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Summary Contract 372 Exam Notes R101,00
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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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  • October 24, 2022
  • 63
  • 2022/2023
  • Summary
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Table of Contents

1. 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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