Semester 2 Cases
1. THE CONTENT AND OPERATION OF
CONTRACTS
1.2 The Parties to the Contract
1.2.1 Privity of Contract
Bellingan v Clive Ferreira & Associates CC 1998 (4) SA
382 (W) (382-384; 402-406; Jutastat)
Context:
• A widow obtained a cession of a claim and sought to target another partner for a
proportion of the remaining debt.
• Legal Question: How much can she claim from the other partners? Can she claim the
full remaining amount, or is she limited to a proportional share?
Key Legal Issues:
• Proportional Share Challenge: What proportionate share can the paying party
challenge?
Relevant Case Law:
• Gerber v Wolson (Surety and Co-Principal Debtor Case)
◦ Legal Question: What impact does cession have on the right of recourse?
▪ Case Details:
• A debtor gets cession from the creditor and targets another debtor (one of
the others).
• Involved 7 sureties and co-principal debtors.
• W paid the full debt, obtained cession, and targeted one other for 6/7th of
the total amount.
• Legal Question: Could W do this? G disputed liability to pay 1/7th and not
6/7th.
◦ Court’s Consideration:
▪ Greenberg JA: Agreement overrides; the agreement determines the right of
recourse and the amount one can claim. If the agreement states 1/7th, then it’s
1/7th, regardless of cession.
▪ Van der Heever JA: Relied on Voet, arguing that if one holds the cession, they
are entitled to claim the full amount minus their share (6/7th).
▪ Hoexter JA: Agreement overrides.
▪ Fagan JA: Pothier; cession limits the claim to a proportional share (1/7th).
Application in Bellingan Case:
, • The court examined the partnership agreement and held that the widow could only
claim a proportionate share (1/7th) from each party.
• The widow’s claim was limited to a portion of the discounted value since she bought
the claim at a discount.
Bellingan v Clive Ferreira Analysis:
• Where co-debtors have an agreement (express or tacit) governing recourse, this
agreement is decisive.
• A paying co-debtor cannot override the agreement by obtaining a cession of the
creditor’s rights; this would amount to fraud.
• The liability inter se (amongst themselves) of co-debtors depends on the terms of the
partnership agreement.
1.3 Types of Obligations:
1.3.4 Divisible or Indivisible Performances:
Bob’s Shoe Centre v Heneways Freight Services (Pty) Ltd
1995 (2) SA 421 (A) (382-384; 402-406; Jutastat)
Facts:
• Bob’s Shoe Centre (B) imported shoes from Portugal, which were stolen from a
warehouse after arriving in South Africa.
• Heneways Freight Services (H) acted as the clearing agent for B and was responsible
for customs clearance and delivery of the goods to B’s business.
• H failed to insert the correct customs number, delaying the release of the goods,
which were subsequently stolen.
• H had already paid customs duties and incurred other expenses.
• The theft made further performance under the contract impossible, and the court
needed to determine the impact of this supervening impossibility on the part of the
contract that had already been performed.
Legal Question:
• What effect does the supervening impossibility of performance have on the part of the
contract that has already been performed?
Court’s Approach:
• The court considered two primary factors:
1. Nature of the Performance: Whether the performance itself was composite or
could be subdivided.
2. Parties’ Intention: Whether the parties intended the performance to be treated as
divisible or indivisible.
Factors Influencing Divisibility:
• Contract Divided into Stages: The contract was divided into stages, with monetary
amounts linked to various steps.
2
, • Expressed Terms: The terms of the contract suggested that the performance was
subdivided into specific duties, indicating the parties’ probable intention for divisibility.
• Counter-Performance: The divisible nature of the counter-performance (specific
monetary amounts for each duty) supported the inference that the respondent’s
performance was also divisible.
Application:
• The court concluded that the contract created a composite performance but treated it
as divisible based on the subdivision of duties and the allocation of specific payments.
• Since the counter-performance was divisible, the performance was also deemed
divisible, allowing H to be compensated for the work performed before the theft
occurred.
Criticism and Considerations:
• The court also looked at rules relating to the severability of illegal contractual terms to
help determine divisibility, though this approach was criticized as being “back to
front.”
• The focus should be on whether the performance was divisible before considering the
severability of specific terms.
Approach to Analyzing Divisibility in Case Law:
1. Facts: Understand the specific facts of the case.
2. Factors Influencing Divisibility: Consider the stages of performance, monetary linkages,
expressed terms, and the nature of the performance and counter-performance.
3. Application: Apply these factors to determine whether the performance in the case
should be treated as divisible or indivisible.
1.4 Types of Terms
1.4.2 Essentialia, Naturalia, Incidentalia
Stocks & Stocks v TJ Daly 1979 (3) SA 754 (A) (Jutastat)
Facts:
• S appointed T to transport a mobile crane.
• The crane was damaged during transportation, and S claimed damages based on
breach of contract.
• T argued that an owner’s risk clause (an incidentalia) excluded their liability, putting
the risk of damage on S.
• One party had passed away, complicating the proof of the contract’s terms.
Legal Issue:
• Who bears the onus of proving the content of the contract?
• Question: Does S have to prove a contract without an owner’s risk clause, or does T
have to prove a contract with one?
Court’s Decision:
3
, • Onus of Proof: The general rule is that the party who alleges must prove. In this case,
S bore the onus of proving the content of the contract, including that it did not include
an owner’s risk clause.
• Waiver: S argued that T should bear the onus because T was alleging a waiver of
rights. The court disagreed, stating that T was arguing that the right never existed due
to the inclusion of the owner’s risk clause from the outset.
• Application of the General Rule: The court held that S must prove the terms of the
contract, including that the naturalia (standard terms) were not varied by the owner’s
risk clause.
• Burden of Rebuttal: While T did not bear the onus of proof, they still had a burden of
rebuttal—to provide sufficient evidence to make their version as probable as S’s.
Strategic Considerations:
• The onus of proof depends on who institutes the action. Sometimes it may be
strategically advantageous to wait for the other party to bring the case to court.
1.4.3 Express Terms, Tacit Terms, and Implied Terms
(ii) True Tacit Terms and Tacit Contracts
Wilkens NO v Voges 1994 (3) SA 130 (A) (Jutastat)
• Emphasizes that tacit terms must be necessary for the business efficacy of the contract,
inferred from express terms and surrounding circumstances, and must not contradict any
express terms.
• Tacit terms must be clearly and precisely formulated, reflecting the actual or supposed
intention of both parties.
South African Forestry Co Ltd v York Timbers 2005 (3) SA
323 (SCA) (Jutastat)
Facts:
• Primary Issue: Safcol wanted to exit a contract with York Timbers, alleging that:
1. Performance Impossibility: Safcol claimed that performance had become impossible,
but this argument was not successful.
2. Breach of an Implied Term: Safcol alleged that York breached an implied term
informed by the principle of good faith, which obligated York to act fairly in exercising
its contractual rights. This argument also failed.
3. Successful Argument: Safcol ultimately succeeded by arguing that other terms of the
contract had been breached based on their proper interpretation.
• Relevant Clauses:
◦ Price Revision Clause: Related to the revision of timber prices.
◦ Termination/Notification Clause: Related to how the contract could be terminated.
Principles:
• The case links implied terms to broader principles like good faith and fairness.
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1. THE CONTENT AND OPERATION OF
CONTRACTS
1.2 The Parties to the Contract
1.2.1 Privity of Contract
Bellingan v Clive Ferreira & Associates CC 1998 (4) SA
382 (W) (382-384; 402-406; Jutastat)
Context:
• A widow obtained a cession of a claim and sought to target another partner for a
proportion of the remaining debt.
• Legal Question: How much can she claim from the other partners? Can she claim the
full remaining amount, or is she limited to a proportional share?
Key Legal Issues:
• Proportional Share Challenge: What proportionate share can the paying party
challenge?
Relevant Case Law:
• Gerber v Wolson (Surety and Co-Principal Debtor Case)
◦ Legal Question: What impact does cession have on the right of recourse?
▪ Case Details:
• A debtor gets cession from the creditor and targets another debtor (one of
the others).
• Involved 7 sureties and co-principal debtors.
• W paid the full debt, obtained cession, and targeted one other for 6/7th of
the total amount.
• Legal Question: Could W do this? G disputed liability to pay 1/7th and not
6/7th.
◦ Court’s Consideration:
▪ Greenberg JA: Agreement overrides; the agreement determines the right of
recourse and the amount one can claim. If the agreement states 1/7th, then it’s
1/7th, regardless of cession.
▪ Van der Heever JA: Relied on Voet, arguing that if one holds the cession, they
are entitled to claim the full amount minus their share (6/7th).
▪ Hoexter JA: Agreement overrides.
▪ Fagan JA: Pothier; cession limits the claim to a proportional share (1/7th).
Application in Bellingan Case:
, • The court examined the partnership agreement and held that the widow could only
claim a proportionate share (1/7th) from each party.
• The widow’s claim was limited to a portion of the discounted value since she bought
the claim at a discount.
Bellingan v Clive Ferreira Analysis:
• Where co-debtors have an agreement (express or tacit) governing recourse, this
agreement is decisive.
• A paying co-debtor cannot override the agreement by obtaining a cession of the
creditor’s rights; this would amount to fraud.
• The liability inter se (amongst themselves) of co-debtors depends on the terms of the
partnership agreement.
1.3 Types of Obligations:
1.3.4 Divisible or Indivisible Performances:
Bob’s Shoe Centre v Heneways Freight Services (Pty) Ltd
1995 (2) SA 421 (A) (382-384; 402-406; Jutastat)
Facts:
• Bob’s Shoe Centre (B) imported shoes from Portugal, which were stolen from a
warehouse after arriving in South Africa.
• Heneways Freight Services (H) acted as the clearing agent for B and was responsible
for customs clearance and delivery of the goods to B’s business.
• H failed to insert the correct customs number, delaying the release of the goods,
which were subsequently stolen.
• H had already paid customs duties and incurred other expenses.
• The theft made further performance under the contract impossible, and the court
needed to determine the impact of this supervening impossibility on the part of the
contract that had already been performed.
Legal Question:
• What effect does the supervening impossibility of performance have on the part of the
contract that has already been performed?
Court’s Approach:
• The court considered two primary factors:
1. Nature of the Performance: Whether the performance itself was composite or
could be subdivided.
2. Parties’ Intention: Whether the parties intended the performance to be treated as
divisible or indivisible.
Factors Influencing Divisibility:
• Contract Divided into Stages: The contract was divided into stages, with monetary
amounts linked to various steps.
2
, • Expressed Terms: The terms of the contract suggested that the performance was
subdivided into specific duties, indicating the parties’ probable intention for divisibility.
• Counter-Performance: The divisible nature of the counter-performance (specific
monetary amounts for each duty) supported the inference that the respondent’s
performance was also divisible.
Application:
• The court concluded that the contract created a composite performance but treated it
as divisible based on the subdivision of duties and the allocation of specific payments.
• Since the counter-performance was divisible, the performance was also deemed
divisible, allowing H to be compensated for the work performed before the theft
occurred.
Criticism and Considerations:
• The court also looked at rules relating to the severability of illegal contractual terms to
help determine divisibility, though this approach was criticized as being “back to
front.”
• The focus should be on whether the performance was divisible before considering the
severability of specific terms.
Approach to Analyzing Divisibility in Case Law:
1. Facts: Understand the specific facts of the case.
2. Factors Influencing Divisibility: Consider the stages of performance, monetary linkages,
expressed terms, and the nature of the performance and counter-performance.
3. Application: Apply these factors to determine whether the performance in the case
should be treated as divisible or indivisible.
1.4 Types of Terms
1.4.2 Essentialia, Naturalia, Incidentalia
Stocks & Stocks v TJ Daly 1979 (3) SA 754 (A) (Jutastat)
Facts:
• S appointed T to transport a mobile crane.
• The crane was damaged during transportation, and S claimed damages based on
breach of contract.
• T argued that an owner’s risk clause (an incidentalia) excluded their liability, putting
the risk of damage on S.
• One party had passed away, complicating the proof of the contract’s terms.
Legal Issue:
• Who bears the onus of proving the content of the contract?
• Question: Does S have to prove a contract without an owner’s risk clause, or does T
have to prove a contract with one?
Court’s Decision:
3
, • Onus of Proof: The general rule is that the party who alleges must prove. In this case,
S bore the onus of proving the content of the contract, including that it did not include
an owner’s risk clause.
• Waiver: S argued that T should bear the onus because T was alleging a waiver of
rights. The court disagreed, stating that T was arguing that the right never existed due
to the inclusion of the owner’s risk clause from the outset.
• Application of the General Rule: The court held that S must prove the terms of the
contract, including that the naturalia (standard terms) were not varied by the owner’s
risk clause.
• Burden of Rebuttal: While T did not bear the onus of proof, they still had a burden of
rebuttal—to provide sufficient evidence to make their version as probable as S’s.
Strategic Considerations:
• The onus of proof depends on who institutes the action. Sometimes it may be
strategically advantageous to wait for the other party to bring the case to court.
1.4.3 Express Terms, Tacit Terms, and Implied Terms
(ii) True Tacit Terms and Tacit Contracts
Wilkens NO v Voges 1994 (3) SA 130 (A) (Jutastat)
• Emphasizes that tacit terms must be necessary for the business efficacy of the contract,
inferred from express terms and surrounding circumstances, and must not contradict any
express terms.
• Tacit terms must be clearly and precisely formulated, reflecting the actual or supposed
intention of both parties.
South African Forestry Co Ltd v York Timbers 2005 (3) SA
323 (SCA) (Jutastat)
Facts:
• Primary Issue: Safcol wanted to exit a contract with York Timbers, alleging that:
1. Performance Impossibility: Safcol claimed that performance had become impossible,
but this argument was not successful.
2. Breach of an Implied Term: Safcol alleged that York breached an implied term
informed by the principle of good faith, which obligated York to act fairly in exercising
its contractual rights. This argument also failed.
3. Successful Argument: Safcol ultimately succeeded by arguing that other terms of the
contract had been breached based on their proper interpretation.
• Relevant Clauses:
◦ Price Revision Clause: Related to the revision of timber prices.
◦ Termination/Notification Clause: Related to how the contract could be terminated.
Principles:
• The case links implied terms to broader principles like good faith and fairness.
4
