The exceptio non adimpleti contractus is a contractual defence which can be raised in regard to reciprocal contracts.
While it is classically stated that reciprocity is the cornerstone of any good relationship, it is evident that times have certainly changed.
The exceptio non adimpleti contractus means in simple layman’s terms the right to withhold performance (eg. payment) where reciprocity exists contractually in terms of the performances by each party.
Performance by the parties must be simultaneously due or one party due to perform before the other. It is typically used in commercial contracts disputes when a party (a land owner or homeowner) is sued for payment by a service provider, for example a building company, when the service provider has not performed at all in terms of the contract or, as most frequently occurs, where the building company has performed defectively in terms of the contract.
The requirement of reciprocity is thus a crucial element of the defence and it also finds particular application in contracts of lease and contracts of letting and hiring and other commercial contracts.
It is increasingly clear that the legal principle of exceptio non adimpleti contractus is taking on substantial significance in South Africa in recent times and since the onset of the Covid19 pandemic and indeed in respect of the seemingly clear trend of parties’ wilfully defaulting/breaching contractual terms with self-professed impunity. This appears to be increasing especially in the fields of commercial contracts for:
- construction contracts for homes, homeowners associations and sectional title units;
- other ‘building’ contracts such as services for electrical wiring, plumbing, ventilation systems, audio-visual services, security systems, swimming pools, spas, Jacuzzis;
- service contracts particularly in regard to independent contractors services; and
- also pure service contracts where a service provider bills the consumer in arrears for the service rendered.
It is thus imperative that when a party to a reciprocal contract does not perform as that party agreed to, the other party must seek expert legal advice without delay from an expert contracts attorney to safeguard its interests, or otherwise the delays caused by inaction or the exercise of incorrect legal remedies may result in serious financial consequences and lack of legal recourse to obtain reciprocity or equity in terms of the contractual relationship.
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