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● A contract is an agreement that creates obligations - Bourbon-Leftley v WPK
Landbou Bpk
○ This case centered around the legal question of whether the parties, in the
course of negotiating, actually concluded a contract
○ They (farmer's co-operative) discussed the possible construction of cold
storage facilities by WPK Landbou Bpk
○ Farmers of opinion that contract had been concluded
○ Griesel J had to decide whether requirements of the contract were met
● Agreement concluded with the intention to create an obligation
● Agreement exists between persons when they consciously achieve unanimity
through negotiation
● Consensus = agreement; situation where people think the same thing
● What is not in definition
● This is a very broad definition of a contract - does not have to be in writing (but some
types of contracts do)
● Agreements for alienation of land, suretyship, donation -> in writing
● The contract itself doesn't require anything to be given to complete the contract
● Conclusion separated from performance
● Real contracts -> had to have a specific object or thing that had to be given
● Contracts have to be supported by consideration -> quid pro quo - something for
something else
● This was an idea in English law
● No one-sided contracts
● Consideration not required in SA law, thus donations are valid contracts - valid
agreement, but donations have to be in writing - if they're not in writing, they're
unenforceable
The definition and features of contracts:
● Agreement
● The meaning of agreement: parties achieved a meeting of minds (consensus)
● Agreement can be actual (subjective);
● Or apparent/deemed (objective) - law deems there to be consensus
● E.g. clicking online that you agree to Ts and Cs; indemnity notice at a public place,
etc.
● At least two parties needed for agreement?
● Party = person (natural/juristic)
● Entities that have the ability to enter into contracts
● You can conclude contracts with yourself - you lend to a company of which you the
sole proprietor - two persons involved
● Vaal Reefs Exploration case
● Types of agreement
● Contractual agreement - parties intend to create obligation (animus contrahendi)
● Distinctive feature of contracts is agreement to create obligations
● Bourbon-Leftley v WPK Landbou Bpk
○ Facts
■ Plaintiffs were a co-operative of export grape farmers, defendant was
an agricultural co-operative (Wesgraan)
, ■ Wesgraan said they would erect a cold storage facility for the grape
farmers
■ They had concluded a contract and the cold storage was built but over
time Wesgraan began to deviate from it
■ Plaintiffs alleged an express oral agreement was concluded between
them and Wesgraan and referred to a model they had produced
during negotiations upon which the contract was to be based
■ Alternatively they relied on a tacit agreement
■ Wesgraan denied the existence of a legally enforceable contract - they
said they'd reached an understanding without any legal force as a
contract
■ They said there was no animus contrahendi (intention to create an
obligation)
○ Principles para 916
■ ‘A contract is an agreement concluded with the intention to create an
obligation or obligations. An agreement exists between persons when
they consciously achieve unanimity through negotiation. This
unanimity or meeting of the minds is usually called consensus’
■ '(N)ot every agreement gives rise to a legal obligation. If I agree to
travel with you to Europe, I can withdraw from the agreement and no
action at law can be brought by you against me. It is therefore only a
particular kind of agreement which gives rise to a legal obligation.'
■ To determine consensus, there had to be offer and acceptance
■ Offer had to be made animo contrahendi and be unquivocal
■ Had to determine what the offer was - most of the ordinary members
of the BTPV (plaintiffs) had knowledge thereof
■ Wesgraan's director had made contradictory suggestions, unclear
what Wesgraan's offer entailed
■ Lack of consensus as to the matters affected by the aforesaid
contradictions
■ Plaintiffs hadn't proven consensus w.r.t. all the material terms of the
alleged contract
■ Alternatively, even if there was consensus, there was no animus
contrahendi
■ Not every agreement of understanding necessarily gives rise to a
legally enforceable contract - binding contract vs gentlemen's
agreement
■ Because of relationship between co-operative and its members,
conclusion of an agreement not necessarily indicative of an intention
to enter into a contract
■ Negotiations between a co-operative and its members usually aimed
at rendering a service for its members, not concluding a binding
contract
■ General members' meeting of a society not usually the occasion on
which binding contracts were concluded
■ Contracts with co-operatives usually with board of directors, not on an
oral basis at a meeting of producers and representatives of the board -
even if it were the chairman and general manager
■ Parties had accepted each other's bona fides - gentlemen's
agreement
■ Not possible for plaintiffs to prove intention to enter into a contract or
rely on a tacit contract
○ Apparent that there was confusion between whether there was understanding
or a contract
○ Understanding - didn't want to be bound, but knew what the parties wanted
, ○ Witnesses did not understand the distinction
○ Kahn: 7 categories (not numerus clausus) - cases where there was an
understanding but not a contract
○ Court found categories 5-7 were present in some way or another, therefore
there was no contract in existence
○ To negotiate in this way does not mean a contract was concluded
Agreements not intended to have legal consequences
● Compare para 16.3 textbook to Kahn's list
● Kahn's list - not numerus clausus
○ 'An apparent promise obviously made in jest, or as a joke, or in a dramatic
performance, or in a moment of excitement, anger or absentmindedness.'
○ 'A mere social arrangement.'
○ 'A mere domestic arrangement.'
○ 'A mere puff.'
○ 'Exclusion of the animus contrahendi.'
○ 'Transaction ''binding in honour only'', ''binding only in conscience'';
''gentlemen's agreement''; ''letter of intent''; and the like’.
○ ''Offer'' to negotiate (treat); invitation to do business; request for an offer;
statement containing information; general expression of intention only, and
the like.'
● Memorandum of Understanding - initial contract?
● You cannot say that this is binding or not - have to look at the facts of each case to
see if this was intended to be binding or not
● Letter of intent
● Expresses what may follow without intending to be bound
● Are these documents contracts or not?
Agreements with legal consequences, but not contracts
● Real agreement
● Intention to transfer and receive ownership is the real agreement
● Debt-extinguishing agreement
● Marriage agreement
● Public law agreement
Obligations
The definition of an obligation
● A legal tie which binds a debtor [to the necessity of] making some performance - Off-
beat Holiday Club v Sanbonani Holiday Spa Shareblock Ltd - quotes Justinian Inst
3.13 pr
● A legal bond between two persons aimed at some sort of performance
Features of obligations to perform something
● Retainability of performance
● That which is given as performance may be kept
● Seller must transfer subject matter of the sale
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