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Private Law 372 - Law of Contract Unit 6 R50,00
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Private Law 372 - Law of Contract Unit 6
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  • June 21, 2021
  • 42
  • 2020/2021
  • Class notes
  • Du plessis
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The Law of Contract: Study Unit 6
Private Law 372: 2021

Table of Contents
6 FORMAL REQUIREMENTS (WRITING)................................................................................2
6.1 INTRODUCTION.................................................................................................................................... 2
6.2 STATUTORY FORMALITIES....................................................................................................................... 4
6.3 FORMALITIES IMPOSED BY PARTIES......................................................................................................... 12
6.4 THE ‘PAROL EVIDENCE’ RULE............................................................................................................... 24
6.5 RECTIFICATION.................................................................................................................................. 33




1

,6 FORMAL REQUIREMENTS (WRITING)
6.1 Introduction
 Formalities = means writing & sometimes a signature, normally required for a contract
 General principle:
o Formalities are NOT normally required for a valid contract.
 Exceptions to this general rule: where the LAW or the PARTIES prescribed formalities.
 Historical development of early law of contract:
o In early Roman Law, they were obsessed with FORM (contract had to be in a
particular format of a particular type & only then was it binding)
 For eg. stipulatio
 Have to use a certain verb
 Eg: “do you promise to give me this?” The answer would be “yes I
promise to give you this”
 There had to be exact formal correspondence between the words
used
 Eg. Contractus literries
 Certain contracts had to be in writing
 Other contracts required you to have to hand over things (eg. loan –
it was only established once you actually gave the money)
o So, the historical development has changed from ‘ex nudo pacto non oritur actio’
to ‘ex nudo pacto oritur actio’
 ex nudo pacto non oritur actio
 From a bare agreement does NOT arise from an action
o But over time we moved away from this and said that a mere
agreement (nudo pactum) should be binding
 ex = from
 nudo = nude/ bare
 pacto = agreement
 non = not
 oritur = arise
 actio = action
 Position nowadays: ex nudo pacto oritur actio (from nude agreement
arises action)
 Our contracts are ‘form free’
 but there are certain exceptions to this
 Exceptions to ‘form free’ principle:
o 1) When the law/ legislation requires it (statutory formalities)
o 2) When the parties themselves require it
 Why does the law still impose/ require formalities?
o Answer: what are the benefits of requiring writing?
 if you put something in writing it creates certainty
 it prevents litigation
 it prevents disputes
 it prevents risk of perjury
 it prevents risk of fraud
o ‘Paper is patient and has an evidentiary function, it creates certainty and
reduces the risk of disputes’
 Eg. suretyship must be in writing – what is an advantage of this?

2

,  Creates certainty
 The other party will be protected until such time that they actually
positively put their hand on that piece of paper
 Writing & signature alerts people to the significance/ importance of
the transaction that they are going to conclude
 It makes people take more positive steps in indicating their assent
rather than just doing so orally
 Negatives of imposing formalities
o Opens the gates for potential abuse
 Where parties hide behind formalities or allege that formalities have not
been complied with in order to escape the contractual liability
o This highlights the shift from formalities being imposed to protect parties to a
contract, towards allowing parties a possible escape route to escape the contract
(simple because of non-compliance with formalities)
 I.e., someone no longer wants to be bound to a contract even though they
perfectly & clearly assented to it
 How to comply with formalities?:
o How to comply with formalities depends on what the formality is but also
depends on what the parties/ statute requires
o Mostly, it would just be writing & signature
1) Writing, also electronic:
 What does writing mean?
o Traditionally this involved a hardcopy/ piece of paper with
writing on it
o But what about use of electronics? How do you comply with
writing in our modern environment?
 Answer = we have statutory provisions which deal with
this (eg: s12 ECTA)
o S12 ECTA
 Indicates to us that writing could also include = a data
message which is accessible in a manner usable for
subsequent reference.
 I.e., data messages are acceptable & constitute
writing in terms of ECTA
2) Signature, also electronic:
 Generally speaking, a signature is a mark which is intended to
represent a particular person
o Initials, surname, anything that is intended to represent you
& your act
o Signature intends to represent you in a distinctive way & as a
way of identification
 What about electronic signatures?
o Must turn towards statutory provisions such as s13 of ECTA,
which makes provision for electronic signatures
o S13(2) of ECTA now provides that electronic signatures are
now the functional equivalent of a ‘wet’ signature (when a
person uses a pen or seal to sign on a physical document,
then they have endorsed it with a ‘wet’ signature = today,
electronic signatures are equal to this)
 S13 ECTA gives us 2 types of electronic signatures
3

, 1. Advanced electronic signature
 This is the default option if a signature is required by
law
 So, if there is a specific statutory requirement and it is
not specified what type of signature is okay and you
want to use an electronic signature – this would be the
default
2. ‘Ordinary’ electronic signature
 You can also sign with an ‘ordinary’ electronic
signature
 This is not the same as an advanced electronic
signature
 What must this signature do?
 1) it must identify the party who signs
 2) & must indicate some form of approval of
the communication
 Spring Forest Trading CC v Wilberry (Pty) Ltd t/a
Ecowash 2015 (2) SA 118 (SCA)
 Is it sufficient to simply type your
name?
 As long as you meet the 2 requirements; (1)
identify party signing it & (2) indicates some
form of approval, then it is okay, if it is intended
as such, to type your name.
 What does this look like in practice?
 Eg: If you accept an offer by way of SMS/ email/
WhatsApp or link via an email, what would
suffice as an ordinary electronic signature?
o So, we work on the basis of what is
actually, substantively intended.
o We do not necessarily require something
of you like to take a picture of your
signature.
 Sources of formalities
o 2 main sources of formalities (2 main reasons a contract might have to be in
writing) (this is an exceptional requirement – normally no contract has to be in
writing):
 1) if legislation/ statute requires it
 2) if the parties require it

6.2 Statutory formalities
 Purpose/ benefits of formalities
o Prevents perjury/ fraud – it creates certainty
o Fulfils a warning function: ‘flag to people’ that they are entering into an
important transaction
 When does statute impose formalities?
o 1) Interpret statute
 Must first interpret the statute (does the statute require adherence to
formalities)
o 2) Interpret contract
4

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