Topic: Drafting tips

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

Bond securing invalid agreement may cover the enrichment claim

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

The Land and Agricultural Development Bank of South Africa lent the sum of R18.5 million to Panamo Properties 103 (Pty) Limited to enable it to purchase agricultural land that was going to be developed into a township. That agreement was invalid. The mortgage bond registered over the property to secure the loan was nonetheless valid to … Continue reading

Interpretation of contracts: you may not get a judgment if you do not set out the factual matrix

By Rashaad Sujee on June 9, 2015 Posted in Drafting tips

The factual matrix may have to be set out and proved in a case involving the interpretation of an ambiguous contract. We have previously written about the method of interpreting a contract in our posts Golden rule of interpretation – Good riddance and Interpret contracts according to words, purpose and context. The Supreme Court of … Continue reading

Ambiguity in contracts

By Patrick Bracher (ZA) on May 12, 2015 Posted in Drafting tips

In recent blogs we have made the point that the background and context of an agreement will be taken into account in the interpretation of an ambiguous provision. Here are two quotes from US cases which have a neat approach to ambiguity: “It is well settled that ‘[a] contract is unambiguous if the language it … Continue reading

Contract interpretation and the ‘value’ of a company

By Patrick Bracher (ZA) on May 11, 2015 Posted in Drafting tips

The evidence of the parties to a written agreement about what either of them may have had in mind when they concluded the agreement is irrelevant for the purpose of finding the meaning of the words they used. The process of giving meaning to the words used in a contract has regard to the context … Continue reading

Unspecified interest is simple, not compound interest

By Yasmin Kadwa on May 8, 2015 Posted in Drafting tips

A contract specifying that interest must be “calculated daily” does not mean compounded daily or capitalised daily. Simple interest therefore applies. In Euro Blitz 21 (Pty) Ltd and Another v Secena Aircraft Investments CC the appeal court found that the words “calculated daily” in a written lease agreement and consequent court order did not mean … Continue reading

General words followed by specific words

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

A recent tax case has a nice illustration of the ejusdem generis rule that where general words follow specific words, the general words must be confined to things of the same kind as those specified. The words in question are in the Eighth schedule of the Income Tax Act where section 35(3)(c) provides that the proceeds … Continue reading

Interpret contracts according to words, purpose and context

By Patrick Bracher (ZA) on April 24, 2015 Posted in Drafting tips

We make no apologies for repeating what we have said in previous blog posts about how contracts are interpreted. Old habits with emphasis on the words used are difficult to break. In the latest case (Cloete Murray v FirstRand Bank Limited) the court said: “The inevitable point of departure in interpreting a statute is the … Continue reading

Good faith negotiations before arbitration clause enforceable

By Donald Dinnie on March 31, 2015 Posted in Drafting tips

An English court has held that a dispute resolution clause in a contract that requires the parties to try to resolve a dispute by friendly discussions in a limited period of time before referring the dispute to arbitration is enforceable. Where commercial parties have agreed a dispute resolution clause which purports to prevent them from … Continue reading