Comprehensive and in depth notes compiled by a Cum Laude student. Includes class notes, combined with the relevant sections in the textbook. Compiled in 2019.
The Law of Contracts
Introduction Lecture
Introduction Lecture
Prof Myburgh
o myburgh@sun.ac.za
o 2014 ou hoof
Textbooks
o The law of contracts 3 ed Hutchinson pretorius
o Casebook 3 ed
Pred
o Tut mark – 20% - 8 tuts in total
o Tests – 3 tests – best 2 , only have to write 2– 80%
Exam – all the work
Prescribed cases on course framework
Topic 1: Introduction
Prescribed:
- Bourbon Leftley
- Bredenkamp v Std Bank
What is a contract?
Contract: an agreement between 2 parties made with an intention
(specific state of mind) to create obligations that the law recognises
as binding on both parties
o offer and acceptance
o certainty is important
o misrepresentations are not allowed leads to agreement being
obtained in an improper fashion
o seriousness of misrepresentation can be different btw consensus
or no consensus could lead to contract being void
Bourbon-Leftley v WPK case
o BL are a group of farmers who export grapes
o They realise they need a cold storage facility
o They approach the defendants, WPK to erect a cold store facility
for them to store their grapes there
, o There was a long period of negotiations
o At a point, BL thought they concluded a contact with WPK
consisting of certain duties
o Subsequently, WPK started acting contrary to that contract
o An example: BL thought the facility was for their exclusive use
but then they opened it up for other farmers
o Because according to BL WPK acted wrongly, they alleging that
WPK is guilty of breach of contract
o On the other side, WPK is alleging that:
there was no contract, only an understanding
The fact that they infringed that understanding has no
legal consequences for WPK as it is not a contract
o Legal question: was a contract concluded btw BL and WPK?
o Court found that there was no agreement because no consensus
neither actual or apparent
o Why not?
The consensue took place at a members meeting This is
not the right context
There was no animus contrahendi from WPK
Prof De Wet said
o A contract is an agreement made with the intention to create
obligations
o it is an oblationary agreement
Basic Requirements:
Requirements of a valid contract
a contract is an agreement made with the intention to create
obligations.
a valid contract requires:
o Consensus minds of the parties must meet on all material
aspects
o animus contrahendi
o Contractual capacity both parties must have the necessary
capacity to
conclude a contract
o content of a contract must be certain agreement must have a
definite and
determinable content so that the
obligations
can be ascertained and enforced
, o content must be possible obligations undertaken must be
capable of
performance when the agreement is
entered into
o content must be legal agreement must be lawful and not
prohibited by statute
or CL
o Formalities SOMETIMES: your contract must comply with
certain formal requirements eg. Writing
Consensus (agreement)
o Primary POD: subjective actual consensus
Parties consciously achieve unanimity over terms of
agreement
Dissensus where one party fails to convey its correct
terms and the other party agrees to what was conveyed
Need a way to recognise that an agreement still exists
despite dissensus so that commerce doesn’t collapse and
everyone escapes from contractual obligations
o objective in certain instances where there is no actual
agreement, we may give effect to a deemed agreement
o Subjective:
A ‘true’ consensus
When all parties seriously intend to contract
Consensus: when the parties’ minds have met regarding
The parties to the contract
The terms of the contract
(These are the material aspects)
Arises when the parties consciously achieve unanimity ie.
Their thoughts are unanimous
o Objective
A ‘deemed’ consensus
Divergence between true intention and perceived
intention
A situation may arise where there is dissensus, whereby
each party thought the contract meant different things
in this case, the law may step in and objectively determine
what the agreement was
Intention to create obligations
, o Animus Contrahendi intention to create legally enforceable
obligations
o Legally irrelevant agreements
If no animus contrahendi
Not legally relevant
Not made with an intention to be binding
May just be a ‘gentleman’s agreement’ or a joke (BL case)
Eg. If Marine promises to do dishes every day and then
leaves for 3 days, cannot sue her for not doing that
o Bourbon-Leftley case: list of examples where animus
contrahendi not required
1. An apparent promise obviously made in jest, or as a joke, or in
a dramatic performance, or in a moment of excitement, anger
or absentmindedness.
2. A mere social arrangement.
3. A mere domestic arrangement.
4. A mere puff.
5. Exclusion of the animus contrahendi.
6. Transaction ''binding in honour only'', ''binding only in
conscience''; ''gentlemen's agreement''; ''letter of intent''; and
the like
7. Offer'' to negotiate (treat); invitation to do business; request
for an offer; statement containing information; general
expression of intention only, and the like.'
Not a closed list, examples
o Legally relevant agreements with a different intention
Not all agreements that are legally binding are contracts
Contracts that are legally relevant but the intention was
different
Obligationary agreements:
Where one or more obligation is required
Debt-extinguishing/ absolving agreements
Terminates obligations
Brings contracts to an end
Real/transfer agreement
There is an agreement
The intention of the parties is not to create or
terminate obligations, but rather to transfer rights,
duties or an obligation as a whole
Requires
o a reason for ownership transfer eg. A sale
o delivery
physical traditio
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