Contents
1 The Content and Operation of Contracts............................................................................................4
1.1 General........................................................................................................................................4
1.2 The Parties to a Contract.............................................................................................................5
1.2.1 Multiplicity of Parties............................................................................................................5
1.2.2 Privity of Contract...............................................................................................................15
1.2.3 Representation...................................................................................................................15
1.2.4 The Contract for the Benefit of a Third Party – Stipulatio Alteri..........................................19
1.2.5 Describing the Parties When Drafting a Contract................................................................20
1.3 Types of Obligations...................................................................................................................21
1.3.1 Introduction........................................................................................................................21
1.3.2 Unilateral and Reciprocal Obligations.................................................................................22
1.3.3 Simple, Alternative, Generic and Facultative Obligations...................................................23
1.3.4 Divisible and Indivisible Performances................................................................................24
1.4 Types of Terms...........................................................................................................................28
1.4.1 Introduction........................................................................................................................28
1.4.2 Essentialia, Naturalia, Incidentalia......................................................................................29
1.4.3 Express, Tacit and Implied terms........................................................................................32
1.4.4 General Terms.....................................................................................................................44
1.5 The Proof and Interpretation of Contractual Provisions............................................................58
1.5.1 Introduction........................................................................................................................58
1.5.2 General Principles of Interpretation...................................................................................61
1.5.3 Further Rules of Interpretation...........................................................................................68
1.5.4 Interpretation of Exemption Clauses..................................................................................69
1.5.5 Interpretation and the CPA.................................................................................................70
2 Breach of Contract............................................................................................................................71
2.1 General......................................................................................................................................71
2.1.1 Meaning of Breach..............................................................................................................71
2.1.2 Five Forms of Breach...........................................................................................................72
2.1.3 Remedies Arising from Breach............................................................................................73
2.2 Positive Malperformance...........................................................................................................73
2.3 Mora Debitoris...........................................................................................................................80
2.4 Mora Creditoris..........................................................................................................................94
2.5 Prevention of Performance......................................................................................................101
2.6 Repudiation..............................................................................................................................106
1
,3 Remedies arising from Breach........................................................................................................122
3.1 General....................................................................................................................................122
3.2 Fulfilment (Specific Performance)............................................................................................125
3.2.1 The Remedy of Specific Performance (in court)................................................................126
3.2.2 Exceptio Non Adimpleti Contractus...................................................................................139
3.3 Cancellation.............................................................................................................................153
3.3.1 General.............................................................................................................................153
3.3.2 Exercising the Right to Cancel...........................................................................................154
3.3.3 Lapse of Right to Cancel....................................................................................................155
3.3.4 Consequences of Cancellation..........................................................................................156
3.3 Damages..................................................................................................................................161
3.4.1 General.............................................................................................................................161
3.4.2 The Specific Requirements for a Claim for Contractual Damages.....................................167
3.4.3 Penalty clauses..................................................................................................................188
3.5 Statutory Remedies arising from Breach.................................................................................191
4 Transfer of Obligations: Cession.....................................................................................................196
4.1 General....................................................................................................................................196
4.2 Requirements for Cession........................................................................................................197
4.2.1 Capacity to Dispose of Right.............................................................................................197
4.2.2 Transfer Agreement..........................................................................................................197
4.2.3 Formalities........................................................................................................................198
4.2.4 Subject Matter must be Capable of Cession.....................................................................199
4.2.5 Legality..............................................................................................................................201
4.2.6 Cession may not Prejudice the Debtor..............................................................................201
4.3 Consequences of Cession.........................................................................................................202
4.4 Cession as Security for Payment of a Debt (Cession in Securitatem Debiti).............................203
4.5 The Termination of Cession.....................................................................................................206
5 Termination of Obligations.............................................................................................................207
5.1 General....................................................................................................................................207
5.2 Termination through Performance..........................................................................................207
5.2.1 General.............................................................................................................................207
5.2.2 Who may Perform to Whom.............................................................................................210
5.3 Termination of Obligations by Agreement...............................................................................211
5.3.1 Release and Waiver...........................................................................................................211
5.3.2 Novation...........................................................................................................................212
3.3.3 Compromise / Settlement.................................................................................................213
2
,5.4 Termination of Obligations by Exercising Right to Terminate..................................................217
5.4.1 General.............................................................................................................................217
5.4.2 Statute..............................................................................................................................218
5.5 Termination of Obligations by Operation of Law.....................................................................219
5.5.1 Set-off...............................................................................................................................219
5.5.2 Supervening Impossibility.................................................................................................221
5.5.3 Extinctive Prescription......................................................................................................228
3
, 1 THE CONTENT AND OPERATION OF CONTRACTS
1.1 General
Casebook p 393
- Factors that influence content and operation of contracts:
o Who must perform to whom?
Chapter 9 parties
Normally there are two parties with an obligation existing between them
But you can have a multiplicity of parties to a contract
Eg a consortium banks could decide to enter into a single loan
contract with SABC
Eg suretyship
Who has to perform what?
You can also have other people involved in the formation of the contract,
but who are not parties to the contract
Eg an estate agent
What is the role of a conveyancer once the contract is concluded?
o The property must be transferred from the seller to the
purchaser
o You don’t need the estate agent
o The conveyancer acts for the seller as the seller is obliged to
transfer
Thus the contract needs to be between the seller
and the conveyancer
o The conveyancer will have to be paid
The contract could determine that the purchaser
must pay the costs of the transfer, even though
legally it is the duty of the seller
Can the conveyancer sue the purchaser for his fee?
o What must be performed?
Terms (chapter 10) and interpretation (chapter 11)
What are the terms of the contract?
You get express terms in the contract, but then also implied terms
and tacit terms
What meaning should we give to the terms of the contracts?
Farlam: the law of contract is fundamentally based on the notion of
consent
Role of courts?
o To what extent can the courts intervene in regard to the
interpretation that the parties agreed on?
o Our courts are generally careful
o What measure do the courts apply to decide whether they
will enforce a contractual term?
Public policy
o The courts have discretion to refuse specific performance
o Courts may rely on good faith more heavily in future
4
1 The Content and Operation of Contracts............................................................................................4
1.1 General........................................................................................................................................4
1.2 The Parties to a Contract.............................................................................................................5
1.2.1 Multiplicity of Parties............................................................................................................5
1.2.2 Privity of Contract...............................................................................................................15
1.2.3 Representation...................................................................................................................15
1.2.4 The Contract for the Benefit of a Third Party – Stipulatio Alteri..........................................19
1.2.5 Describing the Parties When Drafting a Contract................................................................20
1.3 Types of Obligations...................................................................................................................21
1.3.1 Introduction........................................................................................................................21
1.3.2 Unilateral and Reciprocal Obligations.................................................................................22
1.3.3 Simple, Alternative, Generic and Facultative Obligations...................................................23
1.3.4 Divisible and Indivisible Performances................................................................................24
1.4 Types of Terms...........................................................................................................................28
1.4.1 Introduction........................................................................................................................28
1.4.2 Essentialia, Naturalia, Incidentalia......................................................................................29
1.4.3 Express, Tacit and Implied terms........................................................................................32
1.4.4 General Terms.....................................................................................................................44
1.5 The Proof and Interpretation of Contractual Provisions............................................................58
1.5.1 Introduction........................................................................................................................58
1.5.2 General Principles of Interpretation...................................................................................61
1.5.3 Further Rules of Interpretation...........................................................................................68
1.5.4 Interpretation of Exemption Clauses..................................................................................69
1.5.5 Interpretation and the CPA.................................................................................................70
2 Breach of Contract............................................................................................................................71
2.1 General......................................................................................................................................71
2.1.1 Meaning of Breach..............................................................................................................71
2.1.2 Five Forms of Breach...........................................................................................................72
2.1.3 Remedies Arising from Breach............................................................................................73
2.2 Positive Malperformance...........................................................................................................73
2.3 Mora Debitoris...........................................................................................................................80
2.4 Mora Creditoris..........................................................................................................................94
2.5 Prevention of Performance......................................................................................................101
2.6 Repudiation..............................................................................................................................106
1
,3 Remedies arising from Breach........................................................................................................122
3.1 General....................................................................................................................................122
3.2 Fulfilment (Specific Performance)............................................................................................125
3.2.1 The Remedy of Specific Performance (in court)................................................................126
3.2.2 Exceptio Non Adimpleti Contractus...................................................................................139
3.3 Cancellation.............................................................................................................................153
3.3.1 General.............................................................................................................................153
3.3.2 Exercising the Right to Cancel...........................................................................................154
3.3.3 Lapse of Right to Cancel....................................................................................................155
3.3.4 Consequences of Cancellation..........................................................................................156
3.3 Damages..................................................................................................................................161
3.4.1 General.............................................................................................................................161
3.4.2 The Specific Requirements for a Claim for Contractual Damages.....................................167
3.4.3 Penalty clauses..................................................................................................................188
3.5 Statutory Remedies arising from Breach.................................................................................191
4 Transfer of Obligations: Cession.....................................................................................................196
4.1 General....................................................................................................................................196
4.2 Requirements for Cession........................................................................................................197
4.2.1 Capacity to Dispose of Right.............................................................................................197
4.2.2 Transfer Agreement..........................................................................................................197
4.2.3 Formalities........................................................................................................................198
4.2.4 Subject Matter must be Capable of Cession.....................................................................199
4.2.5 Legality..............................................................................................................................201
4.2.6 Cession may not Prejudice the Debtor..............................................................................201
4.3 Consequences of Cession.........................................................................................................202
4.4 Cession as Security for Payment of a Debt (Cession in Securitatem Debiti).............................203
4.5 The Termination of Cession.....................................................................................................206
5 Termination of Obligations.............................................................................................................207
5.1 General....................................................................................................................................207
5.2 Termination through Performance..........................................................................................207
5.2.1 General.............................................................................................................................207
5.2.2 Who may Perform to Whom.............................................................................................210
5.3 Termination of Obligations by Agreement...............................................................................211
5.3.1 Release and Waiver...........................................................................................................211
5.3.2 Novation...........................................................................................................................212
3.3.3 Compromise / Settlement.................................................................................................213
2
,5.4 Termination of Obligations by Exercising Right to Terminate..................................................217
5.4.1 General.............................................................................................................................217
5.4.2 Statute..............................................................................................................................218
5.5 Termination of Obligations by Operation of Law.....................................................................219
5.5.1 Set-off...............................................................................................................................219
5.5.2 Supervening Impossibility.................................................................................................221
5.5.3 Extinctive Prescription......................................................................................................228
3
, 1 THE CONTENT AND OPERATION OF CONTRACTS
1.1 General
Casebook p 393
- Factors that influence content and operation of contracts:
o Who must perform to whom?
Chapter 9 parties
Normally there are two parties with an obligation existing between them
But you can have a multiplicity of parties to a contract
Eg a consortium banks could decide to enter into a single loan
contract with SABC
Eg suretyship
Who has to perform what?
You can also have other people involved in the formation of the contract,
but who are not parties to the contract
Eg an estate agent
What is the role of a conveyancer once the contract is concluded?
o The property must be transferred from the seller to the
purchaser
o You don’t need the estate agent
o The conveyancer acts for the seller as the seller is obliged to
transfer
Thus the contract needs to be between the seller
and the conveyancer
o The conveyancer will have to be paid
The contract could determine that the purchaser
must pay the costs of the transfer, even though
legally it is the duty of the seller
Can the conveyancer sue the purchaser for his fee?
o What must be performed?
Terms (chapter 10) and interpretation (chapter 11)
What are the terms of the contract?
You get express terms in the contract, but then also implied terms
and tacit terms
What meaning should we give to the terms of the contracts?
Farlam: the law of contract is fundamentally based on the notion of
consent
Role of courts?
o To what extent can the courts intervene in regard to the
interpretation that the parties agreed on?
o Our courts are generally careful
o What measure do the courts apply to decide whether they
will enforce a contractual term?
Public policy
o The courts have discretion to refuse specific performance
o Courts may rely on good faith more heavily in future
4
