Commercial Law: Chapter Summarisation
Chapter Seven
abirito boni viri – this means the judgment of a good person. It is under the
clause where the contracting party is allowed to determine the performance.
There are different possibilities when it comes to contracts. This means that
some performances might be impossible to perform in terms of the contract.
There is subjective impossibility and objective impossibility. A contract is not
valid if the performance is objectively impossible. By objective impossibility,
we mean that it is impossible for anyone to perform the required performance.
Subjective impossibility does not make the contract void. An example of
subjective impossibility is when parties enter a contract and they must pay each
other a certain amount to carry out a performance, if one party cannot pay, the
performance is impossible on their side. This means it is impossible only for that
party to carry out the performance, not all the parties involved.
The effects of the illegality of contracts – There are rules that prohibit
people involved in illegal contracts from performing according to the terms of the
contract or from recovering what they already lost from being in the contract.
ex turpi causa rule – this rule states that no action can be based on a
dishonourable cause. It also means that the courts will refuse to enforce a
claim that arises from a party involved in the illegal contract. When there is an
illegal contract, the courts will not allow any action to be enforced.
in pari delicto rule – This means in equal guilt. A party who is in equal guilt will
not be allowed to claim their performance back after they enter an illegal
contract. This is because the party who is in possession of that performance is
stronger. This only applies when both parties are guilty and are aware of the fact
that they are getting into an illegal contract. If one party did not know that they
were entering an illegal contract, the in pari delicto rule does not apply, only the
ex trupi causa applies.
Chapter Eight: Contents of a contract
There are three different types of terms used in a contract. These terms
determine the exact details of what the contract requires.
Essentialia – These are the terms that identify a contract as a specific contract.
The essence of the contract. There are contracts called specific contracts which
must include particular terms. Essentialia are terms that must appear in the
contract for it to be classified as a specific contract. The parties involved in the
contract must agree on these terms for the contract to be specific. For example,
for a contract to be considered a valid lease contract, there must be an
agreement with the essentialia terms such as the object being leased, the
length of the lease, and the amount of rent payable.
Just like the above lease example, a contract that is specifically for a sale should
include such terms: the item being sold, and the amount payable.
Naturalia – Once the contract has been identified to be a specific contract,
there are terms that the law automatically read into the contract. These terms
are the naturalia of the contract. These clauses are implied by law. For example,
if a contract is classified as a lease, the law automatically reads in the common
law duties of the lessor and the lessee. The naturalia determines the rights,
, duties, and obligations of the parties to the lease. The naturalia apply
automatically to a contract even if the parties do not agree to the terms.
Incidentalia - These are the terms that the parties have agreed to, but the
terms are neither essentialia nor naturalia. The terms meet the specific needs of
the contracting parties. For example, when a house is sold, it may be agreed that
certain furniture is sold with the house.
Terms are also identified by how they became part of the contract.
Express terms – a term in a contract that is put into words or given some
physical form by the contracting parties. These kinds of terms can either be
expressed verbally or written down.
Implied terms – The contracting parties do not expressly agree to these terms.
These terms can be read into by the law or the trade usage. This is associated
with Naturalia; the law automatically reads into terms that are also
automatically included in a contract. We say the terms are implied by law. On
the other hand, there are terms implied by trade usage. These are usual, known
terms that are used by trades and are universally understood by everyone.
These terms are said to be implied by trade.
Terms implied by law or any of the contracting parties can be overwritten by an
expressed term. For example, if the law reads into an implied term, only to find
out that that was not the case or the implication is not correct or was not agreed
to by either one or both contracting parties. The courts can ask for an expressed
term. This way they rectify the contract to include expressed terms that will
overrule the implied term. This is different in terms implied by trade usage. The
implied terms will stay implied unless there is enough proof that says otherwise.
The contract will not be rectified, nor will there be an expressed term that
overrules the implied term.
Tacit terms – These are terms that the contracting parties intended to include in
a contract but did not (expressly) because it seemed obvious that it did not seem
necessary to include. Also, this is when there is a gap in the contract, neither the
expressed nor the implied term in there. The term that fills in is the tacit term.
The tacit term is the terms not officially included in a contract because it seems
so obvious that both parties know about it and do not have to expressly agree to.
Imposed terms – These terms are forced to be in a contract. The contracting
parties are forced to have such terms in a contract either by law or by another
contracting party which will not enter the contract unless the terms are included.
Unlike the implied term, this term cannot be changed. A common imposed term
is the exclusion clause. It is known as the exemption of liability clause, meaning
there is a limitation to one party’s liability for any loss, damage, or harm they
would be liable for. The clause can prevent the customer from suing the other
contracting party if anything happens causing the other contracting party loss,
damage, etc.
These terms are usually in unsigned contracts. These are tickets and notices.
Chapter Nine: Common Contractual Terms
Clauses that determine whether or when a contract will take place:
Conditions – This is a contractual term that determines whether a contract will
start or continue to operate. It describes an event that may or may not happen in
Chapter Seven
abirito boni viri – this means the judgment of a good person. It is under the
clause where the contracting party is allowed to determine the performance.
There are different possibilities when it comes to contracts. This means that
some performances might be impossible to perform in terms of the contract.
There is subjective impossibility and objective impossibility. A contract is not
valid if the performance is objectively impossible. By objective impossibility,
we mean that it is impossible for anyone to perform the required performance.
Subjective impossibility does not make the contract void. An example of
subjective impossibility is when parties enter a contract and they must pay each
other a certain amount to carry out a performance, if one party cannot pay, the
performance is impossible on their side. This means it is impossible only for that
party to carry out the performance, not all the parties involved.
The effects of the illegality of contracts – There are rules that prohibit
people involved in illegal contracts from performing according to the terms of the
contract or from recovering what they already lost from being in the contract.
ex turpi causa rule – this rule states that no action can be based on a
dishonourable cause. It also means that the courts will refuse to enforce a
claim that arises from a party involved in the illegal contract. When there is an
illegal contract, the courts will not allow any action to be enforced.
in pari delicto rule – This means in equal guilt. A party who is in equal guilt will
not be allowed to claim their performance back after they enter an illegal
contract. This is because the party who is in possession of that performance is
stronger. This only applies when both parties are guilty and are aware of the fact
that they are getting into an illegal contract. If one party did not know that they
were entering an illegal contract, the in pari delicto rule does not apply, only the
ex trupi causa applies.
Chapter Eight: Contents of a contract
There are three different types of terms used in a contract. These terms
determine the exact details of what the contract requires.
Essentialia – These are the terms that identify a contract as a specific contract.
The essence of the contract. There are contracts called specific contracts which
must include particular terms. Essentialia are terms that must appear in the
contract for it to be classified as a specific contract. The parties involved in the
contract must agree on these terms for the contract to be specific. For example,
for a contract to be considered a valid lease contract, there must be an
agreement with the essentialia terms such as the object being leased, the
length of the lease, and the amount of rent payable.
Just like the above lease example, a contract that is specifically for a sale should
include such terms: the item being sold, and the amount payable.
Naturalia – Once the contract has been identified to be a specific contract,
there are terms that the law automatically read into the contract. These terms
are the naturalia of the contract. These clauses are implied by law. For example,
if a contract is classified as a lease, the law automatically reads in the common
law duties of the lessor and the lessee. The naturalia determines the rights,
, duties, and obligations of the parties to the lease. The naturalia apply
automatically to a contract even if the parties do not agree to the terms.
Incidentalia - These are the terms that the parties have agreed to, but the
terms are neither essentialia nor naturalia. The terms meet the specific needs of
the contracting parties. For example, when a house is sold, it may be agreed that
certain furniture is sold with the house.
Terms are also identified by how they became part of the contract.
Express terms – a term in a contract that is put into words or given some
physical form by the contracting parties. These kinds of terms can either be
expressed verbally or written down.
Implied terms – The contracting parties do not expressly agree to these terms.
These terms can be read into by the law or the trade usage. This is associated
with Naturalia; the law automatically reads into terms that are also
automatically included in a contract. We say the terms are implied by law. On
the other hand, there are terms implied by trade usage. These are usual, known
terms that are used by trades and are universally understood by everyone.
These terms are said to be implied by trade.
Terms implied by law or any of the contracting parties can be overwritten by an
expressed term. For example, if the law reads into an implied term, only to find
out that that was not the case or the implication is not correct or was not agreed
to by either one or both contracting parties. The courts can ask for an expressed
term. This way they rectify the contract to include expressed terms that will
overrule the implied term. This is different in terms implied by trade usage. The
implied terms will stay implied unless there is enough proof that says otherwise.
The contract will not be rectified, nor will there be an expressed term that
overrules the implied term.
Tacit terms – These are terms that the contracting parties intended to include in
a contract but did not (expressly) because it seemed obvious that it did not seem
necessary to include. Also, this is when there is a gap in the contract, neither the
expressed nor the implied term in there. The term that fills in is the tacit term.
The tacit term is the terms not officially included in a contract because it seems
so obvious that both parties know about it and do not have to expressly agree to.
Imposed terms – These terms are forced to be in a contract. The contracting
parties are forced to have such terms in a contract either by law or by another
contracting party which will not enter the contract unless the terms are included.
Unlike the implied term, this term cannot be changed. A common imposed term
is the exclusion clause. It is known as the exemption of liability clause, meaning
there is a limitation to one party’s liability for any loss, damage, or harm they
would be liable for. The clause can prevent the customer from suing the other
contracting party if anything happens causing the other contracting party loss,
damage, etc.
These terms are usually in unsigned contracts. These are tickets and notices.
Chapter Nine: Common Contractual Terms
Clauses that determine whether or when a contract will take place:
Conditions – This is a contractual term that determines whether a contract will
start or continue to operate. It describes an event that may or may not happen in
