A summary of the prescribed textbook chapters (1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 16, 17) for The Law of Contract in South Africa by Hutchinson (eds) and others.
,TOPIC 1: WHAT IS A CONTRACT?.......................................................... 8
DEFINITION...........................................................................................8
THE NOTION OF A CONTRACT.....................................................................8
LEGALLY BINDING DOCUMENTS THAT DO NOT EQUAL CONTRACTS.........................................8
LEGALLY BINDING AGREEMENTS THAT ARE MORE THAN JUST CONTRACTS.............................10
REQUIREMENTS FOR A VALID CONTRACT......................................................11
THE NATURE OF CONTRACT......................................................................12
CONTRACT AND THE LAW OF OBLIGATIONS...................................................13
CONCEPT OF OBLIGATIONS......................................................................................... 13
CONTRACT AND DELICT............................................................................................. 14
CONTRACT AND ENRICHMENT...................................................................................... 16
CONTRACT AND THE LAW OF PROPERTY......................................................16
THE IMPACT OF THE CONSTITUTION............................................................18
BARKHUIZEN V NAPIER.............................................................................................. 18
THE BASIS OF CONTRACT.........................................................................19
CONSENSUS (ACTUAL SUBJECTIVE AGREEMENT).............................................................19
APPARENT OR OBJECTIVE AGREEMENT...........................................................................20
THEORIES OF CONTRACT............................................................................................ 20
APPROACH TO CONTRACT: SUBJECTIVE OR OBJECTIVE?.....................................22
DUAL BASIS OF CONTRACT IN MODERN LAW..................................................22
PROVING THE EXISTENCE OF A CONTRACT....................................................23
CORNERSTONES OF CONTRACT..................................................................24
GOALS OF CONTRACT LAW........................................................................................ 24
CONSUMER PROTECTION ACT...................................................................24
TOPIC 2: HOW TO MAKE A CONTRACT................................................ 28
OFFER AND ACCEPTANCE.................................................................. 28
INTRODUCTION.....................................................................................28
THE OFFER.........................................................................................29
LEGAL EFFECT OF AN OFFER....................................................................................... 30
REQUIREMENTS FOR A VALID OFFER............................................................................30
1
,OFFERS TO THE PUBLIC............................................................................................. 32
ACCEPTANCE.......................................................................................34
REQUIREMENTS FOR VALID ACCEPTANCE.......................................................................34
WHEN AND WHERE ACCEPTANCE TAKES EFFECT...............................................................35
PACTA DE CONTRAHENDO........................................................................38
OPTIONS................................................................................................................. 39
PREFERENCE CONTRACTS........................................................................................... 42
NATURE OF COERCION............................................................................46
REASONABLENESS OF THE FEAR................................................................46
OBJECT OF THE THREAT..........................................................................46
IMMINENCE OF THE HARM........................................................................47
UNLAWFULNESS OF THE THREAT...............................................................47
DAMAGE.............................................................................................47
DURESS BY A THIRD PARTY......................................................................48
CLASSIFICATION OF MISTAKE...................................................................48
UNILATERAL, MUTUAL AND COMMON MISTAKE................................................................48
IRRELEVANT AND RELEVANT MISTAKE...........................................................................49
MATERIAL AND NON-MATERIAL MISTAKE.......................................................................49
TRADITIONAL CLASSIFICATION OF MATERIAL AND NON-MATERIAL MISTAKE..........................51
DOCTRINE OF QUASI-MUTUAL ASSENT OR (DIRECT) RELIANCE THEORY.................52
OBJECTIVE APPROACH AS QUALIFIED BY THE IUSTUS ERROR DOCTRINE.................53
SLIP KNOT INVESTMENTS........................................................................54
FORMALITIES PRESCRIBED BY LAW.............................................................57
PRESCRIBED FORMALITIES REQUIRED FOR VALIDITY........................................58
ALIENATION OF LAND................................................................................................ 58
SURETYSHIP............................................................................................................ 59
DONATION.............................................................................................................. 59
PRESCRIBED FORMALITIES REQUIRED FOR ENFORCEMENT AGAINST 3RD PARTIES.......60
FORMALITIES: ELECTRONIC CONTRACTS.......................................................60
FORMALITIES STIPULATED BY THE PARTIES...................................................61
CREATION OF THE CONTRACT...................................................................................... 61
NON-VARIATION CLAUSES AND THE SHIFREN PRINCIPLE....................................................61
NON-CANCELLATION CLAUSES.................................................................................... 62
LIMITING THE SHIFREN PRINCIPLE................................................................................62
TOPIC 4: PARTIES TO, AND CONTENT OF CONTRACTS..........................63
PARTIES TO CONTRACTS................................................................... 63
NUMBER OF PARTIES.............................................................................63
MULTIPLICITY OF PARTIES.......................................................................63
DIVISIBILITY OF THE PERFORMANCE..............................................................................63
SIMPLE JOINT LIABILITY AND ENTITLEMENT......................................................................64
JOINT AND SEVERAL (IN SOLIDUM) LIABILITY...................................................................64
COLLECTIVE JOINT LIABILITY AND ENTITLEMENT..............................................................65
SEVERAL LIABILITY.................................................................................................... 66
CONTRACTS AND THIRD PARTIES...............................................................66
PRIVITY OF CONTRACT............................................................................................... 66
REPRESENTATION: CONTRACTING THROUGH AN AGENT....................................................66
CONTRACTS FOR THE BENEFIT OF A 3RD PARTY (STIPULATIO ALTERI)...................................69
TRANSFER OF RIGHTS AND DUTIES TO A 3RD PARTY.........................................................71
PERFORMANCE BY A 3RD PARTY.................................................................................... 72
PERFORMANCE MADE TO A 3RD PARTY...........................................................................72
OBLIGATIONS AND TERMS................................................................. 72
3
,OBLIGATIONS.......................................................................................72
CIVIL, NATURAL AND MORAL OBLIGATIONS....................................................................72
RECIPROCAL OBLIGATIONS......................................................................................... 73
SIMPLE, ALTERNATIVE, GENERIC OR FACULTATIVE OBLIGATIONS........................................73
DIVISIBLE OR INDIVISIBLE PERFORMANCES AND CONTRACTS.............................................74
TERMS...............................................................................................74
ESSENTIALIA, NATURALIA, INCIDENTALIA........................................................................74
EXPRESS TERMS....................................................................................................... 75
IMPLIED TERMS......................................................................................................... 78
MATERIAL TERMS..................................................................................................... 80
CONDITIONS AND THEIR EFFECT ON THE CONTRACT.........................................................80
POTESTATIVE, CASUAL, AND MIXED CONDITIONS.............................................................82
TIME CLAUSES......................................................................................................... 82
OTHER COMMON TERMS............................................................................................. 83
TOPIC 5: BREACH OF CONTRACT........................................................ 85
TOPIC 6: REMEDIES FOR BREACH OF CONTRACT................................. 93
4
,CHOICES, ALTERNATIVES AND CONCURRENCE OF REMEDIES...............................93
DIFFERENT TYPES OF REMEDY..................................................................................... 93
ENFORCEMENT AND CANCELLATION MUTUALLY EXCLUSIVE.................................................94
DAMAGES AND INTEREST CUMULATIVE TO OTHER REMEDIES..............................................94
CONTRACT OR DELICT............................................................................................... 94
REMEDIES AIMED AT KEEPING THE CONTRACT ALIVE........................................95
EXCEPTIO NON ADIMPLETI CONTRACTUS.......................................................95
REQUIREMENTS........................................................................................................ 95
FACTORS AFFECTING THE APPLICATION..........................................................................96
COURTS’ EQUITABLE DISCRETION: REDUCED CONTRACT PRICE...........................................97
SCOPE OF EXCEPTIO.................................................................................................. 97
SPECIFIC PERFORMANCE..........................................................................98
SCOPE.................................................................................................................... 98
REQUIREMENTS........................................................................................................ 98
DISCRETION OF COURTS............................................................................................. 98
EXECUTION OF ORDERS............................................................................................. 99
CANCELLATION.....................................................................................99
MATERIALITY OF THE BREACH...................................................................................... 99
CANCELLATION CLAUSE.............................................................................................. 99
THE ACT OF CANCELLATION........................................................................................ 99
LOSS OF THE RIGHT TO CANCEL: ELECTIONS AND WAIVER...............................................100
LEGAL EFFECTS OF CANCELLATION.............................................................................100
RESTITUTION......................................................................................................... 101
DAMAGES.........................................................................................102
NATURE AND PURPOSE OF CONTRACTUAL DAMAGES......................................................102
REQUIREMENTS FOR A DAMAGES CLAIM.......................................................................103
TOPIC 7: INTERPRETATION OF CONTRACTS....................................... 106
PURPOSE OF THE CONTRACT...................................................................106
WORDS USED BY THE PARTIES................................................................106
THE TEXTUAL CONTEXT.........................................................................107
BROADER CONTEXT..............................................................................107
PAROL EVIDENCE RULE............................................................................................ 107
5
,CANONS OF CONSTRUCTION...................................................................111
ALL RULES OF INTERPRETATION HAVE BEEN EXHAUSTED.................................112
INTERPRETATION OF DISCLAIMERS, INDEMNITIES AND EXEMPTION CLAUSES: A SPECIAL
CATEGORY?.......................................................................................112
OBJECTIVE APPROACH TO INTERPRETATION OF CONTRACTS..............................113
TOPIC 8 – DRAFTING A CONTRACT.................................................... 115
PARTIES TO A CONTRACT.......................................................................115
DESCRIBING THE PARTIES......................................................................................... 115
NATURE OF CONTRACT HEADING..............................................................116
RECITALS AND PREAMBLES....................................................................117
DATE OF AGREEMENT...........................................................................117
SEQUENCE OF CLAUSES........................................................................118
DEFINITION AND INTERPRETATION CLAUSES..................................................................118
DOCUMENTS ATTACHED OR INCORPORATED BY REFERENCE............................................119
ESSENTIALIA.......................................................................................................... 119
NATURALIA............................................................................................................ 120
SPECIFIC CLAUSES...............................................................................120
SUSPENSIVE OR RESOLUTIVE CONDITIONS AND TIME PERIODS..........................................120
CLAUSES ON BREACH OF CONTRACT...........................................................................121
LIABILITY, INDEMNITY AND EXEMPTION CLAUSES...........................................................122
PERFORMANCE GUARANTEES AND WARRANTIES............................................................122
GENERAL CLAUSES..............................................................................122
AMENDMENT.......................................................................................................... 123
ENTIRE AGREEMENT................................................................................................ 123
CESSION, DELEGATION AND ASSIGNMENT....................................................................123
WAIVER/RELAXATION OF TERMS.................................................................................123
NOTICES CLAUSES.................................................................................................. 124
FORCE MAJEURE..................................................................................................... 124
GOVERNING LAW.................................................................................................... 124
ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.........................................................124
COST................................................................................................................... 124
CONFIDENTIALITY UNDERRTAKINGS............................................................................125
PURPOSES OF THE CPA........................................................................126
INTERPRETATION.................................................................................127
WHEN DOES THE CPA APPLY?................................................................128
PROTECTION OF CONSUMER RIGHTS.........................................................129
RIGHT TO EQUAL ACCESS TO THE CONSUMER MARKET..................................................129
RIGHT TO PRIVACY.................................................................................................. 130
RIGHT TO CHOOSE................................................................................................. 130
RIGHT TO DISCLOSURE AND INFORMATION..................................................................133
RIGHT TO FAIR AND RESPONSIBLE MARKETING.............................................................133
RIGHT TO FAIR AND HONEST DEALING.......................................................................134
RIGHT TO FAIR, JUST, AND REASONABLE TERMS AND CONDITIONS...................................135
ENFORCEMENT OF THE CPA....................................................................137
A contract is an agreement entered into by two or more persons with the
intention of creating [a] legal obligation/s.
This agreement must be recognised in law as being binding on the parties.
THE NOTION OF A CONTRACT
A contract is an agreement between two or more parties
Not all agreements are contracts, but all contracts are agreements
An essential
element
Serious intention
to create a legally
enforceable
obligation
Animus
contrahendi
When determining whether someone had the intention to have their
agreement bound by law, you look at evidence
LEGALLY BINDING DOCUMENTS THAT DO NOT EQUAL CONTRACTS
Serious intention to enter into a contract is not enough
Some agreements do not create obligations but destroys them or transfers
them
8
, Creates obligation Cancellation of sale Rights are
Contracts of sale Resolve to release transferred
Absolving agreement
Obligatory Agreement
Transfer/real agreement
and lease from obligation Via traditio: physical
element (handing over)
Transfer of a thing, Payment (?) andmental element
bound by price (intention)
Cession of rights
A has a right to claim
money from B, and sells
this right to C
Cession is a separate
agreement w/ concurrent
intentions: transfer the right
on A's part and to take
transfer on C's part
9
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