CONTRACT LAW

A) CAPACITY

• Everyone has the ability to have rights – just some people don’t have the ability to
acquire certain rights and duties
• Won’t be legally viable if don’t have capacity – cannot contract if the necessary
capacity is had
• Some people’s capacity is limited
o Full: most people over the age of 18
o Limited: 7 -18 may have a curator ad litem that can help
o None: Infants (0-7); mentally ill; insolvent; intoxicated
• Theron v AA Insurers – sufficiently minded to enter into an agreement and to
appreciated the necessary obligation

B) CONSENSUS

1) Offer
• Proposal with the intention that by its mere acceptance a contract should be formed
• May expressed (words or written) but can also be implied or tacit (through actions)
• Virtually the same as English law
• Establishes the terms of the contract and the conditions to be followed in the contract
• Requirements for a valid offer
o Animus contrahendi
 Saambou case
 Serious intention to be legally bound
 Cannot simply be a statement made from jest or anger, mere social
and domestic arrangements
o Definite and complete
 Wasmuth v Jacobs
 Offer should be certain and definite
 Firm offers show intention
 An ambiguous proposal cannot be classified as an offer
 Invitations to treat, offers to negotiate, offers to chaffer
• Statements inducing others to enter into negotiations with a
view of arriving at a contract, but this is not an actual
contract
• Biloden Properties v Wilson
 Requests for an offer
• An invitation to have an offer made – ask another
individual to make an offer
• Efroiken case
• Driftwood Properties case
 Statements of information

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 • This is normally in answer to a request
• Party may supply information about the terms to which
they are prepared to do business
• But this is not an offer – merely states information
• Harvey v Facey
 Statements of intention
• Difference between stating that one intends to contract and
someone actually contracting
• Rood v Venter
 Proposals for partial, incomplete or provisional agreements
• Not uncommon for parties to record process in a partial
agreement – so through negotiations come up with partial
agreements
• But these partial agreements cannot be construed as offers
• Pitout v North Cape Livestock Co-op
• These agreements are vague
• Even if terms are agreed upon, until a valid offer is made
there is no offer – requires interpretation
• Initial agreements cannot acquire contractual force if it is
incapable of standing on its own
o Addressed to a specific person
 Cannot be addressed to the whole world (Carlill case)
• Words of the offer are fundamental – if they are clear a conclusion can be reached by
‘linguistic treatment’
• If an offeree’s intention coincides with the true intention they cannot take advantage
of the words of the contract
• Advertisements, circulars, catalogues, price tickets
o Carlill v Carbolic Smoke Ball Co
o By our law a firm offer may be made to the public or to indeterminate
persons by advertisements
o But it comes to a question of fact whether an advertisement is a contract
o Crawley v Rex
o Often these are simply invitations to negotiate
o No legally enforceable rights shall arise out of the contract – ie
advertisements
• Calling for tenders
o May be made generally or to members of a group
o Unlikely to wish to commit oneself to a binding contract
o No more than a request to submit an offer – not obliged to accepted any
kind of tender
o When a sphere of government calls for tenders – it must be fair, equitable,
transparent and cost-effective
o When a tender is accepted it must be treated like any other contract would
• Auctions

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• Termination of an offer
o Effluxion of fixed time – set a specific time in which the contract has to be
accepted (Laws v Rutherford)
o Lapse of reasonable time – a reasonable time can be ascertained from the
surrounding circumstances
o Death – no contract can be entered into if there is no longer possibility of
consensus; but if the contract was entered into before the death, then the
other party has a claim against the estate
o Loss of contractual capacity
o Rejection
o Counter-offer
o Withdrawal or revocation
• Options and rights of pre-emption
o Options
 An offer cannot be withdrawn if the offeror has bound himself by
contract with the offeree not to withdraw it
 Boyd v Nell
 These are separate subsidiary contracts
 Pactum de contrahendo
 Parties are contractually bound to maintain the contract – if not
interdict or damages
o Rights of pre-emption
 Right of first refusal
 Owsianick v African Consolidated Theatres
 Right to have first offer and to reject first
 This is a conditional offer, if the person decides not to contract,
then no contract can exist

2) Acceptance
• No contract can come into existence unless the offer is accepted
• Statement of intention in which offeree signifies his assent to the proposal embodied
in the offer
• Proposition that an offeree can accept and notify the offeror of his acceptance before
the offer is made is impossible
• Requirements
o Only accepted by person it was made to
 Can only be accepted by the person who was offered the
agreement
 Cannot nominate an offeree – must be made by the person to
whom the agreement was made
o Knowledge of the offer
 The parties must be aware that an offer has been made
 Bloom v American Swiss Watch Company
o Acceptance unequivocal

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  was made to must be unequivocal or unambiguous
 Boerne v Harris
 Courts have taken a strict approach to this requirement
 Must accept the raw contract without ambiguity
o Acceptance must correspond to the offer
 Must be communicated to the offeror – must make sure that the
offeror is aware that the offer has been accepted
o Method of acceptance
 Driftwood Properties case
 Laws v Rutherford
 The acceptance must be made in the prescribed manner explained
in the offer
 If this manner is not followed then there is not full acceptance of
the offer
• Silence as acceptance
o Seeff case
o Generally silence is not considered as acceptance of an offer, only
regarded as acceptance if there is a duty to speak
o If there is a duty to reject and offer then silence would be the acceptance
of such an offer
• Postal contracts
o Contracts are often created in the post, but gives rise to a number of
problems
o Cape Explosives Works case
o Four theories in regard to this question
 Declaration theory – when someone declares that they want to be
bound the contract is concluded
 Expedition theory – when the post is posted then the contract is
concluded
 Reception theory – when the post is received the contract is
concluded
 Information theory – when the information is finally read the
contract is concluded
o The form that has been accepted in the Cape Explosives Works case and
Kergeulen case is the expedition theory

3) Reality of Consent
• Theories of Contract and Mistake
o Validity is affected when someone contracts based on a mistake
o Means there are no clear, apparent facts – then true facts may appear –
then there is no contract
o The mistake must be legally significant – must show that it is not legally
binding
o Destroys element of consensus (dissensus)

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o Questions are whether the mistake was a critical? Was it justifiable?
o Subjective/Will theory
 Both parties agree on all elements subjectively
 Both know what the issues are
 But no subjective meeting of the minds – not perfect consensus
(therefore no contract)
 Very difficult test to prove and use – often no subjective meeting
of the minds
 Allows no security in bargains – no free market economy; people
would never agree on the terms created
o Objective/Declaration theory
 SARH case
 Only true indication of a contract is the objective declaration made
by the parties – so it there is an outward declaration
 But this theory does not concern itself with the workings of the
minds
 If through actions, even without a meeting of the minds, then a
contract can in fact exist
 Doesn’t take into account the actual interests of the parties – purely
objective approach
o Possible theoretical approaches
 There is a need for a compromise (Saambou case)
 Jansen J believed that there was a purpose to subjective theory
(first point of reference) then need to consider the objective theory
and how objectively there may be a contract
 Four possible approaches
• Doctrine of estoppel – unsuitable approach
• Doctrine of culpa in contrahendo – German approach
• Doctrine of iustus error – not accepted as a doctrine, but
mistake is often referred to as a iustus error
• Doctrine of quasi-mutual assent/reliance theory – adopted
by Saambou case; feel there is an apparent agreement
o Reliance theory
 Synthesis of different theories
 If there is no subjective agreement then can consider the objective
theory
 A contract will be recognized if
• one party by their outwards actions creates in the mind of
the other party the belief that there is an agreement
• the party wanting the rely on the agreement can show that
their belief is reasonable
 Smith v Hughes
 Hodgson Brothers case

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  If a person conducts himself that a reasonable man would believe
that there was a contract, then there is in fact a contract between
the parties

• Proving a Contractual Mistake

o Apply the reliance theory
o Consider the two parties – party alleging the contract (P) and the party
who argues there is no contract (Q)
o Two enquiries
 1) Party alleging the contract must prove prima facie that there was
an agreement
• Declaration of intention on his P’s part
• Corresponding declaration from Q
 2) if P is successful, onus moves to Q to prove that there was a
mistake
• Material confusion
• Reliance on P’s part is unreasonable – key test; law looks at
P’s conduct and whether it was reasonable
• Has to prove a iustus error
o Material confusion
 Is there confusion as to the nature of the contract or a key term?
• Dobbs, Horty and Sonap, George cases
 Confusion as to the thing that is the subject matter of the contract
• Martiz and Allen cases
 Confusion as to the person with who one is contracting
• Potato Board case
 HOWEVER – problem cannot be with regard to the quality of the
thing; nor can it be for errant motives
o Unreasonable reliance on the contract (if the party alleging the contract
exists…
 Subjectively knew of material confusion, but kept silent
• Sonap case
 Ought reasonable to have known f the material confusion and did
not clarify
• Horty case
 Actually caused the confusion in the first place by creating an
impression, prior to contracting, which is contrary to the document
upon which he now relies
• Allen and Spindrifter case
 The clause in dispute is a trap for the unwary and ought reasonably
have been pointed out and clarified

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 • Compusource case
o If either of these requirements is met there is iustus error
o Contract never existed in the eyes of the law
o If the requirements are not met – the contract exists (George case, Potato
Board case, Hodgson brothers case)
o Contracts are now being made more clearly
o Cape Group Construction case
• Unsigned documents and ticket case
o Signed
 Signatures are seen as apparent acceptance of a contract
 Caveat subscriptor rule – beware the person who signs
 Burge v SARH
 Binding if one signs – implied consent if one signs the terms and
agreements
 Quasi-mutual assent and reliance
o Unsigned documents
 Large scale contracts are impossible to sign – music concerts,
internet transactions
 Even with the absence of a signature, there are implied terms and
conditions which apply
 Richardson Spence and Co
 SARH v McLaren
 Test to determine whether the terms are binding
• 1) Was the person aware that there was writing or printing
on the ticket?
• 2) Did the person know that the writing referred to
contained terms or conditions?
o If yes then bound, if no continue
• 3) Did the party issuing the ticket reasonably notify the
other party that the wording referred to the terms (question
of fact)
o If yes then bound, if no then not bound
 Bok clothing v Lady Land Ltd
• Misrepresentation
o May create consensus but the agreement is wrongfully induced, it is
tainted consensus
o Must be a representation (by statement, conduct or silence) which is false
(either innocently, fraudulently, or negligently) which induce a contract
o Schematic position in Petit case
 Puff – general statement of praise of commendation, spin, no legal
force
 Term – agreed upon, binding, requires performance, if not done
then breach

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  Representation – between puffery and terms, statement made with
regards quality or attributes, goes beyond puffery, induces the
contract
o Fraudulent – can not be treated as binding on innocent party; once a
contract is contrary to good faith it is declared void and to have never
existed
 Elements
• A false representation – must be a statement of fact or a
dishonest opinion
o Feinstein case
o Either by words or conduct (words – Scheepers
case, Bill Harvey case; conduct and words –
Trotman case)
• Must be wrongfully made
o If there is a positive statement it is easy to show that
a representation was made wrongfully
o Problem is with silence or non-disclosure
o If there is a duty to speak then silence is a
misrepresentation
o Sometime duty to speak – in terms of full disclosure
(insurance), relationship of trust (agency and
mandate)
• Made fraudulently
o Derry v Peek
o Lord Hershell – test of intention/dolus –
representation was made knowing it was false;
without belief of its truth; recklessly, carless as to
whether it was true or not
• Must induce the contract
o Must be a causal link between making the
representation and the contract
o Must have acted on the misrepresentation
o Woodstock case
• Made by the other party
o The person must have been a contracting party,
cannot be a third party
o May have a delictual claim against a third party, but
not really capable of rescinding the contract based
on this misrepresentation
 Remedies
• Rescission (contractual remedy) and restitution
(enrichment)
o Restitution
 Feinstein v Niggli

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 Rescission is a form of election to the
aggrieved party to decide whether they want
the contract to hold or not
 The contract can be declared void (although
it never existed) or voidable (if one decides)
 Must be done within a reasonable time, must
tell the person one is doing it; not up to the
court to interpret ones actions
 There is a question of materiality
• It must be material to be able to
rescind the contract
• Taking a purely objective test cannot
work – must also consider the
subjective scenario made available to
the parties
• Kerr
o All misrepresentations are
material – so all can be
rescinded
• De Vos
o Distinguishes different types
of materiality using old
authorities
o Dolus dans causam contractui
(can call it off – because had
known the truth never entered
into the contract)
o Dolus incidens in contractum
(can’t call off – change in
terms would still have
entered into the contract)
o Restitution
 Restitution in integrum – restore the parties
to their original position
 Sometimes this is impossible to do – but the
courts will seek to place both parties in their
original position – so reciprocal restitution
 But may be destroyed because of fraud, an
act of God or depreciation due to fair wear
and tear
• Damages
o Can do this in addition to rescission, or not
o Use delictual means (cannot use contractual means)
 If there was a wrongful act, treat it as a
delict (negative standard)

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 o Trotman case
o Originally had set means of determining damages
for misrepresentation
o But with Ranger’s case decided that there is no
fixed method or formula for determining damages
for misrepresentation; must take a flexible approach
o Negligence
 Elements
• False representation
• Wrongfully made
• Induced the contract
• By the other party
• Negligent
o Kruger v Coetzee
o Test of a reasonable person – and then would they
have forseen the problem
 Remedies
• Same as for fraudulent
• Originally couldn’t award damages for negligence – but
position has changed
• Bayer v Frost
o Innocence
 Simple misrepresentation
 No fault – cannot prove intention
 Only remedy is rescission and restitution (binary – have to adopt
both)
• Duress
o Voet clarified distinction between force (vis) and threats and fear (metus)
o Effect was that could have absolute force (vis absoluta) or threats (vis
compisiva)
o Physical force
 If this is found to be the case the contract is void ab initio
 No consensus
 Literal physical force to conclude the agreement
o Threats
 The person did consent willingly, out of fear, therefore the contract
is not void, but voidable
o Requirements for duress
 Actual violence or reasonable fear
• Test is purely objective – must be sufficient to affect the
mind of reasonable person – but this test seems to stringent
• Therefore, have taken a subjective test – consider the
circumstance, character of the person, ability to reject
• Block v Dogon

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  Fear must be cause by the threat of some considerable evil to the
party or his family
• Must be some threat to oneself or one’s family
• Stringent restriction to person and family – but this is
questioned – should be developed
• Hendricks v Barnard
• Mentze’s case
 Must be the threat of an imminent or inevitable evil
• Would a person ordinary firmness have resisted the threat?
• Should not adopt an armchair approach – need to consider
the subjective test
 Threat or intimidation must be contra bona mores
• This is also a subjective test
• Cannot simply regard that all duress will be contra bona
mores
 Moral pressure must cause damage
• Any threat that would lead to a crime or delict would be
unlawful
• The threat must have induced the party to conclude the
contract – cannot be an element which did not really induce
the agreement
 (If it pertains to property – one must have in addition have
protested vigorously not to have the property taken away)
o Duress by a third party
 Doesn’t matter whether the third party is connected to the
contracting parties or not – if it is done – the contract can be
rescinded
o Remedies – same as misrepresentation
o Revised test of enquiries
 First enquiry – proposal
• Was a threat made?
• Was the threat legitimate?
 Second enquiry – choice
• Did the threat induce the contract?
• Was the victim justified in consenting?
• Undue Influence
o Found value in the English law
o Preller v Jordaan
o One person has acquired an influence over another, which he uses in an
improper/illegitimate manner to induce another to conclude a contract that
he otherwise would not have in terms of his free will
o Question of fact whether the other party has an undue influence over the
other
o Onus is placed on the party seeking to have the contract set aside

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 o May occur between: doctors and patients, husbands and wives, mother and
daughter, father and son, etc
o Key elements
 Other contractant obtained an influence
 Influence weakened the power of resistance (made will pliable)
 Influence was used in an unconscionable manner to persuade him
to agree to the transaction – to his detriment, would not have
concluded otherwise
o Remedies
 Same as misrepresentation
 But never have claimed for damages

C) LEGALITY

1) General
• Renders a contract void or unenforceable
• Been some contravention of some rule of law
• Either a whole contract will be deemed illegal or only a key term of a contract will be
illegal/contrary to law
• Contracts be illegal if they are contrary to statute or common law
• Statute law
o Almost impossible to explain all; but parliament has stepped in to limit
illegality
o Parliament has become more involved, but still leave the role up to
common law to develop
o National Credit Act – significant to contractual agreements, huge
exploitation of consumers, high percentage mark-ups
o Consumer Protection Act – being awaited, but will protect consumer
agreements
o S60 of the Medical Health Care Act – prohibits the sale of human tissues
• Common law illegality
o Injurious to the state
 Trading with the enemy (Hoch v Scoble)
 Tending to injure the public service
o Injurious to the administration of justice
 May oust the jurisdiction of the court
 Collusion – agreement that one shall commit to act in order that the
other may obtain a remedy at law for a real injury
 Champerty and maintenance
 Excessive attorney fees or witness expenses
o Encouraging criminal actions and delict

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 o Injurious to the institution of marriages
o Contracts that effect wills and succession
o Contracts relating to wagering and gambling
o Key principle of legality is the broad principle of public policy – illegality
if it is contrary to public policy and morals (contra bones mores)
o Sasfin v Beukes (Smalberger JA) – public policy is a vague concept,
value based; need to weigh up what the law is, what morality is, and how
the community considers the terms
o Eastwood V Shepstone
o Has taken an individualist/formalist approach
 Contracts are made up of freedom of contract and pacta sunt
servanda (sanctity of contracts/promise)
 Matter of private law between two parties and how they advance
their interests
 Once a contract has been completed must honour ones promises
 Economic matters for the market place (felt that it should be dealt
with in the market place) - but developed, because no longer is
this arena far on all parties
 Bank of Lisbon case – high water mark of individualist approach,
but not have started to consider the circumstances of the parties
Law is concerned with the content and obligation of the contract,
not the form of the contract
 But there have been developments in the law – no longer so
individualistic – realized that some partners do not have the same
bargaining power (Eastwood v Shepstone)
 Sasfin – need to do simply justice between parties (consider equity
and justice)

2) Common law, constitutional and legislative developments

• Focus has been to develop concept of public policy and how it can be used more
effectively to avoid harsh effects of pacta sunt servanda
• Sasfin – no need to classify contrary to public policy, common law or contra bone
mores of society – all mean the same thing
o Public policy generally favours the utmost freedom of contract
o Public policy properly takes into account the necessity of doing simply
justice between man and man
o Power to declare a contract contrary to public policy and unenforceable
should be exercised sparingly and only in the clearest cases
o May be declared invalid if it is clearly contrary
• Two situations where a contract may be illegal according to common law
o Contract or a term thereof is contrary to public policy (objective test of the
general assessment of the contract)
 Requirements
• Court will generally favour freedom of contract – while
promises should be honoured

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 • Public policy also requires courts to be courts of justice and
ensure fairness
• Court will only interfere on grounds of public policy
sparingly and in obvious cases
• If the clause is oppressive, unduly harsh and
socially/economically inexpedient then can cancel the
contract
 Should interpret to maintain the promise of the contract, but if it is
contrary to public policy it must be changed
 Can severe the contract if is contrary to public policy – blue pencil
test (notional severance test)
• Can the contract exist and make sense without the clause
• If it can exist without the clause then cancel it
• If the expunged clause leaves the contract irrelevant – then
the contract is void and disappears
o Terms are valid, but within the context and circumstance the clause would
be unreasonable (subjective test)
 This was originally the exceptio doli generalis rule – but this is
now defunct
 Brisley and Afrox cases – argued that there should be a normative
standard of good faith in contractual dealings
 Good faith
• Conduct oneself in a decent, reasonable and fair manner
• Very difficult term to appreciate
• Minimum level of respect, unreasonable and one-sided
promotion of one’s interests is contrary to good faith -
Hutchison
o Brisley’s case
 First scenario – the clause was not contrary to public policy – so
had to consider second scenario (in the circumstances)
 Second scenario – whether the contract, in the context was against
good faith – but the person was not acting in bad faith as a result of
a doctrine or rule based reason (confirmed in Barkhuizen)
• Constitutional values have become relevant – don’t have to directly apply the Bill of
Rights, but most consider the contract through the eyes of public policy which is
informed in constitutional values (equality, dignity and fairness)
o Barkhuizen case
o Brisely case
• Law is concerned with the content and obligation of the contract, not the form of the
contract
• Supervening impossibility was originally not accepted in our law, but now it is of
importance – it has the same effect as initial impossibility
• Can have partial impossibility – which means that the contract can still hold even if a
clause is impossible – does not have a huge impact on the actual contract

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• No obligation arises if it is impossible

3) Restraint of Trade
• Magna Alloys case – Didcott J
• Until 1984 these restraint clauses were allowed, they were allowed to be used for the
purposes of contracts
• Were examined in light of the interim constitution (s26 – free engagement in
economic activities)
• Originally adopted English approach
o Prima facie invalid
o Only way to succeed is if employer can show restraint is reasonable
o If it impacts negatively on trade won’t be allowed
• But Magna Alloys case held that no longer can they be considered prima facie
invalid, so development – now adopt the Roman Dutch view (polar opposite to
English law)
o Onus is on party attempting to escape the clause to prove that the clause is
unreasonable
o Prima facie valid and enforceable
• Sibex case – clause will be declared contrary to public policy if it violates fair
competition and is not designed to protect a valid proprietary interests – need to
consider general skills, trade connections, goodwill, trade secrets
o General skills
 No proprietary interest in skills
 May not relinquish these
 Cannot restrain because they are good at something
o Trade connections
 Have a proprietary interest
 Relationship would have been built up between the company and
the worker
 Restraint clauses can be used for this
 Rawlens v Caravan Truck
o Goodwill
 Regard/image of a business in the public eye
 Has a form of monetary valued (capital of the business)
 In the sale of a business – may restrain the original owner from
infringing on the new owner
 Botha case
 Can be up to 30 years
o Trade secrets
 Marketing and pricing structures, franchising information,
industrial secrets (patents, etc)
 Must be secret or privileged information
 Sibex case

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• If there is a valid protectable proprietary interest, can argue that the ambit is too wide
and that it needs to be amended – there are factors to consider in relation to space and
time
o Must also consider the nature of the business - whether it is
international/local/unique
o Area from which the cliental are drawn
o Area of restraint cannot exceed the area of the business being protected
o Area of restraint on an ex-employee must also be related with reasonable
fairness to the period of the employee
o When considering time – 30 years for a sales of goodwill; indefinite
period for medical practitioners – this does not clash with public policy
o Generally do not interfere – so rarely will develop these clauses
o MINORS AND MAJORS
• If a restraint of trade clause is too wide there can be a development of severability –
can be severed and the remainder will be enforced – but it can only be severed if the
parts are divisible and can be divided

4) Constitutionality
• Questioned how this affects restraint of trade
o S22 – freedom of trade, occupation, trade, profession
o S21 – freedom of movement
o S13 – slavery, servitude and forced labour
o S10 – dignity
• Key issues is the onus (person attempting to get out of the contract has the onus)
o Magna Alloys – constitutionally sound
 Legitimacy balances the competing issues
o But debate has flared up again as to whether the rights are being valued
o Canon KZN v Booth (declared in 2000)
 Magna Alloys is unconstitutional
 Restraint of trade clauses limit rights (s22)
 Believed that there should place the onus on the employer to prove
that the restraint is reasonable
o Subsequent to this
 Aqua d’or v Camara (cc) – drastic change from Magna Alloys,
cape division does not really accept new approach, still feel people
should be self bound to prove their personal rights are limited
 Rectron v Govender – some court as Canon KZN, argued the
Canon case was incorrectly decided (dispute in the same division)
 Automotive Tooling v Wilkens – ignored the debate completely,
applied Magna Alloys

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 Reddy v Siemens – matter was placed forcefully before the SCA,
declined to deal with the issue, felt it was unnecessary – facts,
outcome would be the same no matter what, implicit application of
Magna Alloys
o Considered as a moot point in our law – neither the SCA cases were good
tests

4) Remedies
o Handout

D) POSSIBILITY OF PERFORMANCE

1) General
• Impossibilum nulla obligation est – impossibility nullifies any obligation
• If impossible if at time entered into (initial impossibility) or at the time of
performance (supervening impossibility)
• Initial impossibility – void ab initio
• Law is concerned with the content and obligation of the contract, not the form of the
contract
• Supervening impossibility was originally not accepted in our law, but now it is of
importance – it has the same effect as initial impossibility
• Can have partial impossibility – which means that the contract can still hold even if a
clause is impossible – does not have a huge impact on the actual contract
• No obligation arises if it is impossible

2) Main requirements
• Impossibility absolute as opposed to probably (specifically for initial)
o Performance must be objectively impossible
o Cannot simply be in the realm of impossibility, must be absolute
o Eg – sale of a putative thing (it may exist in the future however, as for
wine from grapes)

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• Impossibility absolute as opposed to relative (specifically for initial)
o Must not consider the subjective situation of a person
o Contracts must apply objectively to all individuals
• Not the fault of either party (specifically for supervening)
o If these is a fault – misrepresentation, etc – then there is a breach of
contract
o One cannot cause the impossibility
o Vis maior (acts of God) and casus fortuitus (acts of government)
o If someone acts through fault – they bear the consequences of the action
• Principle intention must give way to the contrary common intention of the parties
(supervening impossibility)
o If the other party acts contrary to their original intentions this may cause
impossibility
o But normally there are performance clauses, must be weary of such
clauses

3) Application
• Peters Flamman and CO case
• World Leisure Holidays case

E) FORMALITIES

1) General
• If there are formalities they have to be complied with – Conradie v Rossouw
• No special formalities are required for the making of an enforceable contract
• Serious and deliberate intention is all that is needed for a contract to be binding
• General rule is that no formalities are required for a contract
• Goldbatt v Fremantle – Innes CJ
• Person claiming the contract has the onus of proof
• A written contract does have a number of advantages – preparation of the contract
gives the parties time to consider their positions; onus of proof is simplified because
all that needs to be proven is with a signature, terms are also on the page;
disagreement about the terms is narrowed (because they are written)

2) Formalities decided on by the parties

• An agreement to have a mutual undertaking reduced to writing and signed was
insufficient to discharge the burden of showing the oral agreement was not intended
to be binding
• People have the liberty to create and impose formalities
• Writing

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 o Once parties decide to have a written contract, they cannot return to the
state before (with the oral contract)
o Comes into existence when it is signed by both parties
o Sensible thing to do
o If one parties loses the actual contract, the court has no jurisdiction to ask
the other party to provide him with another copy
o Three different types of writing (Goldbatt v Fremantle)
 A memorandum which facilitates proof of an oral agreement (this
is evidence of the concluded agreement)
 A writing which embodies the agreement of the parties although
not signed (questionable category)
 A written document which is to be the agreement and must be
signed (this is the actual contract, until this is signed the contract
does not exist)
• Signature
o Common formality to require
o May also require witnesses to be present and provide their signatures
• No variation without writing clause
o As a general rule out of common law, that if a contract is reduced to
writing it can be altered or varied through verbal changes
o However, the problem with this is whether there is any security in the
document
o A number place clauses limiting this ability – so have ‘no term of the
contract may be altered or varied unless it is reduced to writing’
o Have pragmatist – claim that the term must be upheld VS those who feel
that verbal changes should allow for change
o Schifren case
o Brisley case

3) Formalities required by law

• Justification for having formalities is to ensure there is reliable evidence of the terms
of the contract
• There were some forms contracts that were often abused, so decided on formalities
that needed to be met to be valid contracts
• These contract formalities now occur frequently and have financial interests – so
guidelines have been set down
• Parliament lays down the regulations
• Alientation of Land Act – cannot conclude the sale of land verbally; cannot divide
bequeathed land, etc; have to sign; specific terms relating to the wording must be
used, etc; lay out the price; name of the parties; description of the land
• General Law Amendment Act – deals with suretyship; must be a written signed
document
• National Credit Act – must be reduced to writing and signed on behalf of the parties

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• Electronic Communications and transactions Act – questions the significance of
signatures – may be digital or electronic encoding devises
• Consumer Protection Act – comes into force this year some time; number of
formalities dealing with consumer contracts; codifies common law

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