physical possibility of performance

• Performance


  If the performance is neither determined nor even ascertainable = normally regarded as void due to vagueness. Must be either already determined or at least ascertainable.
• GENERAL RULE: Performance must be possible
• To determine if the GENERAL RULE is applicable, look at

  • The nature of the contract
  • The relationship between the parties
  • The circumstances of the case
  • The nature of the impossibility
• Performance must be certain or reasonably ascertainable
• Initial impossibility of performance

  Performance cannot be made at the conclusion of the contract
• Initial impossibility of performance

  • Selling a horse that is already dead
  • Selling books to CNA when the warehouse has burned down the day before the contract was concluded
• In the situation where one of the parties has already performed and it is then realised that the contract is void, the party who had performed is entitled to claim back the performance
• EXCEPTION: If a party has guaranteed that performance is possible and it is subsequently becomes impossible to perform, the party who guaranteed performance can no longer rely on impossibility of performance in order to cancel the contract.
• Supervening impossibility of performance

  This is the situation where performance was possible at the time the contract was concluded, but subsequently becomes impossible to perform.
• Causes of supervening impossibility of performance

  • vis major – an act of God (eg: crop is destroyed by locust)
  • casus fortuitous – fortuitous or unavoidable circumstance (State passes legislation saying that it is no longer legal to sell cigarettes, after you have purchased 100 cartons of cigarettes for your shop)
• If the parties could foresee or could reasonably have foreseen the occurrence of the vis major or casus fortuitous, it is not considered to be an impossibility of performance
• If the performance is prevented by one of the parties, then that party cannot claim impossibility of performance in order to render the contract void.
• If the performance is impossible due to a vis major or casus fortuitous, the contract becomes VOID except where: the passing of risk rule forms part of the contract; the parties did foresee or reasonably should have foreseen that performance might be rendered impossible due to a vis major or casus fortuitous; performance is made impossible by one of the parties
• This is also a form of breach of contract (we will deal with this in the next Unit)
• Activity - class discussion

  Read the scenarios below and explain whether the contracts comply with the requirement of possibility of performance. If not, provide a reason for your answer, state which type of impossibility is present and the consequences of that impossibility.
• Generally, a contract will arise as soon as: parties who have the necessary capacity to act reach consensus about the obligations which are physically and legally possible
• Formalities


  The final requirement for the validity of a contract.
• Think of a formality as: a formal, necessary requirement before a valid contract comes into existence.
• Most common type of formality

  • Reduced to writing and signed
• Other formalities

  • Shaking hands
  • Handing over to the document to the company secretary
  • Having 2 directors signing a cheque
• The general rule: no formalities
• Acceptable methods of concluding a contract

  • Orally (spoken words)
  • Tacitly (eg putting bread on the counter in a shop, nodding head, etc.)
• It is possible to conclude some parts of the contract in writing (eg a letter) and then complete the contract by conduct (eg handing over the car keys).
• It is the exception to the rule to require formalities.
• Formalities required by law

  • Alienation of Land Act (eg sale of house)
  • Suretyship contracts
  • Contracts of donation in terms of which performance is due in future
  • Assignment of Copyright
• Antenuptial contracts


  Have the additional formality of having to be attested to by a notary and registered with the Registrar of Deeds within 3 months of its conclusion.
• If the antenuptial contract is not registered, the antenuptial contract still binds the spouses themselves but does not bind 3rd parties
• Formalities required by the parties

  The parties themselves create formalities.
• Formalities required by the parties


  • The offeror indicates that that acceptance may only take place by signing the written agreement
  • Parties will negotiate verbally and indicate that a contract will only come into existence once it has been reduced to writing & signed by the parties
• Parol evidence rule (or integration rule)


  A document is an integration if the parties intended the document to be a conclusive, exhaustive record of the transaction.
• Once a contract has been reduced to writing or integrated into a single document (an integration), the written document is the only record of the agreement.
• One may not submit evidence of agreements reached before (past tense) or simultaneously (present tense) which contradict, alter or add to the terms of the integration.
• Instances where the parol evidence rule will not apply

  • If the document is not an integration
  • Evidence of an agreement concluded after the written contract
  • Evidence confirming the integration (ie do not vary, contradict, add to or alter terms)
  • Evidence to show the nullity (eg reasonable mistake) / voidability (misrepresentation) of the contract
  • Evidence of an objectively determinable fact (* not a term)
• Rectification of the contract

  A document does not reflect the true intention of the parties because an error (eg typographical error) crept in while it was reduced to writing.
• One may rectify the contract if one can prove: true intention of the parties; AND written contract not reflect such true intention
• Rectification will not be allowed: to fix defective consensus (or to cure a lack of formalities); if written document reflects the true intention of the parties
• Onus of proving rectification: is on the claimant; is a heavy onus.