5: THE CONSUMER
Unit 1: Financial and contractual aspects of which consumers should take note.
CONTRACTS
Þ Legally valid agreement between two or more parties where an offer is made,
and its terms and conditions are accepted.
Þ Rights and obligations of each party set out in contract.
Þ Both parties must give something of value and receive something of value.
Example:
Offer: “I will mow your lawn for 50 Rand this weekend.”
Acceptance: “That's a deal.”
Valuable consideration: One party's lawn is mowed, and the other party receives money.
Agreement be reached in 3 ways:
1. Oral agreement - you and friend agree in conversation that you will buy movie
tickets for both of you, and your friend will pay you back later.
2. Silence agreement - you accept without dispute R1000 from your friend in
exchange for your PlayStation.
3. Written contract - legally binding agreements between 2 + parties is put in
writing and signed by all parties in front of witnesses. eg purchase and sale
agreements, leases, higher purchase contracts and partnership contracts.
Requirements for valid contracts
· All parties must consent to the contract. Must be an offer as well as an acceptance
of the offer.
· Parties entering contract must have the capacity to contract. Have to be older than
18 years.
· Cannot be illegal - selling of unpolished diamonds without a license.
· Contract must comply with legal formalities – Documents correctly signed and
initialed by all parties and signed by witnesses.
· Agreement and consent must be voluntary – No party forced into contract.
· Possible to perform contractual obligations – one person cannot sell the moon to
another.
, Breach of contract
- When 1 party fails to perform obligations stated in the contract, they then breach
the contract.
Consequences of breach contract
o Court can declare party guilty for failure to keep to the agreement and a fine / jail
sentence may be imposed.
o Court can sue guilty party for damages.
o Interdict can be obtained to prevent guilty party from continuing with his/her work.
o Contract can be cancelled / declared void.
Types of contracts
- Employment contracts
- Insurance policies
- Credit agreements
- Leases
- Purchase and sale agreements
- Gymnasium membership contracts
- Business contracts
- Partnership agreements
Employment contracts
o Agreement between employer and employee.
o Legal contract, terms and conditions are legally binding.
o To the advantage of both employer and employee and protects both parties in
terms of contractual obligations and service conditions.
o Must be signed by employer, employee and two witnesses.
Insurance Policies
o Agreement between a consumer and insurance company.
o Insurance company undertakes to compensate the consumer in the case of loss or
damage to the insured goods.
o Consumer undertakes to pay a monthly sum / premium to the insurer.
Unit 1: Financial and contractual aspects of which consumers should take note.
CONTRACTS
Þ Legally valid agreement between two or more parties where an offer is made,
and its terms and conditions are accepted.
Þ Rights and obligations of each party set out in contract.
Þ Both parties must give something of value and receive something of value.
Example:
Offer: “I will mow your lawn for 50 Rand this weekend.”
Acceptance: “That's a deal.”
Valuable consideration: One party's lawn is mowed, and the other party receives money.
Agreement be reached in 3 ways:
1. Oral agreement - you and friend agree in conversation that you will buy movie
tickets for both of you, and your friend will pay you back later.
2. Silence agreement - you accept without dispute R1000 from your friend in
exchange for your PlayStation.
3. Written contract - legally binding agreements between 2 + parties is put in
writing and signed by all parties in front of witnesses. eg purchase and sale
agreements, leases, higher purchase contracts and partnership contracts.
Requirements for valid contracts
· All parties must consent to the contract. Must be an offer as well as an acceptance
of the offer.
· Parties entering contract must have the capacity to contract. Have to be older than
18 years.
· Cannot be illegal - selling of unpolished diamonds without a license.
· Contract must comply with legal formalities – Documents correctly signed and
initialed by all parties and signed by witnesses.
· Agreement and consent must be voluntary – No party forced into contract.
· Possible to perform contractual obligations – one person cannot sell the moon to
another.
, Breach of contract
- When 1 party fails to perform obligations stated in the contract, they then breach
the contract.
Consequences of breach contract
o Court can declare party guilty for failure to keep to the agreement and a fine / jail
sentence may be imposed.
o Court can sue guilty party for damages.
o Interdict can be obtained to prevent guilty party from continuing with his/her work.
o Contract can be cancelled / declared void.
Types of contracts
- Employment contracts
- Insurance policies
- Credit agreements
- Leases
- Purchase and sale agreements
- Gymnasium membership contracts
- Business contracts
- Partnership agreements
Employment contracts
o Agreement between employer and employee.
o Legal contract, terms and conditions are legally binding.
o To the advantage of both employer and employee and protects both parties in
terms of contractual obligations and service conditions.
o Must be signed by employer, employee and two witnesses.
Insurance Policies
o Agreement between a consumer and insurance company.
o Insurance company undertakes to compensate the consumer in the case of loss or
damage to the insured goods.
o Consumer undertakes to pay a monthly sum / premium to the insurer.
