Section 1: The law of contract

This section looks at:

The concept of the law of contract;

The law of contract and insurance;

Required evidence to be;

The parties to a contract;

The application of the Insurance Act.

1.1 The concept Law of contract

People often enter into contracts carelessly, without checking terms and fine print, with
dire consequence later on. A contract can be defined as:
(Lat. contractus, from contra here, to draw together, to bind),
1. Agreement between two or more parties that creates in each party a duty to do or
not do something and the right to performance of the others duty or a remedy for
the breach of the others duty.
2. Also document embodying such an agreement
(Source: Martindale Hubbell http://www.lawyers.com)

All contracts fall within the scope of the law of contract. In other words there is a type of
law dedicated to legislating the agreements between parties.

Contracting is also a legal term for a bargain or agreement; some writers, confine the term
to agreements enforceable by law.

The term contract includes every description of

agreement, or obligation, whereby one party becomes bound to another to pay a sum of
money, or to do or omit to do a certain act; or, a contract is an act, which contains a
perfect obligation. In its more confined sense, it is an agreement between two or more
persons, concerning something to be, done, whereby both parties are bound to each
other or one is bound to the other. A contract may also be defined as an agreement,
upon a sufficient consideration, to do or not to do a particular thing. It has also been
defined as a contract between two or more persons.
(Source: Bouviers Law Dictionary 1856 Edition)

1
Copyright: faisit (PTY) LTD 2013

2
Copyright: faisit (PTY) LTD 2013

Contracts fall under the private law and is dealt with in the Law of obligations.

Obligations arise from:

o

Contract

Delict

Undue enrichment

Other causes such as legislation.

Obligations refer to:

o

a juristic bond between parties

in terms of which one party has a right to performance &

the other has a duty to perform.

These obligations come from a valid contract. If a valid contract has been concluded,
parties can validly:

demand performance &

be forced to perform;

Third parties must respect contracts & should refrain from interfering in these
contracts.

Performance means that both parties to the contract must:

Do something or

Deliver something or

Not to do something.

Typically an agreement or contract has four phases; the four different phases of an
agreement can be described as:

The negotiation phase leading to the memorandum of

understanding

Concluding the contract - the requirements of contract.

Operation of the contract

The ending of the contract - with special attention to breach of

contract

3
Copyright: faisit (PTY) LTD 2013

Becoming a Contract:
The contract is concluded when:

One party makes an offer &

Communicates the offer to the other party

The other party accepts that offer.

Parties should ensure that they know what are the terms required in a contract:
1. Performance
2. Obligations
3. What the consequences are if not to perform in terms of the contract.
4. Time frames
5. The deliverables

1.2 Elements of a contract

The following are essential elements of a contract:

The contract must be lawful, e.g. If John contracts with Paul to murder his wife for
R100 000 and Paul defaults on the contract, John cannot sue Paul as the action of
the contract was unlawful.

Performance under the contract must be possible at all times of it conclusion. E.g. If
John contracts to buy a car from Paul, but prior to delivery the car is written off,
John is no longer liable under the contract.

The prescribed formalities must be complied with.

It must free of duress or coercion all parties must be willing.

There must be more than one party to a contract a person cannot enter into
contract with himself or herself.
E.g. Jennys contract to herself to lose 1kg a week is not considered a lawful
contract.

The parties must reach consensus (i.e. they must agree on all aspects of the
contract)

The parties must have the legal capacity to enter into the contract. The following

4
Copyright: faisit (PTY) LTD 2013

people have no or little contractual capacity:

Children under the age of 18;

Insane persons;

persons under curatorship.

spouses married in community of property should have the consent of the other
spouse to contract.

1.3 Key Contract Definitions:

Boilerplate - standard contract terms usually found at the end of the contract
which are important but which do not reflect the essence of the deal. Examples of
'boilerplate' terms include provisions describing notice, governing law or payment
of attorneys' fees;

Breach - a claim by one party to a contract that the other party has failed to
perform as required under the contract;

Conditions - Provisions in a contract that deal with certain events happening or not
happening. Conditions are like triggers that, when pulled, cause some other part of
the contract to come into effect;

Consideration - a benefit or right, which the parties to a contract exchange with

each other in order to form the contract;

Consideration can be a promise to do something (such as a promise to pay money

or to lease your office space) or a promise not to do something (a promise not to
lease your office space to your neighbor's biggest competitor), but whatever the
parties exchange with each other, each party's consideration must be something
of value to it;

Damages - a type of remedy for the breach by a party of a valid contract.

Damages involve an award of money to the injured, non-breaching party;

Recitals - language at the beginning of the contract that describes why the parties
are entering into the contract;

Recitals are not always legally enforceable, so significant contract terms should
always be repeated in the body of the contract after words such as "the parties
agree as follows."

1.4 Contract Drafting Mistakes

There are numerous ways to make mistakes when negotiating and drafting a contract.
There are some mistakes often made that should be avoided.
5
Copyright: faisit (PTY) LTD 2013

Not Drafting the First Draft

Always volunteer to draft the first draft of a contract. Doing so can give you a tremendous
advantage in the negotiations. This allows you to structure the deal initially on your own
wish list with terms most beneficial to you.
Moreover, from a legal cost perspective, drafting the first draft often is more cost-effective
than responding to the other lawyer's one-sided draft.

Not Including Explicit Payment Terms

Almost everyone understands that payment terms are an essential part of an agreement
and should not be omitted or left to be decided until after the agreement is signed.
Deal terms to consider, including:

What is the reason for entering into the agreement with the other party?

Did the party state that he or she has been in business a long time or has a
particular type of Expertise in a particular field?

What did the other person agree that he or she would do for you and what did you
agree to do in return?

When did the parties agree this would happen?

Were special circumstances discussed in negotiating the agreement, which led you
to agree with this particular company?

Is there a critical deadline for receiving goods or services?

Was there some key event or condition that has to happen before you became
fully obligated?

The answers to all of these questions can be included within the agreement so that if at
any point the deal falls apart, it can be shown that you relied on specific answers to these
questions. Good drafting requires that the payment terms be clearly laid out in the
agreement. Avoid ambiguity as to what the amount owed will be, or provide a clear
formula for determining the amount owed. Put terms that explicitly state how much is
owed and when, and also include what will happen if the other party doesn't pay or pays
late. And, make sure to allocate who pays any taxes involved.

Not Including All Deal Terms in the Agreement

All "deal terms" should be included in the agreement. This means that you should not only
include all the legal boilerplate, but also the key items upon which you relied upon when
entering into the agreement.
6
Copyright: faisit (PTY) LTD 2013

Making Assumptions

Don't make any assumptions when drafting the agreement. What this means is you should
spell out all the obligations and assumptions under the agreement within the agreement
itself.

For example:

If you are purchasing equipment, do not assume that the other party will know to
deliver the equipment with any related software or attachments. Spell it out
explicitly.

Don't assume the other party will know that if you receive the goods purchased
late, that you will lose thousands of Rands. Put a time is of the essence clause in
your agreement if this is true.

If the parties agree to have goods shipped and delivered to a certain location,
make sure that you both are in agreement about the specific location and who
pays for shipping costs.

If you only think you do not understand something in the negotiation phase, ask. If you are
unclear on any portion of the agreement, get an explanation. Conversely, if it appears
that the other party is unclear on something you are talking about, then explain it and
spell it out in the agreement don't make the mistake of assuming that the other party
understands what you are talking about.

Not Paying Attention to Boilerplate Terms

Boilerplate terms are an essential part of any agreement and affect the rights under the
agreement as much as any other terms. These terms can be negotiated in the same
manner as all other terms in your agreement.

Key boilerplate terms to really focus on include:

The prevailing party in any dispute will be awarded its attorney's fees;

Amendments to the agreement can only be made in writing;

The contract may not be assigned meaning;

The contract includes all representations, warranties and agreements of the parties
(the "integration" clause).

7
Copyright: faisit (PTY) LTD 2013

Not Negotiating Everything

Everything is negotiable. Even the things the other party tells you are not negotiable are
negotiable. Even preprinted forms and boilerplate terms are negotiable. Some portions of
the agreement will be more important to you than others, but everything can be
important in the event of a problem. There will be give and take in negotiating the
agreementit is important for you to decide in advance which things you can't live
without and which things you can live with. Negotiating everything means that you
discuss, argue, deliberate, and ultimately agree upon all terms of the agreement. Not only
are you allowed to do this, consensus, which means total agreement, is a contract
requirement.

It is always better to make sure, as contract terms can only be changed with considerable
cost and trouble afterwards.

1.5 What You Want From a Contract

A contract needs to do or perform what you expect it to do.

Your goal when drafting a contract is to create a clear, concise and complete
description of the deal.

Clarity

Clarity is at the heart of any well-written contract. As lawyers say, "the terms of an
agreement must be sufficiently definite and certain to be legally enforceable."
Remember, it's not enough for the parties to understand the deal in their own minds. An
outsider should be able to understand the deal from reading the contract. Otherwise, how
will a judge be able to enforce it?

You may be tempted to take shortcuts here, especially when both sides believe they
understand the deal, without writing out the finer points. The other side owns a building,
and you are buying itwhat could be simpler? But clarity is important from the
perspective of enforcement. If things go wrong later, it's always best to have a definitive
written description to which the parties can refer. So don't write a contract to buy "the
seller's building." What if, unbeknownst to you, the seller is the Donald Trump of your
hometown and later claims that you intended to buy his dog of a shack, not the prime
office space you wanted?
8
Copyright: faisit (PTY) LTD 2013

Make sure that both your responsibilities and the other side's obligations are carefully and
clearly described. Ambiguous language in a contract can lead to misunderstandings,
delays, frustration and litigation.

Conciseness

You often don't need a 100-page contract to get the job done. In fact, very long
contracts can delay getting a business deal done. The trick is making sure that you have
sufficiently described what you expect. Our preference is for shorter, concise contracts get to the essential points right away.

Completeness

Many contracts fail because they are incomplete. That is, you may fail to put in some
important terms or expectations. Some people assume that the terms are understood and
don't need to be spelled out. Wrong! Make sure that if you are relying on something
important when entering into a contract (such as a promise or guarantee from the other
side) that this information is actually included in the draft. When drafting your contract be
sure to write down exactly what you mean and include all the relevant points including:

An accurate description of the parties;

The price, including the amount paid, and when and how it will be paid;

A thorough description of the goods or services to be bought or sold.

Contracts, once concluded, are legally binding and all parties can be held to the terms of
the contract in a court of law. The same holds true for insurance contracts, whether short
or long term contracts. A contract of insurance is a legally binding document.

Lee and Honor, in their work entitled on The SA Law of Obligations, define a contract
as an agreement which creates or is intended to create legal obligations between
the parties thereto. South African insurance law is a combination of Roman Dutch and
English law. Insurance is nothing more than a contract between two parties. They are
the insurer, who in return for the payment of a premium, agrees to provide certain
benefits upon the happening of a future uncertain event.

1.6 The Contract of Insurance

Insurance is a contract of (the utmost) good faith between an insurer and an insured
whereby the insurer undertakes in return for the payment of a price or premium to
9
Copyright: faisit (PTY) LTD 2013

render to the insured a sum of money or its equivalent on the happening of a

specified uncertain event in which the insured has some interest.

Note, however that:

It is usual to charge a premium, but this is not essential in South African Law;

The words the utmost can now be considered redundant;

(Mutual & Federal Insurance Company Limited vs Oudtshoorn Municipality

(1985)).

A contract of insurance, like any other contract, is concluded by the acceptance of

an offer. An insurer usually invites the public to do business through intermediaries.
These intermediaries (agents and brokers) provide the prospective insured with a
proposal form which he completes and returns to the insurer. In the proposal form the
proposer gives particulars to the insurer of the risk which he wishes him to undertake.
For this reason the proposal form contains questions about the risk. This would include
the identity of the life assured, his or her state of health, habits, family history,
occupation etc. The proposal usually contains a warranty clause or a declaration that
the answers in the proposal will form the basis of the contract. The acceptance of the
offer by the insurer results in the contract of insurance coming into existence. Should
the insurer accept the offer subject to a health loading, this amounts to a counter
offer that would have to be accepted by the insured before a contract comes into
being.

The terms of an insurance contract are contained not only in the policy document but
also in the application form and schedule. The insurer employs a standard contract
drawn up by the insurer which contains the terms and conditions of the contract and
the insured thus has no choice, should he wish to obtain insurance cover, but to
accept the contract as offered by the insurer.

1.7 Capacity to contract

The person entering into the contract, being the prospective insured must have legal
capacity to contract. In the absence of such capacity, no valid contract can come
into effect. Refer to Section 2 for additional information on this topic.

10
Copyright: faisit (PTY) LTD 2013

1.8 Insurable interest

An insurable interest is the financial interest a person has in the subject matter that is
being insured. In short-term assurance this is usually the financial interest that the
person has in an asset, like a motor vehicle. If the vehicle had to be stolen, the insured
would suffer a financial loss. In the case of long-term insurance or life assurance, the
insurable interest is in a persons life, health or other well-being.

The requirement of insurable interest for the validity of a contract of insurance has for
many years been accepted as part of South African Law and is fundamental to the
contract of insurance. In the case of a life policy the insurable interest is only required
at the time the policy is effected. The continued existence of an insurable interest is
not required, and there is no requirement that an interest must exist at the death of
the life assured. Thus, for example, a creditor who has insured his debtor's life may, on
the latter's death, recover the full amount of the policy proceeds, even though the
debt has already been repaid. Similarly a partner may recover the full amount of the
policy proceeds under a policy owned by him on an ex-partner's life, and an exspouse may recover in similar vein.

A person has an unlimited insurable interest in his own life and can therefore insure his
own life as many times and for as much as he can afford. This is the case even where
a person insures his own life solely for the benefit of others. Most insurers provide that in
the event of suicide within a defined period of time, being usually two to three years,
their contractual liability is suspended. Similarly, in the circumstances of insurance on
the life of a spouse, the existence of an insurable interest is trite, and the amount
thereof unlimited.

In all other cases an insured must have an insurable interest in the life of any other
person before an enforceable insurance contract can exist. The reason for this is one
of public policy. People should be discouraged from gambling or wagering on lives in
which they have no interest, as this is a practice that could serve as an inducement to
murder. Where the required insurable interest exists, a person may in terms of the
common law, insure the life in which he has an interest without the consent of the life
insured, although, in practice the consent of the insured is required by the insurer. The
insurable interest required in these cases is a financial interest, capable of being
valued in monetary terms. The person effecting the insurance, must show that he
11
Copyright: faisit (PTY) LTD 2013

would suffer financially by the death of the life insured and, in order to establish this,
he is required to show the loss of a legal right which results in a financial loss. From a
strictly legal point of view, a person may recover only up to the value of his interest,
being the amount of the loss. This may appear anomalous as the insurer undertakes
merely to pay an agreed amount and not an indemnity. Public policy, however,
intervenes and limits the amount that may be agreed upon and which may be
recovered. Nevertheless, in practice many life policies are concluded and paid where
the value of the interest concerned is not easily and precisely determined.

The Insurance Act 27 of 1943 provides a statutory limitation on the right to insure a
child's life. An insurer may not insure the life of a child under 14 years of age for any
sum which, or which when added to any amount payable on the child's death by any
other insurer or a friendly society, exceeds:

R10 000, if the child is under 6 years, or

R30 000, if 6 years or over.

A policy may, however, be issued providing for the payment on the death of the child
of a sum not exceeding the total of all premiums paid on the policy, together with
interest on the premiums at seven and a half percent (7.5%) per annum compound.

Insurable interest related to the following is important to note:

i. Creditors
A creditor has an insurable interest in the life of his debtor. In general, any contractual
relationship where one person has a real expectation of deriving some benefit from
anothers continuance of life, will support a contract of insurance.

Insurance is allowed at least to the amount of the debt with interest thereon at the
time of effecting the insurance, though the limit has not been defined in South Africa.

ii. Partners
A person has an insurable interest in the life of his partner. The same would apply to
members of a close corporation and shareholders in a company. This assumes that
they have agreed to a buy-and-sell arrangement upon the death of a partner, coshareholder or member. The insurable interest arises from the obligations created in
12
Copyright: faisit (PTY) LTD 2013

the contract to buy the deceaseds interest. The courts have accepted that a person
has an insurable interest in the life of his partner even without the contractual
obligation.

iii. Company/director and employer/employee

A company has an insurable interest in the life of its directors and an employer has an
insurable interest in the life of an employee where its prosperity depends on his
services and skill and where his death would cause it financial loss. The extent of the
insurable interest will depend on the function performed by the director/employee,
the particular skills they posses and the financial loss that their death would cause.

iv. Master and Servant

A servant who has a contract of service for a number of years at an annual salary, has
an insurable interest in the life of his employer to the extent of the value of the future
salary. Similarly, a master who has a claim to the services of a servant, has an insurable
interest in the life of a servant to the extent of the value of his services, while he is
under a legal obligation to serve his master.

1.9 The duty to disclose

All contracts are subject to good faith, since the law cannot support fraud. However,
under ordinary commercial contracts the contracting parties are not required to
reveal all they know about the proposed agreement. Although certain protections are
available to purchasers, the common law principle applicable to most commercial
contracts is let the buyer beware (caveat emptor).

For example, in contracts of sale, although the seller must not misrepresent the article
for sale or deceive the buyer, he is not obliged to point out all its defects and
disadvantages. The onus is on the buyer to satisfy himself that the contract is a
reasonable one and thus he has no legal redress later.

Insurance contracts are based upon mutual trust between the insurer and the insured.
It is not possible for the doctrine of caveat emptor to apply due to the fiduciary nature
of insurance. The information necessary for the parties to assess the contract
adequately cannot be ascertained as with other commercial contracts. Our common

13
Copyright: faisit (PTY) LTD 2013

law therefore requires the standard of utmost good faith to apply to insurance
contracts.

Simply put, utmost good faith in insurance means that each party to a proposed
contract is legally obliged to reveal to the other all information which would influence
the other's decision to enter into the contract, whether such information is requested
or not. Failure to meet this standard of conduct will result in the contract being
voidable.

Recent court decisions have questioned whether the requirement of utmost good
faith is in fact a distinct requirement of our law in the case of an insurance contract. It
seems that failure to disclose material facts may well simply be a misrepresentation as
in the law of contract.

1.10 Parties to a contract

The parties to the contract must agree to do or not to do something, or to give or not
to give something. A person cannot contract with him- or herself, and therefore there
must be two or more parties to constitute a valid contract.

1.11 Consensus
The easiest way to explain the coming into existence of a contract is to state that it
consists of an offer and acceptance. This is generally the case, but it cannot always
be stated that one party made an offer and another accepted. Consensus, or
agreement, implies an actual meeting of the minds. There are, however, cases
where a contract comes into being, or is given a certain content, even though there is
no actual meeting of the minds. The courts do not work only with a simple
psychological concept of contract but will also consider a normative view so, while
the courts use meeting of the minds as a point of departure, in certain instances a
normative view (i.e. where the parties are expected to behave in certain ways and
their acts attract particular consequences), will be held. In Anglo Carpets (Pty) Ltd v
Snyman (1978) judge Coetzee said: It is perfectly true that there is no evidence of a
crisp offer and acceptance but this is not a fatal flaw.

The element of certainty can also be regarded as an essential for a valid contract,
although this is often seen as part of the consensus requirement the parties must
14
Copyright: faisit (PTY) LTD 2013

be certain about what they agree upon. The courts are reluctant to hold void for
uncertainty any provision in an agreement between parties which was intended to
have legal effect. The courts always try to balance matters so that, without violating
essential principles, the dealings of persons in business may as far as possible be
treated as effective, and that the law may not incur the reproach of being a
destroyer of bargains.

1.12 Format that a contracts can take

A contract can exist in various forms:

in writing;

verbal;

tacit; or

implied.

Writing is a legal requirement for certain contracts (which are discussed under
formalities), but in most cases an oral, tacit or implied contract is just as valid. A
contract can come into existence without a word being said and in such a case is
referred to as a tacit contract. A typical example would be where a person takes a
newspaper from a vendor and offers money. A contract has come into being.

1.13 The Parol Evidence Rule and Rectification of Contracts

This rule states that if a contract has been reduced to writing, the writing is the sole
source of the contract and evidence may not be given as to verbal negotiations or
other terms which preceded the actual signing. The document is the only source of
the terms of the contract. However there are exceptions to this rule, and the law also
provides for rectification where the written document does not fully or correctly reflect
the parties true agreement but, in general, they should ensure that the contract
which has been reduced to writing contains all the terms upon which consensus was
reached. Caveat Emptor versus Uberrima Fides (Legal Contracts versus Insurance
Contracts) There are basically two distinct ways that contracts can differ legally.
Contracts undertaken in the normal course of business are generally based on the
premise of caveat emptor or let the buyer beware, but contracts of insurance are
based on a different concept uberrima fides or utmost good faith.

15
Copyright: faisit (PTY) LTD 2013

One must appreciate that in all business dealings one undertakes some form of
contract, even if most of these are simply oral. Examples of these are the purchasing
of a loaf of bread or a packet of cigarettes from a local tea room. Some contracts will
not be as simple. They could be for large amounts, such as the purchase of a car or
even a house.

All of these contracts are based on "caveat emptor". The terms and conditions offered
by the seller are either queried at purchase or are otherwise accepted as true and
correct. However, if it can subsequently be proved that the seller deliberately withheld
information from the buyer that would in all likelihood have affected his or her
decision to buy the buyer will have recourse, if necessary, to the courts. Should this not
be the case it is only where the seller provides some form of warranty that there is a
possibility of a comeback. It is often thought that there is a "cooling off" period when
a major purchase is made. This is, strictly speaking, not correct. The cooling off period
applies only to any credit agreement entered into. However, based on the principles
of common law a purchaser will be able to apply to the courts in the event of
deliberate fraud or misrepresentation of the facts. Note that ignorance of the facts
cannot and will not be accepted as a valid defence. One is expected to be aware of
what one signs or agrees to at all times and, as is often repeated, "Ignorance is no
excuse in the eyes of the law."

The very nature of an insurance contract requires that the "seller" (the proposer)
provides the "buyer" (the insurer) with all the facts at his or her disposal. Nondisclosure
or misrepresentation of any of the fact will give the insurer the right to claim that the
policy was void "ab initio" (from the beginning). The duty of disclosure was highlighted
in the well-known case of Carter v Boehm (1766) where Lord Mansfield stated the rule
and the reasons for it. The duty of disclosure is imposed by law (ex lege) and it is not
based upon an implied term of the contract of insurance. It does not flow from the
requirement of bona fides, nor from the special circumstances of insurance law, being
only an example of the application of general principles, especially relating to
misrepresentation.

Over the years this has led to a certain amount of confusion as to whether insurance
contracts are contract of "uberrima fides" (utmost good faith) or contracts of "bona

16
Copyright: faisit (PTY) LTD 2013

fides" (good faith). The often quoted case of Mutual and Federal Insurance Company
Ltd. v Oudtshoorn Municipality (1985) finally cleared up this confusing principle.

The Appellate Division decided that "utmost good faith" was an impractical concept
since there can only be good faith or bad faith. A person may be less than honest but
cannot be more honest than honest and "utmost good faith" was thus declared to be
meaningless in South African law.

With a contract "uberrima fides" it was accepted that there was an obligation placed
on the proposer to disclose all that s/he knows, and the hiding of any material
circumstance, whether the proposer thought it was relevant or not, would allow the
insurer to void the contract from inception. The implication of this court ruling resulted
in the conclusion that the principle of uberrima fides placed too heavy a responsibility
on the proposer. Further rulings have resulted in what is today known as the
"reasonable man test". The reasonable man test is equally important to long-term as
well as short-term business. While the following section therefore provides a general
overview of its application it will be dealt with in considerably more detail in the longterm and short-term units of the Insurance Institutes legal framework subjects that
concentrate exclusively on these insurance disciplines.

1.14 Law of Delict

When considering the law of contract (ex-contractu) and its legal status, and the
legal responsibilities associated therewith, the following can be considered a summary
thereof:

contractual actions can be brought only by the parties to the contract - these
are easily recognised, and limited in number;

liability under contract law is assumed voluntarily.

By contrast a delictual action can be brought by anyone who has suffered harm
through a breach of general duty not to harm him or her in person, property or
personality (character/reputation). Therefore:

no contractual relationship is needed;

there may be many claimants involved; delictual duty does not depend on
anyone's consent. It arises involuntarily, although as a result of our actions or
omissions.
17
Copyright: faisit (PTY) LTD 2013

Naturally some overlap between contract and delict can occur. For example, a
surgeon performs an operation on a patient in terms of a contract. If s/he leaves a
swab in the patient's body, the patient (plaintiff) has the option of suing the surgeon in
contract or in delict.

In essence therefore a delict is a civil wrong for which damages can be claimed as
compensation and for which redress is not usually dependent on a prior contractual
undertaking to refrain from causing harm. Thus the distinction between delict and
crime can be stated as follows:

delict is a civil wrong whereas crime is a public wrong;

the main aim of an action in delict is to compensate the victim, not to punish
the guilty;

action of delict are brought by the person who suffered the harm. Criminal
actions are brought by the State;

it may be easier to succeed in a delictual action than in criminal proceedings.

Crime must be proved beyond reasonable doubt. Delict can be settled on the
balance of probabilities.

Note that for delict to be alleged there needs to be an element of each of the
following:

wrongfulness;

conduct (either as intent, positive actions, negligence or omission);

fault;

causation;

loss or harm.

(Some commentators combine the first two, but they are perhaps best split from each
other.)

In delict conduct is defined as a voluntary human act or omission. A juristic person

(such as a close corporation) may act through its members and thus be delictually
liable. Allied to this is the capacity to act, and/or to understand the consequences of
ones actions. For liability to attach prejudice (harm) must be caused in a wrongful
(legally reprehensible or unreasonable) manner. Without wrongfulness a defendant
cannot be held liable. Wrongfulness is a conclusion of law that the court draws (or
18
Copyright: faisit (PTY) LTD 2013

does not draw) from the facts pleaded and proved by the plaintiff. One cannot
prove wrongfulness though one can prove facts from which the court is prepared to
draw the conclusion that the defendant acted wrongfully. This can therefore relate to
both a defendant's positive act or a defendant's omission to act. The general rule is
that an author of a deed does not deliberately act unlawfully when s/he merely fails
to prevent damage or bodily injury to another. Liability only follows if its failure was
unlawful, and it would only be unlawful if, under the specific circumstances, there was
a legal duty on the author to act positively to prevent the damage, and s/he failed in
this legal duty. Whether such a legal duty actually exists is answered by means of the
legal conception of society, the boni mores.

19
Copyright: faisit (PTY) LTD 2013