Where the parties have decided that a contract should be recorded in writing, their decision must be respected and the resulting document accepted as the sole evidence of the terms of the contract. Subscribe. In the case of the positive malperformance of a negative obligation, the creditor is also entitled to apply for an interdict to restrain the debtor. A pre-emption right must comply with all the requirements for contracts in general. A fictional contract, in other words, will be recognised. Where, however, there has been a guarantee of performance, this overrides the supervening impossibility—even acts of god. Voet defines the former, voluntary novation, as ‘a transformation and alteration of an earlier obligation, whether natural or civil, into another obligation whether natural or civil, when a fresh cause is created out of a foregoing cause in such wise that the earlier cause is destroyed’. Although the integration rule does not exclude evidence of any subsequent oral agreement,[110] a non-variation clause may be deployed to forestall such a thing. An agreement in restraint of trade that is contrary to public policy is not void, but is unenforceable. The court may hear evidence of surrounding circumstances, including the negotiations of the parties, to determine whether they intended the written agreement to be an integration of their whole transaction or merely a partial integration. An option contract constitutes two offers: a substantive offer and an undertaking or option to keep the offer open. In addition to essentialia, naturalia and incidentalia, on the one hand, and implied and express terms, on the other, Prof. AJ Kerr of Rhodes University offers another popular classification of contractual terms. This theory is similar to estoppel, but has the advantage of giving rise to an actual contract. An underlying principle of the law of contract (pacta sunt servanda or sanctity of contract) is that agreements seriously concluded should be enforced, but agreements that are clearly detrimental to the interests of the community as a whole, whether they are contrary to law or morality (contra bonos mores), or if they run counter to social or economic expedience, is not enforced. The number of people infected with the disease rose by a record 21,832 cases on Thursday, with 844 deaths raising the number of fatalities to 31,368 so far. In this regard, the court must examine, among other things, the nature of the contract and its content, and the nature of the dealings between the parties. Contract (of donation) if it pertains to a right conferred by the contract, Unilateral act if the right is conferred by law. It amounts to saying that the breach must be so serious that it cannot reasonably be expected of the other party that he should continue with the contract and content himself with an eventual claim for damages.[163]. Exemption clauses often bring into issue questions of equity between big business and the common man: for example, as cited (unsuccessfully) by a patient in his claim against a hospital in Afrox Healthcare v Strydom. The condition attached to the obligation must be possible. The creditor has made time of the essence by sending the debtor a notice of rescission. Tested against the dictates of public policy. Waiver and estoppel are two reasonable defences for cancellation. [citation needed] Tacit contracts also present problems as to their conceptual basis, the question being whether or not they should fall under the banner of express terms at all. This he does by demanding performance on or before a definite date or time that is reasonable in the circumstances. On 13 February 1971, Gerike was injured when Sack's motorboat crashed into her. There are five requirements: The consequences of mora debitoris are threefold. The effect of proper performance or payment is to release the party concerned from his contractual obligation. In terms of the convention principle, special damages can be claimed where the parties entered into the contract on the basis of their knowledge of the special circumstances, and thus can be taken to have agreed that there would be liability for damages arising from such circumstances. "[126][127] These include "previous negotiations and correspondence between the parties, [and] subsequent conduct of the parties showing the sense in which they acted on the document, save direct evidence of their own intentions"[128] (by which is meant actual negotiations between the parties). This can take on one of two forms, depending on whether the relevant duty is positive or negative. The general rule is that the old or former relationship falls away, and the new relationship is governed by the settlement agreement. In such a case neglect to take the steps would bring about fictional fulfilment. If the condition is fulfilled, it has an automatic effect, either creating or cancelling a contractual obligation. Electronic Communications and Transactions Act, Alfred McAlpine v Transvaal Provincial Administration, Odendaalsrust Municipality v New Nigel Estate Gold Mining, Government of the Republic of South Africa v Fibrespinners & Weavers, Union Government v Vianini Ferro-Concrete Pipes, Holmdene Brickworks v Roberts Construction, Willowdene Landowners v St Martin's Trust, Haynes v King William's Town Municipality, nemo plus iuris ad alium transferre potest quam ipse haberet, Concrete Products v Natal Leather Industries, Electric Process Engraving and Stereo Co v Irwin, Peters, Flamman and Company v Kokstad Municipality, Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration, Bay Loan Investment (Pty) Ltd v Bay View (Pty) Ltd, Benson v SA Mutual Life Assurance Society, BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk, Bonne Fortune Beleggings Bpk v Kalahari Salt Works (Pty) Ltd, Cinema City (Pty) Ltd v Morgenstern Family Estates (Pty) Ltd and Others, Datacolour International (Pty) Ltd v Intamarket (Pty) Ltd, Durban's Water Wonderland (Pty) Ltd v Botha, First National Bank of SA Ltd v Lynn NO and Others, First National Bank of SA Ltd v Rosenblum and Another, Golden Cape Fruits (Pty) Ltd v Fotoplate (Pty) Ltd, Government of the Republic of South Africa v Fibrespinners & Weavers (Pty) Ltd, Government of the Republic of South Africa v Thabiso Chemicals (Pty) Ltd, Hepner v Roodepoort-Maraisburg Town Council, Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd, KPMG Chartered Accountants (SA) v Securefin LTD and Another, MacDuff & Co Ltd (in Liquidation) v Johannesburg Consolidated Investment Co Ltd, Minister of Education and Another v Syfrets Trust Ltd NO and Another, Motor Racing Enterprises (in liquidation) v NPS (Electronics) Ltd, Nedcor Bank Ltd v Hyperlec Electrical & Mechanical Supplies CC, Odendaalsrust Municipality v New Nigel Estate Gold Mining Co Ltd, Palm Fifteen (Pty) Ltd v Cotton Tail Homes (Pty) Ltd, Peri-Urban Areas Health Board v Tomaselli and Another, Putco Ltd v TV & Radio Guarantee Co (Pty) Ltd and Other Related Cases, Santos Professional Football Club (Pty) Ltd v Igesund and Another, Soja (Pty) Ltd v Tuckers Land and Development Corporation (Pty) Ltd, Swartz & Son v Wolmaransstad Town Council, Thoroughbred Breeders' Association v Price Waterhouse, Tucker's Land and Development Corporation v Hovis, Tucker's Land and Development Corporation (Pty) Ltd v Strydom, Union Government v Vianini Ferro-Concrete Pipes (Pty) Ltd, Victoria Falls & Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd, Willowdene Landowners (Pty) Ltd v St Martin's Trust, World Leisure Holidays (Pty) Ltd v Georges, Institution of Legal Proceedings Against Certain Organs of State Act, Contracts in Administrative Law: Life after Formalism, Peri-Urban Areas Health Board v Tomaselli, Victoria Falls and Transvaal Power v Consolidated Langlaagte Mines, Bay Loan Investment (Pty), Ltd v Bay View (Pty), Ltd, "The Demise of the Exceptio Doli: Is There Another Route to Contractual Equity? Has the creditor used the incomplete performance? If it is determined that the contract may be terminated by reasonable notice, the rules are set out by Smalberger JA in Putco v TV & Radio Guarantee:[209]. It has been argued that, in view of modern methods of communication and international trade, the weight of the locus celebrate contractus in assigning the governing law is diminishing. Negative conditions are generally resolutive. Terms contrary to public policy, or in conflict with a statutory prohibition are not enforced. [11] It seems now to be clear that a causa, be it onerous (ex titulo oneroso) or gratuitous (ex causa lucrativa), is not a separate requirement in the South African law of contract. Release is an agreement between the parties to ‘release’ the debtor from having to perform. Irrelevant evidence is inadmissible: It is a general rule that no evidence may be led to alter the clear and unambiguous meaning of a contract, whether written or oral. The Constitution provides considerable potential for cutting down the range of permissible exemption clauses, however. Finally, but only "when the language of the document is on the face of it ambiguous,"[123] and its meaning therefore uncertain,[124][125] the courts may consider surrounding circumstances: "what passed between the parties during the negotiations that preceded the conclusion of the agreement. It is unsurprising, then, that certain conduct may constitute both a breach of contract and a delict (as when, in Van Wyk v Lewis,[7] a surgeon negligently left a cotton swab inside a patient's body), in which case there is concurrent liability, permitting the plaintiff to sue on either basis. As soon as one serves a summons, therefore, prescription is interrupted. Only for contracts consensu (e.g. She is an Attorney, Notary and Conveyancer of the High Court of South Africa, and specializes in engineering contracts. Other remedies available in the case of breach include the interdict and the declaration of rights. [20] This extremely objective approach has also generally been found to be unacceptable in practice, unless it is qualified. The conduct of the party who induces a contract by improper means frequently constitutes a delict. A term implied in law (a naturale) is one that the law, in the absence of agreement to the contrary by the parties, and in some cases compulsorily, attaches to the particular class of contract. Even then, however, recourse may not be had to evidence of what passed between the parties in the course of negotiating the contract unless a consideration of the “surrounding circumstances” fails to resolve the difficulty. [218] This residual time amounts to three years,[219] and prescription begins to run when ‘the debt falls due’. [32] Parties involved in negotiating a contract may generally terminate the process as they wish. While the innocent party was initially selected for the maintaining of the contract, he or she can cancel in a later stadium if the repudiator refuses to be bounded by the contract. The true basis of contract, then, is to be found in the concurring declarations of the parties, not in what they actually think or intend. Contracts do not have to fall into any particular category, but certain traditional kinds are recognised, along with their own particular rules and terms and consequences. All material terms of the contract must be in writing. Ordinary breach (or positive malperformance) relates to the content and quality of the performance made. Interest is therefore only payable from the date of judgment. The creditor must have a valid right to claim performance forthwith, against which the debtor can raise no valid defence, such as prescription, non-fulfilment of a suspensive condition, or the, The performance must have been fixed for a particular time, either in the contract or by way of a subsequent demand for performance. It follows that the other party to the case may in turn, by oral evidence, prove facts that show the written document did not constitute a contract at all—for example, that it was forged. A negative condition depends on an uncertain future event's not happening. It does not, however, effect the transfer, which is accomplished by the real agreement (the concurring intentions of the parties to make and receive transfer of ownership). Legal causation: The loss must not be too remote a consequence of the breach. Upon the fulfilment of the condition, the contract is terminated and is regarded as if it had never existed. If performance is made, it is regarded as having been owed. The creditor, therefore, may refuse any vaguely inappropriate performance. They are binding on the parties without their having made any explicit agreement as to the points in question. A contractual obligation flowing from a term of the contract can be enforced, but no action lies to compel the performance of a condition. So difficult has it proven in practice to separate them that "no-one knows precisely what the dividing line between the two categories is." This approach has been confirmed by the Supreme Court of Appeal in more recent cases.[79][80]. [citation needed]. The contention that words are always susceptible to one clear meaning is doubious. Conditions are usually classified in three ways, by: The first of these is the most important. It must be noted that the rule does not apply to oral agreements made after the written document was completed. This does not amount to novation. Whereas a concurrence of wills between the parties is usually regarded as the primary basis of contractual liability (will theory), mistake (error) in contract refers to a situation in which a contracting party acts under a misapprehension, causing disagreement (dissensus) between the parties. Where the parties have joint and several liability or entitlement, they may be held liable or be entitled to any share of performance, or even the entirety. According to some authorities, the induced party must have a reasonable fear of some imminent or inevitable harm to him- or herself, or to his property or immediate family. Competitive shipping rates world-wide. As an example, quite common in wills, one may make an obligation under a contract subject to the condition that the other party marry someone. Unfortunately, the use of the words condition and warranty in the English-law sense is relatively common in South Africa. This is a common requirement for the emergence of a contractual commitment that the content should be controlled through mechanisms in the contract. There being a presumption that parties in entering into an agreement have given expression to all the terms by which they intend to be bound, the courts are slow to find that an implied term affects their reciprocal obligations and will never do so if the effect of the implication would be to prejudice the rights of third parties. For example, a property developer contracts an agent to find him a designer for a golf course he wishes to build, but does not give a specific time for the completion of this task; it is an open agreement. If it is occasioned by, Is of the essence (because of an express or implied, Has been made of the essence by the debtor's sending a notice of rescission that has been disregarded, Ordinary repudiation occurs when the obligation is already owing, as in the case of an illegitimate claim (. Some time later, the discovery was made that it had in fact been Adonis who caused the accident. It is an extraordinary remedy, available only if the breach is sufficiently serious or material—unless the parties have provided a cancellation clause (a lex commissoria) in the agreement, in which case the agreement takes precedence over common-law rules. The effect of partial or temporary impossibility of performance depends on the circumstances of the case. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. release, novation), real agreements (whereby rights are transferred; e.g. An understanding of the meaning of individual words must be gained from the wording of the contract as a whole: "It is, in my view, an unrewarding and misleading exercise to seize on one word in a document, determine its more usual or ordinary meaning, and then, having done so, to seek to interpret the document in the light of the meaning so ascribed to that word. At an auction with reserve, the potential purchaser is construed as making the offer; at an auction without reserve, the auctioneer is construed as making the offer. to identify persons or things referred to in the written document; to explain technical expressions or phrases, or words used in a peculiar sense different from the ordinary meaning by reason either of special circumstances, or by virtue of trade usage (provided, it seems, that the usage is not inconsistent with the clear terms of the written document); or. The whole procedure has been "bedvilled by the haziness,"[131] and the future utility of the distinction is questioned. A potestative condition depends for its fulfilment on one of the contracting parties; it is entirely in the power of one of the parties. Duress or metus is improper pressure that amounts to intimidation. These are matters of an uncontentious nature, such as the relationship in which the parties stood to one another at the time of contracting, which may help to explain the context of the contract. The terms of a contract set out the nature and details of the performance due by the parties under the contract: that is, the nature and description of the commodities or services to be rendered, and the manner, time and place of performance. The fixed system of contract freedom – and with the fundamental idea of contracts that are freely closed, should be enforced. In Basson v Chilwan, the court formulated a test for determining whether an agreement in restraint of trade is reasonable: The question of whether a restraint is in conflict with the public interest is to be assessed with regard to the prevailing circumstances at the time enforcement is sought. The distinction is artificial and, in addition, both terms are vague and confusing. A party cannot seek to exempt himself from liability for loss or damage to the property of another caused by his own dolus or by that of his servants. Delegation or intercessio is a form of novation where, by the agreement of all concerned, someone outside of the original contract is given the responsibility of carrying out the performance agreed to in it. In the formulation of AJ Kerr, "If without lawful excuse a party fails to do what he has contracted to do, or does what he has contracted not to do, an ordinary breach of contract is said to have occurred. Authority for this position goes as far back as Grotius, with his stipulation that performance be made in a lump.[184]. The traditional approach is a conservative one that concentrates on the language of the agreement. Another example would be a betting agreement or wager.[43]. [9] Under the causa theory, for the contract to be binding it had to have a iusta causa, or lawful motive in line with Christian moral imperatives, arising not only from a lawful or just right, title, or cause of action, but also from love and affection, moral consideration, or past services. Interest that a creditor would have earned on an amount, had it been paid, is a loss that flows naturally from the breach and therefore constitutes damages that can be claimed. In Le Riche v Hamman,[108] for example, Hamman sued to transfer one Victory Hill, which had been sold to Le Riche in error. For example, suppose that Armand agrees to sell his motor car to Cameron for R100,000 subject to Ali's approval of the car, the price to be paid in monthly instalments of R10,000 each. Only very recently was it decided that the same applies to a negligent misrepresentation. Such provisions are often loosely referred to as ‘conditions’, but they are in fact not conditions at all; they are merely ‘terms of performance’. In other words, the court selects the legal system “with which the transaction has its closest and most real connection.”[citation needed] Usually this is the law of the country where the contract was made or signed (the lex loci contractus), or, when performance is to be tendered in another country, the law of that country (the lex loci solutionis). A person may add a further element to this definition, that the agreements have the right to be bonded on both parties. An option contract is irrevocable. Synallagmatic contracts are subject to the principle of reciprocity. First, supervening impossibility of performance, which is not due to the fault of either party, does not terminate the contract, contrary to the normal rule, unless the debtor can show that, even if he had performed timeously, the same fate would have befallen the prestation in the hands of the creditor (perpetuatio obligationis). An innocent party may have alternative or additional claims in delict. A resolutive condition, then, is one that discharges an existing obligation the moment the condition is fulfilled. Where one party's is greater than the other's, the smaller claim terminates and the greater diminishes. It remains the case in South Africa, however, that the word condition is very loosely used in the drafting of contracts. (2) The provisions of subsection (1) relating to signature by the agent of a party acting on the written authority of the party, shall not derogate from the provisions of any law relating to the making of a contract in writing by a person professing to act as agent or trustee for a company not yet formed, incorporated or registered. In such a case the contract is not varied, but merely applied. MacDuff v JCI[69] is the leading case in this area. Although negligent prevention of fulfilment does not trigger this principle, there may be a duty on a party to take active steps to bring about fulfilment of the condition, either because the contract stipulates such a duty or because omission of such steps would render fulfilment impossible. Oral evidence may be given, therefore. Clearly, the debtor is entitled to damages for any loss he has suffered as a result of the mora, like the cost of storing merchandise or feeding animals he had to deliver. The breach must be major to constitute repudiation, and the denial must be serious. Die partye kan ook uitdruklik ooreenkom op die tyd vir prestasie. The court disagreed, finding on the evidence that, instead of leaving everything to her husband, and thereby paying a purely passive role in the identification, she could herself have asked the one question required to establish Sacks's identity. This, however, is a very strict application of the exceptio and would be too harsh on the debtor. Sa Roj becomes subject to an obligation to deliver the car to Bosie at Bosie's request, and Bosie is obliged to pay Sa Roj the R100 000 the moment Bosie has accepted delivery of the car. It focuses primarily on formal requirements which result in nullity in the event of non-compliance, and in particular, on those prescribed for alienations of land (section 2(1) of Because the creditor knows nothing of this, and because, therefore, the common intention of all parties is lacking, it may not be said that a new contract has been created. In keeping with Enlightenment values, natural lawyers stripped away the Christian morality from contract law. All of these principles were applied uniformly through European ecclesiastical courts. Either party is entitled to give notice for any valid commercial reason. If the option holder accepts the first offer by exercising the option, the main contract is created. Examples include the option contract (in terms of which the grantor's right to revoke his offer is restricted) and the preference contract (whereby the grantor gives a preferential right to conclude a specific contract should he decide to conclude this contract). It is designed to secure a debt, often a loan or overdraft facilities. If the clause is ambiguous, the court interprets it narrowly and contra proferens. The fulfilment of a condition cannot be enforced, however. The debtor should pay the amount specified in contract, though some contracts specifically factor in inflation, in which case it applies. Where one exempts oneself from negligence, however, one should do so explicitly. Where there is uncertainty about rights under a contract, usually in the context of a dispute, a party may approach the court for a declaratory order that binds all interested parties, who should therefore be joined. In such a case, the innocent party may recover damages in respect of any financial loss suffered as a result of the delict, irrespective of whether he elects to affirm or rescind the contract. The parol evidence rule is inapplicable when the question before the court is whether or not the parties actually intended to draw up an exclusive memorial in the first place,[109] and when it is apparent that a written document was not so intended; indeed, the rule applies only to written contracts, and comes into play only once everyone is satisfied that a contract actually exists. [97] "But judicial interpretation cannot be undertaken, as Schreiner JA observed in Jaga v Dönges[98] [...] by 'excessive peering at the language to be interpreted without sufficient attention to the contextual scene'. A contract may provide for the immediate delivery of goods or immediate payment of the price or both, or for the delivery or payment by installments. Not only the nature of the contract is important – the parties must also be in agreement as to the contents of the contract. Tacit contracts are inferred from the conduct of the parties and are very controversial. The common intention of all parties that the delegation take place may be either express or implied from the circumstances, including from the conduct of the parties. Public policy has no fixed meaning, because it represents the public opinion of a particular community at a particular time. Alienation of Land Act 68 of 1981, s 2(1). This means, for example, a provision may not be treated as an exemption clause at all, or a widely drawn clause may be interpreted as not referring to legal grounds of liability, or to cover only the minimum degree of blameworthiness for which the party would be liable, or not to deal with the circumstances of the claim, or not to protect against liability where this ‘would make a mockery of the other provisions of the contract’, in view of the obligations specifically assumed. Time is of the essence when the parties expressly or impliedly agreed that default of performance by the day fixed would entitle the other party to cancel the contract. In light of the foregoing discussion. Mora Debitoris: Is the criminal neglect of a debtor to achieve a positive obligation, despite the failure. Where there is no such express agreement, circumstances may nevertheless be present from which a tacit choice of law may be inferred (for example, where the contract deals with concepts peculiar to a particular system), but such cases are in the nature of things relatively rare. The judgment went against him, the court finding that there was a trade usage whereby wool sales agents were entitled to charge commission. In exceptional cases, a party may be liable despite the impossibility of performance. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on LawTeacher.net then please: Our academic writing and marking services can help you! As Joubert JA put it in Coopers & Lybrand v Bryant,[95] "the language in the document is to be given its grammatical and ordinary meaning unless it would result in some absurdity or some repugnancy or inconsistency with the rest of the instrument. [28] The latter prohibits certain terms or conditions outright, with the result that they are void to the extent of non-compliance. This rule can be relaxed to see justice between the parties, depending on the facts of the case. Future rights, too, may be ceded, as was shown in FNB v Lynn. Where the contract has been lawfully cancelled, the innocent party becomes liable to the breaching party for restitution of any performance received. [92], In determining the common intention of the parties, then, the court must consider first the literal and ordinary meaning of the words in their contract. Although it is clearly established a clause seeking to exclude liability for fraud is invalid, yet liability may be excluded for employees’ dishonest conduct if their employer does not profit from it, and even for a party's own “wilful default.” A party can be exempted from liability not only for negligence but, as per Afrox, also for gross negligence. In other words, only if a consideration of the language in its contextual setting fails to produce sufficient certainty (the degree of certainty required being left to the discretion of the individual judge) may evidence of “surrounding circumstances” be led. [55] It has been held that, where an agreement of purchase and sale has been entered into subject to a suspensive condition, no contract of sale is then and there established; it develops into one of sale only on fulfilment of the condition. Contract Law. If the creditor is in mora, the risk of damage to contractual goods, caused by supervening impossibility and the debtor's negligence (short of gross negligence), passes to the creditor. In cases where the contract must be written in order to exist, the parol evidence rule applies. Nevertheless, an apparently more liberal attitude to the admission of evidence of contextual facts, however classified, as well as a growing emphasis on purposive interpretation, “herald a more flexible and sensible approach in practice.”[140] The strongest judicial attack on Delmas to date was launched by Harms DP in KPMG v Securefin: The integration (or parol evidence) rule remains part of our law. For example, suppose that the owner of a grandstand lets a seat on it to a spectator for a certain day. Mistake presupposes an absence of consensus and renders the contract void ab initio, whereas a contract induced by a misrepresentation is valid but voidable. A lease may be terminated on due notice of usually a month.