Law251: Foundations

of Business Law
Formalities
 2. Formalities
• Formalities involve the requirements of writing, signature, notarization, registration, etc.
There are two types formalities:
(1) Formalities decided on by the parties, and
(2) Formalities required by law.
Purpose:
(3) It is easier to prove both the content of the terms and conditions and the existence of the
contract ( requirement ad probationem); or
(4) The contract does not become valid until it is reduced to writing (requirement ad
validitatum).
(5) It is also used for cautionary purposes (prevents inconsiderate actions) and
(6) Channeling purposes: Governmental authorities can trace contracts for taxation purposes
 Formalities required by Law
• (1) statutory requirement of form
• Some of the most known contracts that should be made in writing or in a prescribed form are:
 Alienation of law
 Credit agreement
 Franchise agreement
 Agreement for construction and sale of home
 Suretyship contract
Donation contract
Antenuptial contract
Public (government) procurement contracts
 Self-imposed formality requirement
• (2) Self-imposed formality requirement
• When the parties agree that all the terms of their contract should be
reduced to writing, then, the contract will not be valid unless it is made in
writing. Although the law may not require the contract to be in writing but
the parties, through their own will, makes it imperative to be in writing.
• TGB Drill Contractors (Botswana) (Pty) Ltd v NDB: The parole evidence
rule or Integration rule – No term can be implied in respect of a written
contract if the term is in contradiction of an express term contained in the
document.
 The implication of making contracts in writing
• Mosienyane v Dobo – Held: In construing a written contract, the duty of
the court is to gather the intention of the parties having particular regard
to the words used in the contract. If the words are clear and unambiguous,
effect must be given to the grammatical or ordinary meaning of the words
and the intention of the parties is irrelevant. Therefore, where the words
are clear and unambiguous, the intention of the parties must be gathered
from the language in the contract and not from what either of them may
have in mind.