Topic: Drafting tips

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

Government’s way of interpreting a statute may help to indicate meaning

By Patrick Bracher (ZA) on January 28, 2015 Posted in Drafting tips

In any marginal question of statutory interpretation, evidence that it has been interpreted in a consistent way for a substantial period of time by those responsible for the administration of the legislation is admissible. The evidence may be relevant to tip the balance in favour of a particular interpretation. It is consistent with the modern … Continue reading

Registrar’s practice directives are irrelevant to interpretation of the law

By Patrick Bracher (ZA) on January 28, 2015 Posted in Drafting tips

It is ultimately up to the court to determine the meaning of a statute. If the meaning of a law is clear and unambiguous, any other views expressed by a regulator, for instance in a registrar’s practice directive, are irrelevant to the proper interpretation of the statute. This was held in an interesting battle under … Continue reading

Repudiation of a contract

By Patrick Bracher (ZA) on January 28, 2015 Posted in Drafting tips

Parties to contracts frequently allege that the other party has repudiated the contract by expressing an intention not to be bound by its terms and cancelling the agreement as a consequence. That step must be taken with care. The Supreme Court of Appeal in Braun Medical (Pty) Limited v Ambasaam CC pointed out that the … Continue reading

Arbitration by foreigners in South Africa

By Patrick Bracher (ZA) on January 20, 2015 Posted in Drafting tips

There is no reason why foreign companies and individuals should not arbitrate their disputes in South Africa according to South African law. The South African courts will encourage the selection of South Africa as a venue for international arbitrations. Where a dispute “arising out of” the relationship between the parties is subject to arbitration, the … Continue reading

How to ensure an arbitration clause survives the agreement

By Patrick Bracher (ZA) on November 5, 2014 Posted in Drafting tips

An arbitration clause should include an express provision that the clause survives the agreement. There was an important shift in Cool Ideas 1186 CC v Hubbard. An unregistered homebuilder was trying to recover the costs of building a home even though the Housing Protection Act prohibits payment and makes it a criminal offence to build … Continue reading

Drafting tips: How not to draft an arbitration clause

By Patrick Bracher (ZA) on September 23, 2014 Posted in Drafting tips

In a UK case, the contract included a provision that “the parties will endeavour to first resolve the matter through Swiss arbitration. Should a resolution not be forthcoming the courts of England will have non-exclusive jurisdiction”. It was held that this is not an arbitration agreement. The parties did not specifically agree to refer the … Continue reading

Drafting tip: “any” v “in accordance with”

By Patrick Bracher (ZA) on September 2, 2014 Posted in Drafting tips

A statute referred to termination of service “in accordance with any applicable regulations”. It was held in Minister of Defence v SANDU that if there are no applicable regulations then there are simply no regulations that the functionary needs to follow. It does not mean that nothing can be done at all. It would be … Continue reading

Interpretation of clumsy laws

By Patrick Bracher (ZA) on August 7, 2014 Posted in Drafting tips

Clumsy laws must be constructively dealt with. Even where laws are clumsily and inelegantly drafted, the courts should be slow to alter the words actually used. In Kalil v Mangaung Metropolitan Municipality the court said that it must guard against the temptation to substitute what the court regards as reasonable, sensible or businesslike for the words … Continue reading

A clear offer and unconditional acceptance is necessary to make a contract

By Patrick Bracher (ZA) on July 31, 2014 Posted in Drafting tips

Acceptance must correspond with the offer in all material respects. When parties are negotiating a contract, an offer made by one party lapses if it is rejected by the other party. If the offeree makes a counteroffer, that amounts to a rejection of the original offer. A binding contract can only be brought about by … Continue reading

Drafting tip: A ‘no prior representation’ clause ineffective if there is no consensus

By Patrick Bracher (ZA) on July 21, 2014 Posted in Drafting tips

An innocent misrepresentation which results in the parties concluding an agreement they never intended to conclude means that the agreement fails even if there is a clause in the document that the property is sold as is (voetstoots) and that the purchaser has not been induced to enter into the agreement on the basis of … Continue reading

Drafting tip: Dictionary meaning must be read in context

By Patrick Bracher (ZA) on June 24, 2014 Posted in Drafting tips

The court had to decide the meaning of the phrase “floor covering” to determine what customs tariff applied to Terratile pitch protection tiles which are placed on top of sports fields when other events such as concerts are held in the stadium. The customs tariff item is “floor coverings of plastics, whether or not self-adhesive, … Continue reading

Don’t allow arbitrators to make the contract

By Patrick Bracher (ZA) on June 4, 2014 Posted in Drafting tips

An arbitration clause should never be drawn so broadly that the arbitrator determines the wording of the contract. Arbitrators should be asked to interpret contracts and not make them for the parties. The consequences of such a broad arbitration clause could be that the arbitrator imposes contract terms on the parties which they would never … Continue reading

Contracting parties may not be bound if conditions precedent are not fulfilled

By Fabio Miceli on April 3, 2014 Posted in Drafting tips

The courts have reaffirmed that if suspensive conditions in an agreement are not fulfilled timeously the agreement will not be binding on the parties. This is not cured by either party performing in terms of the agreement. Suspensive conditions and how they must be fulfilled must be precisely and carefully drafted. Facts of the case … Continue reading

Drafting tips: vague contracts

By Patrick Bracher (ZA) on March 27, 2014 Posted in Drafting tips

When ascertaining the meaning of a contract, a court will first have regard to its wording. The wording must be considered in the context or factual matrix in which the contract was concluded. That is so even if, on the face of it, the words are clear. Where the words are ambiguous or lack clarity, … Continue reading

Drafting tip: What does “after consultation with” mean?

By Patrick Bracher (ZA) on March 12, 2014 Posted in Drafting tips

Where a decision must be taken “after consultation with” someone else, prior consultation is necessary but it remains the consulting party’s decision. Only consultation is required. Consensus or agreement is not required. You have to consult in good faith before taking the decision.… Continue reading

Interpreting a proviso

By Patrick Bracher (ZA) on February 21, 2014 Posted in Drafting tips

When you use the phrase “provided that” remember that what follows qualifies what goes before it. It is not read as a separate provision in its own right.… Continue reading