Class notes
Contract Law 372
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- Stellenbosch University (SUN)
All notes from class in semester 2 and extras
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Contract Law Semester Two 2020Content and operation of a contract
Bellinghan v Clive Ferreira & Associates CC and others 1998 (4) SA 382
(W).
Bob’s Shoe Centre v Heneways Freight Services (Pty) Ltd 1995 (2) SA 421
(A).
Stocks & Stocks v TJ Daly 1979 (3) SA 754 (A) (L&M 419-422).
South African Forestry Co Ltd v York Timbers 2005 (3) SA 323 (SCA).
Westmore v Crestanello 1995 (2) SA 733 (W).
Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA
593 (SCA) paras 18-26.
Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms)
Bpk 2014 2 SA 494 (SCA) paras 10-13.
1. General
- Factors influencing content and operation
o Number of parties
Who must perform to whom?
o Differences in the nature of certain types of obligations and
terms
What precisely must be performed?
Some terms are simply read into contract on basis of
pragmatic considerations or could be unexpressed
intention of the parties.
Conditions and time clauses limit performance
obligations.
Even if you know what terms are, still need to know what
those terms mean (interpretation)
o Other factors
To what extent is the content of a contract determined
solely by the parties?
To what extent do we also take into account other
considerations?
Simple answer: content of contract determined by
intention of parties. (but this isn’t entirely true since
courts can interfere)
Our courts do not recognise good faith as an
independent standard against which one can measure
the validity of a contract or term.
However it is not correct to say that good faith isn’t
given consideration. Good faith is seen as a
value/mechanism underlying development of new rules
or adjustment of existing rules.
,Contract Law Semester Two 2020
2. Parties to the contract
- Contract is a bilateral juristic act.
- Creditor has right to claim performance.
- Distinguish who is a creditor and who is a debtor to an obligation
(entitled to that merx)
- Multiple parties:
o Can give rise to problems of operation of contract
o Share of liability of co-debtors and/or share of entitlement of
co-creditors.
Factors considered: intention of parties; nature of
contract; nature of performance owed under obligation
(whether performance divisible or not)
o Types:
o (a) simple joint relationship (not true joint relationship)
Not dealing with a true joint relationship
Several debtors liable to make a performance to creditor
and performance is divisible (liability intended to be joint
and not joint&several)
Separate obligations`: each debtor only liable for a
proportionate share of performance and these shares
are presumed to be equal.
Multiple debtors or creditors or both.
o (b) true co-debtorship
(i) Common/collective joint relationship
One obligation – performance can only occur
jointly
Must sue jointly
Indivisible performance
(ii) joint and several liability (solidary)
Joint & several liability different to suretyship:
surety is secondary liability: rule is that creditor
can only approach a surety after breach of
contract & suretyship is accessory to principle
debt: validity of surety debt is dependent of
validity to principle debt. Liability in J&S: primary –
approach any of co-debtors for performance. No
need to wait for breach of contract.
J&S also referred to as liability in solidum. A
characteristic is that each co-debtor is liable for
full amount of debt and creditor can claim full
amount from one or more of them.
o Where one debtor pays more than his
required amount, he has a right of recourse
,Contract Law Semester Two 2020
against co-debtors to recover proportionate
share of the debt.
o Other academics: Such a right does not
exist? Right of recourse should arise from
agreement between co-debtor which
stipulates the amount to be paid or should
stem from another source (cession of rights:
not clear whether claim full amount or may
only claim pro-rata share from each debtor)
o Remember: just because they j&s to
creditor, doesn’t mean they are j&s liable to
one another or co-debtor who has paid full
debt. Relationship between creditor and
debtors doesn’t have bearing on relationship
of co-debtors themselves.
o Bellinghan v Clive Ferreira case: where co-
debtors have agreement between them
governing respect of recourse amongst one
another, the agreement is decisive and is
enforceable. Paying co-debtor cannot
override the terms of that agreement by
obtaining cession of creditors rights against
co-debtors (fraud = bad faith)
Applicants obtained cession of rights
and tried to obtain more than
agreement entitled her to do.
o Not agreement: paying co-debtor gets
cession: very unclear on what they can
claim.
J&S is great for a creditor because they can choose
to claim full amount or a great amount from a
financially strong debtor and portions from co-
debtors.
Debate: 1st: one performance relating to one
obligation binding all co-debtors. 2nd: separate
obligations.
o De Wet: analyse relationship of j&s as
multiple obligations relating to same
performance because it would allow for a
more nuanced treatment of relationship
between co-debtors and creditors since it
would explain why you could attach
conditions to some obliagtions and not
, Contract Law Semester Two 2020
others. Also obligations can prescribe
separately (if prescription of one debtors
obligations was interrupted it wouldn’t affect
the others)
o Court: one performance relating to one
obligation that binds all co-debtors. (one
obligation can be interrupted and affect
other obligations)
- How do you know which category you’re dealing with?
o Factors: (look at all)
Intention of parties
What relationship they intended. If intention not
clear: presumption.
Performance divisible or not
Divisible if can divide into meaningful aspects.
o Options are either simple joint relationship or
J&S liability.
Indivisible: cannot be meaningfully divided into
discrete aspects
o Common joint or j&s.
o Possible that performance can be physically
divisible but parties intended for indivisible.
Prescribed legal rules
Partnerships: rule is during existence of
partnership and there are sufficient assets owned
by partnership: common joint relationship unless
assets insufficient then j&s liable in personal
capacities.
Example: debtors that are liable jointly and severally, but only one debtor
pays.
Right of recourse against the other co-debtors? And if so, how much can
he claim from each of them?
General point of departure in SA case law today: in the absence of any
evidence to the contrary, a paying co-debtor who is jointly and
severally liable, has an automatic right of recourse against the other co-
debtors.
In absence of evidence to the contrary, such a paying co-debtor must
pay a pro rata share from each of the other co-debtors.
What is evidence to the contrary of having to pay your pro rata share?
Where the co-debtor obtains cession against the rights of the other co-
debtors (cession = transfer of rights to claim from original DR to
another DR). Effect of cession – person to whom rights have been
ceased acquires the same rights and benefits that the original CR had.
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