Tag archives: Contract

Courts will rarely refuse to enforce contracts on grounds of public policy

Contracting parties cannot escape the enforcement of a contract on the basis of the terms being contrary to public policy unless they can prove that the terms are so unfair, unreasonable or unjust in the circumstances that a court should intervene. The Constitutional Court reaffirmed that although constitutional values such as Ubuntu, reasonableness and fairness … Continue reading

Cancellation for breach of contract: 10 things to know

Cancellation as a remedy for breach of contract is only available where the parties have incorporated a right to cancel in their contract, or where the breach is of a sufficiently serious nature to justify cancellation. The contract may expressly state that if one of the parties breaches terms of the contract or fails to … Continue reading

Effect of invalid clause within lease agreement

The Supreme Court of Appeal held in March 2020 that an invalid clause in a lease does not necessarily result in the unenforceability of the entire agreement. Two parties entered into an agreement in terms of which the lessor let the premises to the lessee for a period of ten years and three months. The … Continue reading

Effect of settlement agreement

Ten years after the 2010 World Cup the Supreme Court of Appeal has given judgment in a dispute between the South African Football Association and a travel business relating to travel arrangements for the competition. The parties had a settlement agreement which was in ‘full and final settlement’ of the dispute relating to whether SAFA … Continue reading

Insurance, consensus and non-existent property

The basis for contractual insurance liability is actual consensus supported by the insureds’ and the insurers’ serious intention to be legally bound to what they have agreed to. There is no consensus if there is a material mistake relating to the identity of the parties to the insurance contract, or the object of the risk, … Continue reading

Constitutional values of ubuntu and fairness are not the basis for the courts’ interference with contractual relationships

It has long been held that although values such as good faith, reasonableness and fairness are fundamental to our law of contract, they do not constitute independent rules that courts can employ to intervene in contractual relationships (South African Forestry Co Ltd v York Timbers Ltd). The fact that a term of a contract is … Continue reading

Contracting with a trust

Where an agreement was purportedly entered into with a trust where one of two required trustees did not sign and in fact refused to do so, the agreement was void and there was no basis for an action compelling the sale to the trustee who did sign to buy the property. A signatory who warrants … Continue reading

Importing a tacit term into a contract

Where a non-variation clause and a whole agreement clause were included in a comprehensive contract dealing in detail with the subject matter between the parties, the court refused to import a tacit term into the contract. A tacit term is an unexpressed provision in the contract which derives from the common intention of the parties … Continue reading

Repudiation of a contract

Where the purchase price of imported sugar included the import duty and the purchase price had to be reduced if the duty was reduced, the persistent claim by the seller for the unreduced amount was a repudiation and led to the lawful cancellation of the sugar contract. Payment of the sugar contract was to be … Continue reading

Acceptance of settlement offer must be unconditional

The Supreme Court of Appeal has reaffirmed the principle that where a party alleges that a compromise (settlement) has been effected in an exchange of correspondence it must be proved that the offer of compromise was accepted. The acceptance must be absolute, unconditional and identical with the offer. Otherwise there is no consensus and no … Continue reading

Sanctity of contracts is good public policy

A lease was challenged on the grounds that the cancellation for non-payment of rent, after prior notice that the rent had not been paid, should not be enforceable because it was against public policy to cancel the agreement for the lease of a hotel that had been in place since 1982. Although good faith is … Continue reading

Rules of interpretation of contract

Clauses in a contract must be interpreted: by having regard to the language used in the light of the ordinary rules of grammar and syntax; in the context of the clauses being interpreted and the agreement as a whole; and taking into account the apparent purpose of the clauses so as to give the contract … Continue reading

Contracts need consensus

The basis of any contract is consensus between the two parties. The court in Vincorp (Pty) Ltd v Trust Hungary ZRT found that the two parties alleged by the plaintiff to be parties to a contract had different things in mind when they negotiated and that no contract came into being because it lacked the … Continue reading

Reciprocal performance under reciprocal contracts

The principle of reciprocity in contracts recognises the fact that in many contracts the common intention of the parties, expressed or unexpressed, is that there should be an exchange of performances. There is a presumption that interdependent promises are reciprocal unless there is evidence to the contrary. The common intention is that neither of the … Continue reading

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

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
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