Contract Law A

CONTRACT LAW

A) CAPACITY

Everyone has the ability to have rights – just some people don’t have the ability to acquire certain rights and duties

Won’t be legally viable if don’t have capacity – cannot contract if the necessary capacity is had

Some people’s capacity is limitedo Full: most people over the age of 18o Limited: 7 -18 may have a curator ad litem that can helpo None: Infants (0-7); mentally ill; insolvent; intoxicated

Theron v AA Insurers – sufficiently minded to enter into an agreement and to appreciated the necessary obligation

B) CONSENSUS

1) Offer Proposal with the intention that by its mere acceptance a contract should be formed May expressed (words or written) but can also be implied or tacit (through actions) Virtually the same as English law Establishes the terms of the contract and the conditions to be followed in the contract Requirements for a valid offer

o Animus contrahendi Saambou case Serious intention to be legally bound Cannot simply be a statement made from jest or anger, mere social

and domestic arrangementso Definite and complete

Wasmuth v Jacobs Offer should be certain and definite Firm offers show intention An ambiguous proposal cannot be classified as an offer Invitations to treat, offers to negotiate, offers to chaffer

Statements inducing others to enter into negotiations with a view of arriving at a contract, but this is not an actual contract

Biloden Properties v Wilson Requests for an offer

An invitation to have an offer made – ask another individual to make an offer

Efroiken case Driftwood Properties case

Statements of information This is normally in answer to a request

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Party may supply information about the terms to which they are prepared to do business

But this is not an offer – merely states information Harvey v Facey

Statements of intention Difference between stating that one intends to contract and

someone actually contracting Rood v Venter

Proposals for partial, incomplete or provisional agreements Not uncommon for parties to record process in a partial

agreement – so through negotiations come up with partial agreements

But these partial agreements cannot be construed as offers Pitout v North Cape Livestock Co-op These agreements are vague Even if terms are agreed upon, until a valid offer is made

there is no offer – requires interpretation Initial agreements cannot acquire contractual force if it is

incapable of standing on its own o Addressed to a specific person

Cannot be addressed to the whole world (Carlill case) Words of the offer are fundamental – if they are clear a conclusion can be reached by

‘linguistic treatment’ If an offeree’s intention coincides with the true intention they cannot take advantage

of the words of the contract Advertisements, circulars, catalogues, price tickets

o Carlill v Carbolic Smoke Ball Coo By our law a firm offer may be made to the public or to indeterminate

persons by advertisements o But it comes to a question of fact whether an advertisement is a contract o Crawley v Rexo Often these are simply invitations to negotiate o No legally enforceable rights shall arise out of the contract – ie

advertisements Calling for tenders

o May be made generally or to members of a group o Unlikely to wish to commit oneself to a binding contracto No more than a request to submit an offer – not obliged to accepted any

kind of tender o When a sphere of government calls for tenders – it must be fair, equitable,

transparent and cost-effective o When a tender is accepted it must be treated like any other contract would

Auctions Termination of an offer

o Effluxion of fixed time – set a specific time in which the contract has to be accepted (Laws v Rutherford)

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o Lapse of reasonable time – a reasonable time can be ascertained from the surrounding circumstances

o Death – no contract can be entered into if there is no longer possibility of consensus; but if the contract was entered into before the death, then the other party has a claim against the estate

o Loss of contractual capacity o Rejectiono Counter-offer o Withdrawal or revocation

Options and rights of pre-emptiono Options

An offer cannot be withdrawn if the offeror has bound himself by contract with the offeree not to withdraw it

Boyd v Nell These are separate subsidiary contracts Pactum de contrahendo Parties are contractually bound to maintain the contract – if not

interdict or damageso Rights of pre-emption

Right of first refusal Owsianick v African Consolidated Theatres Right to have first offer and to reject first This is a conditional offer, if the person decides not to contract,

then no contract can exist

2) Acceptance No contract can come into existence unless the offer is accepted Statement of intention in which offeree signifies his assent to the proposal embodied

in the offer Proposition that an offeree can accept and notify the offeror of his acceptance before

the offer is made is impossible Requirements

o Only accepted by person it was made to Can only be accepted by the person who was offered the

agreement Cannot nominate an offeree – must be made by the person to

whom the agreement was madeo Knowledge of the offer

The parties must be aware that an offer has been made Bloom v American Swiss Watch Company

o Acceptance unequivocal was made to must be unequivocal or unambiguous Boerne v Harris Courts have taken a strict approach to this requirement Must accept the raw contract without ambiguity

o Acceptance must correspond to the offer

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Must be communicated to the offeror – must make sure that the offeror is aware that the offer has been accepted

o Method of acceptance Driftwood Properties case Laws v Rutherford The acceptance must be made in the prescribed manner explained

in the offer If this manner is not followed then there is not full acceptance of

the offer Silence as acceptance

o Seeff caseo Generally silence is not considered as acceptance of an offer, only

regarded as acceptance if there is a duty to speako If there is a duty to reject and offer then silence would be the acceptance

of such an offer Postal contracts

o Contracts are often created in the post, but gives rise to a number of problems

o Cape Explosives Works case o Four theories in regard to this question

Declaration theory – when someone declares that they want to be bound the contract is concluded

Expedition theory – when the post is posted then the contract is concluded

Reception theory – when the post is received the contract is concluded

Information theory – when the information is finally read the contract is concluded

o The form that has been accepted in the Cape Explosives Works case and Kergeulen case is the expedition theory

3) Reality of Consent Theories of Contract and Mistake

o Validity is affected when someone contracts based on a mistakeo Means there are no clear, apparent facts – then true facts may appear –

then there is no contracto The mistake must be legally significant – must show that it is not legally

binding o Destroys element of consensus (dissensus)o Questions are whether the mistake was a critical? Was it justifiable? o Subjective/Will theory

Both parties agree on all elements subjectively Both know what the issues are But no subjective meeting of the minds – not perfect consensus

(therefore no contract)

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Very difficult test to prove and use – often no subjective meeting of the minds

Allows no security in bargains – no free market economy; people would never agree on the terms created

o Objective/Declaration theory SARH case Only true indication of a contract is the objective declaration made

by the parties – so it there is an outward declaration But this theory does not concern itself with the workings of the

minds If through actions, even without a meeting of the minds, then a

contract can in fact exist Doesn’t take into account the actual interests of the parties – purely

objective approacho Possible theoretical approaches

There is a need for a compromise (Saambou case) Jansen J believed that there was a purpose to subjective theory

(first point of reference) then need to consider the objective theory and how objectively there may be a contract

Four possible approaches Doctrine of estoppel – unsuitable approach Doctrine of culpa in contrahendo – German approach Doctrine of iustus error – not accepted as a doctrine, but

mistake is often referred to as a iustus error Doctrine of quasi-mutual assent/reliance theory – adopted

by Saambou case; feel there is an apparent agreement o Reliance theory

Synthesis of different theories If there is no subjective agreement then can consider the objective

theory A contract will be recognized if

one party by their outwards actions creates in the mind of the other party the belief that there is an agreement

the party wanting the rely on the agreement can show that their belief is reasonable

Smith v Hughes Hodgson Brothers case If a person conducts himself that a reasonable man would believe

that there was a contract, then there is in fact a contract between the parties

Proving a Contractual Mistake o Apply the reliance theory

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o Consider the two parties – party alleging the contract (P) and the party who argues there is no contract (Q)

o Two enquiries 1) Party alleging the contract must prove prima facie that there was

an agreement Declaration of intention on his P’s part Corresponding declaration from Q

2) if P is successful, onus moves to Q to prove that there was a mistake

Material confusion Reliance on P’s part is unreasonable – key test; law looks at

P’s conduct and whether it was reasonable Has to prove a iustus error

o Material confusion Is there confusion as to the nature of the contract or a key term?

Dobbs, Horty and Sonap, George cases Confusion as to the thing that is the subject matter of the contract

Martiz and Allen cases Confusion as to the person with who one is contracting

Potato Board case HOWEVER – problem cannot be with regard to the quality of the

thing; nor can it be for errant motiveso Unreasonable reliance on the contract (if the party alleging the contract

exists… Subjectively knew of material confusion, but kept silent

Sonap case Ought reasonable to have known f the material confusion and did

not clarify Horty case

Actually caused the confusion in the first place by creating an impression, prior to contracting, which is contrary to the document upon which he now relies

Allen and Spindrifter case The clause in dispute is a trap for the unwary and ought reasonably

have been pointed out and clarified Compusource case

o If either of these requirements is met there is iustus erroro Contract never existed in the eyes of the lawo If the requirements are not met – the contract exists (George case, Potato

Board case, Hodgson brothers case)o Contracts are now being made more clearly o Cape Group Construction case

Unsigned documents and ticket caseo Signed

Signatures are seen as apparent acceptance of a contract Caveat subscriptor rule – beware the person who signs

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Burge v SARH Binding if one signs – implied consent if one signs the terms and

agreements Quasi-mutual assent and reliance

o Unsigned documents Large scale contracts are impossible to sign – music concerts,

internet transactions Even with the absence of a signature, there are implied terms and

conditions which apply Richardson Spence and Co SARH v McLaren Test to determine whether the terms are binding

1) Was the person aware that there was writing or printing on the ticket?

2) Did the person know that the writing referred to contained terms or conditions?

o If yes then bound, if no continue 3) Did the party issuing the ticket reasonably notify the

other party that the wording referred to the terms (question of fact)

o If yes then bound, if no then not bound Bok clothing v Lady Land Ltd

Misrepresentationo May create consensus but the agreement is wrongfully induced, it is

tainted consensuso Must be a representation (by statement, conduct or silence) which is false

(either innocently, fraudulently, or negligently) which induce a contracto Schematic position in Petit case

Puff – general statement of praise of commendation, spin, no legal force

Term – agreed upon, binding, requires performance, if not done then breach

Representation – between puffery and terms, statement made with regards quality or attributes, goes beyond puffery, induces the contract

o Fraudulent – can not be treated as binding on innocent party; once a contract is contrary to good faith it is declared void and to have never existed

Elements A false representation – must be a statement of fact or a

dishonest opiniono Feinstein case o Either by words or conduct (words – Scheepers

case, Bill Harvey case; conduct and words – Trotman case)

Must be wrongfully made

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o If there is a positive statement it is easy to show that a representation was made wrongfully

o Problem is with silence or non-disclosureo If there is a duty to speak then silence is a

misrepresentationo Sometime duty to speak – in terms of full disclosure

(insurance), relationship of trust (agency and mandate)

Made fraudulentlyo Derry v Peek o Lord Hershell – test of intention/dolus –

representation was made knowing it was false; without belief of its truth; recklessly, carless as to whether it was true or not

Must induce the contracto Must be a causal link between making the

representation and the contracto Must have acted on the misrepresentationo Woodstock case

Made by the other party o The person must have been a contracting party,

cannot be a third partyo May have a delictual claim against a third party, but

not really capable of rescinding the contract based on this misrepresentation

Remedies Rescission (contractual remedy) and restitution

(enrichment)o Restitution

Feinstein v Niggli Rescission is a form of election to the

aggrieved party to decide whether they want the contract to hold or not

The contract can be declared void (although it never existed) or voidable (if one decides)

Must be done within a reasonable time, must tell the person one is doing it; not up to the court to interpret ones actions

There is a question of materiality It must be material to be able to

rescind the contract Taking a purely objective test cannot

work – must also consider the subjective scenario made available to the parties

Kerr

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o All misrepresentations are material – so all can be rescinded

De Voso Distinguishes different types

of materiality using old authorities

o Dolus dans causam contractui (can call it off – because had known the truth never entered into the contract)

o Dolus incidens in contractum (can’t call off – change in terms would still have entered into the contract)

o Restitution Restitution in integrum – restore the parties

to their original position Sometimes this is impossible to do – but the

courts will seek to place both parties in their original position – so reciprocal restitution

But may be destroyed because of fraud, an act of God or depreciation due to fair wear and tear

Damages o Can do this in addition to rescission, or noto Use delictual means (cannot use contractual means)

If there was a wrongful act, treat it as a delict (negative standard)

o Trotman case o Originally had set means of determining damages

for misrepresentationo But with Ranger’s case decided that there is no

fixed method or formula for determining damages for misrepresentation; must take a flexible approach

o Negligence Elements

False representation Wrongfully made Induced the contract By the other party Negligent

o Kruger v Coetzeeo Test of a reasonable person – and then would they

have forseen the problem Remedies

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Same as for fraudulent Originally couldn’t award damages for negligence – but

position has changed Bayer v Frost

o Innocence Simple misrepresentation No fault – cannot prove intention Only remedy is rescission and restitution (binary – have to adopt

both) Duress

o Voet clarified distinction between force (vis) and threats and fear (metus) o Effect was that could have absolute force (vis absoluta) or threats (vis

compisiva)o Physical force

If this is found to be the case the contract is void ab initio No consensus Literal physical force to conclude the agreement

o Threats The person did consent willingly, out of fear, therefore the contract

is not void, but voidable o Requirements for duress

Actual violence or reasonable fear Test is purely objective – must be sufficient to affect the

mind of reasonable person – but this test seems to stringent Therefore, have taken a subjective test – consider the

circumstance, character of the person, ability to reject Block v Dogon

Fear must be cause by the threat of some considerable evil to the party or his family

Must be some threat to oneself or one’s family Stringent restriction to person and family – but this is

questioned – should be developed Hendricks v Barnard Mentze’s case

Must be the threat of an imminent or inevitable evil Would a person ordinary firmness have resisted the threat? Should not adopt an armchair approach – need to consider

the subjective test Threat or intimidation must be contra bona mores

This is also a subjective test Cannot simply regard that all duress will be contra bona

mores Moral pressure must cause damage

Any threat that would lead to a crime or delict would be unlawful

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The threat must have induced the party to conclude the contract – cannot be an element which did not really induce the agreement

(If it pertains to property – one must have in addition have protested vigorously not to have the property taken away)

o Duress by a third party Doesn’t matter whether the third party is connected to the

contracting parties or not – if it is done – the contract can be rescinded

o Remedies – same as misrepresentation o Revised test of enquiries

First enquiry – proposal Was a threat made? Was the threat legitimate?

Second enquiry – choice Did the threat induce the contract? Was the victim justified in consenting?

Undue Influence o Found value in the English lawo Preller v Jordaano One person has acquired an influence over another, which he uses in an

improper/illegitimate manner to induce another to conclude a contract that he otherwise would not have in terms of his free will

o Question of fact whether the other party has an undue influence over the other

o Onus is placed on the party seeking to have the contract set asideo May occur between: doctors and patients, husbands and wives, mother and

daughter, father and son, etco Key elements

Other contractant obtained an influence Influence weakened the power of resistance (made will pliable) Influence was used in an unconscionable manner to persuade him

to agree to the transaction – to his detriment, would not have concluded otherwise

o Remedies Same as misrepresentation But never have claimed for damages

C) LEGALITY

1) General Renders a contract void or unenforceable Been some contravention of some rule of law

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Either a whole contract will be deemed illegal or only a key term of a contract will be illegal/contrary to law

Contracts be illegal if they are contrary to statute or common law Statute law

o Almost impossible to explain all; but parliament has stepped in to limit illegality

o Parliament has become more involved, but still leave the role up to common law to develop

o National Credit Act – significant to contractual agreements, huge exploitation of consumers, high percentage mark-ups

o Consumer Protection Act – being awaited, but will protect consumer agreements

o S60 of the Medical Health Care Act – prohibits the sale of human tissues Common law illegality

o Injurious to the state Trading with the enemy (Hoch v Scoble) Tending to injure the public service

o Injurious to the administration of justice May oust the jurisdiction of the court Collusion – agreement that one shall commit to act in order that the

other may obtain a remedy at law for a real injury Champerty and maintenance Excessive attorney fees or witness expenses

o Encouraging criminal actions and delicto Injurious to the institution of marriageso Contracts that effect wills and successiono Contracts relating to wagering and gamblingo Key principle of legality is the broad principle of public policy – illegality

if it is contrary to public policy and morals (contra bones mores) o Sasfin v Beukes (Smalberger JA) – public policy is a vague concept,

value based; need to weigh up what the law is, what morality is, and how the community considers the terms

o Eastwood V Shepstone o Has taken an individualist/formalist approach

Contracts are made up of freedom of contract and pacta sunt servanda (sanctity of contracts/promise)

Matter of private law between two parties and how they advance their interests

Once a contract has been completed must honour ones promises Economic matters for the market place (felt that it should be dealt

with in the market place) - but developed, because no longer is this arena far on all parties

Bank of Lisbon case – high water mark of individualist approach, but not have started to consider the circumstances of the parties

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Law is concerned with the content and obligation of the contract, not the form of the contract

But there have been developments in the law – no longer so individualistic – realized that some partners do not have the same bargaining power (Eastwood v Shepstone)

Sasfin – need to do simply justice between parties (consider equity and justice)

2) Common law, constitutional and legislative developments Focus has been to develop concept of public policy and how it can be used more

effectively to avoid harsh effects of pacta sunt servanda Sasfin – no need to classify contrary to public policy, common law or contra bone

mores of society – all mean the same thing o Public policy generally favours the utmost freedom of contracto Public policy properly takes into account the necessity of doing simply

justice between man and mano Power to declare a contract contrary to public policy and unenforceable

should be exercised sparingly and only in the clearest caseso May be declared invalid if it is clearly contrary

Two situations where a contract may be illegal according to common lawo Contract or a term thereof is contrary to public policy (objective test of the

general assessment of the contract) Requirements

Court will generally favour freedom of contract – while promises should be honoured

Public policy also requires courts to be courts of justice and ensure fairness

Court will only interfere on grounds of public policy sparingly and in obvious cases

If the clause is oppressive, unduly harsh and socially/economically inexpedient then can cancel the contract

Should interpret to maintain the promise of the contract, but if it is contrary to public policy it must be changed

Can severe the contract if is contrary to public policy – blue pencil test (notional severance test)

Can the contract exist and make sense without the clause If it can exist without the clause then cancel it If the expunged clause leaves the contract irrelevant – then

the contract is void and disappears o Terms are valid, but within the context and circumstance the clause would

be unreasonable (subjective test) This was originally the exceptio doli generalis rule – but this is

now defunct Brisley and Afrox cases – argued that there should be a normative

standard of good faith in contractual dealings

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Good faith Conduct oneself in a decent, reasonable and fair manner Very difficult term to appreciate Minimum level of respect, unreasonable and one-sided

promotion of one’s interests is contrary to good faith - Hutchison

o Brisley’s case First scenario – the clause was not contrary to public policy – so

had to consider second scenario (in the circumstances) Second scenario – whether the contract, in the context was against

good faith – but the person was not acting in bad faith as a result of a doctrine or rule based reason (confirmed in Barkhuizen)

Constitutional values have become relevant – don’t have to directly apply the Bill of Rights, but most consider the contract through the eyes of public policy which is informed in constitutional values (equality, dignity and fairness)

o Barkhuizen caseo Brisely case

Law is concerned with the content and obligation of the contract, not the form of the contract

Supervening impossibility was originally not accepted in our law, but now it is of importance – it has the same effect as initial impossibility

Can have partial impossibility – which means that the contract can still hold even if a clause is impossible – does not have a huge impact on the actual contract

No obligation arises if it is impossible

3) Restraint of Trade Magna Alloys case – Didcott J Until 1984 these restraint clauses were allowed, they were allowed to be used for the

purposes of contracts Were examined in light of the interim constitution (s26 – free engagement in

economic activities) Originally adopted English approach

o Prima facie invalid o Only way to succeed is if employer can show restraint is reasonableo If it impacts negatively on trade won’t be allowed

But Magna Alloys case held that no longer can they be considered prima facie invalid, so development – now adopt the Roman Dutch view (polar opposite to English law)

o Onus is on party attempting to escape the clause to prove that the clause is unreasonable

o Prima facie valid and enforceable Sibex case – clause will be declared contrary to public policy if it violates fair

competition and is not designed to protect a valid proprietary interests – need to consider general skills, trade connections, goodwill, trade secrets

o General skills No proprietary interest in skills

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May not relinquish these Cannot restrain because they are good at something

o Trade connections Have a proprietary interest Relationship would have been built up between the company and

the worker Restraint clauses can be used for this Rawlens v Caravan Truck

o Goodwill Regard/image of a business in the public eye Has a form of monetary valued (capital of the business) In the sale of a business – may restrain the original owner from

infringing on the new owner Botha case Can be up to 30 years

o Trade secrets Marketing and pricing structures, franchising information,

industrial secrets (patents, etc) Must be secret or privileged information Sibex case

If there is a valid protectable proprietary interest, can argue that the ambit is too wide and that it needs to be amended – there are factors to consider in relation to space and time

o Must also consider the nature of the business - whether it is international/local/unique

o Area from which the cliental are drawn o Area of restraint cannot exceed the area of the business being protected o Area of restraint on an ex-employee must also be related with reasonable

fairness to the period of the employee o When considering time – 30 years for a sales of goodwill; indefinite

period for medical practitioners – this does not clash with public policy o Generally do not interfere – so rarely will develop these clauses o MINORS AND MAJORS

If a restraint of trade clause is too wide there can be a development of severability – can be severed and the remainder will be enforced – but it can only be severed if the parts are divisible and can be divided

4) Constitutionality Questioned how this affects restraint of trade

o S22 – freedom of trade, occupation, trade, professiono S21 – freedom of movemento S13 – slavery, servitude and forced labour

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o S10 – dignity Key issues is the onus (person attempting to get out of the contract has the onus)

o Magna Alloys – constitutionally sound Legitimacy balances the competing issues

o But debate has flared up again as to whether the rights are being valuedo Canon KZN v Booth (declared in 2000)

Magna Alloys is unconstitutional Restraint of trade clauses limit rights (s22) Believed that there should place the onus on the employer to prove

that the restraint is reasonable o Subsequent to this

Aqua d’or v Camara (cc) – drastic change from Magna Alloys, cape division does not really accept new approach, still feel people should be self bound to prove their personal rights are limited

Rectron v Govender – some court as Canon KZN, argued the Canon case was incorrectly decided (dispute in the same division)

Automotive Tooling v Wilkens – ignored the debate completely, applied Magna Alloys

Reddy v Siemens – matter was placed forcefully before the SCA, declined to deal with the issue, felt it was unnecessary – facts, outcome would be the same no matter what, implicit application of Magna Alloys

o Considered as a moot point in our law – neither the SCA cases were good tests

4) Remedies o Handout

D) POSSIBILITY OF PERFORMANCE

1) General Impossibilum nulla obligation est – impossibility nullifies any obligation

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If impossible if at time entered into (initial impossibility) or at the time of performance (supervening impossibility)

Initial impossibility – void ab initio Law is concerned with the content and obligation of the contract, not the form of the

contract Supervening impossibility was originally not accepted in our law, but now it is of

importance – it has the same effect as initial impossibility Can have partial impossibility – which means that the contract can still hold even if a

clause is impossible – does not have a huge impact on the actual contract No obligation arises if it is impossible

2) Main requirements Impossibility absolute as opposed to probably (specifically for initial)

o Performance must be objectively impossibleo Cannot simply be in the realm of impossibility, must be absoluteo Eg – sale of a putative thing (it may exist in the future however, as for

wine from grapes) Impossibility absolute as opposed to relative (specifically for initial)

o Must not consider the subjective situation of a persono Contracts must apply objectively to all individuals

Not the fault of either party (specifically for supervening)o If these is a fault – misrepresentation, etc – then there is a breach of

contracto One cannot cause the impossibility o Vis maior (acts of God) and casus fortuitus (acts of government)o If someone acts through fault – they bear the consequences of the action

Principle intention must give way to the contrary common intention of the parties (supervening impossibility)

o If the other party acts contrary to their original intentions this may cause impossibility

o But normally there are performance clauses, must be weary of such clauses

3) Application Peters Flamman and CO case World Leisure Holidays case

E) FORMALITIES

1) General If there are formalities they have to be complied with – Conradie v Rossouw No special formalities are required for the making of an enforceable contract

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Serious and deliberate intention is all that is needed for a contract to be binding General rule is that no formalities are required for a contract Goldbatt v Fremantle – Innes CJ Person claiming the contract has the onus of proof A written contract does have a number of advantages – preparation of the contract

gives the parties time to consider their positions; onus of proof is simplified because all that needs to be proven is with a signature, terms are also on the page; disagreement about the terms is narrowed (because they are written)

2) Formalities decided on by the parties An agreement to have a mutual undertaking reduced to writing and signed was

insufficient to discharge the burden of showing the oral agreement was not intended to be binding

People have the liberty to create and impose formalities Writing

o Once parties decide to have a written contract, they cannot return to the state before (with the oral contract)

o Comes into existence when it is signed by both partieso Sensible thing to do o If one parties loses the actual contract, the court has no jurisdiction to ask

the other party to provide him with another copyo Three different types of writing (Goldbatt v Fremantle)

A memorandum which facilitates proof of an oral agreement (this is evidence of the concluded agreement)

A writing which embodies the agreement of the parties although not signed (questionable category)

A written document which is to be the agreement and must be signed (this is the actual contract, until this is signed the contract does not exist)

Signatureo Common formality to requireo May also require witnesses to be present and provide their signatures

No variation without writing clauseo As a general rule out of common law, that if a contract is reduced to

writing it can be altered or varied through verbal changeso However, the problem with this is whether there is any security in the

documento A number place clauses limiting this ability – so have ‘no term of the

contract may be altered or varied unless it is reduced to writing’o Have pragmatist – claim that the term must be upheld VS those who feel

that verbal changes should allow for changeo Schifren case o Brisley case

3) Formalities required by law

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Justification for having formalities is to ensure there is reliable evidence of the terms of the contract

There were some forms contracts that were often abused, so decided on formalities that needed to be met to be valid contracts

These contract formalities now occur frequently and have financial interests – so guidelines have been set down

Parliament lays down the regulations Alientation of Land Act – cannot conclude the sale of land verbally; cannot divide

bequeathed land, etc; have to sign; specific terms relating to the wording must be used, etc; lay out the price; name of the parties; description of the land

General Law Amendment Act – deals with suretyship; must be a written signed document

National Credit Act – must be reduced to writing and signed on behalf of the parties Electronic Communications and transactions Act – questions the significance of

signatures – may be digital or electronic encoding devises Consumer Protection Act – comes into force this year some time; number of

formalities dealing with consumer contracts; codifies common law

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