COMMERCIAL LAW

• Formalities


  Requirements relating to the outward, visible form in which the agreement must comply with to create a valid contract
• Formalities are either stipulated by law or by the contracting parties themselves
• Example of formality


  • Reducing the contract to writing
• If the law requires that formalities must be observed then requirements must be satisfied before a valid contract comes into existence
• If no formalities are prescribed by the parties or required by law then a valid contract will arise when the other requirements for a valid contract are met
• General rule


  • No formalities are required for the formation of a contract
• Where there is no express provision that certain formalities must be complied with, a contract will arise when the parties who have the capacity to act reach consensus on obligations that are physically and legally possible
• Formalities required by law


  • Exception to the general rule
  • Prevents fraud
  • Reduces uncertainties
  • Evidential proof
• Common formalities required by law


  • Reduce to writing
  • Signed by all the parties
• Contracts where formalities are required by law


  • Contracts for the alienation of land
  • Contracts of suretyship
  • Contracts of donation in terms of which performance is due in the future
  • Consumer contracts
  • Antenuptial contracts
• Alienation of land


  To sell, exchange or donate
• Requirements for a valid contract for the alienation of land


  1. Contained in a written contract of alienation

  2. Signed by the parties/by their agents acting on their written instructions
• Exception: if the parties have already performed fully and the land has been transferred to the new owner
• Contract of suretyship


  An agreement in which one person (the surety) becomes liable towards a creditor of another person (the debtor) for the performance of the debtor's debt
• Requirements for a valid contract of suretyship

  1. In writing

  2. Signed by, or on behalf of, the surety
• Requirements for a valid contract of donation where performance is only due in the future


  1. Terms thereof are in a written document

  2. Signed by the donor or by someone acting on his/her written authority

  3. Authority must be granted in the presence of two witnesses
• This does not apply to a donation that has been completed by delivery
• Consumer contracts


  The written record of each transaction must contain the supplier's full name or registered business name and VAT registration number
• Requirements for a valid franchise agreement


  1. Must be in writing

  2. Signed by the parties

  3. Must be in plain & understandable language
• The National Credit Act 34 of 2005 does not prescribe writing as a requirement for validity of a credit agreement, but the act provides that a credit agreement must be in writing & signed by the parties
• Requirements for a valid antenuptial contract


  1. Concluded prior to the marriage in writing

  2. Notarially executed

  3. Registered in a Deeds office within a specified time
• Unless registered, the antenuptial contract is of no force and effect against any person who is not a party to it
• The parties can prescribe their own formalities, such as requiring the agreement to be in writing
• Data messages


  Recognized as writing if the document or information is for future use
• Exceptions where data messages are not recognized as writing


  • Agreements in terms of Alienation of Land Act
  • An agreement for the long lease of immovable property
  • The execution, retention and presentation of a will or codicil as defined in the Wills Act 7 of 1953
  • Execution of a bill of exchange – Bill of Exchange Act 34 of 1964
• Electronic signature

  Anything from typing a name, scanning a handwritten signature or the use of a complex identification technology
• Where a signature is required by law, only an advanced electronic signature in terms of the ECTA will be sufficient
• Parties can also agree on the signature to be used