Tag archives: Contract

Contracts need consensus

By Patrick Bracher (ZA) on April 17, 2018 Posted in Drafting tips

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

By Patrick Bracher (ZA) on February 26, 2018 Posted in Drafting tips

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

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

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

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

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

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

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

Delictual claim for unlawful interference with contract reined in

By Patrick Bracher (ZA) on December 6, 2016 Posted in General

In the battle between Pick ‘n Pay and Masstores for exclusive rights to trade as a supermarket in a shopping complex the Constitutional Court, in holding for Masstores, has set out the limits for this type of delictual claim. Pick ‘n Pay sued Masstores directly because their method of trading allegedly infringed Pick ‘n Pay’s … Continue reading

Settlement agreements and waiver of right to approach courts

By Aslam Moosajee (ZA) on September 19, 2016 Posted in General

On 15 September 2016, the Constitutional Court in Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Ltd, held that a full and final settlement clause in an agreement to settle a dispute was lawful, even though the agreement contained a waiver to approach the CCMA or any other court for relief. The court highlighted the importance … 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

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

Unauthorised contract with government is not enforceable

By Patrick Bracher (ZA) on October 7, 2015 Posted in General

When dealing with government make sure that the act and the government actor is authorised or you will be left without rights. An employee of the SA National Defence Force entered into an employment contract with the Surgeon General which entitled him to certain benefits he was not entitled to according to the applicable law. … 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

Transactions by public institutions not statutorily authorised are invalid

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

The Land and Agricultural Development Bank of South Africa granted a loan to Panamo Properties 103 (Pty) Limited for the acquisition of agricultural property and the development of a township. The loan was invalid because developing urban property is not within the powers of the Land Bank. The Land Bank, which acts in terms of the … 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

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

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

Interpretation of statutes and contracts

By Patrick Bracher (ZA) on January 15, 2015 Posted in General

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

By Nerushka Bowan on December 1, 2014 Posted in General

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

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

Interpretation of “follow the settlements” insurance clause

By Patrick Bracher (ZA) on August 1, 2014 Posted in Insurance

In an English decision the court had to interpret a follow clause in these terms: “Agreed to follow London’s Catlin and Brit Syndicate in claims excluding ex-gratia payments”. It was held that the following underwriter was bound by the settlement reached by the lead underwriters. The following underwriter was bound to pay its share. The … Continue reading