Topic: Drafting tips

Interpretation of contract: A lawyer’s understanding must not always be imposed on non-lawyers

By Patrick Bracher (ZA) on August 17, 2017 Posted in Drafting tips

In an important development of the law of interpretation of contracts, the Constitutional Court held in July 2017 that where ordinary laypeople use ordinary words in a contract, their understanding of the meaning of the words used must not be overridden by a lawyer’s understanding based on their knowledge of legal principles not familiar to … Continue reading

‘Ought to have known’ does not include negligent lack of knowledge (UK)

By Patrick Bracher (ZA) on June 12, 2017 Posted in Drafting tips

An English court has reaffirmed that, where a claimant is not covered under a road accident fund law if at the time they ‘knew or ought to have known’ that the vehicle was uninsured, negligent lack of knowledge is not enough. The passenger must conclude from available knowledge that the driver might not be insured … Continue reading

Could v would (UK)

By Patrick Bracher (ZA) on May 3, 2017 Posted in Drafting tips, Insurance

In a judgment in the lower court in a reinsurance non-disclosure case the judge referred to what ‘could’ have happened if certain loss statistics had been produced whereas the relevant test was what ‘would’ have happened in that situation. The appeal court held that people, including judges, do not always speak with precision in the … Continue reading

Interpretation of claims ‘arising from or involving’ a prior act

By Patrick Bracher (ZA) on April 5, 2017 Posted in Drafting tips

A professional indemnity policy did not indemnify the insured against any claim ‘arising from or in any way involving’ an act, error or omission committed prior to the retroactive date. In the context the phrase ‘arising from’ was accepted by the parties to mean ‘proximately caused by’ or ‘directly caused by’. The phrase ‘in any … Continue reading

Punctuation matters

By Aneesa Bodiat on March 24, 2017 Posted in Drafting tips

In Maine, USA, the interpretation of a state law involving overtime pay revolved around the use of the Oxford comma. What is the Oxford comma? The Oxford comma comes before the last item in a list of 3 or more things, usually to resolve ambiguity. This example illustrates its use: Without Oxford comma: I love … Continue reading

Setting aside arbitrator’s award for going beyond the dispute

By Patrick Bracher (ZA) on March 22, 2017 Posted in Drafting tips

Arbitration clauses must be construed liberally to give effect to their essential purpose which is to resolve legal disputes arising from commercial relationships before privately agreed tribunals, instead of through the courts. When business people choose to arbitrate their disputes they generally intend that all their disputes will be determined by the same tribunal unless … Continue reading

Principles of contract interpretation

By Patrick Bracher (ZA) on March 14, 2017 Posted in Drafting tips

Where parties signed a memorandum of understanding as an interim arrangement for ten months in anticipation of entering into a more comprehensive and lasting agreement the MOU was binding because the full agreement did not materialise. An attempt to call contextual evidence to change the agreement was not allowed. In the case of Urban Hip … Continue reading

The word ‘sale’ has various meanings

By Patrick Bracher (ZA) on March 5, 2017 Posted in Drafting tips

From an academic point of view a sale has taken place when the parties agree on the price and on the items sold even if they have not yet paid the price or delivered the item. It also has a wider meaning that requires delivery of the property to the buyer before the sale is … Continue reading

Interpretation of exclusions

By Patrick Bracher (ZA) on February 22, 2017 Posted in Drafting tips

Traditionally, ambiguous exclusion clauses provide little or no protection because they will be interpreted narrowly and against the person who tried to exclude their liability (in Latin the contra proferentem rule). In the light of modern methods of interpretation it is doubtful that this principle of interpretation can be used in every case for anything … Continue reading

Leaving a settlement offer open for acceptance

By Patrick Bracher (ZA) on February 6, 2017 Posted in Drafting tips

A South African law contract comes into being when an offer to contract is accepted by the other party. If the response does not accept the offer according to its specific terms but suggests changes, this is a counter-offer. The offer itself is considered rejected and lapses. This is South African law as well as … Continue reading

Does the principle of pay now, argue later apply to an adjudicator’s decision given out of time?

By Keshri Chetty on December 14, 2016 Posted in Drafting tips

When adjudication is incorporated into contracts, often construction contracts, as a means of dispute resolution it is usually included with other mechanisms such as mediation, arbitration and possibly even an approach to a court so that a party dissatisfied with an adjudicator’s award can attempt to rectify what is considered wrong with it in a … Continue reading

Public holidays are not bank holidays

By Patrick Bracher (ZA) on October 25, 2016 Posted in Drafting tips

The definition of ‘business day’ in South African agreements often includes phrases like ‘any day on which banks are open for business in South Africa’. These words are confusing and it is sufficient to refer to a day other than a Saturday, Sunday or official public holiday. The words have crept in from English law … Continue reading

Legislation cannot always be incorporated into an agreement

By Patrick Bracher (ZA) on July 7, 2016 Posted in Drafting tips

You can incorporate legislation into a contract but you cannot attempt to bind non-consenting third parties, like the state or its regulators, by incorporating legislation. Obligations cannot be imposed on private third parties without their consent. For example, the parties in Firstrand Bank v Clear Creek Trading concluded a contract to which the National Credit … Continue reading

Interpretation of contracts – guarantees

By Patrick Bracher (ZA) on June 14, 2016 Posted in Drafting tips

In resolving the question whether a guarantee was a call guarantee or a conditional guarantee the Supreme Court of Appeal in Mutual & Federal v KNS Construction restated what has been said before about interpreting documents. The interpretative process is one of ascertaining the intention of the parties – what they meant to achieve. And … Continue reading

Acceleration clauses are not all equal

By Patrick Bracher (ZA) on June 13, 2016 Posted in Drafting tips

An acceleration clause that allows a creditor to call in a full debt payable by instalments can be drafted to operate automatically on default by a debtor, or it can allow the creditor an election to accelerate the debt. The distinction between automatic and elective acceleration clauses is important because it affects when prescription on … Continue reading

Don’t forget the Interpretation Act

By Nadia Gamieldien on June 6, 2016 Posted in Drafting tips

The Interpretation Act 1957 applies to the interpretation of all laws, so it is a useful act to know. The act was last amended to incorporate the 1993 Interim Constitution. While there are some archaic and strange provisions, like the mention of the former colonies and the Royal Letters Patent of His Majesty King William … Continue reading

Interpretation of contract: What is a ‘supermarket’?

By Patrick Bracher (ZA) on April 5, 2016 Posted in Drafting tips

The court in Masstores (Pty) Ltd v Pick n Pay Retailers (Pty) Ltd had to decide whether a retailer was breaching its lease by operating a supermarket selling a range of perishable and non-perishable food products within its general retailer store. The court said that regard must first be had to the word “supermarket” itself. The … Continue reading

Arbitrator cannot fix scope of arbitration

By Patrick Bracher (ZA) on January 13, 2016 Posted in Drafting tips

An arbitrator has no power to fix the scope of the arbitrator’s jurisdiction. Jurisdiction must be fixed by the terms of reference of the arbitration. Its scope must be objectively ascertainable in advance of the arbitration. An arbitrator cannot make a decision conferring jurisdiction on the arbitrator that is not possessed in law. That is … Continue reading

Statutes interpreted in conformance with common law

By Patrick Bracher (ZA) on December 7, 2015 Posted in Drafting tips

A statute should be construed to conform with the common law unless the statute itself evidences a plain intention on the part of the legislature to change the common law. This observation was made in Engen Petroleum Limited v The Business Zone 1010 CC t/a Emmarentia Convenience Centre. The court found that section 12B of the Petroleum … Continue reading

Interpreting messy contracts

By Gareth Munnick on October 23, 2015 Posted in Drafting tips

A commercial agreement should not lightly be determined unenforceable simply because the parties set out the terms in an unclear manner. The Supreme Court of Appeal, in Novartis v Maphil, dealt with whether a pharmaceutical drug manufacturer and a medical device supplier had concluded a contract. The court had to consider written documents, oral agreements … Continue reading

What does mutatis mutandis mean?

By Patrick Bracher (ZA) on October 8, 2015 Posted in Drafting tips

When you import the provisions of one document or statute into another it is common to do so “mutatis mutandis”. The Supreme Court of Appeal in Mayo No v De Montlehu reminded us that there is an imperative nuance when you use that Latin expression. The words mean “subject to the necessary alterations” not the … Continue reading

Interpret statutes according to the purpose

By Patrick Bracher (ZA) on August 25, 2015 Posted in Drafting tips

In a recent decision the Constitutional Court reminded us that where there is a constitutional issue there is a new approach to interpreting statutes. The courts must seek an interpretation that promotes the spirit, purport and objects of the Bill of Rights. The courts will apply a generous construction over a merely textual or legalistic … Continue reading

Headings will be taken seriously

By Patrick Bracher (ZA) on June 29, 2015 Posted in Drafting tips

Where a suretyship was headed “Deed of Suretyship – Tuning Fork (Pty) Limited t/a After Market Products” it was held that the surety only owed money for the debts incurred by the After Market Products division of the company even though that division was not a separate legal person. The court in Ian Kilburn v … Continue reading

Contracting with a trust

By Patrick Bracher (ZA) on June 21, 2015 Posted in Drafting tips

Ideally, when you contract with a trust, the agreement should be in the name of the trustee or trustees acting on behalf of the named trust. But where the trust is named as a party to the contract that does not render the contract invalid. This is the welcomed finding by the Supreme Court of … Continue reading