Tag archives: Contract

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

Election not to repudiate a contract may be changed for persistent default

Where one party repudiates a contract, the innocent party who elects to enforce performance can change that election and cancel the contract if the defaulting party persists in the breach by continuing to show an unequivocal intention not to remedy the breach or perform the contract. The plaintiff construction company in Primat Construction v Nelson … Continue reading

Principles of contract interpretation

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

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

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

Legislation cannot always be incorporated into an agreement

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

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

Interpreting messy contracts

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

Headings will be taken seriously

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

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

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

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

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

Repudiation of a contract

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

Interpretation of statutes and contracts

Where the language of a written contract is ambiguous, evidence is admissible to construe its meaning, by reference to its context or the factual circumstances under which the contract was concluded. The apparent purpose to which the contract was directed may also be considered when interpreting it. Evidence may be admitted as to what was … Continue reading

WhatsApp your contract

A recent court decision (Spring Forest Trading v Ecowash) potentially allows contracting parties to sign their contracts by way of a data message (which includes emails and other communication platforms such as WhatsApp, BBM and social media) by typing their name at the end of a message. In the case, the contract was subject to … Continue reading
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