Chapter 1: The nature and basis of contract
The notion of the contract:
Contract as an agreement intended to create enforceable obligations
A contract is an agreement between two parties
Not all agreements are contracts
Serious intention to create legally enforceable obligations di...
Summary KTR211- law of Contracts 211 - Nature AND
Basis OF Contractual Liability
Chapter 1: The nature and basis of contract
The notion of the contract:
Contract as an agreement intended to create enforceable obligations
A contract is an agreement between two parties
Not all agreements are contracts
Serious intention to create legally enforceable obligations distinguishes contracts from non-binding
agreements (animus contrahendi)
Example: a date with a girl is not a contract but you agree on a time
Legally binding agreements that are not contracts
Classification of legally binding agreements:
- Obligationary agreements one or more obligations are created
obligationary agreements are contracts, example: sale and lease
- Absolving agreements obligations are discharged or extinguished
- Real (or transfer) agreements rights are transferred, mainly ownership
Legally binding agreements that are more than just contracts
Some legally binding agreements that create obligations for the parties cannot be regarded as just a
contract because they contain elements giving them another dimension or placing them in a
separate category
It is based on the agreement of the parties and gives rise to obligations eg. The duty to support
Example: Marriage or judgement by consent does not create obligations, cannot be made or
terminated by free exercise, it requires the state
Definition of a contract
A contract is an agreement entered into by two or more persons with the intention of creating a
legal obligation or obligations
Requirements for a valid contract:
The contract must meet the requirements in order for it to be a valid and binding contract:
o Consensus minds of the parties must agree on all material aspects of the agreement
o Capacity must have the necessary capacity to contract
o Formalities if present, all formalities must be complied with
o Legality agreement must be lawful, not prohibited by statute or common law.
, o Possibility the obligations must not be impossible
o Certainty agreement must have a definite content so that the obligations can be enforced
The nature of the contract:
Contract is a juristic act an act to which the law attaches the consequences intended by the
parties. Conclusion of a contract is bilateral or multilateral:
Bilateral or multilateral minimum of two parties to an agreement
our law doesn’t recognise a unilateral promise as binding = a meeting of 2
minds is required.
Reciprocal most contracts entail reciprocity:
one party’s performance is promised in exchange for the other party’s performance
In other words : both/all parties have rights and duties
not all agreements are reciprocal
exception: donation contracts
Informal-formal process of contracting is mostly an informal one
majority of contracts are concluded orally or tacitly without formality
Freedom of contract parties can agree to anything that is possible and lawful
Warranty
A contract entails undertakings –on one or both sides. The undertaking may be to
- make a certain performance : immediately or in future
- to give something (dare) OR
- to do something (facere) 0R
- to refrain from doing something (non facere)
Contract and the law of obligations:
Law of contract forms part of private law and, more particularly, the law of obligations
How does contract relate to other branches of the law of obligations, in particular delict and
enrichment?
The concept of obligation
Definition of obligation: a legal bond between two or more persons, obliging the one (the debtor) to give,
do, or refrain from doing something to or for the other (the creditor)
Personal right (ius in personam)legal relationship created by an obligation is a personal one
only enforceable against the contracting parties
creditor can demand performance only by debtor and debtor is
obliged to perform only to the creditor
Real right (ius in rem) enforceable against the whole world
Civil obligation enforceable by action in a court of law (usually the case)
Natural obligation unenforceable but does have certain legal consequences
Primary sources of obligations : contract and delict
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