contractual capacity

• Contractual Capacity


  The legal ability to conclude a contract – person entering into the contract must be able to understand the nature and consequences of a contract before concluding it
• Contractual capacity differs for

  • Minors
  • Married persons
  • Mentally ill persons
  • Insolvent persons
• Minor


  A person below the age of 18 – a major is an adult who can make independent decisions – minors attain majority by turning 18 or by getting married
• Emancipated minor


  A minor who has been freed from parental authority and thus has full contractual capacity – can be emancipated by a court or through tacit emancipation
• Factors considered for tacit emancipation

  • The relationship between the minor and their guardian
  • The living arrangements of the minor
  • Whether the minor has a job, is earning their own livelihood and is financially dependent
  • If the minor operates their own bank account
• Guardianship


  The administrative part of taking care of a child – biological parents are referred to as the natural guardians
• Conditions for biological father to have guardianship

  • If he was living with the mother in a long-term relationship
  • If he contributed for a reasonable period, or attempted to contribute, in good faith, to the maintenance of the child
  • If he consented to being identified as the child's father
  • If he paid damages in terms of African customary law
• Infans


  A child below the age of 7 has no contractual capacity at all – they have neither the intellect nor the judgement to enter into a legally binding contract
• Pupillus


  A minor between the ages of 7 and 18 has limited contractual capacity – can only enter into a contract assisted by a guardian
• Legal acts requiring consent of both natural guardians

  • Consenting to the minor being put up for adoption
  • Removing the minor from the country
  • Alienation of the minor's immovable property
  • Applying for the minor's passport
  • Consenting to the marriage of the minor
• Restitutio in integrum


  If the guardian does not act in the minor's best interest (where the contract is prejudicial or too burdensome to the minor), it's possible for the contract to be set aside
• Ways to apply for restitutio in integrum

  • If the minor is close to attaining majority, they can wait until they become a major and bring the application on their own
  • The minor can bring the application with the assistance of their guardian
  • The minor can bring the application with the assistance of a court-appointed representative
• Unjustified enrichment and rei vindicatio

  The legal bases for claiming the return of benefits under a contract that is set aside
• Marriages in Community of Property (CoP)

  The separate assets and liabilities of the spouses are joined together in a joint estate – this is the default regime in SA
• Contracts requiring written consent of both spouses in CoP


  • Sale or mortgage of immovable property
  • Surety agreement
  • Credit agreement
• Contracts requiring written consent of both spouses in CoP

  • Selling of valuable assets – shares, insurance policies, investments
  • Withdrawal of one spouse's money that is held by the other spouse in a bank
• Marriages out of Community of Property


  The spouses continue to own their property separately – they have full contractual capacity over their own property
• Out of Community of Property without the accrual

  Assets and liabilities of the spouses are kept separate before, during and after the marriage
• Out of Community of Property with the accrual

  Property that the spouses bring into the marriage is kept separately, while the marriage continues, assets and liabilities are also managed separately – when the marriage comes to an end, the growth in each partner's estate during the marriage is shared according to a percentage
• Civil Unions


  Marriages between 2 persons under the Civil Union Act – mainly but not limited to same-sex partners – will automatically be regarded as being married in CoP unless the spouses' contract otherwise
• African Customary marriages


  A monogamous customary marriage is regarded as being in CoP, however parties can contract out of this default regime
• Polygynous African Customary marriages


  The husband must apply to a High Court to regulate the matrimonial regime of the respective marriages – if a polygynous marriage is concluded w/o an order from the HC, it'll still be valid, but will be concluded out of CoP
• Mentally ill persons


  Generally contracts concluded by a mentally ill person are void and unenforceable on the basis that they do not understand the nature and terms of the contract – an exception is where the person contracted during a lucid interval
• Intoxicated persons


  In order for a person to escape liability on a contract concluded while intoxicated, a court will have to determine whether the person was so intoxicated so as to not understand the terms of the contract – if this can be proved the contract becomes void and unenforceable
• Insolvent person


  A person is factually insolvent if they owe more than they own – their liabilities exceed their assets – when the court declares someone insolvent, they issue a sequestration order
• Sequestration


  To take legal possession of the insolvent's property until all debts have been paid or other claims have been met
• Consequences of limited contractual capacity for insolvent persons

  • He is disqualified from holding certain offices
  • May not engage in business, directly or indirectly, as a general dealer, manufacturer
  • He is not allowed to conclude any contracts that seeks to further impoverish the estate
• Rehabilitation of insolvent persons


  An insolvent is automatically rehabilitated after 10 years, or by the court before 10 years, subject to certain circumstances