It is important to know the nature of damages that can be recovered for your loss namely, whether its contractual damages stemming from a breach of contract or delictual damages by operation of common law. Equally important is to be able to distinguish the type of claim to pursue as that is a crucial aspect to the prospect of success of one’s claim. As the title suggests, this article shall delve deeply into the distinction between pursuing contractual and delictual damages. In doing so, we look at the recent judgment of Devland Cash and Carry (Pty) Ltd v G4S Cash Solutions SA (Pty) Ltd (GJ) (unreported case no 2020/169/10, 3-7-2023) (Moorcroft AJ).
In Devland, Moorcroft AJ explains the distinctions between pursing contractual or delictual damages for loss suffered, where the plaintiff was in a contractual relationship with the defendant and pursued a delictual claim against the defendant for loss suffered, which was under the contract between the plaintiff and the defendant.
Before getting into the summary of the case, it is imperative to first unpack what a contract is, what a delict is, and the requirements to pursuing a claim namely, cause of action under contract or delict.
While there are numerous definitions for a contract, a contract fundamentally refers to a legally binding agreement between two or more parties, which intends to give rise to enforceable obligations (D Hutchison (ed) and C Pretorius (ed) The Law of Contract in South Africa 4ed (OUP Southern Africa 2022)). For a contract to be valid there are strict requirements, which must exist. There needs to be consensus between the contracting parties, the parties need to have capacity to contract, the contract and its terms need to be lawful, the contract obligations need to be capable of performance, the contract must have determinable content which can be ascertained, and the formalities need to be observed.
A contractual claim arises as a result of a breach of a valid contract. Parties to a contract have enforceable obligations as per the contract terms and if one or more of the parties fail to meet such terms, it amounts to a breach and the aggrieved party may be entitled to a claim for damages.
A delict refers to a wrongful and culpable conduct/act that causes harm to a person and obliges the wrongdoer to compensate the aggrieved/injured party for the harm/loss suffered (J Neethling and JM Potgieter Law of Delict 7ed (Durban: LexisNexis 2014)). For a wrongful act to constitute a delict there are five elements that need to be met: the delict needs to be an act, there must be wrongfulness, fault, causation, and harm suffered.
The law of delict fundamentally indicates which interests are recognised by the law, and under which circumstances such interests are protected. An aggrieved/injured party has a right to claim damages in terms of delict against their wrongdoer, while the wrongdoer has an obligation to compensate the aggrieved party for damage suffered.
Devland Cash and Carry and G4S Solutions (G4S) were parties in a contractual relationship. The parties entered into a written contract where G4S would provide cash management and security services to Devland Cash and Carry. G4S was responsible for collection, storage, and delivery of money in accordance with its operating methods.
On 9 September 2019, G4S made two collections from Devland Cash and Carry, one before noon and the second one in the afternoon. Later in the same afternoon, a cash-in-transit heist took place while the cash, which belonged to Devland Cash and Carry was still in the custody of G4S.
Devland Cash and Carry instituted a delictual claim against G4S for the first collection of cash, stating that G4S’s failure to deposit the first collection of cash before going back for the second collection amounted to negligence, wrongfulness, and breach of duty of care.
Moorcroft AJ found that the delictual claim pursued by Devland Cash and Carry against G4S arose in accordance with and during the performance of G4S’s contractual obligations. The loss incurred by Devland Cash and Carry as a result of the cash-in-transit heist occurred in the performance of G4S’s contractual obligations to Devland Cash and Carry, thus, G4S cannot be held liable in delict. He went on to add that if G4S were under a contractual obligation to first deposit cash before going for another collection and they had failed to do so, then Devland Cash and Carry’s potential claim would have been for that of contractual damages.
Therefore, the mere fact that G4S did not deposit the first cash collection before going for the second collection does not mean G4S was not acting in fulfilment of its contractual obligations under the contractual relationship, nor that its action was a wrongful conduct amounting to a delict.
Accordingly, the court ordered that G4S cannot be held delictually liable to Devland Cash and Carry’s loss incurred as a result of the cash-in-transit heist for the services that were performed in accordance with and pursuant to the contract between them.
The fundamental difference between a contractual and delictual obligation is that the former is generally voluntarily assumed by the parties (in accordance with the terms of the contract), while the latter is generally imposed by the law irrespective of the parties’ will.
Contracting parties have the liberty to determine the terms and obligations which regulate their contractual relationship, provided that these are lawful and capable of performance. If a party breaches any of those terms and obligations, the aggrieved party will be entitled to then claim damages as a result of breach of contract.
Agreeably, this claim for damages between Devland Cash and Carry and G4S is subsequent to their contractual relationship and breach of a contract does not necessarily amount to a delict. To pursue a delictual claim, one would need to prove the existence of all five elements of a delict, and where there are parties in a contractual relationship, the claiming party would also need to prove that their right, which exists independently of the contractual relationship, was infringed by the wrongful conduct of the party which they are claiming against.
Ultimately, when loss is suffered during the performance of and in fulfilment of contractual obligations, the aggrieved party cannot merely claim damages against the other party by way of delict, if the claim arose from a contractual relationship between the parties. The terms and obligations of the parties to the contract need to be considered to establish breach of contract and existence of the five elements of delict will need to be provided to establish a delictual claim.
Be this as it may, the simultaneity of contractual and delictual damages may create a lot of uncertainty. They are both civil wrongs which in suitable circumstances give rise to pay damages as compensation. Accordingly, contractual and delictual remedies are not mutually exclusive. Moorcroft AJ explains that the two can concur, however, the autonomy of contractual damages and remedies need to be respected, because the parties’ voluntary rights and obligations according to the contract need to be respected – before those imposed by law. Accordingly, he provides that the concurrence of the two does not mean that a delictual remedy must immediately and automatically be made available merely because contacting parties failed to provide contractual remedy when they could have done so.
Achuma Mangele LLB (UWC) is a candidate legal practitioner at MRT Law Inc in Cape Town.
This article was first published in De Rebus in 2024 (July) DR 9.
