PVL3702 STUDY SUMMARY NOTES.
This is an all-inclusive guide to PVL3702 - Law Of Contract
Contract as an agreement intended to create enforceable obligations
→ A contract is an agreement between two or more parties with the intention of creating enforceable
obligations. To constitute an enforc...
,Contract as an agreement intended to create enforceable obligations
→ A contract is an agreement between two or more parties with the intention of creating enforceable
obligations. To constitute an enforceable contract, an agreement must be one which the law
recognizes as binding on the parties.
→ The extra ingredient that distinguishes contracts from non-binding agreements is a serious intention to create
legally enforceable obligations (animus contrahendi).
→ The absence of an animus contrahendi explains why ‘gentlemen’s agreements’ are not enforceable as
contracts (binding on their honour only).
Legally binding agreements that are not contracts:
→ The fact that the parties seriously intend their agreement to have a binding legal effect does not necessarily
mean that it is a contract.
→ Classification of legally binding agreement:
1. Obligationary agreements (e.g. sale/lease), whereby one or more obligations are created. This is by
far the most important of the three agreements;
2. Absolving agreements (debt), whereby obligations are discharged or extinguished. Discharge is
achieved by the debtor's performing what he has undertaken to perform with the consequence that the
obligation concerned is terminated in a natural way;
3. Real (or transfer) agreements, whereby rights are transferred. Real rights, for example ownership, are
transferred by delivery (movable property) or registration.
→ These agreements may sometimes overlap to a greater or lesser extent. Suppose D walks into a cafe, puts
his R5 on the counter and points to a packet of sweets. The proprietor takes his money and hands over the
sweets.
Requirements for a valid contract – must all be complied with
Consensus: the minds of the parties must meet (or at least appear to meet) on all material aspects of
their agreement;
Capacity: the parties must have the necessary capacity to contract;
Formalities: where the agreement is required to be in certain form (for example, in writing and signed),
these formalities must be observed;
Legality: the agreement must be lawful – not prohibited by statute or common law;
Possibility: the obligations must be capable of performance when the agreement is entered into;
Certainty: the agreement must have a definite or determinable content, so that the obligations can be
ascertained and enforced.
The nature of a contract
→ A contract is a juristic act. The conclusion of a contract is bilateral or multilateral. There must be at least
two parties to an agreement.
→ A contract entails undertakings on one or both sides. Undertaking may be to make a certain performance
immediately or in future. May be an undertaking that a certain state of affairs exists/existed (warranty). Most
contracts entail reciprocity (an exchange).
→ All contracts are consensual, in the sense of being based on an agreement of some sort and are bona fide
(with good faith).
, Contract and the law of obligations
→ The law of contract forms part of private law (specifically the law of obligations).
→ From a contract, arises an obligation or obligations. An obligation is 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) to demand a performance by the debtor, and the duty of the debtor to make that
performance.
→ Right created by obligation is a personal right (ius in personam). If the obligation is enforceable by action in
a court of law, it is referred to as a civil obligation.
→ Primary sources of obligations are contract and delict. Other sources include undue enrichment, family
relationships, negotiorum gestio (unauthorized administration of another’s affiars), wills and statutes.
→ A distinction is made between civil obligations (obligatio civilis) and natural obligations (obligatio naturalis).
→ Civil obligation may be enforced directly by recourse to a court of law, whereas a natural obligation may not.
→ However, a natural obligation does have some legal effect: it is a legal relationship as opposed to a merely
moral relationship, and just as in the case of a civil obligation, it can be validly discharged, is capable of indirect
enforcement by way of set-off, and can serve as the basis of an accessory contract such as suretyship.
→ An example of a natural obligation is a contractual obligation that requires a minor who acted without the
necessary consent, to perform something, or an obligation which requires the payment of a wagering or
gambling debt.
Real rights and Personal Rights
→ The only real right recognised in our law is ownership. Where a person has complete title (or control) over a
thing or property. A person may also hold a limited real right in relation to property, which is a subcategory of
real rights - they are held by a person in relation to someone else's property. One can never have a whole real
right in relation to someone else's property.
→ A personal right is one against another person for the performance of an obligation, i.e.: the other person
must either do or refrain from doing something. These rights are usually created by contract.
Contract and Delict
→ A delict is wrongful and blameworthy conduct that causes harm to a person (i.e. defamation or negligent
damage to property). Such conduct obliges wrongdoer to compensate injured party.
→ Essential difference between contractual and delictual obligations: Contractual obligations are voluntarily
assumed by the parties themselves. Delictual obligations are imposed by law, irrespective of the will of the
parties.
→ Breach of contract and a delict are very similar – both constitute civil wrongs and give rise to a duty to pay
damages.
→ Sometimes concurrent contractual and delictual liability can arise so that Plaintiff can sue on either basis.
Plaintiff who sues in delict must prove that all the elements of delictual liability are satisfied – the conduct must
infringe a right of the Plaintiff that exists independently of the contract.
Contract and Enrichment
→ Key to distinguishing contractual from enrichment lies in question whether or not a transfer of wealth from one
estate to another occurred pursuant to a valid contract. Where such ground is present in form of a contract,
one is dealing with a contractual obligation; whereas if it is absent, one is dealing with an enrichment
obligation.
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