Contract Law Notes
STUDY UNIT 1:
(1) CONTRACT AS AN AGREEMENT INTENDED TO CREATE ENFORCEABLE
OBLIGATIONS:
• The extra ingredient that distinguishes contracts from these non-binding agreements
is a serious intention to create legally enforceable obligations (animus contrahendi).
• A “letter of intent” or “subject to contract” indicates that the agreement in question isn’t
yet to be regarded as a legally binding contract.
• Where a party lacks animus contrahendi, but leads the other party into the reasonable
belief that he does seriously intend to bind himself, the law will protect that reasonable
belief and uphold the contract, despite the absence of a genuine agreement.
• Obligations give rise to PERSONAL RIGHTS as opposed to REAL RIGHTS!
(2) LEGALLY BINDING AGREEMENTS THAT ARE NOT CONTRACTS:
1. OBLIGATORY AGREEMENTS: whereby one or more obligations are created, e.g.,
contracts: sale and lease.
2. ABSOLVING AGREEMENTS: whereby obligations are discharged or extinguished.
3. REAL (OR TRANSFER) AGREEMENTS: whereby rights are transferred, e.g., cession
= sale of a right – the sale itself doesn’t transfer the rights, that is achieved by cession.
• Obligatory agreement creating the duty to cede the right in question, and the real
agreement of cession whereby the right is actually transferred.
• “Pacta sunt servanda” – an agreement must be honoured.
❖ The conclusion of a contract gives rise to the duty and corresponding right.
❖ Actual performance is when the parties actually do what they promised to do in terms
of the contract.
❖ However, parties are bound to the contract before performance takes place.
(3) LEGALLY BINDING AGREEMENTS THAT ARE MORE THAN JUST CONTRACTS:
• Marriage is regarded as an agreement sui generis, giving rise to a relationship that
confers on the parties a status of a public character.
• Judgment by consent – parties to litigation conclude an agreement setting some or all
of the issues in dispute between them and thereafter ask the court to give a judgment
or to make an order that reflects the terms of their agreement.
DUAL CHARACTER:
(1) It is clearly a judicial act with all the authority, force and effect of any other judgment
or order of the court.
(2) It remains in substance a contract of the parties, albeit one of an elevated status
because of the superimposition of the command of the court.
(4) DEFINITION OF CONTRACT:
A contract may be defined as an agreement entered into by two or more persons with the
intention of creating a legal obligation(s).
STUDY UNIT 1:
(1) CONTRACT AS AN AGREEMENT INTENDED TO CREATE ENFORCEABLE
OBLIGATIONS:
• The extra ingredient that distinguishes contracts from these non-binding agreements
is a serious intention to create legally enforceable obligations (animus contrahendi).
• A “letter of intent” or “subject to contract” indicates that the agreement in question isn’t
yet to be regarded as a legally binding contract.
• Where a party lacks animus contrahendi, but leads the other party into the reasonable
belief that he does seriously intend to bind himself, the law will protect that reasonable
belief and uphold the contract, despite the absence of a genuine agreement.
• Obligations give rise to PERSONAL RIGHTS as opposed to REAL RIGHTS!
(2) LEGALLY BINDING AGREEMENTS THAT ARE NOT CONTRACTS:
1. OBLIGATORY AGREEMENTS: whereby one or more obligations are created, e.g.,
contracts: sale and lease.
2. ABSOLVING AGREEMENTS: whereby obligations are discharged or extinguished.
3. REAL (OR TRANSFER) AGREEMENTS: whereby rights are transferred, e.g., cession
= sale of a right – the sale itself doesn’t transfer the rights, that is achieved by cession.
• Obligatory agreement creating the duty to cede the right in question, and the real
agreement of cession whereby the right is actually transferred.
• “Pacta sunt servanda” – an agreement must be honoured.
❖ The conclusion of a contract gives rise to the duty and corresponding right.
❖ Actual performance is when the parties actually do what they promised to do in terms
of the contract.
❖ However, parties are bound to the contract before performance takes place.
(3) LEGALLY BINDING AGREEMENTS THAT ARE MORE THAN JUST CONTRACTS:
• Marriage is regarded as an agreement sui generis, giving rise to a relationship that
confers on the parties a status of a public character.
• Judgment by consent – parties to litigation conclude an agreement setting some or all
of the issues in dispute between them and thereafter ask the court to give a judgment
or to make an order that reflects the terms of their agreement.
DUAL CHARACTER:
(1) It is clearly a judicial act with all the authority, force and effect of any other judgment
or order of the court.
(2) It remains in substance a contract of the parties, albeit one of an elevated status
because of the superimposition of the command of the court.
(4) DEFINITION OF CONTRACT:
A contract may be defined as an agreement entered into by two or more persons with the
intention of creating a legal obligation(s).
