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Summary Contract 372 Exam Notes
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This document contains comprehensive explanatory notes on all work covered in Contracts 372. Including examples and case summaries.
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Table of Contents1. The Content and Operation of a Contract............................................................................................................... 3
1.1 General................................................................................................................................................................. 3
1.2 The parties to the contract.................................................................................................................................... 3
1.2.1 Multiplicity of parties....................................................................................................................................... 3
1.2.2 ‘Privity of contract’.......................................................................................................................................... 7
1.2.3 Representation............................................................................................................................................... 8
1.2.4 The contract for the benefit of a third party (Stipulatio Alteri).......................................................................11
1.2.5 Describing the parties when drafting a contract...........................................................................................13
1.3 Types of obligations............................................................................................................................................ 13
1.3.1 Introduction.................................................................................................................................................. 13
1.3.2 Unilateral and reciprocal obligations............................................................................................................ 14
1.3.3 Simple, alternative, generic or facultative obligations...................................................................................14
1.3.4 Divisible or indivisible performances............................................................................................................ 15
1.4 Types of terms.................................................................................................................................................... 17
1.4.1 Introduction.................................................................................................................................................. 17
1.4.2 Essentialia, Naturalia and Incidentalia......................................................................................................... 18
1.4.3 Express terms, Tacit terms and Implied terms............................................................................................. 22
Express terms.............................................................................................................................................................. 22
True tacit terms and tacit contracts........................................................................................................................... 23
Implied terms or terms implied ex lege..................................................................................................................... 26
1.4.4 General terms.............................................................................................................................................. 27
Supposition, warranty and modus............................................................................................................................. 27
Condition and time clause.......................................................................................................................................... 29
Exemption clause........................................................................................................................................................ 33
Non-variation clause................................................................................................................................................... 34
1.5 The proof and interpretation of contractual provisions........................................................................................ 34
1.5.1 Introduction.................................................................................................................................................. 34
1.5.2 Interpretation of terms: General principles................................................................................................... 34
1.5.3 Further “rules of interpretation”..................................................................................................................... 36
1.5.4 Interpretation of exemption clauses etc........................................................................................................ 36
1.5.5 Interpretation and the CPA........................................................................................................................... 36
2. Breach of Contract.................................................................................................................................................. 37
2.1 General............................................................................................................................................................... 37
, 2.2 Positive malperformance..................................................................................................................................... 39
2.3 Negative malperformance (Mora debitoris)......................................................................................................... 43
2.4 Making performance impossible......................................................................................................................... 51
2.5 Repudiation......................................................................................................................................................... 52
2.6 Breach of contract by the Creditor (Mora creditoris)........................................................................................... 55
3. Remedies Arising from Breach.............................................................................................................................. 59
3.1 General............................................................................................................................................................... 59
3.2 Fulfilment............................................................................................................................................................ 60
3.2.1 Specific performance................................................................................................................................... 60
3.2.2 Exceptio non adimpleti contractus................................................................................................................ 61
3.3 Cancellation........................................................................................................................................................ 61
3.3.1 General, capacity to cancel.......................................................................................................................... 61
3.3.2 Exercising the capacity to cancel................................................................................................................. 61
3.3.3 Lapse of right to cancel................................................................................................................................ 61
3.3.4 Consequences of cancellation and restitution..............................................................................................61
3.4 Damages............................................................................................................................................................. 61
3.4.1 General: nature and purpose of claim for damages; positive and negative interesse..................................61
3.4.2 Specific requirements for a claim for damages............................................................................................61
Financial loss; approaches to quantification............................................................................................................ 62
Causation (Factual and Legal).................................................................................................................................... 62
3.4.3 Penalty clauses............................................................................................................................................ 62
3.5 Statutory remedies arising from breach.............................................................................................................. 62
4. The Transfer of Obligations: Cession.................................................................................................................... 62
5. The Termination of Obligations.............................................................................................................................. 62
5.1 General............................................................................................................................................................... 62
5.2 Termination by performance............................................................................................................................... 62
5.2.1 General........................................................................................................................................................ 62
5.2.2 Who has to perform to whom?..................................................................................................................... 62
5.3 Termination by agreement.................................................................................................................................. 62
5.3.1 Release and waiver...................................................................................................................................... 62
5.3.2 Novation....................................................................................................................................................... 62
5.3.3 Compromise or settlement........................................................................................................................... 63
5.4 Termination by exercising a right to terminate.................................................................................................... 63
5.5 Termination by operation of law.......................................................................................................................... 63
5.5.1 Set-off.......................................................................................................................................................... 63
5.5.2 Supervening impossibility of performance.................................................................................................... 63
, 5.5.3 Extinction prescription.................................................................................................................................. 63
1. The Content and Operation of a Contract
1.1 General
Factors influencing the content and operation of contracts.
o Number of parties
o Differences in the nature of certain types of obligations and terms.
What must be performed?
Terms that are read in through law
Terms that are expressly agreed upon
Terms that represent the unexpressed intentions of the parties
Terms limiting performance and obligations of the parties
o Other factors?
1.2 The parties to the contract
General
o A contract is a bilateral juristic act that involves at least 2 parties.
The party who is obliged to perform is the debtor
Said to be on the passive side of the obligation
The party who is entitled to the performance is the creditor
Said to be on the active side of the performance
o Because the creditor has the right to claim the performance
o More often than not, a contract will create multiple obligations
Contract of sale:
2 obligations: 1 is to deliver the merx and 2 is to pay the purchase price
o 1st obligation: delivery of the merx
The creditor (who is entitled to the merx) is the buyer
The debtor (duty to deliver the merx) is the seller
o 2nd obligation: payment of the purchase price
The creditor (right to claim the purchase price) is the seller
The debtor (has the duty to pay) is the buyer.
1.2.1 Multiplicity of parties
H&P 9.1 – 9.2
, Bellingan v Clive Ferreira & Associates CC
Multiple debtors and/or multiple creditors.
Types:
o (a) Simple joint relationships/ ‘Not true’ Joint relationship
How to determine whether it is a simple joint relationship?
There are separate obligations
o Example:
Bank A lends R3 million to B1, B2 and B3
This performance is divisible
o Not only in fact but the intention would be
for each debtor to be held liable for his
portion of the debt.
o However, the parties can agree to a
different proportion of the debt, but without
this, each debtor will be liable to repay
Bank A R1 million.
Because there are multiple debtors, the contract
will create more than one obligation
o These obligations relate to a distinct part of
the performance.
What makes this not a true joint relationship?
Because the performance is not, in its entirety,
owed by more than one debtor. The creditor may
only claim his debt proportionately between the 3
debtors.
o (b) True co-debtors.
(i) Common/collective joint liability
Only one obligation: performance can only occur jointly by the co-
debtors or be claimed jointly by the co-creditors
Must sue jointly.
Indivisible performance.
o Example: A and B sell a house to C
You cannot divide this performance and give A the duty
to deliver half of the house & B the duty to deliver the
other half of the house.
For the sale of the house to be meaningful and effective,
it has to occur as a whole.
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