FCP

• Formalities


  Generally, most contracts do not have formalities – they do not have to comply with a particular form or format
• Types of formality that often apply to contracts


  • The contract must be in writing and signed
  • Notarially executed
  • Registered at the Deeds Office
• Formalities required by law


  • Antenuptial contracts must be notarially executed before the parties marry and must be registered at the deeds office within 3 months of the date of execution
  • Transfer of immovable property must be in writing and signed by the contracting parties
  • Suretyship must be in writing and signed by the surety – creditor need not sign
• Where the parties agree to certain formalities


  • If the contract does not comply, it will still be valid
  • If the parties require the formalities for validity, the contract will be void if it does not comply
• Parties can agree to formalities for subsequent changes to the contract


  Entrenchment clause or non-variation clause – any subsequent agreements to change the contract must be in writing and signed by the parties
• Electronic Contracts


  • The ECTA provides that an accessible data message is generally sufficient to satisfy the formality that a contract be in writing
  • The Act also allows an electronic signature to replace a written signature in certain circumstances
  • If a signature is required by the parties, a simple electronic signature will be sufficient, however if a signature is required by law, an 'advanced' electronic signature must be used
• Certainty


  • If it is not clear what each of the parties to a contract must do, the contract is void due to uncertainty
  • For performance to be possible it must be clear what each party has to do in terms of the contract
  • The contract must state clearly what performance is required and enable the person to decide what performance is required, from the contract itself
• If performance is not certain but ascertainable, performance can be made certain with more information – 'that is certain which can be made certain'
• Main causes of uncertainty


  • Whether one party will ever acknowledge the existence of an obligation
  • Where the vague and uncertain language creates the impression that the parties never reached agreement
  • Where there is uncertainty as to the subject matter which still has to be agreed to
• Courts will, as far as possible, interpret a contract in a way that does not result in uncertainty – the courts will try to give effect to the intention of the parties and will try to interpret a contract so that it is valid – whether it is 'reasonably certain'
• Contracts the courts will consider to be ascertainable, even though they appear to be unclear


  • A clause that allows a third party to determine or change performance
  • A clause that allows one of the contracting parties to determine or change performance
  • A generic obligation
  • An alternative obligation
  • A facultative obligation
• Possibility


  • A contract will not be valid if performance is objectively impossible at the time the contract is concluded
  • Objective impossibility – performance is impossible for anyone to perform
  • Subjective impossibility – performance is not completely impossible for anyone to perform, but only impossible for the contracting party to perform
  • Supervening impossibility – when something that is out of the parties' control happens after the contract is concluded, and performance has thus become objectively impossible – the contract becomes void
  • If performance is difficult or inconvenient, but not impossible, the contract remains valid
• Legality


  • A court can enforce a contract only if it is allowed by law
  • Statutory illegality – a parliamentary act or delegated legislation makes an agreement invalid or void
  • Common law illegality – agreements that are against public policy are not allowed
• Contracts found to be void because they are against public policy


  • Contracts that interfere with the administration of justice
  • Contracts relating to marriage
  • Gambling contracts
  • Unfair contracts
• Restraints of trade


  • A clause in a contract that restricts a person's ability to be involved or employed in a specific trade or business
  • In principle such clauses are valid and enforceable
  • Only when it goes too far or is considered to be in conflict with the public interest, will it be unenforceable
• Factors considered in deciding whether a restraint is against public policy


  • Is the restraint aimed at protecting a legitimate interest
  • Is the restraint reasonable as between the parties
  • Does it serve the interests of the public
• Ex turpi causa non oritur actio rule


  No action can be based on a dishonourable cause – the law will not allow any action to enforce an illegal contract
• In pari delicto potior est conditio possidentis rule


  When both parties are both equally guilty, the party that is in possession of an item is in a stronger position than the party who does not have it – the party will not be allowed to claim their performance back