UNIT 3
Formalities
Formalities in Contracts
Formalities refer to the external visible form required for a valid contract.
General Rule: No formalities are required for a valid contract of sale.
Exceptions: Statutory formalities apply to the sale of immovable property.
Parties can agree to formalities, such as:
Written agreement
Signatures
Proof of payment
Witnesses
Two possible reasons for formalities:
1. Contract is valid only after formalities are complied with.
2. Formalities serve as proof of an existing contract.
Statutory formalities cannot be changed or excluded by mutual agreement.
Contract of Sale of Land
Important Concepts
Alienate: To sell, exchange, or donate land, subject to conditions.
Land: Includes units, rights to claim transfer, and undivided shares in land.
Deed of Alienation: A document used for alienating land, broader than a contract.
Aims of Formalities in Sale of Land
1. Prevent disputes.
2. Avoid uncertainties.
3. Prevent malpractices.
Legal Requirements (Alienation of Land Act 68 of 1981)
Contract must be written and signed by both parties or agents.
Formalities for a Contract of Sale of Land
(a) Contract Must Be Written
Must include all essentialia and material terms.
, Material term: A term considered essential by both parties.
Key Requirements:
1. Object Sold Must Be Clearly Defined
Must be identifiable in writing without verbal evidence.
Example: "Portion 12 of the farm Bonny Heights, Rustenburg."
2. Purchase Price Must Be Clearly Defined
Must specify price, payment method, and schedule.
Example:
Purchase Price: R1 180 000
Monthly Repayment: R12 787
Loan Term: 20 years
No valid contract if price is left for future negotiations.
3. Parties Must Be Clearly Described
Seller and buyer must be identified.
If third parties are involved, their roles must be specified.
Example: "Masodi Van Eck (Seller) and Lynda Properties Ltd (Buyer)."
4. Alteration of Written Contracts
Any significant change must meet statutory formalities.
Non-compliance makes the contract null and void.
Example: Adjusting a property boundary in a contract.
5. Termination and Reinstatement
Can be done verbally.
(b) Signature of Parties
Both parties must sign or their authorized agents.
Any mark or initial is sufficient if identity can be proven.
If the contract consists of two documents, both must be signed.
Agents in Contracts
Agents act on behalf of individuals/entities.
Must have written authority before concluding the contract.
Example: Mary (buyer) appoints attorney David to purchase property in Cape Town.
Contract is null and void if authority does not exist at the time of the act.
Influence of the Consumer Protection Act (CPA)
CPA does not require contracts to be in writing.
If written, it must:
Be signed by the consumer.
Be in plain, understandable language.
Consequences of Non-Compliance with Formalities
Formalities
Formalities in Contracts
Formalities refer to the external visible form required for a valid contract.
General Rule: No formalities are required for a valid contract of sale.
Exceptions: Statutory formalities apply to the sale of immovable property.
Parties can agree to formalities, such as:
Written agreement
Signatures
Proof of payment
Witnesses
Two possible reasons for formalities:
1. Contract is valid only after formalities are complied with.
2. Formalities serve as proof of an existing contract.
Statutory formalities cannot be changed or excluded by mutual agreement.
Contract of Sale of Land
Important Concepts
Alienate: To sell, exchange, or donate land, subject to conditions.
Land: Includes units, rights to claim transfer, and undivided shares in land.
Deed of Alienation: A document used for alienating land, broader than a contract.
Aims of Formalities in Sale of Land
1. Prevent disputes.
2. Avoid uncertainties.
3. Prevent malpractices.
Legal Requirements (Alienation of Land Act 68 of 1981)
Contract must be written and signed by both parties or agents.
Formalities for a Contract of Sale of Land
(a) Contract Must Be Written
Must include all essentialia and material terms.
, Material term: A term considered essential by both parties.
Key Requirements:
1. Object Sold Must Be Clearly Defined
Must be identifiable in writing without verbal evidence.
Example: "Portion 12 of the farm Bonny Heights, Rustenburg."
2. Purchase Price Must Be Clearly Defined
Must specify price, payment method, and schedule.
Example:
Purchase Price: R1 180 000
Monthly Repayment: R12 787
Loan Term: 20 years
No valid contract if price is left for future negotiations.
3. Parties Must Be Clearly Described
Seller and buyer must be identified.
If third parties are involved, their roles must be specified.
Example: "Masodi Van Eck (Seller) and Lynda Properties Ltd (Buyer)."
4. Alteration of Written Contracts
Any significant change must meet statutory formalities.
Non-compliance makes the contract null and void.
Example: Adjusting a property boundary in a contract.
5. Termination and Reinstatement
Can be done verbally.
(b) Signature of Parties
Both parties must sign or their authorized agents.
Any mark or initial is sufficient if identity can be proven.
If the contract consists of two documents, both must be signed.
Agents in Contracts
Agents act on behalf of individuals/entities.
Must have written authority before concluding the contract.
Example: Mary (buyer) appoints attorney David to purchase property in Cape Town.
Contract is null and void if authority does not exist at the time of the act.
Influence of the Consumer Protection Act (CPA)
CPA does not require contracts to be in writing.
If written, it must:
Be signed by the consumer.
Be in plain, understandable language.
Consequences of Non-Compliance with Formalities
