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Contract Law Class Notes
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Private Law 372 (Contract Law) Class Notes made in 2023 covering the whole year's work. Includes case discussions, tutorial and test feedback.
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TopicsSemester 1............................................................................................................................................ 6
1. Introduction..................................................................................................................................... 6
1.1 Key concepts ........................................................................................................................... 6
1.1.1 The definition and features of the contract that creates obligations .............. 6
1.2 The development and sources of the law of contract ................................................ 9
1.2.1 The South African common law .................................................................................. 9
1.2.2 Statutory law and the impact of the Constitution................................................ 10
1.2.3 Indigenous, customary law and ubuntu (not discussed in class) .................... 10
1.3 The underlying (constitutional) values of the law of contract ................................. 10
1.4 The relationship between common-law rules of contract and consumer
legislation (Consumer Protection Act)................................................................................... 12
1.4.1 Introduction to CPA; its purpose & interpretation ................................................ 12
1.4.2 Application of the CPA ................................................................................................ 12
1.4.3 Consumer rights (Chapter 2 CPA) ............................................................................ 13
1.4.4 Remedies and enforcement of CPA ....................................................................... 14
2. Consensus as requirement for contractual liability............................................................ 15
2.1 Offer and acceptance as an indication of consensus ............................................. 15
2.1.1 Introduction ..................................................................................................................... 15
2.1.2 The requirements for a valid offer ............................................................................. 15
2.1.3 The consequences of an offer ................................................................................... 19
2.1.4 The termination of an offer ......................................................................................... 19
2.1.5 The requirements for acceptance ........................................................................... 20
2.1.6 The consequences of acceptance ......................................................................... 22
2.2 Pacta de contrahendo: options and rights of preference ....................................... 23
2.2.1 Option ............................................................................................................................... 23
2.2.2 Preference contract/ right of preference .............................................................. 27
2.3 Pre-contractual relationships ............................................................................................. 32
3. Contractual liability if there is no actual consensus .......................................................... 33
3.1 When is consensus absent?: The influence of various types of mistake on
consensus ....................................................................................................................................... 34
3.1.1 The meaning of mistake............................................................................................... 34
3.1.2 Effect of a mistake: depends on type of mistake ................................................ 34
3.2 Liability in the absence of consensus .............................................................................. 40
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Private Law 372 (Contracts) Class Notes 2023
, 3.2.1 Theories of contractual liability .................................................................................. 40
3.2.2 Doctrines that establish liability on objective grounds (when there is no
actual consensus).................................................................................................................... 43
4. Rescission of an existing contract due to improperly obtained consent.................... 52
4.1 General .................................................................................................................................... 52
4.2 Misrepresentation .................................................................................................................. 54
4.2.1 Introduction: Misrepresentation and mistake ........................................................ 54
4.2.2 Elements of a misrepresentation ............................................................................... 56
4.2.3 Remedies arising from misrepresentation ............................................................... 61
4.2.4 Excluding liability for misrepresentation................................................................... 68
4.3 Duress (metus) ........................................................................................................................ 70
Requirements of duress: ......................................................................................................... 70
4.4 Undue influence .................................................................................................................... 75
4.5 Other cases of improperly obtained consent .............................................................. 79
Tutorial 1 feedback: .................................................................................................................... 82
Values guiding the development of the common law on improperly obtained
consent ........................................................................................................................................... 84
5. Contractual capacity ................................................................................................................ 86
6. Formalities ...................................................................................................................................... 86
6.1 Introduction ............................................................................................................................ 86
6.2 Statutory formalities .............................................................................................................. 88
6.3 Formalities imposed by parties .......................................................................................... 95
6.3.1 Formalities imposed by parties for concluding contract ................................... 95
6.3.2 Formalities imposed for variation of contract........................................................ 95
6.4 The “parol evidence” rule ................................................................................................ 100
6.5 Rectification.......................................................................................................................... 105
Requirements for rectification: ........................................................................................... 105
7. The requirement of possibility of performance ................................................................. 108
7.1 General rule .......................................................................................................................... 108
7.2 Distinctions (HP Fig 8.1) ...................................................................................................... 109
7.3 Meaning of impossibility .................................................................................................... 109
7.4 Consequences of impossibility ........................................................................................ 111
7.5 Partial impossibility .............................................................................................................. 112
7.6 Temporary impossiblity....................................................................................................... 112
8. Certainty of performance....................................................................................................... 112
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Private Law 372 (Contracts) Class Notes 2023
, 8.1 General rule: ......................................................................................................................... 112
8.2 Application of rule .............................................................................................................. 113
8.3 Consequences of uncertainty HP 8.2.3 ........................................................................ 117
9. Legality ......................................................................................................................................... 117
9.1 Introduction .......................................................................................................................... 117
9.2 Statutory illegality ................................................................................................................ 118
9.3 Common-law illegality ....................................................................................................... 119
9.4 Specific examples of illegality: ........................................................................................ 126
9.5 The consequences of illegality ........................................................................................ 136
9.5.1 Introduction ................................................................................................................... 136
9.5.2 Valid, but unenforceable .......................................................................................... 137
9.5.3 Void (and unenforceable) ........................................................................................ 137
Semester 2: (middle of contract lifespan) .............................................................................. 141
1 Content and operation of a contract ................................................................................. 141
1.1 General .................................................................................................................................. 141
1.2 Parties to the contract ....................................................................................................... 141
1.2.1 Multiplicity of parties ....................................................................................................... 142
1.2.2 “Privity of contract” (9.3.1) ........................................................................................ 146
1.2.3 Representation ............................................................................................................. 147
1.2.4 Stipulatio alteri (contract in favour of a third) ..................................................... 149
1.2.5 Describing the parties H&P 16.2 ............................................................................... 150
1.3 Types of obligations ............................................................................................................ 150
1.4 Types of terms....................................................................................................................... 152
1.4.1 Introduction ................................................................................................................... 152
1.4.2 Essentialia, naturalia, incidentalia ........................................................................... 152
1.4.3 Express, tacit, and implied terms ............................................................................. 155
1.4.4. General terms (typical types of terms) ................................................................. 159
1.5 Proof and interpretation of contracts ........................................................................... 164
1.5.1 Introduction ................................................................................................................... 164
1.5.2 Interpretation: general principles ............................................................................ 164
1.5.3 Further “guidelines” of interpretation/canons of construction ....................... 168
1.5.4 Interpretation of exemption clauses ...................................................................... 168
1.5.5 Interpretation and the CPA ...................................................................................... 168
2. Breach of contract ................................................................................................................... 169
2.1 General .................................................................................................................................. 169
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Private Law 372 (Contracts) Class Notes 2023
, 2.2 Positive malperformance.................................................................................................. 170
2.3 Mora debitoris (negative malperformance) ............................................................... 173
2.4 Making performance impossible/rendering performance impossible ................ 178
Tutorial 4 feedback: .................................................................................................................. 179
2.5 Repudiation .......................................................................................................................... 180
2.5.1 Definition......................................................................................................................... 180
2.5.2 Examples ........................................................................................................................ 180
2.5.3 Origin ............................................................................................................................... 181
2.5.4 Requirements ................................................................................................................ 182
2.5.5 Consequences ............................................................................................................. 184
2.6 Mora creditoris ..................................................................................................................... 187
2.6.1 Definition......................................................................................................................... 187
2.6.2 Requirements ................................................................................................................ 188
2.6.3 Consequences ............................................................................................................. 188
3. Remedies arising from breach .............................................................................................. 191
3.2 Fulfilment/Enforcement ..................................................................................................... 192
3.2.1 Specific performance................................................................................................. 193
3.2.2 Exceptio non adimpleti contractus (the exceptio rule) ................................... 200
Test 2 feedback:......................................................................................................................... 205
3.3 Cancellation ......................................................................................................................... 206
3.3.1 General ........................................................................................................................... 206
3.3.2 Exercising right to cancel .......................................................................................... 208
3.3.3 Loss of the right to cancel ......................................................................................... 210
3.3.4 Consequences of cancellation ............................................................................... 213
3.4 Damages.......................................................................................................................... 218
3.4.1 General ........................................................................................................................... 219
Tutorial 5 feedback: .................................................................................................................. 224
3.4.2 Specific requirements for damages claim ........................................................... 228
3.4.3 Penalty clauses: ............................................................................................................ 237
3.5 Statutory remedies: Consumer Protection Act 68 of 2008 ...................................... 238
3.5.1 Defective services ....................................................................................................... 239
3.5.2 Defective goods .......................................................................................................... 241
4. Transfer of obligations: cession .............................................................................................. 243
4.1 General .................................................................................................................................. 243
4.2 Requirements ....................................................................................................................... 243
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Private Law 372 (Contracts) Class Notes 2023
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