FACULTY OF BUSINESS &

MANAGEMENT SCIENCE
2022

COMMERCIAL LAW 621

00
FACULTY OF BUSINESS & MANAGEMENT
SCIENCES

STUDY GUIDE MATERIAL

COMMERCIAL LAW 621

(1ST SEMESTER)

Copyri ght © 2022

Richfield Graduate Institute of Technology (Pty) Ltd
Regi stration Number: 2000/000757/07
Al l ri ghts reserved; no part of this publication may be reproduced in a ny form or by a ny means,
i ncl uding photocopying, without the written permission of the Institution

i
 TABLE OF CONTENTS
Topics
Section A : Preface
1. Welcome
2. Title of Modules
3. Purpose of Module
4. Learning Outcomes
5. Method of Study
6. Lectures and Tutorials
7. Notices
8. Prescribed & Recommended Material
9. Assessment & Key Concepts in Assignments and Examinations
10.Work Readiness Programme
11.Work Integrated Learning
12.Interactive Learning
Section B: THE LEGAL ENVIRONMENT
TOPIC 1: South African legal system 1
1.1 A Short History of the Law 1
1.2 Sources of South Africa Law 3
1.3 Judgment of court 11
1.4 The Old authorities 13
1.5 Foreign law 13
1.6 The Court in the Republic 13
1.7 Review Questions 21
TOPIC 2: Introduction to the science of law
2.1 The term “Law” 22
2.2 The divisions of Law 23
2.3 The meaning of right 23
2.4 Legal subjects 24
2.5 Legal objects 24
2.6 Subjective right 24
2.7 The law of process 24
2.8 Family Law 24
2.9 Law of personality 26
2.10 Patrimonial law 26
2.11 Original methods of acquiring ownership 27
2.13 The protection of ownership and of possession 27
2.14 The law succession 27
2.15 The law of intellectual property 27
2.16 The law of obligations 27
2.17 Introduction to the law of delict 27
2.18 Introduction to the law of unjustified enrichment 30
2.19 The origin of the claim for enrichment 30
2.20 The obligation imposed upon the enriched person 30
2.21 Review Questions 31
TOPIC 3: INTRODUCTION TO THE LAW OF CONTRACT

3.1 The contract as a source of obligation 32

3.2 Requirements for the formation of a valid contract 33
3.3 Freedom to contract 34
3.4 Electronic agreements 34
Assessment Questions 35
TOPIC 4: CONSENSUS
4.1The concept of consensus 36
4.2 Offer and acceptance 37
4.3 Requirements for the offer and acceptance 37
4.4 The falling away offer 37
4.5 The continued existence of the offer: The option 38
4.6 Special rules in regard to offer and acceptance 39
4.7 The Moment and Place of the Formation of a Contract 39
4.8 Consensus and defects in will 39
4.9 Absence of consensus – mistake 40
4.10 Requirements to be met before mistake will render a Contract 40
Void

4.11 The improper obtaining of Consensus 40

4.12 Effects of Misrepresentation 40
4.13 Duress 41
4.14 Undue Influence 41
Assessment Questions 41
TOPIC 5: CAPACITY TO PERFORM JURISTIC ACTS
5.1 Legal capacity and capacity to act 42
5.2 Factors that determine a person’s juristic acts 43
5.3 Majority 44
5.4 Minority 44
5.5 The minor or the child under the age of seven years 44
5.6 The minor or child over the age of seven years 45
5.7 Special situations 45
5.8 Marriage 47
5.9 Wife has full capacity 47
5.10 The influence of alcohol or drugs 48
Assessment Questions 49

TOPIC 6: POSSIBILITY OF PERFORMANCE

6.1 Legal possibility 50
6.2 Contracts contrary to common law 50
6.3 Consequences of unlawful contracts 51
6.4 Physical possibility 51
Assessment Questions 52
TOPIC 7: FORMALITIES
7.1 The general rule: no formalities required 54
7.2 Contracts where formalities are required 55
7.3 Formalities required by the parties 56
Assessment Questions 59
TOPIC 8: TERMS OF THE CONTRACTS
8.1 The terms 60
8.2 Essential, naturalia and incidentalia 60
8.3 The condition 61
8.4 The time clause 62
8.5 The supposition 62
8.6 The warranty 63
8.7 The modus 63
8.8 The cancellation clause 63
8.9 Penalty clause 63
8.10 The forfeiture clause 64
8.11 The rouwgeld clause 64
8.12 Entrenchment clauses 64
Assessment Questions 64
TOPIC 9: INTERPRETATION OF THE CONTRACT
9.1 Contents 65
9.2 Principles of interpretation 65
9.3 The parol evidence or integration rule 66
9.4 Rectification 66
Assessment Questions 66
TOPIC 10 : BREACH OF CONTRACT
10.1 Forms of breach of contract 67
10.2 Default of the creditor 68
10.3 Rights and duties (obligations) in a contract of sale 69
10.4 Repudiation 70
Assessment Questions 71
T0PIC 11: REMEDIES OF BREACH OF CONTRACT
11.1 Different remedies 72
11.2 Execution of the contract 73
11.3 Cancellation 74
Assessment Questions 76
TOPIC 12: TRANSFER AND TERMINATION OF PERSONAL RIGHTS
12.1 Cession 77
12.2 Discharge 78
12.3 Rescission and cancellation 79
12.4 Agreement 79
12.5 Release 79
12.6 Novation 79
12.7 Delegation 79
12.8 Settlement (transaction) 79
12.9 Merger (confusion) 80
12.10 Set-off 80
12.11 Impossibility of performance supervening after conclusion of the 80
contract
12.12 The consequences of supervening impossibility of performance 80
12.13 Objectives and subjective impossibility of performance 80
12.14 Temporary and partial impossibility of performance 81
12.15 Prescription 81
Assessment Questions 82
TOPIC 13: MODULE ASSESSMENT 83
TOPIC 14: ADDENDUM 621(A) CASE STUDY FOR TUTORIAL 89
TOPIC 15: (B) ASSIGNMENT QUESTIONS 90
TOPIC 15: (C) TYPICAL EXAM QTN PAPER & MEMO 92
SECTION A: PREFACE
1. WELCOME

Welcome to the Faculty of Business and Management Sciences at Richfield. We trust you will find the
contents and learning outcomes of this module both interesting and insightful as you begin your
academic journey and eventually your career in the business world.

The following lectures will focus on the study units described:

SECTION A: WELCOME & ORIENTATION

Study unit 1: Orientation Programme
Introducing academic staff to the learners by Academic Head. Introduction of Lecture 1
institution policies.
Study unit 2: Orientation of Learners to Library and Students Facilities
Introducing learners to physical structures, Issuing of necessary learning material. Lecture 2

Study unit 3: Orientation on how to use the Commercial Law 621 Study Guide,
Prescribed Textbooks and Recommended Materials Lecture 3

Study unit 4: Discussion on the Objectives and Outcomes of the module

Commercial Law 621 Lecture 4

Study unit 5: Orientation and g u i d e l i n e s t o c o m p l e t i n g

Lecture 5
assignments(included in Topic 15)Review and Recap of Study units 1-4

2. TITLE OF MODULES DETAIL

1st Semester

Title of Module: Commercial Law 621

Module Code: CLAW621
NQF Level: Credits: NQF 6: 10 Credits
Mode of Delivery: Contact/ Distance

3. PURPOSE OF MODULE

The purpose of this module is to provide learners with an insight into certain legal aspects pertaining
to business issues and relationship and have a basic understanding of the legal system, formation of
valid contracts, capacity to contract, formalities required for the formation of a valid contract, terms of
a contract, interpretation of a contract, breach of contract, remedies for the breach of contract, transfer
and termination of personal rights.
4. LEARNING OUTCOMES

On completion of this module the student will be able to:

• Understand South African law of contract in general, i.e. requirements to be valid,
different conditions and terms that needs to be fulfilled. Understand remedies
available.
• Know the meaning of delivery.
• Acquire knowledge of the fundaments of the Law of contract.
• In depth knowledge of a legal contractual relationship and its
consequences.
• Understand the basis of the termination of legal obligations and its significances.

5. METHOD OF STUDY

The sections that have to be studied are indicated under each topic, in this study guide you are
expected to have a thorough working knowledge of the prescribed text book. These form the basis
for tests, assignments and examination. To be able to do the activities and assignments for this module,
and to achieve the learning outcomes and ultimately to be successful in the tests and examination, you
will need an in- depth understanding of the content of these sections in the learning guide, prescribed
book, recommended book, articles placed on Moodle such as lectures by independent experts,
magistrates, advocates, judges, independent legal journals, case laws and legal magazines. In order to
master the learning material, you must accept responsibility for your own studies. Learning is not the
same as memorizing. You are expected to show that you understand and are able to apply the
information. You will also be made aware of lectures, tutorials, online lectures, case studies and group
discussions to present this module.

As a South African student of Commercial law, you are advised to use South African statutes, case law
and articles when giving an opinion on a legal issue. Indiscriminate use of foreign law or case law as a
foundation for a legal solution to a problem is not acceptable. This may result in a student being
penalised for the incorrect application of a statute or case law. It is advisable to use foreign law for
comparative purposes only.
Foreign jurisdictions may have similar statutes, e.g. “The National Credit Act” this does not mean that
you must apply a foreign statute as a substitute for a South African Act. Students researching on
international websites are advised to apply caution in this regard.

6. LECTURES AND TUTORIALS

Learners must refer to Moodle, or the class timetable for details of the lecture times. The lecturer
assigned to the module will also inform you of the number of lecture periods and tutorials allocated to
a particular module. Prior preparation is required for each lecture and tutorial. Learners are
encouraged to actively participate in lectures and tutorials in order to ensure success in tests,
assignments and examinations.

7. NOTICES

All information pertaining to this module such as tests dates, lecture and tutorial time tables,
assignments, examinations etc. will be displayed on Moodle. Learners must check Moodle on a daily
 basis. Should you require any clarity, please consult your lecturer, Campus manager, Head of
department, National programme manager, or administrator on your respective campus.

8. PRESCRIBED & RECOMMENDED MATERIAL

8.1 Prescribed Material

Heinrich Schulze; Tukishi Manamela; Philip Stroop; Ernst Manamela; Eddie Hurter; Boaz Masuku; Chrizell
Stroop 2019. “General Principles of Commercial Law” 9th ed Claremont. Juta & Co. Ltd.

8.2 Recommended Material

Nagel et al.2018 “Commercial Law”. 5th ed.Durban.Lexis Nexis
8.3 Independent Research

Students are encouraged to undertake independent research. South African Law is not easily available on
Google. Students are advised not to apply foreign law e.g. foreign statutes and case law in assignments,
tests and examinations. Students are advised to refer to Moodle, under the heading “useful websites”
this will enable students to have access to SAFLII. This legal site is free and encompasses a database of
case law (by reference to the various courts), legal journals and other legal literature which i s essential
for assignments, tests and examinations.

8.4 Library Infrastructure

The following services are available to you:

• Each campus keeps a limited quantity of the recommended reading titles and a larger
variety of similar titles which you may borrow. Please note that learners are required to
purchase the prescribed materials.
• Arrangements have been made with municipal, state and other libraries to stock our
recommended reading and similar titles. You may use these on their premises or borrow
them if available. It is your responsibility to keep all library books safe.
• Richfield has also allocated one library period per week to assist you with your formal
research under professional supervision.
• The computers laboratories, when not in use for academic purposes, may also be used
for research purposes. Booking is essential for all electronic library usage.
• Public libraries are divided into subject categories. Students are advised to locate the
correct section by enquiring from municipal staff in advance. The law library may not
always be located in the same building as other libraries. Since municipal libraries
subscribe to further legal databases, students will have greater access to electronic legal
information not easily available to private institutions.

9. ASSESSMENT

Final Assessment for this module will comprise of two Continuous Assessment Tests (CAT1 and CAT2),
one written assignment and an examination. Your lecturer will inform you of the dates, times and the
venues for each of these. You may also refer to Moodle and the notice board on your campus or the
Academic Calendar which is displayed in all lecture rooms and as well as on the programme handbook
and prospectus.
9.1Continuous Assessment Tests (CAT)

There are two compulsory test for this module, in each semester. Your lecturer will inform you of the
date, time and the venue for this test. You must also refer to Moodle regularly.

9.2 Assignment

There is one compulsory research based written assignment for this module. Your lecturer, and Moodle
will inform you of the question and due date for the assignment. You must also refer to Moodle regularly,
for articles and further research materials that your lecturer may decide to provide you.

9.3 Examination

There is one two-hour examination for each module. Make sure that you diarise the correct date, time
and venue. The examinations department will notify you of your results once all administrative matters
are cleared and fees are paid up.
The fi nal examination covers the entire syllabus and may consist of multiple choice questions, case study,
short questions and essay type questions. This requires you to be thoroughly prepared as all content
matter of lectures, tutorials, all references to the prescribed text and any other additional
documentation/reference materials is examinable in both your tests and the examinations.
The examination department will make available to you the details of the examination (date, time and
venue) in due course. You must be seated in the examination room 15 minutes before the
commencement of the examination. If you arrive late, you will not be allowed any extra time. Your student
registration card must be in your possession at all times during examination.

9.4 Final assessment

The final assessment for this module will be weighted as follows:

CA Test 1
CA Test 2 40%
Assignment 1

Examination 60%
Total 100%

9.5 Key Concepts in Assignments and Examinations

In assessment and examination questions you will notice certain key concepts (i.e. words/verbs) which
tell you what is expected of you. For example, you may be asked in a question to list, describe, illustrate,
demonstrate, compare, construct, relate, criticise, recommend or design particular information / aspects
/ factors /situations. To help you u n d e r s t a n d exactly what these key concepts or verbs mean so
that you will know exactly what is expected of you, we present the following taxonomy by Bloom,
explaining the concepts and stating the level of cognitive thinking that these terminologies refer to.
 Competence Skills Demonstrated

Observation and recall of information knowledge of dates, events, places

Knowledge
knowledge of major ideas mastery of subject matter.
Question Cues
list, define, tell, describe, identify, show, label, collect, examine, tabulate,
quote, name, who, when, where, etc.

Understanding information; grasp meaning; translate knowledge into new

Comprehension context; interpret facts, compare, contrast order, group, infer causes; predict
consequences.
Question Cues
summarise, describe, interpret, contrast, predict, associate, distinguish,
estimate, differentiate, discuss, extend.

Application Use information, methods, concepts, theories in new situations to solve

problems using required skills or knowledge.
Questions Cues
apply, demonstrate, calculate, complete, illustrate, show, solve, examine,
modify, relate, change, classify, experiment, discover.

Analysis Seeing patterns; organization of parts; recognition of hidden meanings;

identification of components.
Question Cues
analyse, separate, order, explain, connect, classify, arrange, divide, compare,
select, explain, infer.

Synthesis Use old ideas to create new ones generalize from given facts relate
knowledge from several areas. Predict and draw conclusions.
Question Cues
Combine, integrate, modify, rearrange, substitute, plan, create, design, invent,
what if, compose, formulate, prepare, generalise and rewrite.

Evaluation Compare and discriminate between ideas, assess the of theories, presentations
make choices based on reasoned argument verify value of evidence, recognize
subjectivity.
Question Cues
Assess, decide, rank, grade, test, measure, recommend, convince, select, judge,
explain, discriminate, support, conclude, compare and summarise.
10. WORK READINESS PROGRAMME (WRP)

In order to prepare learners for the world of work, a series of interventions over and above the formal
curriculum, are concurrently implemented to prepare learners. These include:
• Soft skills
• Employment skills
• Life skills
• End –User Computing (if not included in your curriculum)

The illustration below outlines some of the key concepts for Work Readiness that will be included in your
timetable.

It Is in your interest to attend these workshops, complete the Work Readiness Log Book and
prepare for the Working World.

11. WORK INTEGRATED LEARNING (WIL)

Work Integrated Learning forms a core component of the curriculum for the completion of this programme.
All modules making up of this qualification will be assessed in an integrated manner towards the end of the
programme or after completion of all other modules.
• Prerequisites for placement with employers will include:
 • Completion of all tests & assignment;
• Success in examination, payment of all arrear fees;
• Return of library books, etc;
• Completion of the Work Readiness Program

Students will be fully inducted on the Work Integrated Learning Module, the Workbooks & assessment
requirements before placement with employers. The partners in Work Readiness Program (WRP) include:

Good luck with your studies…

xiii
 SECTION B
Section B: THE LEGAL ENVIRONMENT
TOPIC 1: SOUTH AFRICAN LEGAL SYSTEM Lecture 6
TOPIC 2: INTRODUCTION TO THE SCIENCE OF LAW Lecture 6
TOPIC 3: INTRODUCTION TO THE LAW OF CONTRACT Lecture 6
TOPIC 4: CONSENSUS Lecture 7
TOPIC 5: CAPACITY TO PERFORM JURISTIC ACTS Lecture 8
TOPIC 6: POSSIBILITY OF PERFORMANCE Lecture 9
TOPIC 7: FORMALITIES Lecture 10
TOPIC 8: TERMS OF THE CONTRACTS Lecture 11
TOPIC 9: INTERPRETATION OF THE CONTRACT Lecture 12
TOPIC 10: BREACH OF CONTRACT Lecture 13
T0PIC 11: REMEDIES OF BREACH OF CONTRACT Lecture 14
TOPIC 12: TRANSFER AND TERMINATION OF PERSONAL RIGHTS Lecture 15
TOPIC 13: MODULE ASSESSMENT Lecture 16
TOPIC 14: ADDENDUM CASE STUDY FOR TUTORIAL Lecture 17
TOPIC 15: TYPICAL EXAM QTN PAPER & MEMO Lecture 17
TOPIC 15: ASSIGNMENT QUESTIONS(content covered in lecture 5)

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 TOPIC 1
THE SOUTH AFRICAN LEGAL SYSTEM

After studying this topic, you should be able to:

• Outline the origin of South African law.
• Explain the “stare decisis doctrine”.
• Explain where the sources of the law may be found.

Study Chapte r One In Henrich Schulze (2019:1-22)

1.1 A SHORT HISTORY OF THE LAW

South African law consists of the Western component, an indigenous African component and a
universal component. Thus, if we go back to the historical roots of the law, we should look both
to Europe (including England) and to Africa.

1.2 SOURCES OF SOUTH AFRICA LAW

Earliest origins: Roman law

As far as the Western component of the law is concerned, its history starts with the foundation
of Rome 753 years before the birth of Christ.
• During the earliest phase of Roman law, the law applied only to Roman citizens, and was
characterised by rigidity and formalism.
• In the pre-classical period of Roman law (250-27 BC), a new legal system was established.
This legal system was characterized by fairness, flexibility and a lack of formalism.
• During the next phase of Roman legal development, called the classical period (27 BC -284
AD), the Roman legal system was refined and developed to such an extent that, as a legal
system it was superior to all those of other ancient civilisations.

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• In the post-classical period (284-565 AD) efforts were made to simplify the law, and the
influence of what is known as "vulgar law", as administered by officials in distant parts of the
Empire, made itself felt.
• The law schools of the Eastern Roman Empire in particular made a conscious effort to regain
an understanding of classical law. It was chiefly the work done at these law schools that
enabled the Eastern Roman Emperor.

What is Roman Law?

Reception of phenomenon: Roman-Dutch Law

The Roman Empire fell in AD 476 but this did not mean that Roman law disappeared.

Modern South African law is the product of a double reception process.

• The first reception process was the process through which, over the course of many
centuries, Roman law was adopted or received by the Germanic customary law systems of
various Western European countries.
• Roman law was received into the laws of Holland, one of the seven provinces of the
Netherlands.
• Roman law, as amended by the local Dutch legislation and customary law, became known as
Roman-Dutch law and was transplanted to the Cape in the seventeenth century.
• The second reception process was the process through which English law was adopted into
the prevailing Roman-Dutch law from the eighteenth century onwards.

Current South African law is a unique mixture of legal system, firmly rooted in Customary law,
Roman Dutch law and English law.

English Law

1. 1652 Jan van Riebeeck brought Roman-Dutch law in the Cape.

2. After 1814 Cape was ceded to Great Britain.
3. The direct and indirect influence of the English law was encouraged.

It is important to distinguish between, on the one hand, the origin of our law, or the sources
from which our law derived (where it comes from), and on the other, the sources from which
we know our law (where it can be found).

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Sources of South African Law

3
Sources of South African Law explained

4
To what extent did Roman Law influence the English legal
system?
England did not adopt Roman Law as the other countries in
Europe had. In England, ancient Roman texts were never
considered as rules having the force of law. Nonetheless,
Roman Law was taught at the Universities of Oxford and
Cambridge, just as it was taught at Bologna. Scholars, who had
studied Roman Law on the Continent (the so-called Civilians), did
have considerable influence on the development of certain areas
of law. Some substantive rules, and more importantly concepts
and ways of reasoning, developed by continental legal scientists,
based on the Roman legal tradition, influenced the English legal
system.

What does the term, Classical Roman Law, mean?

The Romans were the first people to make law into a science.
During the first two centuries of the Common Era, Roman legal
science was the most fertile. This age is called the class ical period
of Roman Law, because the law during this time period, as it was
taught and practiced, best exemplified the classic characteristics
of the Roman legal tradition.

How do we know about Roman Law?

A rich variety of written documents concerning Roman Law
during antiquity has come down to us including: statutes, deeds
and the writings of legal scholars. The most important text
among all these is the Corpus iuris Civilis. In addition to the
Corpus Iuris, the Institutes of Gaius from the middle of the
second century of the Common Era must be mentioned; these
Institutes constitute a beginners' textbook on Roman Law.

What is the Corpus Iuris Civils?

In the sixth century A.D., the Eastern Roman Emperor, Justinian
(Iustinianus), ordered the compilation of several law codes.
These codes were based on much older sources of law, mostly
statutes and legal writings from the classical period. They were:
The Institutes (Institution’s) a book largely copied from the
Institutes of Gaius - written 300 years prior, and it may be
considered a beginners' textbook. The rules contained in the
Institutes were given legal force in many countries;
consequently, the work may be regarded as both a textbook and
a statute.
The Digest (Digester or Pandect) a collection of fragments from
scholarly writings. Like the rules contained in the Institutes, the

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legal opinions expressed in these fragments were often given
legal force.
The Code (Codex) was a collection of imperial statutes.

Justinian had planned to add another collection to these three. A

collection of new pieces of legislation which had come into force
after the compilation of the Code (novella constitutions). This
plan was never realized. There exist today only private collections
of these novella constitutions. These form, together with the
three codes, the Corpus Iuris Civils. The Corpus Iuris is by far the
most important written source of Roman Law that has come
down to us. The texts transmitted therein constituted the basis
of the revival of Roman Law in the Middle Ages. As well, most of
the insights gained by modern research on Roman legal history
are owed to the analysis of texts from the Corpus Iuris.

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 What is the Gloss?
When the Medieval scholars started to study the old texts of the
Corpus Iuris again, they first wrote explanations concerning the
meaning of single words in the texts (glosses). Based on earlier
works of this kind, at the beginning of the 13th century, Accurses
of Bologna, wrote a collection of such glosses to the texts of the
Digest and the Code. This seminal work destined previous
piecemeal attempts to oblivion. It was simply called The Gloss
(glossa ordinaria) and all further elaboration of the Ius
Commune proceeded from Accurses' gloss.

Why is Roman Law still important today?

Today Roman Law has been replaced by modern codes. These
codes, however, did not create new law from scratch. But rather,
to a large extent, the rules of Roman Law which had been
transmitted, were placed in a statutory framework which
provided a modern, systematic order. This is particularly true in
regard to the German Civil Code. So, in order to fully understand
the German Civil Code, it is necessary to know about the legal
foundation upon which it rests. As this is true in regard to
German law, it is equally true in regard to most modern
European legal systems.

Most important of all, Roman Law will have great significance in

regard to the formation of uniform legal rules which further the
process of political integration in Europe. Roman Law is the
common foundation upon which the European legal order is
built. Therefore, it can serve as a source of rules and legal norms
which will easily blend with the national laws of the many and
varied European states.

Where can I get more information about Roman Law?

The internet, legal websites, Juta Stat, the library.

Statute Law or Legislation

• Legislation is the most important source of the law currently.

• The law is found to be statute enacted by the parliament and provincial legislature and
proclamations, regulations and by-laws enacted by subsidiary legislative bodies such as the
State President, ministers, and municipalities.
• The most important piece of legislation recently passed in SA is the Constitution of the
Republic of South Africa (Act 18.1 of 1996).

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• In the interpretation of any law and the development of the common law and customary
law, a court must promote the spirit, purpose and objects of the Bill of Rights.

Following the 1994 elections, South Africa was governed under an interim constitution. This
constitution required the Constituent Assembly (CA) to draft and approve a permanent
constitution by May 9, 1996. After review by the Constitutional Court and intensive
negotiations within the CA, a revised draft was certified by the Constitutional Court on
December 2, 1996. President Nelson Mandela signed the new constitution into law on
December 10, and it entered into force on February 3, 1997.

The Government of National Unity (GNU) established under the interim constitution ostensibly
remained in effect until the 1999 national elections. The parties originally comprising the GNU
-- the ANC, the NP, and the in Katha Freedom Party (IFP) -- shared executive power. On June
30, 1996, the NP withdrew from the GNU to become part of the opposition.

The Parliament consists of two houses viz, the National Assembly and the National Council of
Provinces, which are responsible for drafting the laws of the republic. The National Assembly
also has specific control over bills relating to monetary matters. The current 400member
National Assembly was retained under the new constitution, although the constitution allows
for a range of between 350 and 400 members. The Assembly is elected by a system of "list
proportional representation." Each of the parties appearing on the ballot submits a rank-
ordered list of candidates. The voters then cast their ballots for one party.

Seats in the Assembly are allocated based on the percentage of votes each party receives. In
the 1999 elections, the ANC won 266 seats in the Assembly, the DP 38, the IFP 34, the NNP,
28, the UDM 14, and other groups won the remaining 20.

The National Council of Provinces (NCOP) consists of 90 members, 10 from each of the nine
provinces. The NCOP replaced the former Senate as the second chamber of Parliament and
was created to give a greater voice to provincial interests. It must approve legislation that
involves shared national and provincial competencies as defined by the constitution. Each
provincial delegation consists of six permanents and four rotating delegates.

The president is the head of state. Following the June 2, 1999 elections, the National Assembly
elected Thabo Mbeki president. The president's responsibilities include assigning cabinet
portfolios, signing bills into law, and serving as commander in chief of the military. The
president must work closely with the deputy president and the cabinet. There are currently
28 posts in the cabinet, 25 of which are held by the ANC and three by the IFP.

8
 1. What are the similarities between Germanic law, early
Roman Law and Indigenous African Law?

2. Why is a thorough knowledge of the history of SA law

necessary?

3.Explain the comparative –law method

4. What legal systems have Roman law in common?

Customary Law

Refers to traditional common rule or practice that has become an intrinsic part of the accepted
and expected conduct in a community, profession, or trade and is treated as a legal
requirement.

Requirements of customary law:

• It must be reasonable.
• It must have existed for a long time.
• It must be generally recognized and observed by the community.
• The contents of the customary rule must be certain and clear.
• The court decision that a particular custom is valid merely recognizes the custom, as being
law does not give the custom any greater force than it has before.
• Customary law is also called trade usage.
• Customary law plays an important role in the business and commercial world.

9
 1. Briefly explain the relation between law and human
relationships.
2. Illustrate, by means of a diagram, how customary law
can be subdivided into different categories.
3. Illustrate, by means of a diagram, how the indigenous
African groups of Southern Africa can be subdivided into
different groups.
4. Discuss the relationship between African customary law
and magic religious conceptions.
5. Describe the factors that promote the observance of
customary law.

1.3 JUDGMENT OF THE COURT: CASE LAW

• SA courts are divided into superior and lower courts.

• Judgments of the SA courts after 1910 form an important authoritative source of law, which
is known as case law.
• The most important judgments are that of the Constitutional Courts, the Supreme, Court
of appeal and the High Courts and are reported in the South African Law Report.
• Some judgments of the courts in Namibia and Zimbabwe are also reported.

1.3.1 The Doctrine of Stare Decisis

• The function of the judge of the state is to interpret, and apply the existing law but not to
make new laws.
• The effect of a judicial decision which gives a new interpretation to a statutory provision or
which abstracts, extends or adapts common-law principles is in many cases to create law.
• However, a principle of the common law can be in fact be abrogated by disuse if it is no
longer in accordance with modern views, and a judge may decide that such a principle no
longer applies.

Application of the Doctrine

Stare decisis: the decision stands.

10
 • When the court gives a decision, the parties to the dispute will be bound to this decision.
• A court is bound by its own decisions unless and until they are overruled by a Superior
court.
• The court decisions are binding in this manner has never been laid down by statute.
• The rule of stare decisis is itself an example of how the courts operate to create law.

The Doctrine of Stare Decisis and The hierarchy of Courts

• Every court is bound by their decisions of the superior court within its area of jurisdiction,
unless the decision of the superior court is based on so obvious.
• As error, such as failure to take into account a statutory provision, that there can hardly be
any difference of opinion on the matter.
• Every court is bound by the decision of a court of concurrent status within its own area of
jurisdiction.
• Only a High court is not bound to follow the decisions of another court since they belong
to different areas of jurisdiction.
Magistrate courts are bound by the judgments of the Supreme Court of Appeal and High
Courts.

1.3.2 Ratio Decided

The reasoning in a particular case which was essential to reaching the decision and forms the
binding judicial precedent. The legal principle upon which the decision in a specific case is
founded. The ratio decided is also known as the rationale for a decision. As indicated the actual
parties are bound to the decisions. The first step is to determine the material facts on which
the judge based the decision.

1.3.4 Obiter Dictum

An opinion voiced by a judge on a point of law not directly bearing on the case in question and
therefore not binding. It may be an expression of opinion on a matter of law, given by in court
in the course of either argument or judgment, but not forming an essential part of the reasons
determining the decision, and therefore not of binding authority. Any statement that falls
outside the ratio decided is known as obiter dictum or incidental remark.

11
 Distinguishing

• A judge distinguishing one case from another by deciding that the ratio decided of a previous
decision is not binding on the case before him or her and therefore that the ratio decided of
the first case does not apply.

• The later court may also find that the earlier court did not take sufficient account of a fact,
which would have led to a different ratio decided, and for this reason, may not follow the
earlier decision.

1.4 THE OLD AUTHORITIES

• The works of the old jurists of Holland are still authoritative in the courts today.
Ancient Roman law as set out in the Corpus Iris Civilize still applies as a direct source of SA
law.
• Then body of law provided by the old authorities is also known as the common law.

1.5 FOREIGN LAW

• Foreign law is not regarded as authoritative source of law in SA law.

• It has persuasive authority only.
• The courts will reject SA decisions, which in the past have wrongly adopted English Law.
• Foreign law as a source has also been recognized in the Constitution.
• The constitution specifically provides that in interpreting the Bill of Rights a court of law
must consider international law and may consider foreign law.

1.6 THE COURT IN THE REPUBLIC

Courts Hierarchy of SA

• Constitutional Court
• Supreme Court of Appeal
• High courts
• Circuit local divisions
• Other high courts
• Regional courts
• Magistrates' courts
• Criminal jurisdiction

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• Other criminal courts
• 10.Community courts

There are over 20 courts that have binding authority in South Africa. The subsequent text
presents a discussion on the first ten;

Constitutional Court

Background
This court, the highest in South Africa on constitutional matters, was born of the country's first
democratic Constitution in 1994. In an acclaimed new building at Constitution Hill, the 11 judges
stand guard over the Constitution and protect everyone's human rights

The Constitutional Court

Situated in Johannesburg, is the highest court in all constitutional matters. It is the only court
that may adjudicate disputes between organs of state in the national or provincial sphere
concerning the constitutional status, powers or functions of any of those organs of state, or that
may decide on the constitutionality of any amendment to the Constitution or any parliamentary
or provincial Bill. The Constitutional Court makes the final decision on whether an Act of
Parliament, a provincial Act or the conduct of the President is constitutional. It consists of the
Chief Justice of South Africa, the Deputy Chief Justice and nine Constitutional Court judges.

The constitutional court judge is headed by a Chief Justice appointed by the Head of state.

Supreme Court of Appeal

The Supreme Court of Appeal, situated in Bloemfontein in the Free State, is the highest court
in respect of all other matters. It consists of the President and Deputy President of the SCA,
and a number of judges of appeal determined by an Act of Parliament. The SCA has jurisdiction
to hear and determine an appeal against any decision of a high court.

Decisions of the SCA are binding on all courts of a lower order, and the decisions of high courts
are binding on magistrates’ courts within the respective areas of jurisdiction of the divisions.
The SCA comprises 25 judges, including its president.

High courts

A high court has jurisdiction in its own area over all persons residing or present in that area.

13
These courts hear matters that are of such a serious nature that the lower courts would not be
competent to make an appropriate judgment or to impose a penalty. Except where a minimum
or maximum sentence is prescribed by law, their penal jurisdiction is unlimited and includes
handing down a sentence of life imprisonment in certain specified cases.

There are 13 seats of the High Court. In terms of the Renaming of the High Court’s Act, 2008
(Act 30 of 2008), they are: Western Cape High Court, Cape Town; Eastern Cape High Court,
Grahams town; Eastern Cape High Court, Port Elizabeth; Eastern Cape High Court, Mthatha;
Eastern Cape High Court, Bisho; Northern Cape High Court, Kimberley; Free State High Court,
Bloemfontein; KwaZulu-Natal High Court, Pietermaritzburg; KwaZulu-Natal High Court; Durban,
North Gauteng High Court, Pretoria; South Gauteng High Court, Johannesburg; Limpopo High
Court, Thohoyandou; and North West High Court, Mafikeng.

Circuit local divisions

These itinerant courts, each presided over by a judge of the provincial division, periodically visit
areas designated by the Judge President of the provincial division concerned.

Other high courts

The Land Claims Court and the Labour Court have the same status as the High Court. The Land
Claims Court hears matters on the restitution of land rights that people lost after 1913 as a
result of racially discriminatory land laws. The Labour Court adjudicates matters relating to
labour disputes. Appeals are made to the Labour Appeal Court.

Decisions of the Constitutional Court, the SCA and the high courts are an important source of
law. These courts are required to uphold and to enforce the Constitution, which has an
extensive Bill of Rights binding all state organs and all persons. The courts are also required to
declare any law or conduct that is inconsistent with the Constitution to be invalid, and to
develop common law that is consistent with the values of the Constitution, and the spirit and
purpose of the Bill of Rights.

Regional courts

The Minister of Justice and Constitutional Development may divide the country into magisterial
districts and create regional divisions consisting of districts. Regional courts are then established
per province at one or more places in each regional division to hear matters within their
jurisdiction.

The Jurisdiction of Regional Courts Amendment Act, 2008 (Act 31 of 2008), empowers regional
magistrates to preside in civil matters. Processes are underway to pave the way for the

14
implementation of the Act. Prime among those is the need to build capacity at regional court
level to deal with civil and divorce matters. The divorce courts will be subsumed under the
regional-court divisions. This will address the jurisdictional challenges in terms of which litig ants
have to travel to remote courts to get legal redress.

The formal training of magistrates and legal practitioners around this legislation and other
areas of judicial work will be the responsibility of the newly established South African Judicial
Education Institute. Preparations were at an advanced stage in October 2009 for the institute
to commence with its work.
The Jurisdiction of Regional Courts Amendment Act, 2008 will, in the medium to long term,
reduce the workload in the high courts. In this way, divorce and other family-law matters and
civil disputes of an amount determined from time to time will be within the jurisdiction of
regional courts. This therefore means that attorneys will have the opportunity of representing
their clients in matters where they ordinarily brief counsel. This will in turn reduce the cost of
litigation and therefore increase access to justice.

There are nine regional court presidents and 343 regional court magistrates.

Magistrates' courts

Magisterial districts have been grouped into 13 clusters headed by chief magistrates. This system
has streamlined, simplified and provided uniform court-management systems applicable
throughout South Africa, in terms of judicial provincial boundaries.

It has also facilitated the separation of functions pertaining to the judiciary, prosecution and
administration; enhanced and developed the skills and training of judicial officers; optimised
the use of limited resources in an equitable manner; and addressed imbalances in the former
homeland regions. In terms of the Magistrates’ Act, 1993 (Act 90 of 1993), all magistrates in
South Africa fall outside the ambit of the Public Service. The aim is to strengthen the
independence of the judiciary.

Although regional courts have a higher penal jurisdiction than magistrates’ courts (district
courts), an accused cannot appeal to a regional court against the decision of a district court;
only to the High Court.
By mid-2009, there were 366 magisterial districts and main magistrates’ offices,
80 branch courts and 282 periodical courts in South Africa. There were 1 906 magistrates in the
country, including regional court magistrates.

In addition, full jurisdiction was conferred to courts in rural areas and former black
townships that exercise limited jurisdiction and depend entirely on the main courts in urban
areas to deliver essential justice services.

15
Criminal jurisdiction

Apart from specific provisions of the Magistrates’ Courts Act, 1944 (Act 32 of 1944), or any other
Act, jurisdiction regarding sentences imposed by district courts is limited to an imprisonment of
not more than three years or a fine not exceeding R60 000. A regional court can impose a
sentence of not more than 15 years’ imprisonment or a fine not exceeding R300 000.

Any person charged with any offence committed within any district or regional division may be
tried either by the court of that district or by the court of that regional division.
Where it is uncertain in which of several jurisdictions an offence has been committed, it may
be tried in any of such jurisdictions.

Where, by any special provision of law, a magistrate’s court has jurisdiction over an offence
committed beyond the limits of the district or regional division, the court will not be deprived
of such jurisdiction.

A magistrate’s court has jurisdiction over all offences except treason, murder and rape. A
regional court has jurisdiction over all offences except treason. However, the High Court may
try all offences. Depending on the gravity of the offence and the circumstances pertaining to
the offender, the Directorate of Public Prosecutions decides in which court a matter will be
heard and may even decide on a summary trial in the High Court.

Prosecutions are usually summarily disposed of in magistrates’ courts, and judgment and
sentence passed.

The following sentences may, where provided for by law, be passed upon a convicted person:

• Imprisonment.
• Periodical imprisonment.
• Declaration as a habitual criminal (regional courts and high courts).
• Committal to an institution established by law.
• A fine with or without imprisonment as an alternative, correctional supervision or a
suspended sentence.
• Declaration as a dangerous criminal (regional courts and high courts).
• A warning or caution discharge.

The sentencing of “petty” offenders to do community service as a condition of suspension,

correctional supervision or postponement in appropriate circumstances, has become part of

16
an alternative sentence to imprisonment. Where a court convicts a person of any offence
other than one for which any law prescribes a minimum punishment, the court may, at its
discretion, postpone the passing of sentence for a period not exceeding five years, and
release the convicted person on one or more conditions; or pass sentence, but suspend it on
certain conditions.

If the conditions of suspension or postponement are violated, the offender may be arrested
and made to serve the sentence. This is done provided that the court may grant an order
further suspending the operation of the sentence if offenders prove that circumstances beyond
their control, or that any other good and sufficient reason prevented them from complying
with the conditions of suspension.

Other criminal courts

In terms of statutory law, jurisdiction may be conferred upon a chief or headman or his deputy
to punish an African person who has committed an offence under common law or indigenous
law and custom, with the exception of certain serious offences specified in the relevant
legislation. The procedure at such trials is in accordance with indigenous law and custom. The
jurisdiction conferred upon a chief and a magistrate does not affect the jurisdiction of other
courts competent to try criminal cases.

Community courts

South Africa’s community courts provide timely judicial services – usually within 24 hours of
an arrest of a criminal suspect. This assists in easing the country’s court case backlog.
Community courts, such as the Hatfield Community Court in Pretoria, are normal district
magistrates’ courts that assist in dealing with matters in partnership with the local
community and businesses. These courts focus on restorative justice processes, such as
diverting young offenders into suitable programs.

The business community and other civil-society formations contribute significantly to the
establishment and sustainability of these courts.
Thirteen community courts have been established. Four are fully operational and had been
formally launched in Hatfield, Fezeka (Gugulethu), Mitchells Plain and Cape Town.

Another nine pilot sites commenced in Durban (Point), KwaMashu, Mthatha, Bloemfontein,
Thohoyandou, Kimberley, Phuthaditjhaba, Hillbrow and Protea (Lenasia).

17
 A case is heard in the Bronkhorstspruit magistrate's court. An
appeal is lodged with the High Court in Pretoria. There are
conflicting judgments made by the following Courts:

• A single judge of the High Court in Pretoria

• A single judge of the High Court in Pietermaritzburg
• Three judges of the Supreme Court of Appeal
• A full bench of the High Court in Cape Town

To which decision will the High Court in Pretoria be bound? Give

reasons for your choice.

The High Court in Pretoria will be bound by the decision of the

Supreme Court of Appeal, because all higher (and lower) courts
are bound by the decisions of this court. If the Supreme Court
of Appeal has not decided the matter, the High Court would be
bound by its own earlier decision. The decisions of the court in
Pietermaritzburg and even the full bench in Cape Town would,
in the absence of a decision from the Supreme Court of Appeal
and the earlier decision by the High Court in Pretoria, simply
have persuasive power.

Legal Concepts

Advocate: An LLB graduate who has been admitted as an advocate of the High Court. When an
advocate practices as such, he or she is usually also a member of a Bar. There is a Bar for each
of the High Courts. In order to become a member of a Bar candidate must complete a pupillage
and pass the Bar examination. An advocate may appear in any court, except the small -claims
court. Advocates do not deal directly with the public, but are instructed by attorneys on behalf
of their clients. Unlike attorneys, they are involved primarily in litigation and legal opinion work.
A person may not be an advocate and an attorney at the same time.

Appeal: Taking a decision of a lower court to a higher court. The person bringing the appeal
hopes to persuade the higher court to change the decision of the lower court.

Attorney: A LLB graduate who has completed the board examination and articles of clerkship.
Attorneys may appear in the lower and high courts. Attorneys deal directly with members of
the public who need legal advice or representation, and they may refer these people to

18
advocates. Apart from litigation, attorneys also give assistance in all kinds of no litigious
matters, such as the drawing up of contracts and wills.

Clerk of the court: The official who receives and issues legal documents and pleadings in civil
actions in the magistrate's court.

Codified: Recorded in one comprehensive piece of legislation. The Corpus luris Civilis is a
codification of the Roman law which appeared during the reign of Emperor Justinian in the
sixth century. South African law is not codified.

Common law: The term is used in both a wide and a narrow sense. In the wide sense it is used
to indicate law that is not contained in legislation, namely the Roman-Dutch law as influenced
by English law. In the narrow sense it is specifically used to refer to the works of the old
authorities.

Constitutional Court: The highest court in South Africa for constitutional matters.

Defendant: The person who is sued by the plaintiff in a civil action.

Government Gazette: The state's official newspaper in which all acts, proclamations and other
information that needs to be brought to the public's notice is published. The Government
Gazette is published by the Government printer.

Judge: A court officer who hears and decides cases in the superior courts.

Judgment: The decision of a judge or magistrate or other judicial officer in a case.

Jurisdiction: This could refer to a court's authority to hear a particular matter (e.g. 30 a
magistrate’s court may not decide on a divorce) and/or the geographical region within which it
may function (e.g. the jurisdiction of the magistrate's court in Potchefstroom is confined to the
relevant magisterial district of Potchefstroom, and such court would not have jurisdiction over
an offence committed in Bloemfontein).

Magistrate: The court officer who hears and decides cases in the magistrate's court.

Minority judgment: The judgment of a judge or judges who disagrees/disagree with the
judgment of the majority of judges who hear a case.

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Obiter dictum: A remark in passing which was unnecessary for the decision of the case, and is
hence not binding in subsequent court cases.

Plaintiff: The person bringing an action in a civil case.

Quasi: A prefix that means similar to, resembling.

Ratio decided: The underlying reason for the court's ruling.

Registrar: The official who receives and issues legal documents or pleadings in a superior court.

Statute law: The law created by the passing of an Act by Parliament or a provincial legislature.

Supreme Court of Appeal: The highest court in the country, except for matters that fall within
the jurisdiction of the Constitutional Court. Parties cannot take their cases directly to the
Supreme Court of Appeal, because this court hears only appeals against the decisions of the
High Courts.

• Why is law a social science?

• State and briefly explain the various sources of Law.
• Vividly define the stare decisis doctrine and explain it
application?
Explain the following:
• Ratio decided
• Obiter dictum

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 TOPIC 2

INTRODUCTION TO THE SCIENCE OF LAW

After studying this topic, you should be able to:

• Explain the meaning of law.
• Discuss each of the subdivisions of the law.
• Explain the various rights to property.
• Explain the various ways in which a legal subject can become
the owner of property.
• List the sources of obligations.
• Explain “Delict” and its consequences.
• Discuss the principles of unjustified enrichment.

Study chapter 2 in Haveng a (2014: 23- 46)

2.1 THE TERM “LAW”

Refers to the body of rules and principles under which justice is administered or order enforced
in a state or nation. In other words, it is a combination of those rules and principles of conduct
promulgated by legislative authority, derived from court decisions and established by local
custom.

Different kinds of rules apply in society, but not all of these are legal rules. People also abide by
other sets of rules, for example social and religious rules. Legal rules are characterized by the
fact that they can be enforced through coercion. If a person does not follow the rules, he or
she may for example be imprisoned, or may be made to pay person compensation.

Traditionally, the main division in law is the one between public law and private law. Public law
is concerned with the distribution and exercise of power by the state and the legal relations
between the state and the individual. Private law, on the other hand, is concerned with the
legal relations between individuals.

21
 2.2 THE DIVISIONS OF LAW

• Divided between public and private law.

• Public law consists of those legal rules which controls the relationships between the state
and its citizens.
• Private law in turn consists of those legal rules, which governs the relationships between
citizens in their dealing with each other.
• Public law: international law, constitutional law, administrative law, and criminal law, law
of procedure.
• Private law: Law of persons, family law, law of personality, patrimonial law.

2.3 THE MEANING OF RIGHT

A right is any right a legal subject has regarding a specific legal object and which is protected by
law.
• Real rights: refers to a right in a thing and it is enforceable against the whole world or any
legal subject
• Personal rights: Is a right against a specific person and exist against that legal subject only

Functions of law:

• Order: maintain order & peace in the community.

• Justice: Refers to the prevailing sense of people of goodwill as to what is fair and right.

The law must meet the following requirements (postulates of justice):

• Reasonableness: legal rules must be reasonable to achieve justice; absurd rules brings the
legal systems into disrepute.
• Generality: Legal rules must be applied consistently to all legal subjects.
• Equality: Legal rules must apply equally in similar circumstances .
• Certainty: The same result must be achieved if the circumstances are similar.
• Due process: An independent, unbiased judiciary must apply the law. Judges must dispense
justice with due deliberation and impartiality, according to the laws of the country.

2.4 LEGAL SUBJECTS

• A human being or entity subject to the law, a member of the legal community to whom the
law applies and for whose benefit the law exists.

22
 • Every legal subject has legal capacity that is the capacity to be the bearer of rights and duties.
• NATURAL PERSON: Human beings.
• JURISTIC PERSON: Legal and Commercial intercourse.

2.5 LEGAL OBJECTS

A legal objective is any entity, which can be object of a legal subject’s claim to a right.

2.6 SUBJECTIVE RIGHT

• The relationship between a legal subject and a legal object, as well as that between a legal
subject and other legal subjects, can be termed a right.
• A real right is a right, which a legal subject has to property such as a book, pencil. (Thi nk of
ownership over something).
• Intellectual property rights are rights to intellectual property.
• Personality rights are rights relating to aspect of personality.
• Personal rights are rights in terms of which some or other conduct, referred to as
performance, and may be demanded from a person.

2.7 THE LAW OF PERSONS

1. Part of private law.
2. The termination of the natural person as a legal subject.
3. Thus this law determines:
• Who are legal subjects?
• How one becomes or ceases to be a legal subject.
• The various classes of legal subjects.
• What the legal position of each of these various classes of legal subject is.

2.8 FAMILY LAW

• The law of the family is that part of private law, which has to do with the requirements for
the conclusion of a valid marriage, the legal consequences of marriage, the grounds on
which a marriage can be dissolved, and the legal relationship between parents and children.

• The law of the family thus comprises two subdivisions, the law of husband and wife, and
the law of parent and child.

23
• Wife leaves husband for co-worker.

• Husband was committed for manic hyper sexuality.

• What is the husband’s rights when he gets out?

24
 2.9 LAW OF PERSONALITY

• In respect of their physical being, they’re dignity and their reputation.

• This right is protected by both criminal law and civil law.
• The law of personality is concerned with relationships between people concerning their
physical and physical integrity.

2.10 PATRIMONIAL LAW

Patrimonial can be defined as a law dealing with a thing, which comes from the father, and by
extension, from the mother or other ancestor, such as inheritance of property or wealthy.

The Law of Property

• Concerned with the relationships of persons towards material objects.

• The relationships of persons towards property are controlled by means of the granting and
recognition of rights over property
• Ownership: Is the state of being an owner; the right to own; exclusive right of possession.
• Possession is the act of ownership. In law, the acquisition of either a considerable degree of
physical control over a physical thing, such as land or chattel, or the legal right to a thing.
• Ownership & possession: A person owns property is not necessarily the possessor of the property.
• The acquisition of ownership: The basic distinction encountered in this respect is that between
original a derivative methods of acquiring ownership.

In what way is the right of ownership obtained in each of

the following cases, if at all?
1. Rajen buys a farm Blomhof from his neighbour Praveen.
2. Ram catches hares on his farm
3. Rehana gives her sister Brenda a car as a Birthday present
4. In 1960 Solly fenced his stand and turned it into a garden.
When the stand was surveyed in 1992, it appeared that the
part, which bordered on the municipal park, did not farm
part of his stand, but was part of municipal land.
Feedback:
1. Rajen will gain the ownership of the farm by having it
registered in his name at the Deeds office.
2.Since the hares do not belong to anyone, Ram succeeds in
catching them; he will become the owner by taking
position of them.
3. Brenda will become the owner as soon as a car is delivered
to her, since this is movable thing.
4. Sully obtain ownership through prescription, because he
has openly owned the land for more than 30 years (he
fenced it and turned into a Garden.)
2.11 ORIGINAL METHODS OF ACQUIRING OWNERSHIP

Ownership is the state or fact of exclusive rights and control over property, which may be an
object, land/real estate or intellectual property.
• Occupation.
• Prescription registration
• Delivery.

2.12 THE PROTECTION OF OWNERSHIP AND OF POSSESSION

Primarily granting the owner the remedy known as the reivindicatio protects ownership.

Servitudes: Servitude is a limited right over property of another that confers on the holder of
the right specific powers to use the property in a particular way.

Praedial Servitude: E.g., one owner wants to walk over another’s land to fetch water.

Personal Servitude: A usufructuary has the power to use and enjoy their property of another.
E.g., a farmer cannot cut down trees without replacing them.

Mortgage & Pledge: are limited real rights over property on which another has ownership.

2.13 THE LAW SUCCESSION

When a person dies, he/she leaves behind what is known as deceased estate, which consists
of all his/her assets. This estate is administered by one or more executors under letters of
executor ship granted by Master. It is the duty of the executor to pay all debts of the
deceased, realizing the assets of the estate if necessary.

2.14 THE LAW OF INTELLECTUAL PROPERTY

Copyright law, patent law, trade mark law and design law form part of intellectual property
law.

2.15 THE LAW OF OBLIGATIONS

An obligation between legal subjects may come about through

• Contract
• Delict
• Various other causes, for example unjustified enrichment

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2.16 INTRODUCTION TO THE LAW OF DELICT

The factors that cause the damage are disasters, floodwaters or drought. Compensation for
damage suffered by a person can be recovered from another pers on only if there are legally
recognized grounds for recovery.

The law of delict lays down what is required for an act causing damage to qualify as a delict
and what remedies are available to the party suffering the damage.

Define Delict

Any unlawful culpable act whereby a person causes the other party an injury to personality,
and whereby the prejudiced person is granted a right to damages and compensations. The
elements of a delict are the following:

• An act: voluntary human conduct, but it need not be a wilful act.

• Unlawfulness: Before an act can be deemed to constitute a delict it must also
be unlawful. An act is unlawful when it infringes the rights of another person.

Necessity: exists when a person is through external reasons forced placed in such a position
that the person’s legitimate interests can only be protected through a reasonable
infringement of the rights of another.

Self-defence: exists when a person, in a reasonable way, defends himself or herself against
an actual or imminent unlawful attack by another to defend his/her or another’s legally
acknowledged right.

Consent: person legally capable of expressing his/her will give consent to injury or harm, the
causing of such harm will be lawful.

Statutory Authority: A person does not act unlawfully if he/she performs an act while
exercising a statutory authority. Two requirements: the statute must authorize the
infringement of the particular right concerned and the conduct must not exceed the bounds
of authority conferred by the statute.

Provocation: exists when a person is provoked or incited by another’s words or actions to

cause harm to the other. Not a complete defence when verbal provocation is followed.

Fault: An unlawful act does not necessarily entail liability for the wrongdoer; the wrongdoer
must also be at fault. A wrongdoer is at fault if he or she acted intentionally or negligently.
A legal requirement for intent or negligence is that the wrongdoer must have reached a
sufficient level of mental development to be able to comprehend the nature and
consequences of his or her action. One cannot blame someone who does not have sufficient
mental capacity to know any better. The basic principle of the law regarding delicts is
27
contained in the requirement that the wrongdoer must have the capacity to have a
blameworthy state of mind. If wrongdoer has unlawfully and negligently caused damage, but
the injured person has also been negligent, the damage is divided in proportion to the
respective degrees of negligence shown by the parties.

Causation: A wrong doer can be held liable only for consequences he/she has legally caused.
Causation comprises two elements, namely factual causation and legal causation. The former
is present if a causal link exists between the act and the damage.

But a single act can give rise to an unlimited number of harmful events and the next step is
to determine which acts should in law give rise to liability for the damage in question.

Damage or impairment of personality: To incur edictal liability a person must have caused
another either damage or impairment of his or her personality. By damage, patrimonial
damage is meant. A person suffers damage as a result of another’s acts his/her estate
becomes smaller than it otherwise would have been. Impairment of personality on the other
hand results when someone’s personality is wrongfully infringed, that is to say when one or
more of his or her right of personality is infringed.

The remedies in the case of delict are an interdict and payment of damages for proved
patrimonial loss, sentimental damages and compensation for pain and suffering. The action
legs Aquiliae is aimed at recovering patrimonial damage (economic loss or loss which can be
assessed in terms of money). The actio iniuriarum is aimed at recovering sentimental
damages, and the action for pain and suffering is aimed at recovering compensation for injury
to personality for example for emotional shock that is wrongfully or culpably caused.

Maria has a heart problem. She is very

attached to her nephew, Boswell, whom
she has brought up. David is jealous of the
relationship between Maria and Boswell
and decides to do something to hurt Maria,
knowing that she has a heart problem, he
visits her one evening and tells her that
Boswell has been involved in a burglary,
caught red-handed by the police and fatally
wounded in a wild shooting incident. As a
result of the shock, Maria suffers a heart
attack. This causes her considerable
medical expenses. Explain the steps you
would take in order to establish whether

28
 David's behaviour meets the requirements
for a delict.
FEEDBACK
In order to determine whether David has
committed a delict, his behaviour must
satisfy all the elements of a delict, namely:
1. An act: The things David said comply
with the requirement of capricious human
conduct and he was in control of his
behaviour.
2. Wrongfulness: David's conduct is in
conflict with the community's sense of
reasonableness and violates Maria's
physical and psychological integrity.
3. Fault: David behaved intentionally. He
foresaw the consequences and reconciled
himself to them.
4. Causation: David’s intentional,
wrongful behaviour caused the heart
attack and the predictable patrimonial
damages that ensued.
5. Damage: Maria's medical expenses
resulting from the heart attack constitute
damage.
Comment: Medical expenses are
patrimonial damages that have to be
recovered by way of the action legs
Aquiliae. Any possible compensation for
shock is recovered by way of the action for
pain and suffering.

2.17 INTRODUCTION TO THE LAW OF UNJUSTIFIED ENRICHMENT

It is patently inequitable for the one person to be enriched to the detriment of another. It is
therefore a principle of SA law that nobody should be enriched at the expense of another.

2.18 THE ORIGIN OF THE CLAIM FOR ENRICHMENT

In Roman law the transfer of property, which had been given to another person without legal
title, could reclaim the property from the other person by means of a legal process called
the condictio indebiti. No general enrichment action, however, is recognized in SA law.

29
2.19 THE OBLIGATION IMPOSED UPON THE ENRICHED PERSON

The obligation imposed upon the enriched person takes one of two forms, namely:

A. Restitution: a person who has delivered or transferred money or property which is not
due to another person, may recover that money or property from the other person. Payment
or delivery in error:
Payment or delivery was made under a mistake

• The mistake was reasonable.

• Payment or delivery was not made on condition that it would not be recovered.
• Payment or delivery was made by way of a compromise.

B. Compensation: An obligation to compensate the person at the expense of whom one has
been unjustly enriched, can arise in the following:

• Partial Performance: If one party to a contract has performed only a portion of

an obligation, which is indivisible, the possibility of enrichment liability arises,
because the party already-delivered portion of Bob’s performance cannot be
returned as a result of its nature.

• Improvement to property: If person effects improvements to property with the

intention of doing so for his/her own benefits and he or she has no right or title
to the property, the improvements become the property of the true owner.

• Negotiorum gestio: Negotiorum gestio is related to enrichment. It arises when one

person voluntarily and without the permission or knowledge of another person.

1. Differentiate between private and public law.

2. What is a right?
3. What are the original method of acquiring ownership?
4. Explain the derivative method of acquiring ownership.
5. Enumerate the protection of ownership and of possession.
6. Explain the following:
• Servitude Mortgage
• Law of succession
• Law of intellectual property
• Law of obligation
7. Explain critically the law of delict
8. Discuss the remedies granted to person suffering damage

30
 TOPIC 3

INTRODUCTION TO THE LAW OF CONTRACT

On completion of the topic the learner must be able to

understand the following:
• The aim of this study unit is firstly to guide the learner towards
an understanding of the distinction between contracts and
other agreements.
• Secondly the learner should be able to list the requirements
laid down for the creation of a valid and forcible contract.
• Finally, one needs to realise that a person’s freedom to enter
into contract with whoever he or she wishes to is subject to
restrictions.

Study Chapter 9 in Henrich Schulze 2019

- P103-122

3.1 THE CONTRACT AS A SOURCE OF OBLIGATION

A contract can be described as an agreement which is concluded between two or

more persons with the serious intention of creating legally enforceable obligations,
and which meets the requirements set by the law for the formation of a valid contract.

A. Obligation: An obligation is the “title” given to the legal relationship that exists
between parties to an agreement when they acquire personal rights against each
other that either entitle them to performance and/or oblige them to perform.

B. Agreement: A contract is a particular type of agreement. Not all agreements

are contracts as not all agreements create obligations. The difference between a
contract and another agreement lies in the intention of the parties and in the
different consequences that are attached to their agreement.

C. Two or more parties: A person cannot contract with himself or herself unless
he/she acts in a different capacity on each side of the contract.
3.2 REQUIREMENTS FOR THE FORMATION OF A VALID CONTRACT

31
There are at least four requirements for the formation of any valid contract; the fifth one
formality is set in exceptional.
Consensus- it is derived from the Latin word meaning agreement to the same thing.
Capacity to act – the ability in law to perform the act of entering into the contract.
Juridical possibility –the agreement must be legally possible.
Physical excitability – the duties and the duties must be able to be done
Formalities – if any formalities are prescribed.

3.3 FREEDOM TO CONTRACT

Freedom to contract is considered to be one of the cornerstones of the modern law

of contract and one is generally free to choose with whom and on what grounds one
wants to contract with another.
32
3.4 ELECTRONIC AGREEMENTS

In considering which rule to apply to contracts made by telex, fax, or the Internet, the
type of machine then acceptance is not important when trying to determine the
acceptance, the place and time of formation in terms of the common law principles
set out above.

It should rather be considered whether the circumstances of the case indicate an

instantaneous method of communication and, if that is the case, whether a
conversional situation similar to a telephone call existed allowing uncertainties to be
cleared up immediately. Where the communication medium allows for this type of
instantaneous and `conversational` communication, the parties are in a position
analogous to being in each other’s presence, and the ascertainment theory should
then prevail. In all other instance the choices of theories should be influenced by the
by the intention of the parties, sound business practice and, perhaps, also by a
judgment of where the risk should lie.

In the case of contracts concluded over the Internet the choice of a suitable theory is
further complicated by the fact that that different services are offered on the Internet,
for instances electronic data interchange and e-mail. Only the e-mail procedures are
discussed here.

As soon as an e-mail has been sent, it travels to the sender’s server. The server serves
as the central point for the collection and dispatch of messages from a number of
computers. The server sends the message into the Internet. The message is
reassembled by the recipient’s server and placed in the recipient’s mailbox, where it
remains until the recipient retrieves it, whether it is minutes, days or months later.
Communication is thus usually non- instantaneous, but where the e-mails sent via an
internal company network, to recipient who is logged on at the moment of it being
mailed, it may well take place instantaneously. This is also the case in respect of the
so-called `chat rooms` where parties are in real time communication.

It is clear from the above that the application of the common law rules in an e-
commerce environment may differ from situation to situation, depending on the
facts. The ECT Act 25 of 2002 addressed some situations in this regard. It regulates
contracts concluded by electronic means where the parties failed or chose not to
regulate contract concluded by electronic means or where the parties failed or chose
not to regulate contract formation specifically. The Act provides that, in the absence
of a different agreement between the parties, an agreement concluded electronically
is concluded at the time when and the place where the acceptance of the offer is
received by the common-law principles. As the `receipt` of an electronic message
plays a crucial role in this theory, this concept has been statutorily defined. A data
33
message is deemed to have been received by the addressee when the complete data
message enters an information system (computer or network) designated or used by
the addressee and is capable of being received and processed by the addressee. The
message becomes legally effective upon such receipt as defined without the need for
acknowledgement. However, an acknowledgement of a message may be given
communication or conduct by the addressee indicating that the message has been
received. The Act also provide that a message is deemed to be received at the usual
place of business of the receiver, or if there is no place of business, at the usual place
of residence. This means that the receipt of a message on a web site at a remote
server will not be the place of formation of the contract, which is linked to the physical
place of business or residence of the receiver. When contracts are concluded using a
combination of traditional and electric methods of communication, it is advisable that
the parties should express indicate the time and place of formation to eliminate
uncertainty in this regard.

Explain the requirement for forming the valid contract. What

are the sources of obligation?

34
 TOPIC 4
CONSENSUS
On completion of the topic the learner must be able to
understand the following:
• Consensus as the basis for contractual commitment.
• Define the relationship between offer and acceptance.
• Understand the requirements of offer and acceptance.
• Consensus and defects in will.
• Understand the concept of misrepresentation.

Study Chapter 4 in Henrich Schulze:2019

4.1 THE CONCEPT OF CONSENSUS

Consensus as the basis for contractual commitment: Consensus is the basis for every
contract. Apart from the other requirements that must be satisfied before a contract can
be legally valid and enforceable, a contract will only come into existence if the parties reach
consensus on the Consensus can be reached only:

• Every one of the parties has the serious intention to be contractually bound.
• The parties have common intention; in other words, they must have in mind the same
commitment.
• Every party makes his/her intention known to every other party by means of a
declaration of intention.

The intention to be contractually bound

• The essence of reaching consensus is that every party to a contract must have the
serious intention to be contractually bound and create a legal obligation.
• Not every agreement or arrangement will give rise to a legally enforceable contract.
A contract will only arise if the parties have the intention to conclude an everlasting
binding contract. Rights and duties are created by their agreement.

35
Common intention

The parties must also agree on the contractual obligations or commitments they wish
to create. They must therefore have common intentions to contract with each other
and must intend to create the same legal relationship.

Making the intention known

Consensus can exist only if the parties are mutually aware of one another’s intention.
The mere existence of the two independent but corresponding intentions cannot
create a contract.

4.2 OFFER AND ACCEPTANCE

The concept of offer and acceptance: The usual way in which parties make their
intentions known to one another is through offer and acceptance.
An offer is a declaration made by a person in which he/she indicates an intention to
be contractually bound by the mere acceptance of the offer and in which the person
sets out the rights and duties he/she wishes to create.

4.3 REQUIREMENTS OF OFFER AND ACCEPTANCE

OFFER ACCEPTANCE

Must be consistent with the elements of a Must be consistent with the elements
valid contract. of a valid contract.

Must be communicated expressly or by Must be communicated expressly or by

conduct. conduct.

Must be clear and certain. Absolute, unconditional & identical with

the terms of the offer.

Offer or may prescribe / specify manner of Takes place in the manner prescribed
acceptance. by the offeror ’s.

May be addressed to a specific person or Absolute, unconditional & correspond

group of people or to the whole world. with the terms of the offer.

Must have seriously been intended to create Must have seriously been intended to
legal relationship between the parties. create legal relationship between the
parties.

36
4.4 THE FALLING AWAY OF THE OFFER

• Time: If the offer stipulates that it is valid only for a certain period of time, the offer falls
away if it has not been accepted within that period.

• Revocation: If, before the offer has been accepted, the offeror informs the offeree that he
revokes the offer, the offer is extinguished.
• Rejection: If the offeree rejects the offer, the offer falls away and cannot be revived.
• Counter Offer: If the offeree does not accept the offer exactly as it was made, but makes a
counter-offer, the offeree by implication rejects the offer and the offer is extinguished.
• Death: If either the offeror or the offeree dies before the offer is accepted, the offer falls
away.

In the following situations, could you speak of a valid offer?

1.Raja is considering selling his motorcycle as soon as he takes
delivery of his new car.
2.Durban Butchery has the following notice on the shop
window.
‘Half a lamb at R 98.99 Kilogram’.
3.An advertisement in the newspapers reads as follows: ‘Bean
Cottage at Isipingo for exchange. Call Rehana at 902 597457 4’.
Max puts his house on the market because he wishes to move
to an old-age home. Cindy views the house and sends Max a
letter in which she informs him that she will purchase it for
R250, 000. Max passes away before he receives the letter.

Feedback:

1.Raja’s intention has not yet been made known to the

potential addressee with the intention of being legally bound.
2.This is simply an advertisement, an invitation to do business,
Clients who are interested and inquire about the meat will make
offers to buy the meat.
3.All we have here is an intention in principle to enter into an
exchange contact. An offer must contain complete details of the
contact, which the offeror has in mind. There are still several
essential uncertainties.
Cindy’s expression of her intention does not amount to an
offer. An offer is only valid if it comes to the notice of the
addressee.

37
4.5 THE CONTINUED EXISTENCE OF THE OFFER: THE OPTION

It is possible to entrench the continued existence of the offer by means of an option.

By the word `entrench' we mean the application of an extra safeguard to ensure the

continued existence of the offer. The offer cannot be withdrawn while the safeguard
exists. This safeguard is a separate contract, namely an option. The option gives the
option-holder the right to choose whether or not to conclude the main contract
(which will arise from the entrenched substantive offer) with the option-giver. The
option holder’s right is usually limited to a specified time.

4.6. SPECIAL RULES IN REGARD TO OFFER AND ACCEPTANCE

• An invitation to make an offer

• Statements of intention / undertaking to contracts.
• Calling for tenders
• Auctions
• Offers of reward
• Options

4.7. THE MOMENT AND PLACE OF THE FORMATION OF A CONTRACT

A contract arises at the moment when, and at the place where consensus is reached.
Determination of the exact moment at which consensus is reached is important in
order to decide whether the offer can still be revoked, whether the offer has expired
as a result of the passage of time and when the contractual duties become
enforceable.

Where the offeror’s and offeree are in each other’s presence

(a) If the offeror’s and the offeree are in each other’s presence when the offer and
acceptance are made, it is usually easy to determine the time and place of formation
of the contract, since the offeror’s learns of the acceptance of the offer at the same
time and place the acceptance’s made known.

Where the parties are not in each other’s presence

The acceptance is not communicated directly to the offeror’s, but via another
medium. Where contracts are concluded over the telephone, the parties are
considered to be in each other’s presence as the offeror’s learns of the acceptance of
the offer at the same time it is made.

38
4.8. CONSENSUS AND DEFECTS IN WILL

If consensus is absent for any reason no valid contract arises and the proposed
contract is void. The distinction between void and avoidable contracts hinges on
whether or not consensus existed between the contracting parties.

4.9. ABSENCE OF CONSENSUS – MISTAKE

Mistakes exist when one or more of the parties proposed contract labour under a material
misunderstanding in respect of a material act or legal rule relating to the proposed contract.

4.10. REQUIREMENTS TO BE MET BEFORE MISTAKE WILL RENDER A CONTRACT VOID

• Mistake must relate to a fact, or legal rule or principle

• Mistake must concern a material fact legal rule of principle. The mistake is also
reasonable

4.11. THE IMPROPER OBTAINING OF CONSENSUS

Here we study methods of achieving consensus frowned. Disapproved by the law. Why does
the law come to the assistance of victims of these improper methods?

Misrepresentation:

The law defined a misrepresentation as a false statement of a present or past fact. An

untrue statement concerning an existing fact or state of affairs.
• One contracting party must make the misrepresentation to another contracting
party.
• The misrepresentation must be unlawful.
• The misrepresentation must have induced the contract as it stands .
• The misleading party must be at fault in the sense that the misrepresentation
should have been made intentionally, negligently or innocently.

4.12. EFFECTS OF MISREPRESENTATION

Does not exclude consensus between parties and the contract is therefore not void. This means
that a valid contract arises. The contract is voidable at the instance of the deceived
party.

• Intentional Misrepresentation: Occurs if a false statement of a material fact is

made with the intention of inducing a contract, and if that statement is made
either in the awareness that it is false, or recklessly without regard to the truth or
falseness of the statement.
39
• Negligent Misrepresentation: Defined as false statements or a material fact,
which is made negligently and with the aim of inducing a contract.
Negligence will be assumed if a person makes a statement he/she believes to be true.

• Innocent Misrepresentation: If a false statement is made with the intention of

inducing a contract, but the party who makes the statement is neither fraudulent
nor negligent, the statement is referred to as an innocent misrepresentation.

4.13. DURESS

May be defined as an unlawful threat of harm or injury, made by a party to the contract or
someone acting on his or her behalf that causes the other party to conclude a contract.
• There must be actual physical violence or a reasonable fear of violence or damage.
• The threat must be of an imminent or inevitable evil.
• The threat of harm or violence must be unlawful.
• One contracting party against the other contracting party must exercise the
duress.
• The threat must cause the threatened person to conclude the contract.

4.14. UNDUE INFLUENCE

May be defined as any improper or unfair conduct by one of the contracting parties by means
of which the other contracting party is persuaded to conclude a contract.

• The party who has allegedly exercised the undue influence must have acquired an
influence over the victim.
• That party must have used his/her influence to weaken the victim’s ability to, so
that the victim will become susceptible.
• The influence must have been used unscrupulously to persuade the victim to
consent to a transaction the victim.
• Would not have entered into of his/her normal free will and which was to
• the victim’s disadvantage.

40
 On what grounds are contracts legally enforceable? A
contract with B to provide bricks at a cost price if B only buys
bricks from A. If B buys from another supplier, A is allowed to
cancel the contract. Is it a legal contract and is it enforceable?
Write short note on the following:
1.Misrepresentation
2. Duress.
3.Undue Influence
4.Mistake
5.Explain the special rules relating to offer & acceptance
6. Define option.

41
 TOPIC 5

CAPACITY TO PERFORM JURISTIC ACTS

On completion of the topic the learner must be able to:

• Understand the legal rights of a minor in different
situations and ages
• Marriage contracts/agreements

Study Chapter 5 in Henrich Schulze:2019

-

Capacity to act must be distinguished from legal capacity. According to the South African law
every legal subject, irrespective of whether s/he is a natural person (human being) or juristic
person (such as company) legally has the right to be the bearer of rights and duties. This capacity
is termed legal capacity, and the bearer of the rights and duties is referred to as a legal subj ect.
However, not every person who has legal capacity to act. The term capacity to act refers to the
capacity to perform juristic acts, to participate in legal dealings and to conclude a valid contract.
Only natural persons are potentially capable of having capacity to act. Juristic persons can never
be capable of performing juristic acts. Natural person must conclude a contract on behalf of the
juristic person.

5.1. LEGAL CAPACITY AND CAPACITY TO ACT

LEGAL CAPACITY CAPACITY TO ACT

The capacity to acquire and bear rights The capacity to
and duties. • Perform juristic acts
• Participate in legal transactions, and
Conclude valid contracts.

42
 All legal subjects have this capacity, Only natural persons have this
namely: capacity.
• Natural persons (human beings) Natural persons must act for juristic persons.
• Juristic persons (e.g. companies)

Exceptions:
• Natural persons with no c capacity to act
• Natural persons with limited capacity
act
• Reason for exclusion or limitation of
capacity to act: the law’s view of whether
the person can
• Form and declare his or her will Judge the
rights and duties (the consequences

Example of a person with full capacity to act

on his or her own:
An unmarried major.

5.2. FACTORS THAT DETERMINE A PERSON JURISTIC ACTS.

Unless the minor’s capacity is flawed for some reason other than his or her age. A
minor retains the acquired the acquired capacity to act even if the marriage is dissolved
before s/he reached the age of majority.
5.2.1 Age
Every person’s ability to form and declare a will, as well as the ability to appreciate the
consequences of a contract, is determined by his or her level of intellectual and
emotional development, which in turn is mostly determined by his or her age. While
for purpose of determined capacity to act, a distinction has traditionally been drawn
between three major age bands for persons, namely:

• Zero to seven years

• Seven to twenty-one years (the traditional age of majority) &
• Twenty-one years and older

The Children’s Act 38 of 2005, which came into operation on the 1 July 2007, states the
age of majority to be eighteen years. Note that only certain sections of this Act will
come into effect at the later stage when the Children’s Amendments act is passed by

43
Parliament. The age of majority in South Africa has thus been lowered to eighteen
years. This amendment was necessary to bring the age of majority in line with the
constitution and international instruments, which define a child as person under the
age of eighteen years. The lowering of age has thus affected the abovementioned
traditional distinctions and changed the last two age groups from seven to eighteen
years (see (b) above) and eighteen years older (see (c) above). These three bands and
the consequences of the contracts concluded by persons in each of the bands will now
be discussed. The law is set out as at present but reference is made to some important
sections of the Children’s Act which are not yet in operation and, in some instances
reference are made to previous position.

5.3 MAJORITY

In terms of Children’s Act 38 of 2005 a person or child becomes a major when he or

she reaches the age of eighteen years. Unless a person’s independent ability is in some
way flawed as results of some other factor (such as by mental deficiency), a person will
have full capacity to act when she or he reaches the age of majority.
Previously any person who has reached the age of eighteen years (remember the
majority age was then twenty-one years) might have applied to a High Court for an
order to be declared a major (in terms of the repealed Age of Majority Act). If such an
application is granted the minor acquire full capacity to act. It is not clear in terms of
the Children’s Act whether a person under the age of eighteen may apply to the court
to be declared as a major. But the Children’s Act provides that every child (or anyone
acting in the interest of the child) may bring, and be assisted in bringing, a matter to a
court provided that the matter falls within the jurisdiction of that court.

Only time will tell whether a person under the current dispensation. A minor obtains
full capacity to act, upon marriage.

5.4. MINORITY

A minor or child is any natural person who has not yet reached the age of majority.
Minors have either no capacity to act at all or they have limited capacity, depending
on their age. A distinction is drawn between minors or children who have not yet
reached the age of seven and those who are between seven and eighteen years old.
Minority is does not revive after it has been terminated.

5.5. THE MINOR OR THE CHILD UNDER THE AGE OF SEVEN YEARS

In terms of our law a minor under the age of seven has an insufficient level of
development to enable him or her to form a sound judgment of contractual
obligations. Such a minor has no capacity to act and can, therefore, not conclude any
contract or whatsoever. The minor under the age of seven is not even capable of
44
concluding a contract of which he or she acquires rights without incurring any
concomitant obligation and may, for example, not even accept an offer of a donation.
The law permits a guardian, who obviously must be a person with capacity to act, to
act on behalf of the minor.

5.6. THE MINOR OR CHILD OVER THE AGE OF SEVEN YEARS

Although a minor who is older than seven years has an independent intellect and can
therefore exercise an independent will, it is assumed that he or she does not possess
mature and sound judgment. In order to supplement this defective judgment, a minor
needs assistance from someone who has full capacity to act. The minor over the age
of seven therefore has limited capacity to act because he or she may normally perform
juristic acts only with the assistance of a guardian. The Children’s Act provides that a
parent or a guardian of a child must assist or represent the child in administrative,
contractual and other legal matters. Moreover, this Act provides that a parent or
guardian of a child must administer and safeguard the child’s property and property
interest. The guardian’s assistance may take the form of assenting and being present
at the conclusion of a contract or if it’s prior authorization or subsequent ratification.

How could a valid contract of purchase have come about if

Vicky aged nine, who has limited capacity to act, walks into a
café on her own and buys herself an ice cream?

Feedback
Vicky’s parents either gave her their permission in advance to
conclude the contract or they ratified (approved
retrospectively) the transaction.

5.7. SPECIAL SITUATIONS

• Contracts for which guardian’s assistance is insufficient: The consent must come
from the high Court or a specified person, must also be obtained.

• Tacit Emancipation: Minor has the capacity to conclude certain contract without
the assistance of his/her guardian. The consent may be given, expressly or tacitly.

• Contracts which the minor concludes without the necessary assistance in spite
of a limited capacity to act: concludes a contract without the necessary assistance
of the guardian, the contract is not necessarily void and without effect. A contract

45
 is binding on the minor if the guardian ratifies it before the minor reaches the age
of majority.

• Minor is liable: If the minor recklessly squandered the full amount, if the minor
bought a luxury item, if the minor used the money to provide essentials for which
the guardian normally would have to pay.

• Fraudulent Misrepresentation: If a minor in any form of conduct poses as a major

in a fraudulent manner and thereby induces a third party to contract with him/her,
the minor is liable on the contract as though he/she were in fact a major and had
the capacity to act.

FULL CAPACITY TO ACT LIMITED CAPACITYT TO ACT

Question of fact Question of fact

Minor has full capacity to act, except to: Minor has capacity to act, but only in respect
• Conclude a marriage. of:
• Alienate encumber immovable • Minor’s business (e.g.: photographer)
property. • Minor’s occupation (e.g.: student)

Guardian consents to the minors Guardian retains power relating to

complete freedom to decide about other areas of the minor’s life.
and to pursue his or her lifestyle and
way of earning and living .

What are the consequences if a minor concludes a contract without the assistance of his or
her guardian? We distinguish the following circumstances, indicated in the table below:

SITUATION CONSEQUENCE

The contract if ratified

- By guardian -Contract is valid – both parties are liable to
during once perform
minority he/she
- By ‘minor’
attains majority -Contract is valid – both parties are liable to
perform

46
 The contract is not ratified: - Contract is invalid, but contract has
- The other party has not yet certain consequences. Minor may claim
rendered performance. performance without rendering
- The other party has rendered own performance,
performance. but needs assistance of guardian to
claim performance. This assistance is ratification
by implication. Contract thus valid. Minor
consequently liable to perform. Other party now
has contractual defence that he or she need not
perform until minor has performed or offered to
perform.
-No contractual liability: Liability on
unjustified enrichment:
-Luxury items: Minor liable for what remains in
his or her possession when claim is instituted.
Necessities: Guardian is liable

5.8. MARRIAGE
• Has patrimonial consequences.
• Marital regime refers to marriages in and out of community of property.
• Agreements concluded prior to 1 December 1993 where the husband still had marital
powers.
• Certain agreements concluded by a spouse married in community of property.
• Agreements concluded by a spouse married out of community of property.

Agreements concluded prior to 1 December 1993 in cases where the husband had marital
powers. Without her husband’s consent, the married woman who was subject to her husband’s
marital power could not conclude contracts which imposed liabilities or duties on the common
estate, or jointly and severally on her or her husband’s separate estates.

5.9 WIFE HAS FULL CAPACITY:

1. In respect of the purchase of household necessaries

2. If she was a public trader

(a) The marriage is dissolved by divorce or death of one of the parties.

(b) The joint estate acquires the profits and bears the loss, which arise during the marriage.
(c) If the spouse whose consent is required withholds it unreasonable, or if any other case there
is good reason to dispense with consent, a High Court may on application permit the
transaction without the required consent.
47
Agreements concluded by a spouse married out of community of property.

• Parties to marriage may agree in an ante nuptial contract that their marriage will
be out of community of property. The contract must be concluded prior to the
marriage.
• The Matrimonial Property Act 88 of 1984 provides that spouses married out of
community of property, are advised to make pro rata contributions in accordance
with each one’s financial means, in respect of necessities for the common
household.

Mental Deficiency

If a person’s mental condition is such that he/she is not able to understand or appreciate the
nature of the consequences of his/her conduct at a level which is sufficient to enable him/her
to manage the particular affair and make rational decisions, it stands to reason that such a
person cannot form the necessary will to conclude a contract.

5.10. THE INFLUENCE OF ALCOHOL OR DRUGS

A person, who is such a state of intoxication caused by alcohol or drugs that he/she
does not appreciate the nature and consequences of his/her actions, or who is unable
to control the actions, is incapable of forming a will.

Prodigals

If by virtue, a person’s propensity to squander his/her own money in an Irresponsible and

extravagant manner, a person is called a prodigal.

Insolvency

A person’s capacity to act is not influenced merely by insolvency. However, if a person’s estate
is sequestrated, a person’s capacity to act will be influenced by certain provisions of Insolvency.
If insolvent, cannot conclude any contracts or agreements.
1. Differentiate the capacity to act from legal capacity.
2. Discuss factors that determines person’s juristic acts

3. Write a comprehensive essay on the relationship that

subsists within a legal marriage.

4. In what capacity can a mentally derailed person enter in to

contract

48
 TOPIC 6
POSSIBILITY OF PERFORMANCE

On completion of the above topic the learner must:

• Know the contracts contrary to law

• Explain the agreements contrary to law
• Understand the physical possibilities

Study Chapter 6 in Henrich Schulze:2019

Performance must be physically possible and contracts that are concluded must be
permissible if they are to be valid. You should be able to determine which contracts
and performances are illegal, unenforceable or impossible, what the consequences of
such contracts are and what remedies are available.

6.1 LEGAL POSSIBILITY

Legality refers to the state or quality of being legal; conformity to law, and resting upon, the letter
of the law.

A contract will be legally possible if law permits it. A contract will be unlawful when upon
conclusion the performance to be rendered, statute or common law forbids the reason for it.

6.2 CONTRACTS CONTRARY TO COMMON LAW

An agreement can be contrary to common law because it is legally impossible, or because it is

against good morals, or against public policy.

6.2.1 CONTRACTS, WHICH CANNOT BE LEGALLY EXECUTED

In general, it can be said that a contract cannot be legally executed if the rights and duties in
terms of the contract cannot be performed in accordance with general legal principles.

6.2.2AGREEMENTS THAT ARE CONTRARY TO GOOD MORALS

49
An agreement will be contrary to good morals of the community if the act itself and
the rights and the duties agreed upon, are contrary to the community’s perception of
what is proper and decent and in accordance with the conscience of the community.

6.2.3 AGREEMENTS THAT ARE CONTRARY TO PUBLIC POLICY

A contract will be contrary to public if it is harmful to the interests of the public

at large.
• Agreements involving the administration of justice
• Agreements involving crimes and delict
• Agreements affecting the safety of the state
• Agreements restraining a person’s freedom to participate in legal intercours e
Agreements restraining a person’s freedom to participate in commercial
intercourse.
• Gambling contract: Betting, gaming, gambling and wagering are mostly used as
interchangeable terms.

6.2.4. CONTRACTS CONTRARY TO STATUTORY LAW

Various contracts are contrary to statutory law because they are forbidden by an
Act of parliament, a provincial ordinance, or municipal regulation- usually because they are
considered to be harmful to society.

6.3. CONSEQUENCES OF UNLAWFUL CONTRACTS

An unlawful contract is normally void in terms of the common law. None of the parties
acquire any enforceable rights and duties from the contract. The effect of statutory
illegality has to be determined with reference to the words of the statute. Statutory
illegality will void a proposed contract if the legislature makes its intention plain by
enacting that contract in contravention of the prohibition shall be null and void

6.4 PHYSICAL POSSIBILITY

A contract is physical possible if the performance is possible as well ascertainable at

the time of the conclusion of the contract. It would be impossible to perform
something which has not been determined and which is not determinable.

50
 Shivani sells a dining room suite consisting of a table, six chairs and a
sideboard to Estelle. The suite actually belongs to John, Shivani’s
previous husband.

Answer the following questions and give reasons for each of your
answers:

1. Is the contract between Shivani and Estelle valid in the light of

the fact that Shivani does not own the suite?
2. Suppose that, on returning home, Shivani finds that her father
had burned the suite spite John, even before

Shivani concluded that contract with Estelle. What is the status of

the contract now?
3. Suppose that Shivani arrives home after her father has only
thrown

Feedback:

1. The contract is not invalid because it is simply subjectively

impossible to perform. Objectively it is physically possible
to perform because Shivani can always buy the suite from
John in order to meet her contractual obligations. Failing
that, she commits breach of contract.
2. In this case performance would be objectively physically
impossible and the contract would be invalid
3. The dining room suite is physically divisible into the
sideboard, the table and the chairs. This does not,
however, necessarily mean that the law views the dining
room suite as a divisible performance. If the law does view
the performance as divisible, a valid contract comes into
being, and the performance is that part of the divisible
performance, which is still possible if the law does not view
the performance as divisible, the contract is null and void.
So, it is necessary to determine whether the dining room
suite is legally divisible performance. One way of
determining whether the performance is indivisible is to
see how the price is expressed. If the price of the suite of
R5, 500, the performance might not be divisible but if the
price is set at R1 000 for the table, R1 500 for the sideboard
and R500 for each of the chairs,

Objective Possibility to Perform

51
It must be physical possible to render the performance to which the parties have
committed themselves. Performance will be physically impossible if, at the moment of
concluding the contract, it is objectively impossible to render performance as valid
contract arises.

Determined and Ascertainable Performance

It is impossible to perform in terms of an agreement where the nature of the performance is

unclear and ambiguous, for instance when the performance is either not determined or
not ascertained.

The determined performance:

The performance will be determined if the parties expressly mention the performance in them
agreements.

The ascertainable performance: at the time of concluding the contract, the parties
agree on a criterion or a formula to identify the performance or if they agree that a
specified person will determine the performance.

A. The alteration obligation: exists where a party may select the

performance, which is due from two or more different alternative.

B. The generic obligation: is determined by describing a kind of commodity in terms

of number or mass. The valid determination of performance must contain
• The kind of commodity from which the selection must be
made
• The method of selection, be it according to mass or measure
• The party who must make the selection.

When can a contract be unlawful?

1. Justify gambling as a lawful contract.

2. What are the consequences of unlawful contracts?

3.Differentiate between subjective and objective possibility to
perform.

52
 TOPIC 7
FORMALITIES

On completion of the topic the learner must be able to:

• Explain what is meant by compliance with formalities
• Understand the requirement of formalities for the formation
of a valid contract
• Know the effect of ante nuptial contract between two
persons and other persons
• Explain why the contract has to be reduced to writing for it to
be valid, and reduction of contract
Study Chapter 7 Heinrich Schulze:2019 P99-102

The final factor to be taken into consideration in determining whether a valid contract
has come into existence is whether compliance with any formalities is prescribed for
the formation of a particular type of contract. Formalities are those requirements
relating to the outward, visible form in which the agreement must be cast in order to
create a valid
contract.

7.1 THE GENERAL RULE: NO FORMALITIES REQUIRED

As a general rule, no formalities are needed for the formation of a valid contract. Contracts
may be entered into
• Through spoken words
• Through written words
• Through conduct only
Most contracts are formed orally or by conduct. Think of shopping at a supermarket. In the
example concerning a lease given in the textbook, Anna’s
formal letter or informal note would contain an offer in written words, and her oral offer to
Bob
may be, ‘Hello, I’d like to hire this house form you for R 2000 a month.

Bob could accept in a formal letter or an informal note (written words), or, if he is a
man of few words, he could merely nod his head or hand over the house keys to
Anna (conduct)Some aspects of the contract may be agreed to orally or through
conduct, and some may be agreed to in writing. For example, Bob could hand Anna
a note about who is to be responsible for maintaining which parts of the house and
garden, and then hand Anna the keys to the house.
• No formalities are required

53
• In the majority of cases an informal contract is binding and contract are validly concluded
without the observation of any formalities.
• Normally parties are free to choose the way in which they wish to create a contract, and
they may at conclude the contract in writing, orally or tacitly.

7.2 CONTRACTS WHERE FORMALITIES ARE REQUIRED

Formalities Required by Law: aimed at preventing fraud and most contracts must be reduced
to writing and should be signed in order to be valid.
A. Contracts for alienation of land: no contract for alienation of land is valid unless
it is contained in a contract of alienation, which is signed by the parties to the
contract.
B. Contracts of Surety ship: valid only if it is in writing and signed by the parties.
C. Contracts of donation: in terms of which performance is due in the future:
a contract of donation under which performance is due, is valid only if the terms are
inserted and
written in the contract and signed

There are some exceptions to the general rule that no formalities are required. They are
discussed below.

TYPE OF PRESCRIBED FORMALITIES CONSEQUESNCE OF

CONTRACT BY REQUIRED NON-COMPLAINCE
Alienation of land Alienation of 1.Contract of alienation Invalid but deemed to
(sale, exchange, Land Act 68 of be valid if both parties
donation 1981 2.Signed by parties or have fully performed and
their agents transfer to the new
owner has occurred.
3.Agents must have
written instructions

Suretyship General Law 1. In writing Invalid

Amendment 2. Signed by or on behalf
Act 50 of of surety
1956 Surety may orally authorise
agent to sign on his or her
behalf
Contracts of General Law 1. In written document Invalid
donation in which Amendment Signed by donor or
performance is due Act 50 of someone on his or her
in future 1956 behalf

54
 2. Donor must give written
authorisation to the
person to sign on his
or her behalf
3. Authority must be
granted in presence of
two witness
Ante nuptial Deeds Must be registered Invalid against third
contracts Registries Act parties;
47 of 1937 nevertheless, valid
between parties to
contract.

7.3 FORMALITIES REQUIRED BY THE PARTIES

Apart from the instances where the legislature requires compliance with certain
formalities to create a valid contract, it sometimes happens that the contracting
parties themselves prescribe formalities.

Marriage in community of property versus the ante nuptial contract

One of the biggest decisions a person can make in his or her life is what matrimonial
regime they should follow when getting married (just ask Paul McCartney).
If you get married in community of property, at the time of dissolution of the
marriage the parties as a general principle split the assets equally, as well as the
debts. The danger with getting married in community of property is that a creditor
of one party can sue the other party if need be.

Should you get married with an ante nuptial contract your separate assets will be
protected in the event of a creditor suing your spouse for monies owed. One must
distinguish between getting married with the application or the exclusion of the
accrual system.

Should you decide to get married with the application of the accrual system a
contract will be signed wherein each spouse sets out the net commencement value
of his or her assets. Should your net commencement value be nil?

At the date of dissolution of the marriage it is R1 million your spouse will be entitled
to half of the accrual, which in this case is R500,000.00. A party is entitled to exclude
any assets which he or she chooses from the accrual e.g. If you own a house before
you get married, you may specifically exclude this from the accrual so that at time of
dissolution of the marriage your spouse has no claim to it. Should you get married
55
with the exclusion of the accrual system, this would basically mean that your spouse
is not entitled to claim any of your assets at dissolution of the marriage and vice
versa.
The accrual system only came into being in 1984 and all marriages with an ante nuptial contract
prior to 1984 would therefore be with the exclusion of the accrual system.

The costs involved in having an ante nuptial contract drafted would vary from attorney
to attorney and could be anything up to R2000,00. It would be money well spent to
consult an attorney prior to getting married for advice on a suitable matrimonial
regime.
Couples should consider getting married with the application of the accrual system,
as it is often the fairest way to get married. It is similar to being married in community
of property but it also offers an individual protection against the creditors of his or
her spouse.

56
 SAMPLE OF AN ANTENUPTUAL AGREEMENT
It is hereby certified that a R10.00 stamp is affixed to the original contained in my protocol
register.

PROTOCOL NO:
ANTENUPTIAL CONTRACT
with the
APPLICATION OF THE ACCRUAL SYSTEM
in terms of the
MATRIMONIAL PROPERTY ACT, 1984
BE IT HEREBY MADE KNOWN

THAT on this day of

2019 before me:
(INSERT NAME OF NOTARY PUBLIC)
Notary Public, practising at Pretoria in the Province of Gauteng appeared

FULL NAME: IDENTITY NUMBER:

UNMARRIED
-and-
FULL NAME: IDENTITY NUMBER: UNMARRIED

And the appears declared that whereas a marriage has been agreed upon, and is
intended to be solemnised between them, they have agreed and now contract
with each other as follows:

1. That there shall be no community of property between them.

2. That there shall be no community of profit or loss between them.
3. That the marriage shall be subject to the accrual system in terms of the provisions of Chapter
1 of the Matrimonial Act, 1984 (Act No. 88 of 1984).
4. That for the purposes of proof of the net value of their respective estates to be as follows:
that of (INSERT FULL NAME) to be R 000.00 consisting of:
1.) (INSERT DETAILS)

that of (INSERT FULL NAME) to be ZERO

5.) That the assets of the parties or either of them, which are listed hereunder,
having the values shown, and all liabilities presently therewith, or any other asset
acquired by such party by virtue of his possession of former possession of such
asset, shall not be taken into account as part of such party’s estate at either the
commencement or the dissolution of the marriage.

The assets of (INSERT FULL NAME) so to be excluded are R000.00 consisting of:
57
 1.) (INSERT DETAILS)
The assets of (INSERT FULL NAME) so to be excluded are NONE

THUS DONE AND EXECUTED at aforesaid

AS WITNESSES:

1._ 2. _

FULL NAME AND SURNAME FULL NAME AND SURNAME

on the day, of month and year

first
FULL NAME AND SURNAME

AS WITNESSES:
1._

FULL NAME AND SURNAME FULL NAME AND SURNAME

2._

FULL NAME AND SURNAME

A forewritten in the presence of the undersigned witnesses.

Explain the general rule concerning the formalities

1. What are the contracts where formalities are required?
2.Distinguish between marriages in community of property
versus the ante nuptial contract

58
 TOPIC 8
TERMS OF THE CONTRACT

In completion of the topic the learner must be able to:

• Explain the meaning of the word term
• Explain and précis the different types of terms
• Differentiate between Essentialia, Naturalia, Incidentalia

8.1 THE TERMS

Term is a general word, which covers all the specific provisions. A term in a contract
is a provision which imposes on a contracting party, one or more contractual
obligations to act in a specific manner or to refrain from performing a specific act, or
which qualifies the contractual obligations. Terms, which are statements made
seriously and deliberately with the intention that they should be enforceable in law,
must be distinguished from statements regarding the contract made with no intention
that it should have legal consequences.

A. press Terms: The contract parties may incorporate terms into their contract by
means of articulated declarations of intent. A term is articulated if it is expressed
in so many words, whether in writing or orally.
B. Tacit Terms: A tacit term is a term, which has not been expressed in words but is based on
the party’s true intention, or their intention as imputed by the law. The court from the
expressed terms and surrounding circumstances, which can include the recognition of terms
customarily or observed in a specific trade, infers a tacit term.

Implied Terms: An implied term is also a term, which has not been expressed in words
and can be incorporated into the contract by the operation of law. Terms can also be
implied by trade usage if it is so universal and notorious that a party’s knowledge and
intention to be bound by it can be presumed.

8.2 ESSENTIALIA, NATURALIA AND INCIDENTALIA

Essentially: are those terms, which are essential for the classification of a contract as
belonging to a particular class or category of contract.

Naturalia: are terms, which the law attaches to every contract of a particular class.
Naturalia helps to determine the rights and duties of contracting parties and their
effects and consequences of their contracts.
59
Incidentalia: Once parties have agreed upon the essentialia of a particular type of contract,
such a contract has been concluded in bare outlines. Further details must usually be
provided.

Naturalia may fulfil this function, but if contracting parties have special requirements; additional
terms may be inserted. These additional terms
are referred to as incidentalia. E.g. Allowance for certain time for paying money due.

8.3 THE CONDITION

1. Often used to refer to what in reality is the all-inclusive concept term.

2. Is a particular kind of term and does not include all the terms generally found in contracts?
3. A condition can be described as a contractual term, which renders the operation and
consequences of the contract dependent on the occurrence, or non-occurrence, of a
specified uncertain future event.
4. Events must be specified and must be uncertain.

The Suspensive Condition

Is a contractual term, which suspends the operation of the contractual obligations in terms of
the contract until the condition has been fulfilled? The contractual relationship is dissolved
and neither of the parties has an obligation
towards the other. The contract is suspended and never comes into operation because the
condition is not fulfilled.

The Resolutive Condition

1. Is a contractual term, which renders the continued existence of the contract dependent
on the occurrence of a specified uncertain future event?
2. If an agreement contains a resolute condition a binding contract comes into existence
when the contract is concluded.
3. If the condition is fulfilled the contract is dissolved and the contractual rights and duties
cease to exist.
4. If parties have already performed in terms of the contract prior to fulfilment of the
condition and the contract is therefore dissolved after performance has been rendered
each party usually has to return whatever he/she has
received in terms of the contract.

60
8.4 THE TIME CLAUSE

The time clause must be clearly distinguished from the condition. Contrary to a condition
where a contract comes into operation or is dissolved upon the occurrence or non-occurrence
of a specified uncertain future event, the time clause is brought into operation by the reaching
of a certain determined or ascertainable time, which has been agreed upon.

The time clause determines a specific time when or the period within which the contract will
either become operative or be dissolved.

The Suspensive Time Clause

The contract is subject to a suspensive time clause if the duty to perform is postponed until a
determined or ascertainable moment has arrived. The consequences o 69f a suspensive time
clause is that the contract comes into being
when it is concluded, and the parties are bound to the obligations, but the rendering of them
performances in terms of the contract are postponed until the moment has arrived or when the
period has lapsed

Activity:
John agrees with his wife Mary that he will buy a car on condition that she
obtains a Diploma. Is this condition suspensive or reclusive?
Feedback:
This is a suspensive condition. There is a valid contract but its operation is
suspended until Mary obtain the Diploma.

The Resolute Time Clause

The contract is subject to a resolute time clause if the parties agree that the obligations flowing
from the contract will have effect only until the arrival of a certain moment or until the expiry
of a certain period of time.

8.5 THE SUPPOSITION

A contractual term, which renders the existence of the contract dependent on an event, which
has already taken place, or on a state of affairs, which exists at the time concluding the
contract, is known as supposition. Contracting parties will include a supposition when they
are uncertain whether a specific situation exists or existed, and they only wish to contract if it
in fact exists or existed. If a contract rests on a supposition, contractual obligations come into
being only what is supposed indeed exists or existed.

61
 Activity:
Praveen is a collector of old books. He is missing one volume of a valuable set. At and
exhibition he comes across one volume but is unsure whether it is the volume he needs to
complete his set. How would you advise him to formulate the contract of sale?
Feedback:
Praveen should make the purchase subject to the supposition that his is the specific
volume that is still missing from his set. In this way he can insert his reason for purchasing
the book in contract. If it turns out that the specific book is not the volume he is seeking,
the supposition has not been met and the contract of sale does not come into being. If it
is the volume concerned the obligations stemming from the contract arise.

8.6 THE WARRANTY

A warranty is a contractual term whereby a contracting party accepts absolute responsibility

for proper performance relating to the absence of defects in the warrantor’s product or
service, or to the possibility that the warrantor is able to render the performance, or to the
quality or standard of warrantor’s product or service, or to the quality of the performance.

8.7 THE MODUS

Modus is a contractual term, which burdens a contracting party’s right to the performance
made to him or her terms of contract. The burden can be to perform as against a third party,
or to do something, or to refrain from doing something. The burden will always relate to
something that has to happen in the future.

8.8 THE CANCELLATION CLAUSE

The cancellation entitles a contracting party to cancel the contract summarily if the other party
is in breach of contract. If such a term is included in the contract, the party in whose favour
the cancellation clause is stipulated can cancel the contract without more ado as soon as the
other party breaches the contract. It is unnecessary to send a letter of demand or a notice
warning the other party of the intended cancellation of the contract.

8.9 PENALTY CLAUSE

The law, and more particularly common law, attached certain consequences to breach of
contract by affording certain remedies to the innocent party. Depending on the type of breach
committed, the innocent party can claim execution of the contract, or cancel the contract,
and/or claim damages. The obligation imposed by a penalty clause usually consists of the
payment of a sum of money.

Basic Benefits which penalty creditor derives from the penalty clause are the off:
1. The penalty is recoverable merely on the ground of the debtor’s breach of contract.

62
2. The extent of the penalty is predetermined.

8.10 THE FORFEITURE CLAUSE

A party, who is entitled to cancel or rescind a contract in certain specified circumstances, will
normally, be entitled to restitution as well. The right to restitution entitles the party who cancels
or rescinds the contract claim the return of everything he/she has already performed in terms
of the contract.

8.11 THE ROUWGELD CLAUSE

Is a one that contains terms that a person can withdraw from the Contract upon payment of a
sum of money. A rouwgeld clause must be clearly distinguished from a penalty clause.
Whereas a penalty clause becomes operative only in the event of breach of contract, the
rouwgeld is no way connected to the breach of contract. If the clause relates to a contract of
sales, it is called rouwkoop clause. E.g. Sale of land

8.12 ENTRENCHMENT CLAUSES

A contractual term, which provides that the agreement may be altered only by means of a
written amendment, is known as an entrenchment clause.

Define the following:

• Essentialia, naturalia, incidentialia.
• Express terms, tacit terms, and implied terms.
• Suspensive condition & resolutive condition
• The time clause
• Warranty
• Modus and penalty clause.

63
 TOPIC 9

INTERPRETATION OF THE CONTRACT

On completion of the topic the learner must be able to:

• Know the content of a contract
• Must be able to explain the parole evidence or
integration rule
• Understand rectification

Study Chapter 9 in Heinrich Schulze:2019 P117-121

9.1 CONTENTS

The content of a contract consists of the terms incorporated into that contract by the parties.
These terms can be incorporated orally, tacitly or in writing.
Where parties verbally or tacitly agree on the promised performance, the content is evident
from their words and conduct.
Where the agreement is in writing, the content of the contract is generally determined from the
document.
Where the written has been signed the signature usually bound by the ordinary meaning and
effect of the words.

9.2 PRINCIPLES OF INTERPRETATION

(a) In principle there is no difference between contracts concluded in writing, orally or by

conduct.
(b) Apart from specific exceptions where compliance with formalities is required, the validity of
a contract is not affected by the manner of its creation.
(c) The same interpretation can usually be applied when interpreting all contracts, irrespective
of the manner of conclusion.
(d) Rules:
1. It is accepted that the parties normally use words in their ordinary grammatical meaning.
2. After ascertaining the literal meaning of the words or phrase, note is taken of the context in
which the words are used, the contract as a whole and surrounding circumstances.
3. If any uncertainty or ambiguity remains with regard to a word or a phrase, the courts
sometimes interpret the clause against the party who was responsible for its drafting.
64
4. The law also uses various presumptions. One such resumption is that the parties intend their
agreement to be valid and enforceable.
5. When a contract is reduced to writing the parole evidence rule is brought into operation.

9.3 THE PAROL EVIDENCE OR INTEGRATION RULE

The parole evidence rule is that where the record of a transaction is embodied in a document,
extrinsic evidence is not generally admissible to vary or interpret the document or as a
substitute for it.

Where agreements are involved or where there is a likelihood that a difference of opinion
might arise with regard to the exact terms of the contract, the terms of the contract are
often recorded in writing so as avoid or minimise arguments about the content of the
contract. The fact that the agreement is reduced is reduced into writing brings the parole
evidence into operation, irrespective of whether the eventual document is the outcome of
extensive negotiation and consultation, or whether it is a standard-form contract which a
consumer signed without even having looked at its terms.
The effect of this rule is that once a contract has been recorded in writing and the written
contract purports to reflect the whole contract on a particular subject matter, a contracting
party will not be allowed to submit evidence in the form of agreement reached before or
simultaneously with the conclusion of the integrated written agreement. It is clear that the
rule will, inter alia, not apply in the following instances. It does not affect evidence of an
agreement concluded subsequently to the written contract, even if it varies or contradicts
the written contract, and even if it makes additions to or exclusions from the written
contract. It does not prohibit the evidence of, for instance, prior inducing agreements where
the terms of the earlier document do not contradict, alter, add to or vary the terms of the
integrated written agreement.
As the rule only extends to extrinsic evidence, which tends to contradict the terms of the
integrated written agreement.

9.4 RECTIFICATION

As a result of the operation of the parole evidence rule the parties will not be able to submit
extrinsic evidence, which is in conflict with the terms of the integrated in written contract.
The law allows rectification of the document in order to bring the document in line with the
intention of the parties.
How can a contract be interpreted?
Give a clear explanation of Parole Evidence.
Rectification discloses and covers what in a contract.

65
 TOPIC 10
BREACH OF CONTRACT

On completion of the topic the learner must be able to:

• Differentiate between DEBTOR & CREDITOR
• Know the different types of breach of contracts
• Differentiate between MORA DEBITORIS & MORA
CREDITORIS

Study Chapter 10 in Heinrich Schulze:2019 P123-129

10.1 FORMS OF BREACH OF CONTRACT

The primary focus when creating contracts is their fulfilment or discharge by proper
performance. Where the intended result is not achieved as a consequence of the fault by one
of the parties, that party commits breach of contract.

The table below indicates the forms of breach of contract and which party may be responsible
for a particular kind of breach of contract:

CAN BE COMMITTED BY CAN BE COMMITTED BY

TYPE OF BREACH DEBTOR CREDITOR

Default of the debtor √ X

Default of the creditor X √

Positive mal- performance √ X

Repudiation √ √

Prevention of √ √
Performance

66
There are five different forms of breach of contract:

(a) Default by the debtor

(b) Default by the creditor
(c) Positive mal-performance
(d) Repudiation
(e) Prevention of Performance

Default of the Debtor

• A debtor commits breach of contract in the form of default of the debtor, also referred to
as Mora debtors, if he/she does not perform upon/as the agreed time, and the delay is
due to the debtor’s fault. It is then said that the debtor is Mora or in default
• There are two requirements that must be met:
(a) Performance must be delayed. In the case of default of the debtor, the latter is only late
with his or her performance. If, any other way, the debtor’s obligations are not honoured.
(b) The delay must be due to the debtor’s fault. There can be breach of contract only if a party
to a contract culpably; either internationally or negligently, does not honour his/her obligation.
There, is for instance, no breach of contract where the debtor cannot perform timorously
owing to bad fortune or circumstances beyond his/her control.

(b)The consequences of the debtor’s fault

Default of the debtor entitles the creditor to the remedies for the breach of contract, to be
discussed later. In addition to this, it also has an effect on liability of debtor should
performance become impossible while he/she is Mora. As a general rule, supervening
impossibility of performance extinguishes the obligation, releasing the debtor from the duty
to perform.

10.2 DEFAULT OF THE CREDITOR

Default of the creditor, or Mora creditors, as it is also referred to, occurs where the creditor
causes the debtor’s performance to be breach of contract, which can occur only where
discharge of the debtor’s obligation involves a bilateral juristic act, that is, where the creditor’s
co-operation is required for the debtor to be able to render performance.
Requirements are as follows:
(a) The performance must be dischargeable. The performance owing to the creditor must be
dischargeable in terms of an existing and valid obligation and must be physically and legally
capable of being discharged.
(b)The debtor must tender performance. The debtor must offer proper performance as
specified in the contract and must call upon the creditor to co- operate.

67
 (c)The creditor must fail to give his/her co-operation and thereby delay performance. As in
the case of more debtors the performance should merely be delayed and it must still be
possible for the debtor to perform at a later stage.
(d)The default must be due to the fault of the credit or delayed. Mora creditors are a form of.

You will recall that, in the law of contract (and thus also in respect of breach of contract), we
refer to the party who has certain obligation in terms of the contract (that is the party who has
to perform), as the ‘debtor’, and to the party who has the corresponding right to receive that
performance, as the ‘creditor’. At times it is important not to confuse the legal meanings of
‘debtor’ and ‘creditor’. With meaning of debtor and creditor as accounting entry.

THEREFORE THEREFO
DUTY RESTS ON CALLED RIGHT HELD BY RE CALLED

To pay The The debtor To receive The seller The creditor

purchase purchaser the purchase
price price
To transfer The seller The debtor To receive the The The creditor
the merx merx purchaser
To preserve The seller The debtor To receive the The The creditor
the merx merx in same purchaser
until delivery condition

To The seller The debtor Not to be The The creditor

protect evicted purchaser
the buyer
against
eviction
To deliver the The seller The debtor To receive The The creditor
merx free the merx free purchaser
from latent from latent
defects defects

In reciprocal contracts (e.g. a contract of sale) both parties are simultaneously obligated to
perform and entitled to performance that is both parties are simultaneously debtor and creditor
but in respect of different performances (as the table below shows).

10.3 RIGHTS AND DUTIES (OBLIGATIONS) IN A CONTRACT OF SALE

As the table shows, the same transaction between the parties (e.g. a sale) may create several
different rights and duties. In the context of breach of contract, it is always important to start by
ascertaining which performance obligation gave rise to a ‘problem’ and then to decide whether
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it is the debtor or the creditor in respect of the performance, who is responsible for the
problem (breach of contract)The consequences of the creditor’s default When a creditor is
in default, the following consequences arise: The debtor’s duty of care is diminished if the
creditor is in Mora; the debtor is responsible only for intentionally loss and loss occasioned by
gross negligence.
In the case of reciprocal agreements, the debtor remains entitled to the performance due to
him/her.

The creditor’s Mora may thus not be used to escape from his or her obligation to perform.
Should the performance become impossible other than through intention or gross negligence
while the creditor is in Mora, the debtor is released from the obligation to perform.

If the debtor is in Mora, it is removed by the subsequent default of the creditor. Default by one
party is always extinguished if the other party subsequently falls in Mora, since these two forms
of breach of contract cannot exist alongside each other in respect of the same obligation.

Positive Mal-performance

Positive mal-performance is that form of breach of contract, which occurs when the debtor
commits an act, which is contrary to terms of the contract. Performance can be that a person
must do something or that he/she refrains from doing something.

(a) The debtor tender’s defective or improper performance

(b) Debtor does something he/she may not do in terms of the agreement.

10.4 REPUDIATION

As a form of breach of contract is understood as any behaviour by a party to a contract

indicating that he/she does not intend to honour the obligations under the contract. A party
can behave in this way with regard to all his/her obligations in terms
of the contract.

Repudiation already constitutes breach of contract, entitling the innocent party so the usual
remedies for breach of contract.

Prevention of Performance

Prevention of Performance by the debtor:

The debtor commits breach of contract in the form of prevention of performance where
he/she culpably renders his/her own performance impossible. In this case the debtor is not
released from the obligation to perform. Because the debtor can no longer perform as agreed,
he/she will be liable for damages in lieu of performance. Prevention of performance by the
creditor. The creditor who culpably renders the debtor’s performance impossible commits
69
breach of contract in the form of prevention of performance. Where performance has become
impossible through the fault of the creditor, the debtor will be deemed to have discharged
his/her obligation.

• What is breach of contract?

• Describe mora
• What is a material breach of a vital term of a contract
and its consequence?
• Clearly state and define the basic five forms of breach of
contract.

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 TOPIC 11

REMEDIES OF BREACH OF CONTRACT

In completion of the topic the learner must be able to:

• Discuss the remedies for breach of contract

• Indicate in which circumstances the remedy of
cancellation will be available
• Set out the principles used in determining damages

Study chapter 10 in Henrich Schulze: 2019

-

11.1 DIFFERENT REMEDIES

The following diagram shows the different remedies for Breach of contracts:

Where one party to a contract commits breach of contract the rules of the law of contrary
protect the innocent party’s personal rights and grant him/her redress in the form of a legal
remedy, which can be enforced through an action in a court of law. The legal remedies at the
disposal of the innocent party are execution of the contract, cancellation of the contract, and
damages.

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11.2 EXECUTION OF THE CONTRACT

The remedy of execution of the contract is the obvious remedy for breach of contract, since it
attempts to achieve the same result as was intended originally by the parties, or a result that
is as close as possible to that.

Three possibilities are:

(a) An order for specific performance

(b) An order for reduced performance
(c) A prohibitory interdict

Orders for specific performance

An order for specific performance is a court order, which commands a contracting party to
render the performance he/she has undertaken to render. However, such an order will not be
made against a person whose estate has been sequestrated, since it may be prejudice to the
other creditors. An order for specific performance also cannot be granted where performance
is no longer possible, since the law cannot force anybody to do the impossible.

Orders for reduced performance

In certain circumstances the court will order a contract party to render a reduced performance.
This can happen if the other contract party has rendered performance, but his performance is
defective or incomplete. In principle incomplete performance by one party would entitl e the
other party to refuse to render his/her counter performance. The principle of reciprocity
means that the plaintiff can claim the defendant’s performance only if she/he has performed
or is willing to perform. The court grants plaintiff an order for reduced performance only if he
has proved the following:
(a) That the defendant is using the defective performance
(b)That the circumstances are such that it would be equitable for the court to exercise its
discretion in favour of the granting of such an order, What the reduced contract price should
be, that is, the contract price less the amount required to bring the performance up to the
required standard.

Prohibitory Interdicts

Should a party do something he/she may not do in terms of the contract, or threaten to act in
this manner, the other may apply for an interdict to end or prevent such conduct.

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11.3 CANCELLATION

Cancellation is an abnormal remedy for breach of contract; because the consequence is that
the parties do not accomplish that which they originally agreed upon. Since it is a general
principle of our law that persons should be bound by their contracts, this remedy is not
necessarily available in every case of breach of contract. The contract does not contain a
cancellation clause; the innocent party would be entitled to cancel the contract only if the
breach of contract is material that is of, serious nature.

Cancellation and Default of Debtor

(a) Specific date for performance and tacit term that timely performance is essential
(b) Notice of intention to cancel
(c) Cancellation clause

Cancellation and default of the creditor

(a) Specific date for performance and tacit term that timely performance is essential
(b) Notice of intention to cancel
(c) Cancellation clause

Cancellation and Defective performance

(a) Material breach of contract

(b) Cancellation clause

Cancellation and repudiation of the contract

(a) Material repudiation

(b) Cancellation clause

Cancellation and prevention of performance

Prevention of performance by the debtor always entitles the creditor to cancellation, since
execution of the contract is no longer possible.

The act of Cancellation

The innocent party always has the choice of the claiming execution of the Contract, but if
performance has been made impossible, he or she will have to be content with damages in lieu
of performance. The right of cancellation must be exercised within a reasonable time after the
innocent party has become aware of the other party’s breach of contract. If the innocent party
73
has not cancelled the contract within reasonable time the assumption could be made that this
remedy has been waived.

The consequences of cancellation

The major consequences of cancellation are the termination of the obligations.

If neither of the parties has performed, both of them are relieved of their obligations to perform.
If restitution has become impossible, the party who is Cancelling the contract is relieved of the
duty to return the performance which has been received, as long as the impossible; the party
has to return that which is left.
It is fair to assume that when parties conclude a contract, they have its fulfilment in mind. In
general, therefore, the policy of the law is to regard the fulfilment of contractual obligations
highly. One of the remedies, which the Law puts at the disposal of the innocent party where
he/she has suffered loss as a result of the breach of contract of the other party, is damage.

Patrimonial Loss

The mere fact that one of the parties as committed breach of contract does not Mean that the
other party has necessarily suffered loss.
(a) The financial position the plaintiff would have been in if the contract had been carried out
and breach of contract had not occurred
(b) The Plaintiff actual financial position.
This is in contrast with negative interest which applies when the injured party has to be placed
in the position he/she would have been in had the agreement never been entered into.

Causal Connection between Breach of Contract and Loss

The breach of contract must have caused the loss or, put differently, the loss must have been
a consequence of the breach of contract.

Foreseeable Loss

In some circumstances the defendant will not be liable for the patrimonial loss of the other
party, despite the fact that it resulted from the breach of contract by the defendant.

The duty to mitigate damages

The defendant will not be held liable for loss, which the injured party could have limited
by exercising reasonable care.

The proof of loss and calculation of damages

As it has already been shown, the loss to the innocent party who has been the
74
‘victim’ of the defendant’s breach of contract consists of his/her positive interest, namely the
difference between the value his/her patrimony would have had, had the contract been
carried out and the actual value of his or her patrimony at the time of the breach of contract.
Examples:
(a) Where the contract is a contract of sale in respect of a marketable commodity and the
merx is not delivered on time, the damage is usually expressed, as the difference
between the contract price and the market value of commodity at the time and place
performance should have occurred.
(b) In the event of failure to discharge a money debt, interest is awarded as damages,
calculated from the due date for payment.
(c) In the case of the defective execution of a piece of work, the amount which it would
cost to repair the defect, or the amount which it would cost to have the work done be
somebody else, may be awarded as damages.

• What are the remedies for breach of contract?

• Explain the cancellation of the contract
• What are damages

TOPIC 12
TRANSFER AND TERMINATION OF PERSONAL RIGHTS

In completion of the topic the learner must be able to:

• Describe the transfer of personal rights by way of cession.
• Explain the different ways in which personal rights may be
terminated.
• Differentiate between initial impossibility of performance
and prevention of performance and supervening
impossibility of performance.

Although personal rights can be terminated in various ways, they can be transferred in one
way, namely by way of cession. Cession will now be discussed and thereafter the ways in
which obligations can be terminated.

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12.1 CESSION

Refers to surrender, relinquishment, or assignment of territory by one state or government to

another. It also means the formal giving up of rights, property, or territory, especially by a
state. The transfer of a right by agreement is known as a cession. The person who transfers
the right is called the cadent, and the person to whom it transferred is the cessionary. Cessions
of rights may be affected freely.

Cession is affected without formality. The parties can make clear their intention to cede by
any means, be it orally or by delivery of the document evidencing the right.

The Consequences of Cession

(a) The right now forms part of the patrimony of the cessionary and not of that of the cadent.

(b) The cessionary alone has the right to collect the debt.

(c) Once the cadent has ceded his/her claim to one person, it can no longer be ceded to another
person.

(d) After a cession, the debtor can no longer perform validly to the cadent.
However, if the debtor pays the original creditor in good faith, the debtor is released from
his/her liability.
(e) The claim is transmitted to the cessionary in its entirety together with all benefits and
privileges such as security or interest.

The cessionary also receives the right with all the disadvantages attached to it. The following
scheme shows eight ways in which personal rights may be terminated

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 12.2 DISCHARGE

The primary purpose in creating contractual obligations is that they should be fulfilled by due
and proper performance, which will then also bring the legal relationship between the
parties to an end. Performance of an obligation undertaken is called discharge and is the
natural way in which a contractual relationship is terminated.
1. A discharge can be either a bilateral oral / unilateral juristic act.
2. Where the debtor’s obligation is of such a nature that he/she needs the creditor’s
cooperation for fulfilment.
3. A bilateral contract is discharged in full only when both parties have compiled with their
respective obligations.
4. Performance must take place as against the creditor or his or her representative who must
authorize to receive performance.
5. The parties can of course also agree that the debtor will perform to third party.
6. A cherub is not legal tender, and is only acceptable if it can be proved that the creditor
accepted the cherub.

IF THE DEBTOR FAILS TO MAKE AN ALLOCATION:

(a) Interest is paid before capital.
(b) Due debts are paid before debts which have not yet fallen due.
(c) Onerous debts, for example debts secured by means of a mortgage bond, have preference
over non-onerous debts.
(d) Old debt has preference over new debts.

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12.3 RESCISSION AND CANCELLATION

The term rescission is used to refer to the act of withdrawing from a contract due to reasons
other than breach of contract, while the term cancellation is used to refer to withdrawal from
a contract due to breach of contract. Cancellation is one of the remedies for breach of
contract. When the innocent party who has acquired a right of cancellation following the other
party’s reaches of contract exercises this right, the contract is terminated.

12.4 AGREEMENT

The parties to a contract can also agree to end the contractual relationship between them.
Sometimes the original contract between the parties contains requirements for its
termination. The agreement, through which obligations can be terminated are release,
notation and settlement.

12.5 RELEASE

This is an agreement between creditor and debtor in terms of which the creditor releases the
debtor from his/her contractual obligations. Release is often accompanied by an intention to
donate on the part of the creditor, but is can also be in exchange for something else.

12.6 NOVATION

Is an agreement between the creditor and debtor in terms of which the old obligation between
them is extinguished and a new obligation created in its place? Notation only occurs where
the parties have the intention of replacing the old obligation with a new one. The existence of
a valid initial obligation is a prerequisite for the existence of a valid notation. The effect of
notation is to extinguish the original debt and therefore to extinguish accessory obli gations
such as surety ship, to extinguish security, to bring the running of interest to an end, and to
purge default.

12.7 DELEGATION

Is a specific form of innovation, namely where a new party is introduced? It may involve either
a change of creditors or a change of debtors. Delegation therefore differs from cession, which
is the mere transfer of a personal right. Unlike cession, where the co-operation of the debtor
is not required the co-operation of all three parties is required for delegation.

12.8 SETTLEMENT (TRANSACTION)

Settlement is an agreement by which parties settle a dispute between them about an actual or
supposed obligation. The validity of a settlement does not require that there must be a
valid debt.
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12.9 MERGER (CONFUSION)

Merger takes place when a person becomes both creditor and debtor in respect of the same
obligation. Since one cannot owe something to oneself, the debt is extinguished

12.10 SET-OFF

(a) The debts must be similar in nature; two debts need not be equal in size, since a debt can
also be extinguished partially by set-off.
(b) The debts must be liquidated. A debt is liquidated when its exact monetary value is certain
or can easily be ascertained.
(c) The debts must be claimable. One cannot extinguish a debt, which is already claimable,
which is not yet claimable.
(d) The debts must be between the same persons. The debts must in fact be Reciprocal that is
they must exist between the same parties in the same capacity.

12.11 IMPOSSIBILITY OF PERFORMANCE SUPERVENING AFTER CONCLUSION OF THE

CONTRACT

Supervening impossibility of performance occurs when, after conclusion of the contract,

performance becomes impossible. The impossibility must not be due to the fault of one of the
parties, but must be the result of an external factor beyond the control of the parties, such as
exceptional forces of nature, warm death.

12.12 THE CONSEQUENCES OF SUPERVENING IMPOSSIBILITY OF PERFORMANCE

Supervening impossibility of performance extinguishes the obligations of the contract.

Supervening impossibility of performance, that is, impossibility of performance that is the
consequence of unforeseen circumstances. Where the debtor has accepted the risk of
supervening the impossibility, the obligation is also not terminated.

12.13 OBJECTIVES AND SUBJECTIVE IMPOSSIBILITY OF PERFORMANCE

Another important aspect of supervening impossibility of performance to be borne in mind is

that subjective impossibility of performance that is the specific debtor’s inability to perform
does not relieve him/her of liability.
Objective impossibility of performance that is not the fault of the debtor, not only terminates
the obligation in question, but where the obligations are reciprocal, it
is also the counter obligation?

12.14 TEMPORARY AND PARTIAL IMPOSSIBILITY OF PERFORMANCE

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Cases where performances become partially impossibility will also have to be determined in
accordance with the principles set out above. Where a divisible performance becomes
partially impossible, the whole obligation is not terminated the debtor is released only
proportionately, and the counter- performance is naturally also reduced proportionately. The
same principles ought to apply where performance in the case of a continuing obligation
becomes temporarily impossible, because this too is a case of partial impossibility.

12.15 PRESCRIPTION

The nature of prescription one may be both, acquire rights and be released from obligations
through the passage of time. Extinctive prescription is one of the ways in which contractual
obligations may be terminated. The underlying idea of prescription is to bring about legal
certainty.

RULE: Prescription starts running as soon as the claim becomes enforceable.

PRESCRIPTION DELAYS

(a) The debtor is outside the Republic

(b) The debtor and creditor are married to each other
(c) The creditor is a minor or is a person under curator ship or is prevented by superior force
from interrupting the running of prescription.
(d) The creditor and debtor are partners and the debt is a debt, which arose out of the
partnership relationship.
(e) The creditor is a juristic person and the debtor is a member of governing body of such juristic
person.

Prescription Periods
(a) Thirty years in respect of:
1. A debt secured by mortgage bond
2. A judgment debt
3. A debt in respect of any taxation imposed or levied by or under any law
4. A debt owed to the State in respect of any share of the profits, royalties or any similar
consideration payable in respect of the right of mine minerals or other substances.
(b) Fifteen years in respect of any debt owed to the State and arising from an advance or loan
of money, or a sale or lease of land by the State to the debtor, unless a longer period applies
in respect of the debt in question in paragraph (a) above.
(c) Six years in respect of the debt arising from a bill of exchange or other negotiable instrument
or notarial contract, unless longer periods applies in respect of the debt in question in terms
of paragraph (a) or (b) above.
(d) Save where an Act of Parliament provides otherwise, three years in respect of any other debt.

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ASSESSMENT QUESTIONS

81
 TOPIC 13

MODULE ASSESSMENT QUESTIONS

QUESTION 1

1.1 Complete the following sentences based on the origin of the South African law:

The basis of the South African law is During the 19th

century South African law was strongly influenced by
The condition of the Roman law, is still sometimes used as a source
of the South African law.

1.2 List the courts, and their main functions in South Africa?
1.3 Literally, what does the word “stare decisis” mean?
1.4 What is ratio decided? What is obiter dictum?
1.5 What requirements have to be met before a customary rule will be recognized as a legal
rule?

QUESTION 2

2.1 Fill in the blanks

LEGAL OBJECT SUBJECTIVE RIGHT AREA OF LAW

Property Patrimonial law

Intellectual
Prop right

Aspects of Law of delict

Personality

Personal right Law of obligations

2.2 Explain the following terms:

2.2.1 Immovable things
2.2.2 Negligence
2.3 What does the law of persons determine?
2.4 Differentiate between a natural person and a juristic person? Name two original methods of
acquiring ownership?
2.5 List the 5 elements of a delict?

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 QUESTION 3

3.1 List the 5 requirements for the formation of a valid contract?

3.2 Give 3 instances when consensus can be reached?
3.3 Under what circumstances does the offer fall away?
3.4 List 3 instances when the contract will be void on the ground of mistake.
3.5 Briefly explain when will a contract be voidable as a result of misrepresentation?
3.6 Three forms of misrepresentation are distinguished. Identify each one and then explain?
When shall a contract be voidable based on duress?

QUESTION 4

4.1 List the requirements for reaching consensus?

4.2 List three requirements when a contract will be void on the ground of mistake?
4.3 List three instances when a mistake is material and excludes consensus. Briefly explain each
one?
4.4 Briefly list three elements of undue influence?

QUESTION 5

Fill in the blanks. The following diagram refers to the difference between legal capacity and
capacity to act.

LEGAL CAPACITY CAPACITY TO ACT

The capacity to acquire rights and duties

All legal subjects have this capacity

5.2 List two instances where it is possible for a minor to be granted major status?
5.3 “Johan is a mentally disturbed boy. The local community knows about him. In spite of
knowing full well about this, Mr. Aggie concludes a contract of work with Johan. Johan is
unable to perform, and Aggie wants to claim damages. Advise the local community about the
claim.”

QUESTION 6
6.1 When will a contract be unlawful?
6.2 List 6 contracts that are contrary to public policy?
6.3 What is meant by “PHYSICAL POSSIBLILITY’ of performance?
6.4 Explain the alternative obligation and the generic obligation? List three formalities
required by law?
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QUESTION 7

7.1 List and explain 3 ways of incorporating terms into a contract?

7.2 Tabulate differences between the resolute condition and suspensive condition? Define
modus?
7.3 What benefit does the penalty creditor derive from the penalty clause?

QUESTION 8

8.1 A contractual term which provides that the agreement may be altered by means of a written
amendment only is known as an ………
8.2 List three instances when the Parole Evidence rule does not apply? List the five different
forms of breach of contract?
8.3 List the four elements of mora creditors

QUESTION 9

9.1 List the three possible orders that the execution of the contract can comprise?
9.2 What will the plaintiff have to prove for the court to grant an order for reduced
performance?
9.3 List three circumstances that are common for mora debtors and mora creditors?
9.4 What are the consequences of cancellation?
9.5 Briefly explain what is meant by patrimonial loss?

QUESTION 10

10.1 List five consequences that occur when the right from the cadent to cessionary takes
place?
10.2 List four ways in which an obligation can be terminated? Briefly 10.3list and explain the
four requirements for a set-off? List four periods of prescription of debts?

QUESTION 11

11.1 In front of ten other people, Jack calls Jill a liar and a child molester. Offended
by these statements, Jill wishes to sue Jack. Which of Jill’s rights has Jack
infringed?

(a) a personality right

(b) a personal right
(c) a real right
(d) an immaterial right
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11.2 In which of the following instances will the contract be void?

(a) Sam holds a pistol to Pam’s head and persuades her to sell his car.
(b) Sam does not know whether the contract he has concluded is a contract of sale or a
contract of lease.
(c) Sam tells the buyer that he is buying a 2001 model car, while it is in fat a 2000 model
(d) Sam, a doctor, persuades a very sick patient to sell her car cheaply to him.

11.3 In which of the following cases can Pat, who is 19 years’ old and not emancipated, conclude
a valid contract without his guardian’s consent:

(a) Pat donates a motorcycle to Pam

(b) Pat rents a flat from Pam
(c) Pat buys a plot from Pam for R20 000
(d) Pat concludes an insurance policy on his own life with Pam

11.4 Sam rents his house to Jim for R800 per month. Unknown to them the house burnt to the
ground the previous day. Which of the following statements is correct?

a. A valid contract arose and Jim can claim alternative housing

b. A valid contract arose, but became invalid because of supervening impossibility
of performance
c. The contract is void because of mistake
d. The contract is void because of initial impossibility of performance

11.5 On her birthday Sally receive an expensive watch as a gift from her Uncle Jack. Four
months later, Uncle Jack informs Sally that he wants the watch back. What is the legal
position?
11.6 When a party to a contract indicates that he does not intend to perform in terms of the
contract, we have breach of contract in the form of
The period of prescription in respect of a debt arising from a bill of exchange or other
negotiable instrument, is usually
11.7 The fact that a contract of sale is perfecta means that

11.8 When will a court apply the guideline of interpreting a contractual term against the
interest of the party who formulated that term?
11.9 Which of the following is not a consequence of cession?
(a) The right forms part of the patrimony of the cessionary and not of that of the cedent
(b) The cessionary receives the claim without the disadvantages attached to it

85
 (c) The claim is transferred to the cessionary in its entirety together with all benefits such
as interest.
(d) The cessionary alone has the right to collect the debt.

TOPIC 14

Carlill v. Carbolic Smoke Ball Co.

[1893] Q.B. 256 (C.A.)

Procedural History:

Appeal from decision of Hawkins J. wherein he held that the plaintiff, Ms. Carlill was
entitled to recover £100.

Parties to the Action:

Appellant: Carbolic Smoke Ball Co. [defendants at trial level]

Respondent: Ms. Carlill [plaintiff at trial level]

Facts:

The Defendants manufactured and sold the “Carbolic Smoke Ball” and advertised in the
newspaper that they would pay £100 to anyone who uses the medicine as directed and
nevertheless contracts a cold, influenza, or other cold disease. The advertisement also claimed
that £1000 was being deposited into the bank to demonstrate their sincerity. The plaintiff
used the ball as directed but contracted influenza. She sued to recover the money promis ed in
the advertisement.

Issue:

Does an advertisement to the general public promising to pay money to anyone who
does something create a binding contract between the parties?

Arguments:

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The Defendant argued that:

o Contract was too vague to be enforced; o No way to

check the conditions were met; o You cannot contract
with everybody (i.e. the whole world); o Timeframe not
specified; o Acceptance had not been communicated to
the offeror; o There was no consideration: nudum
pactum;

ADDENDUM 621 (A): CASE STUDY FOR TUTORIAL

DISCUSSION

87
Analysis:
Bowen L.J.: How would an ordinary person construe this document? Was it
intended that the £100 should, if the conditions were fulfilled, be paid? The advertisement says
that £1000 is lodged at the bank for this purpose. Therefore
the statement was not a mere puff, “I think it was intended to be understood by the public as
an offer which was to be acted upon.”

The extravagance of a promise is no reason in law to not enforce a contract. “If this is
an offer to be bound, then it is a contract the moment the person fulfils the
condition.” Whether notification is required in advertising cases is to be determined
by the language of the ad and the nature of the transaction.
The law does not require us to measure the adequacy of consideration and inconvenience
sustained by one party at the request of another is enough to create
consideration. Lindley M.R.: “…the person who makes the offer shows by his language and from
the nature of the transaction that he does not expect and does not require notice of the
acceptance apart from notice of the performance.”

Ratio (Reason):
Advertisements of unilateral contracts are treated as offers. Where the language is clear that an
ordinary person would construe an intention to offer, anyone who relies on this offer and
performs the required conditions thereby accepts the offer and forms an enforceable contract.

Held:
Yes, the contract was binding and the defendant was ordered to pay the £100 to the
plaintiff. Appeal Dismissed. Obiter Dicta / Notes:
Bowen L.J. considered how the ordinary person would construe the intention of the
offer – rather than the subjective intention of the offeror or the offeree. Word Count:

Source:
http://faculty.law.ubc.ca/biukovic/Contracts%20law/.pdf (27/06/2011)

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 TOPIC 15

FACULTY OF BUSINESS AND MANAGEMENT SCIENCES / DEPARTMENT OF LAW AND ECONOMICS

ASSIGNMENT COVER SHEET COMMERCIAL LAW 621
Name & Surname: ______________________ ICAS No: _________________________
Qualification: __________________ Year: _______ Module Name: _________________
Specialization: _________________________ Assignment Due Date: _______________
ID Number: __________________ Date submitted: __________ Semester: _______________

MARK EXAMINER’S MODERATOR’S

ASSESSMENT CRITERIA REMARKS
ALLOCATION MARK MARKS
MARKS FOR CONTENT
QUESTION ONE 90
QUESTION TWO
QUESTION THREE
QUESTION FOUR
QUESTION FIVE
TOTAL 90
MARKS FOR TECHNICAL ASPECTS
1. TABLE OF CONTENTS 2
Accurate numbering according to the
numbering in text and page numbers
2. LAYOUT AND SPELLING 3
Font – Calibri 12
Line Spacing -1.0
Margin should be Justified
3. REFERENCE 5
According to the Harvard Method
TOTAL MARKS 10
TOTAL MARKS FOR ASSIGNMENT 100
EXAMINER’S COMMENTS

MODERATOR’S COMMENTS

Name of the Examiner : __________________ Name of the Moderator: __________________

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Signature of Examiner: __________________ Signature of Moderator: __________________
Date : ___________________ Date: ____________________

Instructions and guidelines

NB: 1. Candidates are advised to read the guide lines in the study guide.
2. Assignment questions are on page 3.
3. For reference use prescribed, recommended books and other resources you may come
across.
4. Correct Harvard referencing carries (5 Marks).

The purpose of an assignment is to ensure that the Student is able to:

• Use methods of enquiry and research in a disciplined field.

• Interpret and evaluate text.

• Have a sound understanding of key principles and theories, rules and awareness.

• Solve unfamiliar problems using correct procedures as well as investigate and critically analyse
information and report thereof.

• Present and communicate information reliably and coherently.

Instructions and guidelines for writing assignments

1. Use the correct cover page provided by the institution.

2. All essay type assignments must include the following:
2.1. Table of contents
2.2. Introduction
2.3. Main body with subheadings
2.4. Recommendations and Conclusions
2.5. Bibliography
3. The length of the entire assignment must have minimum of 10 pages. Typed with font size 11
Calibri. 1.5 spacing
4. The quality of work submitted is more important than the number of assigned pages.
5. Copying is a serious offence which attracts a severe penalty and must be avoided at all costs. If
any student transgresses this rule, the lecturer will retain the assignments and ask the affected
students to resubmit a new assignment which will be capped at 50%.
6. Use the Harvard referencing method.
7. Please note that these guidelines are not applicable to quantitative subjects like Accounting and
Statistics.

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 COMMERCIAL LAW 621

Derrick Obama graduated from Richfield, a private college in Umhlanga, Durban with a B Com degree.
Derrick obtained employment at Dilane properties Ltd, in Pretoria as an assistant Chief Financial
Officer. The existing Chief Financial officer has informed the company that he intends emigrating. On
the 6th of January 2020 he, Derrick commenced employment for the very first time. Since Derrick
Obama was a new recruit, it was compulsory that he attends the company’s recruitment and training
conference held at Midrand.

On his way to the training centre Derrick noticed a “For Sale” sign in front of a residential property
with contact details of the Estate agent. He contacted the agent and after viewing the property decided
to purchase the property.

Derrick Obama approached Led Bank for a home loan to finance his property. The condition for his
bond approval was that Derrick Obama obtain a suitable surety since he was employed for only one
month. Derrick approached his father Mr Obama to stand as surety and co-principal debtor for his
indebtedness to Led Bank. Mr B. Obama is a wealthy businessman and has valuable assets as well as
an excellent income. The bank accepted the surety and finalized the loan facility for the immoveable
property.

Derrick Obama paid his first installment at the end of February 2020. In March 2020 Dilane properties
suffered serious financial impediments due to COVID 19. During the subsequent “LOCKDOWN” the
company terminated trading activities, for five months and no salaries were paid to the staff. Derrick
Obama had no income and was unable to service his bond with Led Bank. Derrick approached the legal
department of Led Bank to make arrangements to repay his debt. Led bank requires a written response
from Derrick mitigating his default.

Answer the questions that follow with an intention to build a viable defense for Derrick Obam a. A few
legal principles applicable to the response by Derrick is indicated below. In the event you wish to raise
further legal issues you are entitled to discuss them supported by South African legislation and case
law.

1.1. Discuss the common law position of possibility of performance. Advise Derrick Obama whether the
common law only, can assist him in suspending payments during the “LOCKDOWN’ (20)

1.2. Discuss the impact of statute on Derrick Obama’s failure to pay his installments, or
honour his installment obligations when they were due. (20)

1.3. 1.Does COVID render the contract illegal? (10)

1.3.2. Discuss the legal principles of: - 1. ex turpi causa non oritur action (10)

2. in pari delicto potior est conditio possidentis (10)

2.1Discuss the liability of B. Obama on the Deed of Suretyship signed in favour of Led bank, if Led Bank
decides to institute an action for the recovery of outstanding bond installments. (20)

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 TOPIC 16
ADDENDUM (B)
COMMERCIAL LAW 621 (B):

EXAMINATION PAPER & MARKING GUIDELINES

RICHFIELD GRADUATE INSTITUTE OF TECHNOLOGY (PTY) LTD
HIGHER EDUCATION AND TRAINING
FACULTY OF LEADERSHIP AND BUSINESS ADMINISTRATION
COMMERCIAL LAW 621
MEMO

2nd SEMESTER NATIONAL EXAM

DURATION: MARKS: 100 DATE:

EXAMINER: INTERNAL MODERATOR:

EXTERNAL MODERATOR:

This paper consists of 5 questions of 15 pages including this page.

PLEASE NOTE THE FOLLOWING:

1. Ensure that you are writing the correct examination paper, and that there are no missing pages.
2. You are obliged to enter your student details on the answer sheet. The answer sheet provided
are the property of Richfield Graduate Institute of Technology (Pty) Ltd and all extra sheets must
be handed to the invigilator before you leave the examination room.
3. If you are found copying or if there are any documents / study material in your possession, or
writing on parts of your body, tissue, pencil case, desk etc. your answer sheet will be taken away
from you and endorsed accordingly. Appropriate disciplinary measures will be taken against you
for violating the code of conduct of Richfield Graduate Institute of Technology (Pty) Ltd
Examinations Board. Therefore, if any of these materials are i n your possession you are
requested to hand these over to the invigilator before the official commencement of this paper.
4. The question paper consists of 3 sections.
4.1. Sections A and B are compulsory.
4.2. Section C comprises of 3 questions; you are required to answer any 2 questions.

SUGGESTED TIME REQUIRED TO ANSWER THIS QUESTION PAPER

NUMBERS QUESTIONS MARKS TIME IN MINUTES
SECTION A: MULTIPLE CHOICE QUESTIONS COMPULSORY
1 Question One 30 35
SECTION B: SHORT QUESTIONS COMPULSORY
2 Question Two 30 35
SECTION C: ANSWER ANY TWO QUESTIONS
3 Question Three 20 25
4 Question Four 20 25
5 Question Five 20 25
TOTAL 100 120

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SECTION A: ANSWER ALL QUESTIONS
QUESTION ONE (30 MARKS)

Four (4) alternatives are provided for each of the following questions. Choose the correct alternative
for each of the questions/statements and write down the alphabet corresponding to your choice
next to the question number in the answer sheet provided.

1.1 The ___________________is the highest court in South Africa. (1)

A. Regional court
B. House of lords
C. Supreme court of Appeal
D. Crown court
Answer: C

1.2 Which of the following must be considered when examining a precedent before it can be
applied to a
case? (1)
A. The precedent must be a proposition of law.
B. The precedent must form part of the obiter dicta of the case.
C. The material facts of each case must be the same.
D. The preceding court must have had a superior status to the later court, such that its decisions
are binding on the later court.
Answer: B

1.3 Identify the correct statement/s. (1)

1. Superior courts are the Constitutional Court, the Supreme Court of Appeal and the High Court
2. Superior courts are the Constitutional Court, the Supreme Court 0f Appeal and the regional
Court
3. Lower courts are magistrate’s courts and small claims courts
4. Lower courts are regional court, high court and magistrate courts
A. 1 and 2
B. 1 and 3
C. 1 and 4
D. 2 and 4
Answer: B

1.4 Identify the correct definition of law. (1)

A. The system of rules which a particular country or community recognizes as regulating the
actions of its members and which it may enforce by the imposition of penalties
B. The system of customs which a particular country or community recognizes as regulating the
actions of its members and which it may enforce by the imposition of penalties
C. The system of commands which a particular country or community recognizes as regulating the
actions of its members and which it may enforce by the imposition of penalties
D. The system of rules which a particular country or community does not recognizes as regulating
the actions of its members and which it may enforce by the imposition of penalties
Answer: A

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1.5 Identify a city in Kwa-Zulu Natal where the high court is situated. (1)
A. Lagos
B. Bulawayo
C. Pietermaritzburg
D. Pretoria

Answer: C

1.6 Choose the option that is NOT concerned with the law of property. (1)
A. Relationships of persons towards material objects
B. Ownership: the right to own; exclusive right to a property
C. Acquisition of either a considerable degree or physical control over a physical thing
D. Rights and obligations between married couples
Answer: D

1.7 Court of first instance is the court______________________________. (1)

A. where the case is originally heard in full
B. which has given its first interlocutory verdict
C. where the original decision is reversed
D. of magistrates
Answer: A

1.8 Identify the correct definition of a contract. (1)

A. A contract can be described as an agreement concluded by two or more people with the serious
intention of creating illegally enforceable obligation
B. An agreement creating obligations enforceable by parliament
C. A contract can be described as an agreement concluded by two or more people with the serious
intention of creating legally enforceable obligation
D. An agreement creating obligations enforceable by police officer
Answer: C

1.9 Choose the correct option. When is an offer valid? (1)

1. Must be consistent with the elements of a valid contract.
2. Clear and certain.
3. Must be communicated expressly or by conduct.
4. Offeror may prescribe / specify manner of acceptance.

A. 1
B. 2,3
C. 3,4
D. 1,2,3,4
Answer: D

1.10 A consent is said to be free_________________________. (1)

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 A. when two or more people agree upon the same thing in the same sense
B. when two or more people disagree upon the same thing in the same sense
C. when no one person agrees upon the same thing in the same sense
D. when two or more people agree upon the same thing but not in the same sense
Answer: A

1.11 An offer must be__________________________________. (1)

A. exciting and certain
B. interesting and certain
C. clear and certain
D. challenging and certain

Answer: C

1.12 At this age a natural person is regarded as a major and is now able to act or be legally
and contractually bound.
(1)
A. 16
B. 18
C. 21
D. 24
Answer: B

1.13 A contract cannot be legally executed if the __________and_____of the contract cannot be
performed. (1)
A. right and duties
B. law and contract
C. legal and possibility
D. expense and delivery
Answer: A

1.14 Identify the essential feature of a gambling contract. (1)

A. One party undertake to render performance.
B. Two party undertake to render performance.
C. Three to four parties undertake to render performance.
D. One party does not undertake to render performance.
Answer: A

1.15 Choose the correct option. When does acceptance occur? (1)
1. Must be consistent with the elements of a valid contract
2. Must be communicated expressly or by conduct
3. Absolute, unconditional & identical with the terms of the offer
4. Takes place in the manner prescribed by the offeror

A. 1, 3

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 B. 2,3
C. 1,3,4
D. 1,2,3,4
Answer: D

1.16 Which ONE of the following is not a form of contractual formality? (1)
A. A requirement that a contract be executed by deed.
B. A requirement that a contract be in writing.
C. A requirement that a contract be witnessed and signed by a judge to verify its legality.
D. A requirement that a contract be evidenced in writing.
Answer: C

1.17 What does a person's contractual capacity refer to? (1)

A. The extent to which that person can enter into a legally binding contract.
B. The number of contracts that person is allowed to enter into.
C. The formalities that that person must adhere to in order to create a legally binding contract.

D. The minimum amount of consideration that person must provide in order to create a legally
binding contract.
Answer: A

1.18 In relation to mental incapacity, which ONE of the following statements is true? (1)
A. A contract entered into by a mentally incapacitated person is void if the other party knew of
the incapacity.
B. A mentally incapacitated person can enter into a binding contract for the purchase of
necessaries.
C. A mentally incapacitated person never has capacity to enter into a legally binding contract.
D. Mentally incapacitated persons are always bound by the contracts they enter into.
Answer: B

1.19 The doctrine of privity of contract states that? (1)

A. A third party may enforce a contract only if he has an interest in the contract
B. A contractual term that imposes obligations on a third party is binding upon that party
C. Only parties to a contract may enforce the contract, and the contract only imposes obligations
on the parties to it
D. Contractual terms are private and a contract will be unenforceable if its terms are revealed to
a third party
Answer: C

1.20 The collateral transaction to an illegal agreement is________________. (1)

A. void
B. illegal
C. voidable

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 D. not affected at all
Answer: B

1.21 An agreement made with an alien enemy is _________________. (1)

A. unlawful on the ground of public policy
B. unlawful because it becomes difficult to be performed
C. valid
D. voidable
Answer: A

1.22 Which of the following statements is false in respect of precedence? (1)

A. Every court is bound by the decisions of the superior court within its area of jurisdiction
B. Every court is bound by the decision of a court of the concurrent status within its own area of
jurisdiction
C. Magistrate courts are not bound by the judgments of the Supreme Court of Appeal and High
Courts
D. Only the High court is not bound to follow the decisions of another court
Answer: C

1.23 Which of the following options is NOT needed for a legally binding contract to be in force? (1)
A. Consideration
B. Offer and acceptance
C. Written contract
D. Intention to create legal relations
Answer: C

1.24 What is your understanding of an invitation to treat? (1)

A. Another name for an offer
B. An invitation of the other party to make an offer
C. Another name for acceptance
D. A name for an offer made between two individuals
Answer: B

1.25 When an offeree agrees to be bound by all the terms of an offer, which one of the following
options is NOT applicable?
(1)
A. Acceptance must be in writing
B. Acceptance must be firm
C. Acceptance must identical with the offer
D. Acceptance must be communicated to the offeror
Answer: C

1.26 Identify the option that is NOT a requirement of good and just law. (1)
A. Reasonableness

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 B. Generality
C. Inequality
D. Due process
Answer: C

1.27 Contracts that involve important or complicated matters should be ______. (1)
A. implied in fact
B. written
C. breached
D. implied in law
Answer: B

1.28 If either party fails to perform her or his duties as specified in the terms and conditions of the
contract, the contract is said to have been ________.
(1)
A. performed
B. breached
C. enforced
D. executed
Answer: B

1.29 Another name for a contract implied at law is a(n) ______. (1)
A. executed contract
B. written contract
C. quasi contract
D. express contract
Answer: B
1.30 Identify the option that is NOT an example a legal right. (1)
A. Real right
B. Intellectual property right
C. Personality right
D. Moral right
Answer: D

SECTION B: COMPULSORY (30 MARKS)

QUESTION TWO (30 MARKS)

Read the following case study and answer the questions that follow:

2.1Nosipho aged 17 year, buys a motorcycle from Vumani, a dealer. Nosipho is still living with her
parents, but has a job and pays board and lodging to her parents, Nosipho’s father did not
approve of Nosipho’s purchase of the bike, but her mother thought it was a nice bike. A week
after the purchase, Nosipho collides with a fire engine and destroys the bike completely.
Nosipho now refuses to pay the balance of R20 000, which she still owes on the bike. Vumani
wants to sue her. Discuss the legal position of both parties. (20)

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Traditionally, the age of majority was 21 years. The Children’s Act 38 of 2005 reduced the age of
majority from 21 years to 18 years. The act came into effect in 2007.

Where a minor is assisted by a guardian, when entering into a contract, the minor is bound to the
terms of the agreement. The agreement is valid and binding.

Where the assisted contract is prejudicial to the minor, the minor can approach the courts to have
the contract set aside.

The minor may also ask the court for restitution to the pre -contractual position. This will mean that
the other party must give back to the minor everything that the minor had paid or given in terms
of the contract.

The court can also order that the minor pays back to the other party the extent of its enrichment.

The minor is restored to the pre-contractual position.

In the above question, a minor concluded a contract with Vumani, a major without the assistance
of his guardian.

Where an innocent minor enters into a contract on his or her own, without the assistance of its
guardian, the contract is Void.

Nosipho cannot be held liable under the terms of the contract and is entitled to the return of the
money paid. Her father did not consent to the purchase of the motorbike.

It can be argued that Nosipho was enriched in that she used the motorbike to work and generated
an income or salary. Nosipho will then be liable to Vumani for one week’s payment that is, to the
extent of her enrichment.

In Tanne Vs Foggit, an unassisted minor concluded a contract with the owner of a typing college to
take lessons, the fee was payable in advance. Termination of the contract required one month’s
notice be given. The minor paid the fee for one month and attended for that month, but then
stopped attending without giving notice. The minor was then sued for one month’s fees.

The court held that the contract was unassisted, and that the minor was not liable on the contract.

If the minor wishes to hold the other party to the contract, he or she may sue the other party with
the assistance of a guardian, or by him or herself on the attainment of a majority at the age of 18.
In this way, the minor can choose whether to enforce the contract or cancel it. The other party is
denied this choice and must abide by the decision of the minor. This is known as a ‘limping’ contract
because of the unequal situation.

On being sued, the other party must restore the minor to the position in which the minor was
before the minor contracted. This is known as restitution or restitution in integrum. The minor
must restore to the other

person the extent of the minor’s enrichment at the time of the court action or pay the other party
a sum of money to the value of the benefit received.

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 If the minor wants to get out of such a contract and has lost the benefit, the law would seem to
have a problem. Should the minor get back his or her performance from the other party without
returning the benefit received? On the other hand, why should an adult be allowed to deceive or
take unfair advantage of an innocent minor? The law is clear that the minors must be protected.
Accordingly, the minor may reclaim his or her performance. If there is no benefit left, then that is
to the disadvantage of the contracting party. Majors should always be careful of contracting with
minors.

A fraudulent minor can never reclaim what he or she has already given under the contract, but
the other party is able to reclaim the enrichment gained by the minor. This is the penalty a
fraudulent minor must pay for dishonesty.

Since the motorbike was destroyed in the accident, Vumani will be deprived of the motorbike and
Nosipho will not have to pay for the motorbike or any damage to it.

Nosipho could be held liable for a week’s usage of the bike, being the extent of the unjust
enrichment.

2.2 In terms of Children’s Act 38 of 2005, the age of majority was reduced from 21 years to 18 years
Briefly discuss the effects of this legislation. (10)

A person or child becomes a major when he or she reaches the age of eighteen years. Unless a
person’s independent ability is in some way flawed as a result of some other factor (such as
mental deficiency), a person will have full capacity to act when he or she reaches the age of
majority. Previously any person who has reached the age of eighteen years (remember the
majority age was then twenty-one years) might have applied to the High Court for an order to be
declared a major (in terms of the repealed Age of Majority Act). If such application is granted the
minor acquire full capacity to act. It is not clear in terms of the Children’s Act whether a person
under the age of eighteen may apply to the court to be declared as a major. But the Children’s
Act provides that every child (or anyone acting in the interest of the child) may bring, and be
assisted in bringing, a matter to court provided that the matter falls within the jurisdiction of that
court. A minor obtains full capacity to act upon marriage

SECTION C: ANSWER ANY TWO QUESTIONS (40 MARKS)

QUESTION THREE (20 MARKS)

3.1 In terms of the Electronic Communications and Transactions Act, list the items of relevant
information that must be available on the website. (10)

1. Information

2. Review, correction or withdrawal from the transaction.

3. safe and secure payment system

4. Cooling-off period

5. unsolicited goods, services or communications, or ’spam’

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 6. prompt performance

3.2 Briefly discuss the difference between being married in community of property versus ante
nuptial contract. (10)

One of the biggest decisions a person can make in his or her life is what matrimonial regime they
should follow when getting married. If you get married in community of property, at the time of
dissolution of the marriage the parties as a general principle split the assets equally, as well as the
debts. The danger with getting married in community of property is that a creditor of one party can
sue the other party if need be. Should you get married with an ante nuptial contract your separate
assets will be protected in the event of a creditor suing your spouse for monies owed. One must
distinguish between getting married with the application or the exclusion of the accrual system.

Should you decide to get married with the application of the accrual system a contract will be signed
wherein each spouse sets out the net commencement value of his or her assets. Should your net
commencement value be nil, and at the date of dissolution of the marriage it is R1 million your
spouse will be entitled to half of the accrual, which in this case is R500, 000.00. A party is entitled
to exclude any assets which he or she chooses from the accrual e.g. If you own a house before you
get married you may specifically exclude this from the accrual so that at the time of dissolution of
the marriage your spouse has no claim to it. Should you get married with the exclusion of the
accrual system, this would basically mean that your spouse is not entitled to claim any of your assets
at dissolution of the marriage and vice versa. The accrual system only came into effect in 1984
and all marriages with an ante nuptial contract prior to 1984 would therefore be with the exclusion
of the accrual system. The costs involved in having an ante nuptial contract drafted would vary
from attorney to attorney. It would be money well spent to consult an attorney prior to getting
married for advice on a suitable matrimonial regime. Couples should consider getting married with
the application of the accrual system. It is similar to being married in community of property but it
also offers an individual protection against the creditors of his or her spouse.

QUESTION FOUR (20 MARKS)

Write short notes on the following aspects of law:

4.1 Statute Law or Legislation (5)

• Legislation is the most important source of the law currently.

• The law is found to be statute enacted by parliament and provincial legislature. Proclamations,
regulations and by-laws are enacted by subsidiary legislative bodies such as the State President,
ministers, and municipalities.
• The most important piece of legislation recently passed in SA is the Constitution of the Republic of
South Africa Act 18.1 of 1996.
• In the interpretation of any law and the development of the common law and customary law, a
court must promote the spirit, purport and objects of the Bill of Rights.

4.2 The hierarchy of the courts in South Africa. (5)

• Constitutional Court

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• Supreme Court of Appeal
• High courts
• Circuit local divisions
• Other high courts
• Regional courts
• Magistrates' courts
• Criminal jurisdiction
• Other criminal courts
•Community courts

4.3 The Law of Property. (5)

• Concerned with the relationships of persons towards material objects.

• The relationships of persons towards property are controlled by means of the granting and
recognition of rights over property
• Ownership: Is a state of being an owner, the exclusive right to own property.
• Possession is the act of ownership. In law, the acquisition of either a considerable degree of
physical control over a physical thing, such as land or chattel, or the legal right to a thing.
• Ownership & possession: A person owns property is not necessarily the possessor of the property.
• The acquisition of ownership: the basic distinction encountered in this respect is between
original and derivative methods of acquiring ownership.

4.4 Misrepresentation.
(5
)
• The law defines a misrepresentation as a false statement of a present or past fact.
• An untrue statement concerning an existing fact or state of affairs.
• One contracting party must make the misrepresentation to another contracting party.
• The misrepresentation must be unlawful.
• The misrepresentation must have induced the contract as it stands.
• The misleading party must be at fault in the sense that the misrepresentation should have been
made
• Intentionally, negligently or innocently.

QUESTION FIVE (20 MARKS)

Discuss the following common contractual provisions in a written contract.

5.1. The Resolutive Time Clause (2)

5.2. Essentialia (2)

5.3 Terms and conditions of a contract. (2)

5.4 Express terms (2)
5.5 Implied terms (2)
5.6 Suspensive conditions (2)
5.7 Indemnity clause (2)
5.8 Cancellation clause (2)
5.9 Domicilium citandi et executandi (2)

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5.10 Notice (2)

The Resolutive Time Clause.

The contract is subject to a resolutive time clause if the parties agree that the obligations
flowing from the contract will have an effect only until the arrival of a certain moment or until
the expiry of a certain period of time.

Essentialia.

Are those terms, which are essential for the classification of a contract as belonging to a
particular class or category of contract?

Terms and conditions of a contract.

A ’condition’ in a contract is a provision of the agreement that affects its existence. It determines
whether or not there is a contract.

Express terms.

These are terms that are specifically stated, either in writing or verbally. As the terms are based
on the intentions of the parties, there are usually no problems regarding whether or not express
terms forms part of the contract.

Implied terms.
These are terms that are not stated in words, but may be implied by law or f rom the surrounding
circumstances at the time the contract was entered into.

Suspensive conditions.

Rights and duties are delayed until the specified events happen. Once the event occurs the
condition is fulfilled.

Indemnity clause.

The parties may agree that one or more of them is exempted from certain kinds of liability that
might apply.

Cancellation clause.

The parties agree that any failure to comply with the terms of the agreement will entitle an
aggrieved party to cancel the contract immediately.

Domicilium citandi et executandi.

The parties can agree on specific addresses for the delivery of legal notices and pleadings for
each other.

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Notice.

The parties can agree that notices will be deemed to have been received if they are issued in
specific ways. For example, they may agree that a letter sent by registered post will be deemed
to have arrived five days after being sent.

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