that it would remain servicing the contract. The Municipality denied Primat access to the site and appointed four new contractors. Primat repeatedly requested access and attempted to continue performance. On 3 February 2012, Primat threatened court action if the Municipality did not remedy its breaches. On 9 February 2012, Primat's attorneys formally cancelled the contract and gave notice of intention to sue for damages of R22 million. Primat sued for damages for breach of contract.

• Whether the Municipality repudiated the contract
• Whether Primat was entitled to change its election not to accept the repudiation and subsequently cancel the contract and claim damages
• Whether a further act of repudiation after the initial election is required before an aggrieved party can change its election
• What constitutes 'persisting in repudiation' and whether it requires a new independent act of repudiation

The appeal was upheld with costs including those of two counsel where so employed. The order of the full court was set aside and replaced with: "The appeal is dismissed with costs including those of two counsel where so employed." This had the effect of reinstating the trial court's judgment in favour of Primat (the question of quantum of damages having been separated for later determination).

Where a party to a contract repudiates it and the aggrieved party elects to abide by the contract and enforce its performance, if the defaulting party nonetheless persists in the breach by evincing an unequivocal intention not to remedy the breach or be bound by the contract, the aggrieved party, after affording the defaulting party the opportunity to repent of the repudiation, may change the election and cancel the contract and claim damages. No additional new act of repudiation is required; it is sufficient that the defaulting party continues to manifest an unequivocal intention not to perform, as objectively perceived by a reasonable person in the position of the aggrieved party. The doctrine of election is not inviolable and must give way to commercial reality where the defaulting party shows persistent and unequivocal refusal to perform despite being given the opportunity to reconsider.

The court noted approvingly the double-barrelled procedure sanctioned in Custom Credit (Pty) Ltd v Shembe 1972 (3) SA 462 (A) and originating in Ras & others v Simpson 1904 TS 254, by which an aggrieved party may claim in one action first performance, and in the alternative, if that is not forthcoming, cancellation and damages. The court described this as "a useful procedural device." The court also discussed the objective test for repudiation established in Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd 2001 (2) SA 284 (SCA), noting that "the emphasis is not on the repudiating party's state of mind, on what he subjectively intended, 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, it is a matter of perception." The court endorsed Professor Robert Sharrock's view that the 'repentance' principle was well-established as far back as De Wet v Kuhn 1910 CPD 263. The court also referenced G B Bradfield's view in Christie's Law of Contract in South Africa 7 ed (2016) that 'persistence' should be understood as a further indication of intention to repudiate after having been given an opportunity to reconsider.

This case clarifies an important principle in South African contract law regarding the doctrine of election following repudiation. It establishes that an aggrieved party who initially elects to abide by a contract following repudiation is not permanently bound by that election where the defaulting party persists in the repudiation. The judgment confirms the "repentance principle" and rejects the more restrictive approach that would require a new independent act of repudiation before an election can be changed. The case balances the doctrine of election (that a party is bound by their choice of remedy) with the commercial reality that an aggrieved party should not be forced to continue attempting to enforce performance against a party showing an unequivocal and persistent intention not to be bound. This principle provides flexibility and fairness in contract enforcement, preventing defaulting parties from keeping contracts artificially alive while refusing to perform. The judgment builds on earlier authorities including Culverwell & another v Brown 1990 (1) SA 7 (A) and Sandown Travel (Pty) Ltd v Cricket South Africa 2013 (2) SA 502 (GSJ), and clarifies that "persistence in repudiation" should be understood as a continued indication of intention to repudiate after being given an opportunity to reconsider, viewed objectively from the perspective of a reasonable person in the position of the aggrieved party.