Introduction to the Theory of Law & Law of Contract

ASSIGNMENT NUMBER CL2 PART A

INTRODUCTION TO THE THEORY OF LAW &

PART B
LAW OF CONTRACT

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PART A: INTRODUCTION TO THE THEORY OF LAW

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TABLE OF CONTENT
PART A: INTRODUCTION TO THE THEORY OF LAW................................2 QUESTION 1.................................................................................................. 5 ......................................................................................................................5 ANSWER 1 .................................................................................................... 5
Relevance of Legal Conviction of the Community in South African law...............................................7

QUESTION 2.................................................................................................. 9 ANSWER 2..................................................................................................... 9

Hence the four types of capacities are as follows:....................................................................................11 Name of the cases, where Capacity exists or Does not exists:................................................................12 ........................................................................................................................................................................12

QUESTION 3 ............................................................................................... 14 ANSWER 3................................................................................................... 14 QUESTION 4 ............................................................................................... 20 ANSWER 4................................................................................................... 20 QUESTION 5................................................................................................ 23 ANSWER 5................................................................................................... 23
Distinction between Onus of Proof and Evidentiary Burden in the context of civil litigation...........25

PART B: LAW OF CONTRACT...................................................................27 QUESTION 1 ............................................................................................... 28 ANSWER 1 .................................................................................................. 28 3 of 46 Assignment CL2 of Rakesh Kumar

Introduction to the Theory of Law & Law of Contract QUESTION 2 ............................................................................................... 32 ANSWER 2 .................................................................................................. 32 QUESTION 3 ............................................................................................... 37 ANSWER 3................................................................................................... 37 QUESTION 4 ............................................................................................... 39 ANSWER 4................................................................................................... 39 BIBLIOGRAPHY..........................................................................................45

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QUESTION 1

What does the expression legal convictions of the community mean? What is the relevance thereof in South African law?

ANSWER 1

Bois et al (1100:2011) while clarifying what legal conviction of the community state as follows:

The reference to the legal convictions of the community is better understood as an acknowledgement of the fact that the court, in exercising its judicial discretion to decide the wrongfulness issue, must be sensitive to the boni mores of society.

Hence the legal conviction of the community can also be understood as the acknowledgement of good moral values of the community by the court, while exercising the judicial discretion.

The Department of Water Affairs, Republic of South Africa in one of their presentation The Presumption of negligence states that:

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The five requirements (or elements) necessary for delictual liability are: 1.) Conduct 2.) wrongfulness 3.) fault (intention or negligence) 4.) causation 5) Harm.

Hence it can be seen that one of the requirements of delictual liability is wrongfulness, which need to be proved for a person to have committed a delict. For any conduct to be wrong, it must be legally wrong, just being morally wrong is not enough. However, in case if there does not exists any law with respect to particular issue, in that case the court asks, though there does not exist any law with respect to particular issue, but whether the conduct of the person is considered unreasonable, based on the legal conviction of the community? Whether the community would have considered the issue as just, not only morally wrong but legally wrong too.

Bois et al (1097:2011) also stated that:

Negligent conduct giving rise to damage is . not actionable per se. It is only actionable if the law recognizes it as wrongful.

Just that the conduct is unreasonable does not make it wrongful due to other reasons attached to it. The reasonableness of conduct must be established objectively.

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Introduction to the Theory of Law & Law of Contract Hence legal Conviction of the community is the guide to the court, to decide what is wrong and illegal, when there does not exist any written legal guide.

Relevance of Legal Conviction of the Community in South African law

The changing values of the society, changing technologies and developments create legal uncertainty and the law must adopt these changes in order to remain effective. Kleyn & Viljoen (15:2011) while referring one case where the court using the legal convictions of the community referred as follows:

In Clarke v Hurst 1992 4 SA 630 (D) the court had to decide if a wife may be appointed as her husbands curator with the power to make decisions about his medical treatment. The man was terminally ill, in a permanent vegetative state and was unaware of his surroundings. There was no previous decision in which a court allowed passive euthanasia. Justice Thirion, however, found that the legal convictions of the South African community do not regard the stopping of medical treatment as unlawful if a person is being kept alive artificially. Accordingly, he granted the wifes application. A 1997 discussion paper of the South African Law Commission recommended that this position should be confirmed in legislation.

Further Kleyn and Viljoen (15:2011) referred that in another case of Van Erk v Holmer 1992 2 SA 636 (W) the court decided that due to changing social

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Introduction to the Theory of Law & Law of Contract environment, the natural fathers inherent right extended to the child born out of marriage.

Hence, we can see that where there is no previous decision exists to guide the court, the South African court could guide them self based on the legal conviction of the community about the subject matter in taking decision, which is in accordance with the legal conviction of the community is lawful. In the previous two referred cases too, the South African court took the decisions that the wife can be appointed as her husbands curator with the power to make decisions about his medical treatment and in another case South African court decided to extend the natural fathers inherent right to the child born out of marriage.

Hence we can see that the South African courts time to time guides themselves with the legal conviction of community.

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Question 2

Explain the concept of capacity. In your answer address the different types of capacity and name 3 cases where capacity exists or does not exist.

Answer 2

Concept of Capacity has been defined by different legal experts and they are as follows:

Bhana, Bonthuys & Nortje (75:2010) while defining the capacity states as follows:

In order to form the necessary animus contrahendi and to reach consensus all the parties to the contract must have the necessary contractual capacity. This means that they must be able to understand the nature of a contract and the consequences of entering into a contract.

Bois et al (146:2011) while defining capacity states that:

The only capacity common to all persons is legal capacity in it narrow sense:
every legal subject, irrespective of his or her personal attributes, has the

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capacity to have rights and duties, although the extent of this capacity and the particular rights and duties proposed at a certain time by virtue of this capacity may vary from one person to another. On the other hand, not all persons have any or all of the other capacities. So, for example, infant (children below the age of 7 years) and insane persons have no capacity to perform juristic act or to litigate, while these capacities are subjected to certain limitations in the case of minors above the age of 7 years.

Hence capacity of a legal subject could be understood as his/her capacity to contract, ability to understand nature and consequences of contract. But the extent of legal capacity may vary from person to person. People having mental illness, are in intoxication, minors less than 7 years of age does not have contractual capacity and a person declared prodigal by court have limited contractual capacity.

Kleyn & Viljoen (109:2011) while defining legal capacity states as:

Legal capacity is the capacity to be the bearer of rights and duties, in other words to be legal subject.

Hence the legal capacity of a legal subject determines his capacity to bear right and duties.

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Introduction to the Theory of Law & Law of Contract In addition Kleyn & Viljoen (109:2011) while defining capacity and its type states as follows:

Positive law provides legal subjects with the ability to participate in legal activities. Such abilities are called capacities and we differentiate between four types of capacities.

And Plessis & Hees (134:2009) while defining capacity and its type states as follows:

., a legal subject needs certain basic juridical means, or capacities as they are known in legal parlance, in order to participate in (the) legal reality. In private law four such capacities are relevant, namely: legal capacity, the capacity to act, the capacity to be a party to civil proceedings (locus standi in iudicio) and accountability. These capacities mean that a legal subject can participate in private law activities.

Hence the four types of capacities are as follows:

1. Legal Capacity: It is the legal subjects capacity to be the bearer of right and duties to be subject in legal activities. 2. The Capacity to act: That is the capacity of a legal subject to perform juristic acts such as signing contracts of purchase and sale, drawing up wills, marriage etc. Different factors such as age and mental health

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Introduction to the Theory of Law & Law of Contract determines individual capacity to act. A child less than 7 years of age does not have capacity to act. Minors between 7 to 18 years have limited capacity to act. 3. The Capacity to be a part of civil Proceeding: The legal subjects have a capacity to be part of legal proceeding as plaintiff or defendant. Minors can appear in the court only with assistance of his parents or guardian. 4. Accountability: The accountability is the capacity to act lawfully and to be held liable for unlawful act. Insane people can not be held liable for unlawful acts.

Name of the cases, where Capacity exists or Does not exists:

Edelstein v Edelstein 1952 3 SA 1 (A): Here it was stated that the minor, through out his/her minority does not have capacity to contract.

Dhanabakium v Subramanian 1943 AD 160 167: It was stated that minor do not have capacity to contract without assistance of his guardian subjected to certain qualification.

Buttar v Ault 1950 4 SA 229 (T) 239: It was stated that an unassisted minor dont have capacity to accept the donation until he has reached the age of puberty.

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Introduction to the Theory of Law & Law of Contract Spangenberg NO and Another v De Waal (15226/2005) [2007] ZAGPHC 233 (18 October 2007): It was stated that a person who does not have proper mental capacity can not institute a matrimonial action without the assistance of the Curator ad Litem

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Question 3

Ownership is a real right. Discuss what is meant by this statement and compare the extent and characteristics of such a right with a right which arises from the conclusion of a contract.

Answer 3

Study material of Association of Arbitration (Introduction to Theory of Law) states that:

Rights in property are referred to as real rights. Real rights attach to things and are enforceable against the whole world. The most extensive of all the real rights is the right of ownership. Possession, mortgage, pledge, servitudes and liens are other real rights.

Bois et al (427:2011) states the following:

Real right or proprietary rights are those rights that a legal subject has with regard to a particular item of property. Unlike personal rights, which concern the relationship between parties to a contract or delict, real rights establish an almost direct relationship between the holder of the right and the property. In order to identify the basic characteristic of the real rights, real and personal rights need to be distinguished clearly. Then the various categories of real

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rights can be identified and the criteria for the recognition of new categories explained. Only real rights with regard to land are registerable in terms of the Deeds Registries Act.

And Bois et al (470:2011) further states that:

Ownership, in contrast to limited real rights like servitude and mortgage, is potentially the most extensive private right that a person can have with regard to property. In principle, ownership entitles the owner to deal with his or her property as he or she pleases within the limits set by law. The comprehensive right of ownership embraces not only power to use (ius utendi), to enjoy the fruits (ius fruendi) and consume property (ius abutendi), but also the power to possess (ius possidendi), to dispose of (ius disponendi), to reclaim property from anyone who unlawfully withholds it (ius vindicandi) and to resist any unlawful invasion of property (ius negandi). The list is not necessarily complete, for if an owner grants all the list entitlements to a third party, ownership is suspended only to the extent of the powers granted and, once the grant is extinguished, ownership automatically becomes unencumbered again, demonstrating the elasticity of ownership and why ownership is sometimes called a reversionary right.

Hence based on thought of different educational experts, we can see that real right is the right associate with property/things. The right related to ownership of any property is also related to right associated with things, and hence ownership is considered as a real right. Ownership establishes direct relation

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Introduction to the Theory of Law & Law of Contract between owner and things/property. In case of real right of ownership of land, the lands are registerable under deeds of registries act. This registration allows the real right with respect to land/property to be legally secure. Further right of ownership is associated with things such as land or home and this right can be enforced against the whole world (against any one).

In addition Kleyn and Viljoen (112:2011) define real rights as follows:

Real rights are the rights with respect to things, for example ownership.

Hence we understand by the statement Ownership is a real right as the right rights associated with respect to property/things. Hence the meaning of the statement Ownership is a real right can be understood as ownership of any thing such as house or car, gives the owner a real right that is his/her right to use it, sell it, lend it, give it on hire, may dispose it, reclaim from anyone who unlawfully withhold it. Further ownership is considered to be most extensive rights among all other real rights. It is also noted that regarding ownership, if owner of the house grants power of attorney to A for renting his house to anyone for the duration of 5 years, till he (owner) is outside the country. The ownership of A has been suspended only for renting the house, as he has given this power to A, and A can not do any thing else then giving the house to any one on rent. Further after 5 years, that is expiration of power to rent, A looses the authority to rent the house and the owner gets the authority to rent again. 16 of 46 Assignment CL2 of Rakesh Kumar

Introduction to the Theory of Law & Law of Contract

Plessis & Hees (142:2009) states the following:

The right of ownership (or ownership, in short) is real right the only (real) ius in re propria or ius in re sua (a right to ones own thing). All other deal rights are limited real rights or iura ius in re aliena (rights to the things of others). Examples of such rights are: the right of a pledge to movable property (in otherwords a pledge); the right of a bondholder to immovable property; the right to lessee of fixed property to that property; a right of way; and the right(s) of a usufructuary.

Here we can see that Plessis & Hees also supported the statement and views stated earlier that the ownership is the most extensive real right among all other real rights.

Right arises from conclusion of Contract is personal right. Under a contract one party is obliged to carry or not to carryout particular things for another party, which gives another party personal right. For example in a sales contract, buyer has right against the seller, that the seller will deliver the goods on time to buyer.

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Comparison between Real Right and Personal Right (that is right arises from Conclusion of Contract):

Real Right Right related to Property/Things.

Personal Right This is concern with the relationship

between parties to contract or Delict. Real right can be enforced against Personal right can be enforced again large number of people, in case of parties to contract or third party who ownership; it could be against whole is engaged with the contract due to world too. It established direct any reason. relationship It talks about the relationship

between holder of the right and the between parties. property. Real right refers to a right that is A right that is based on one's status

attached to a thing rather than a as an individual and does not derive person. from property.

Right to use it and/or sell it and/or In case of personal right for example lend it and/or give it on hire, in case of sales agreement, for buyer: Right to receive Get Servicing as per goods as per or the of

depending upon type of real right.

agreement. Guaranty, suppliers Contract.

warranty from

Conditions

For seller: Right to receive payment as per agreement. 18 of 46 Assignment CL2 of Rakesh Kumar

Introduction to the Theory of Law & Law of Contract Elasticity: Part of real right could be This is not as flexible as real right. passed to other for a certain period and after that period that rights come back to the real right holder. Only real rights with respect to land No need of registration in terms of are registerable in terms of Deeds of Deeds of Registries Act. Registries Act. Example: Ownership, Servitude, Example: Contract or Delict

Mortgage, right of way, rights of bondholder to immovable property, right to lessee of fixed property, use, pledge, usufruct, habitation and

predial servitude

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Question 4

Give the meanings and respective importance of the ratio decidendi and obiter dictum of a case.

Answer 4

The South African court follows the precedent system that is standing by with the previous decision taken by other courts. However every word in the judgment is not binding.

Plessis and Hees (240:2009) states that:

According to the stare decisis rule, court A:

Is either absolutely obliged to follow the judgment of court B; Or follows the judgment of court B because A can find no fault with it; Or allow itself to be persuaded by the arguments of court B.

Hence we can see that precedent system rules allow court A to consider the decisions made by court B. The decision could be obligatory or persuasive.

Plessis and Hees (240:2009) while defining what is binding in the judgment of a court states that:

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In a judgment a court normally makes finding on two kinds of issues in other words, two kinds of questions are answered:

Factual issues or question of fact, and Legal issues or questions of law.

A factual issue generally differs from case to case and is unique to a specific instance. Hence the facts of one case can not be relevant to another case. But at the same time the legal issues of one case could be relevant to another case. A fact in a particular case is not binding in another case, but the courts finding in respect of question of law of once case could be binding in another case, in case if there is a significant similarity between the aspect of two cases. This statement is substantiated by the statement of Plessis and Hees (241:2009) which is:

A courts answer to the question of fact in a particular case cannot be binding on a latter court; its answer to a question (or questions) of law does, however, have binding force.

Further it is to be noted that all decided by one court in previous decision is not binding to the other court. Kleyn and Viljoen (60-61:2011) states that:

Everything mentioned by a court in its judgment does not create a precedent

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and Only ratio decidendi creates a precedent.

And further defines obiter dicta and ratio decidendi as follows:

Obiter dicta (the singular is obiter dictum) likewise do not create a precedent. Obiter dicta literally mean remarks in passing. These are the judges casual remarks concerning the law. They are not directly relevant and applicable to the case before the court. It is not necessary for the court to take them into account in order to reach its decision. The judges views on a hypothetical case will, for example, be obiter dictum. Obiter dicta are not binding, but they can sometimes have persuasive force.

Hence ratio decidendi (reason for decision) is the legal principle applied by the court to the material facts to reach the decision which is binding. Obiter dicta that is remarks in passing made by the court is not binding but persuasive evidence and as stated above courts answer to the question of fact in a particular case is not binding but it has persuasive evidence and is considered Obiter dicta.

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Question 5

Define the concepts of onus of proof and evidentiary burden and distinguish between them in the context of civil litigation.

Answer 5

Factoidz website states the followings:

He who alleges must prove is the foundation of the evidentiary burden. This must be distinguished from the burden of proof. The burden of proof never changes; an accused must be found guilty beyond a reasonable doubt, the plaintiff must prove on a balance of probabilities that the event occurred according to his/her version. The evidentiary burden shifts from party to party.

Hence evidentiary burden is burden on the parties to provide evidence to prove his case, while burden of proof burden on plaintiff that he/she must prove on a balance of probability that, what he/she was alleging is right.

In a court case the plaintiff presents evidence to provide that what he is alleging about defendant is right and he can prove this based on the evidence he is presenting. At this stage the burden to present evidence (evidentiary

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Introduction to the Theory of Law & Law of Contract burden) to prove his allegation lies with the plaintiff. Here it is to be noted that these evidence presented by the claimant is subjected to cross examined by the defendant and in case plaintiff failed to present his evidence in support of his allegation, there will be no case against defendant. Further in case the evidence presented by the plaintiff is not enough to substantiate his case, the defendant may not choose to present his case based on insufficient evidence presented by the plaintiff and in this case he may force the judge to take the decision, if he wants to dismiss the case or want the defendant to present his evidence/case.

During cross-examination the burden of evidence (evidentiary burden) to prove innocence shifts from plaintiff to defendant. At this stage the defendant cross-examine the witness/evidence presented by the plaintiff and present his evidence to prove that he/she is innocent and at this stage he/she/defendant is responsible for presenting evidence to prove him/her innocent. Hence at this stage the evidentiary burden lies with the defendant.

Plessis and Hees (101:2009) has stated about the onus of proof as follows:

To be successful in court, a litigant has to prove his case. In a civil case the nature of the dispute determines on whom the burden (or onus) of proof rests: the one who avers must prove and the one who

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Introduction to the Theory of Law & Law of Contract denies must disprove. It is thus not necessarily always the plaintiff/applicant who bears the onus.

and Kleyn & Viljoen (131:2011) stated about the onus of proof as follows:

The burden of proof (onus) in a criminal trail also differs. In a civil case the onus is on the party that alleges. This will usually be the plaintiff. In a criminal case the state initiates the prosecution, thus the state carries the burden of providing the guilt of the accused.

Hence the onus of proof can be defined as burden on the party who averts must prove that other party was at fault. Generally the plaintiff has the burden/onus of proof that what he alleges is right. In case of criminal case the burden/onus of proof lies with the state to proof that guilt has been committed by the accused.

Distinction between Onus of Proof and Evidentiary Burden in the context of civil litigation
Onus of Proof Evidentiary Burden The burden of proof never changes. Evidentiary burden shifts from party to The plaintiff must prove on a balance party. In a civil court case, if plaintiff of probabilities that the event alleges something Then the about burden the to

occurred according to his/her version defendant.

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Introduction to the Theory of Law & Law of Contract Generally the onus is on plaintiff in provide the evidence lies with the civil cases. plaintiff, but during cross-examination and while defending, it is

In case the plaintiff fails to provide responsibility of the defendant to evidence, he will be said to fail to provide the evidence to prove he discharge his burden/onus of proof. (defendant) is innocent.

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PART B: LAW OF CONTRACT

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Question 1

List 3 circumstances which may render a valid contract voidable. For each of the 3 circumstances above, explain what requirements must be satisfied before a party will succeed in having the contract voided.

Answer 1

Bois et al (772:2011) while defining the voidable contract stated as follows:

A voidable contract is one which is valid, that is, it comprises all the elements necessary to constitute a contract, but which one of the parties is entitled to rescind because of some cause or defects which existed before or at the time the contract was concluded. The chief of these causes are as follows: (1) misrepresentation; (2) duress; (3) undue influence; and (4) commercial bribery.

Hence voidable contract is a valid contract and it has got all essential of valid contract but the consensus obtained is based on improper method that is defective and hence innocent party is entitled to rescind the contract due to those defects that is (1) misrepresentation; (2) duress; (3) undue influence; and (4) commercial bribery.

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Introduction to the Theory of Law & Law of Contract Based on the above mentioned explanation the three circumstances which may render a valid contract voidable:

First Circumstance:

If A gets the consent of B for purchase of Bs car to A, based on undue influence, which weaken Bs power to resist. In this case B is entitled to rescind the contract, because of the undue influence made by A, before the contract concluded.

Requirement that the party should satisfy before succeeding in contract voidable:

If B wants not to rescind the contract then for him to succeed in making the contract void he has to do the followings: 1. Give notice to A that since he has taken his consent based on undue influence before signing the contract, he is not continue with the contract that is going to sell his car to A, and due to that undue influence he (B) considers the contract between A and B voidable. 2. However if the A goes to court to force B to sell his car to A bases on the contract. B needs to prove that A has unduly influenced him/her to take his consent to sell his/her car to B. B need to provide evidence to

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Introduction to the Theory of Law & Law of Contract court to substantiate that he has been unduly influenced by A to sell his car to A, before contract signing.

Second Circumstance:

If, one party by providing false information about the condition/quality of goods, sold to another. Until the person who purchased the goods, does not rescind the contract, the contract is valid. There is no necessity of a court order to declare the contract is rescinded.

Requirement that the party should satisfy before succeeding in contract voidable.

If one party (party A) provided false information about his car, that the car is 2005 model, while the car is actually 2000 model (where one of the basis of sale is that car is of 2005 model). Based on this information the other party (party B) purchased the car from party A. When party B comes to know that the car he purchased is of 2000 model, not 2005 model as stated by Party A.

The party B can rescind the contract by sending notice to party A that since the information (model of the car) based on which the car was sold by party A and purchased by party B, was a false information, provided by Party A to Party B to sell the car. The party B does not accept the goods provided and

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Introduction to the Theory of Law & Law of Contract claim back his money. If the party A does not returns the money to party B. The party B can go to court and by providing evidence claim the money from party A. Parties A and B may agree, that Party A will supply party B another car of Model 2005.

Third Circumstance:

If A signs a contract to sell his 5 car to B for an amount of R 40,000, by paying a bribe of R 2000 to agent (C) of B. But just after contract signature B comes to know that A has paid bribe to his agent C (who was providing suggestions to B on purchase of the Car from A) for getting this contract. The contract of sell of car is voidable at the option of B.

Requirement that the party should satisfy before succeeding in contract voidable:

Just after coming to know about the information of bribe by A to C that is his agent. B can give notice to A stating that, since he has fetched the contract by providing bribe to his agent C. Hence B does not accept the contract and consider the contract as void. If A goes to court, B has to provide evidence to prove that A has paid bribe to C to get the contract.

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QUESTION 2
One of the requirements for a valid contract is possibility. Discuss this requirement, providing examples of each type of impossibility with the consequences thereof.

ANSWER 2

Different educational experts has stated by possibility as follows:

Bois et al (753, 754:2011) while defining possibility of performance states as follows:

The contract must be possible of performance. If, at the time of conclusion of the contract, performance is impossible on either side, the agreement is a nullity and accordingly creates no binding obligations: impossibilium nulla obligation est.

. Similarly Christie and Bradfield (97:2011) also states while referring another court decision that:

By the Civil Law a contract is void if at the time of its inception its performance is impossible: impossibilium nulla obligation.

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Introduction to the Theory of Law & Law of Contract Whereas Bhana, Bonthuys & Nortje (2010:16) while defining possibility states that:

At the time of conclusion of the Contract, it must be objectively possible to perform in terms of the contract. If it is impossible to carryout the terms of the contract, the contract will be invalid. If the performances in terms of the contract are possible at the time of the conclusion of the contract, but subsequently become impossible, the contract is fully valid, but special rules apply to determine who must perform and who bears the risk of impossibility.

Based on above-mentioned view of educational experts, it was understood that if performance is impossible at the time of conclusion of the contract, the contract is void/invalid and it does not creates any obligation to the parties of the contract. Further there is two cases of impossibility one is impossible at the time of conclusion of contract and another one is impossibility after contract signature.

Impossibility at the time of conclusion of contract: (Initial Impossibility):

If the performance of the contract is impossible at the time of making the contract, the contract is void and the party to the contract is not liable to perform their duty under the contract. This is also called initial impossibility 33 of 46 Assignment CL2 of Rakesh Kumar

Introduction to the Theory of Law & Law of Contract and the party to contract is discharged from their responsibility from the beginning of the contract. However for a performance to be impossible in this cases four things need to be satisfied. That is impossibility must be absolute, must be absolute as opposed to relative, must not be the fault of both party and the principle must give way to the common contrary intention of the parties.

If the parties by mistake form a contract and which they realize that it is impossible to perform, the contract is void since the time it was form. Christie & Bradfield (2011:340) supporting this statement states that:

Common mistake will render the contract void ab initio only if it leads the parties to make a contract which is impossible of performance, such as a sale of res extincta.

Impossibility after contract signature:

If the performance of the contract becomes impossible after the contract signing due to force major (situation/power which can not be controlled by ordinary individual) or casus fortuitus (inevitable accident) then the parties of the contract is discharged from their obligation. However if the contract is becoming impossible due to own fault of the party to the contract, then the party is not discharged from the liability of the contract. For example: If A has given his house to B on lease, but due to Bs fault fire broke in to the house 34 of 46 Assignment CL2 of Rakesh Kumar

Introduction to the Theory of Law & Law of Contract and it is impossible for B to use the house, B still has to pay the lease amount to B as the impossibility is due to his fault.

But in case of sales of goods, if seller sells a good and dispatches to buyers location and if the goods get destroyed during the transit, the buyer must make the payment.

Partial Impossibility: If there is a divisible contract and one part of the contract becomes impossible. In that case, one can accept part performance or cancel the contract.

Material Impossibility: This occurs where the obligation is to deliver property, and the property is destroyed before delivery. If the destruction is due to vis major the obligation of the debtor is discharged; but not if it is due to the fault or negligence of debtor. For example:

Another case is that if A has obligation to perform any services for B, however due to vis major or by death or due to sever illness A was not able to perform, B is still discharged from his performance due to impossibility of the performance.

Another case of impossibility is that state prevents the party of contract not to perform. For example A has to deliver the goods to B who is living in another

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Introduction to the Theory of Law & Law of Contract country and B has to pay. However in between the war broke up between countries of A and B and there is state order from As state not to have any business relation with country of B. In this case the performance of A became impossible due to state order and hence he is discharged from his performance.

If the impossibility of performance is due to the risk taken by the debtor, the debtor is not discharged from performance.

Just

becoming

the

performance

difficult

or

change

in

commercial

circumstanced does not make performance impossible. And further if the debtor is once discharged from his performance due to impossibility, it does not entitle him/her to make a new contract and insist on making performance on new term.

Legal Impossibility: Those contract which are legally impossible, such as contract to perform illegal or immoral acts or invalid contract. The parties to the contract are discharge from liability from the beginning of the contract.

Physical Impossibility: If the contract is physically impossible, for example constructing a big multistory house by one person in one month. Due to this physical impossibility of performance, the parties to contract are discharge from the liability from the beginning of the contract.

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Introduction to the Theory of Law & Law of Contract

QUESTION 3

One of the essentials of a contract is agreement or consensus. In the following scenario, describe, in no more than one sentence for each step, what is happening on the path to consensus. (a) The employer issues a set of documents seeking a contractor to build a hotel. (b) A contractor responds, quoting a price to do the work on certain terms. (c) The employer accepts most of the terms, but rejects others. (d) The contractor withdraws all of the terms to which the employer objects, but increases the original price. (e) The employer issues an order to the contractor to commence work, but quotes the original price. (f) The contractor moves onto site to start work.

ANSWER 3

(a) Employer requests an offer based on some defined conditions, from contractor with an intention to create contract. (b) Contractor submitted a Conditional offer for acceptance to the Employer with an intention to create contract.

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Introduction to the Theory of Law & Law of Contract (c) Employer revised the initial conditions of the request for offer, considering acceptable terms proposed by contractor and requested offer from the contractor with an intention to create contract. (d) The Contractor and Employer comes to same understanding of most of the essential terms, except price. (e) By issuing order Employer expresses his agreement and expressed common understanding of all terms of the revised proposal but rejects the change in Price (quotes same price). (f) By moving to work on site the Contractor expresses agreement to the issued order by his conduct, which leads to the mutual consent (same mind or understanding) of the parties about change in requirement with original price (essential or material factors of the agreement).

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Introduction to the Theory of Law & Law of Contract

QUESTION 4

Explain the concept of mora in South African law. Include in your discussion the meaning, different types, and application of mora.

ANSWER 4

Bhana, Bonthuys & Nortje (215:2010) while defining mora states as follows:

Mora happens when performance is not made on time.

Hence the term mora means delay or default in performance, while performance is possible to be carried out. Under a contract a person is said to be in mora, when he/she does not perform under stipulated timing in the contract. However if the duration for the performance is not stated in the contract, party to the contract must demand the performance to be done in a reasonable time, and after that reasonable time, if other party fails to perform, he/she will be said to be in mora.

Where the timing was stipulated in to the contract the mora is named as mora ex re and where the timing was not stated in to the contract but the performance was demanded by one party from another party by stipulating

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Introduction to the Theory of Law & Law of Contract reasonable time, in this case the party who fails to perform is in mora, and this mora is named as mora ex persona.

Further Bois et al (858:2011) while defining the forms of breach states:

The breach may take one of the following forms, each of which will be discussed in turn: mora debitoris; mora creditoris; positive

malperformance; repudiation; and rendering performance impossible.

Hence it can be seem that mora debitoris and mora creditoris are the forms of breach, that is mora is of two types that is mora debitoris and mora creditoris, which is further divided in to two types that is mora ex re and mora ex persona as stated before.

Mora Debitoris:

It is defined as the late performance by a debtor, where the performance of the debtor is due, enforceable under contract and possible for debtor to execute. For example A has a valid contract with B, where A has to delivery a car to B, before 31st of January 2012, however by 1st February 2012, A fails to deliver the car to B, whereas there was nothing which was preventing him to perform the contract, that is to deliver the car, and B was ready to receive the car. In this case A is said to be mora Debitoris.

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Introduction to the Theory of Law & Law of Contract Mora ex re: In the above-mentioned case, if the date of delivery was

mentioned in the contract and A fails to deliver the car by 1st February 2011, A is in mora ex re.

Mora ex persona: In the above-mentioned example, if the date of delivery is not mentioned in the contract, in that case B has to give reasonable notice to A to deliver the car. If after passing the reasonable time, A fails to deliver the car, though there was nothing to stop him from performance, A is in mora ex persona.

However in case where the contract does not state timing but the debtor knows that the performance needs to be made urgently. For example calling an ambulance from a hospital in case of emergency, if the hospital does not sends the ambulance within reasonable time, the hospital is said to be in mora.

As the mora is an ongoing breach of contract, when the party to contract fails to perform, after the deadline stipulated in the contract or reasonable duration notified to the party, the party is in mora and will remain more until he performs the contract. If during the time when party is in mora, and the performance becomes impossible, the party will remain in mora and failure to perform will be considered as breach of contract and debtor may have to face consequences of breach of contract.

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Introduction to the Theory of Law & Law of Contract

Since, during mora if one party does not perform, he will be under breach of contract. Other party has right to Specific Performance or Right to Damage or Right to Cancel the Contract on basis of mora. The party can elect either specific performance or cancellation but not both together, yes damages can be claimed alone or either with specific performance or cancellation, if applicable. For cancellation the party needs to satisfy few specific requirements before canceling, such as the court directed specific performance to the party in mora and again he fails to perform by the time provided. Other party can cancel the contract. Or if the contract provides provision of termination under certain circumstances and those circumstances has been fulfilled, the party can cancel the contract.

Mora Creditoris:

In a contract both parties has right and duty, if the creditors does not provide co-operation, which is required under the contract, so that debtor can fulfill his/her obligation, creditor is said to be in mora. For example, the debtor came to deliver the car (as per agreed specification) to creditor on agreed date but creditor was not there to receive the car, though there was no forced circumstances which was making him/her not to be present there to accept the car, hence creditor is in mora from next day.

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Introduction to the Theory of Law & Law of Contract Since in this case creditor has obligation to receive on due date, debtor is performing as per contract, however creditor failed to perform (receive), there was no case of maior or casus fortuitus and performance was possible. Hence the creditor is in mora

The day the party becomes mora creditor and if other party is in mora debitoris, he comes out of mora. Further from the day creditor is in mora, he/she is responsible for damage or impossibility of performance, the surety for the debt is released and he/she becomes liable for payment of interest on the debt.

In this case debtor has an option for specific performance, cancellation of contract or damage.

The party can elect either specific performance or cancellation but not both together, yes damages can be claimed alone or either with specific performance or cancellation, if applicable. For cancellation the party needs to satisfy few specific requirements before canceling, such as giving reasonable notice to creditor or if the time is essence or if there is a provision in the clause to cancel.

In case of mora creditoris too, when there if timing is clearly stated the creditor does not perform he is in mora ex re and if debtor gave him

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Introduction to the Theory of Law & Law of Contract reasonable time and even after this reasonable time, the creditor does not perform he is in mora ex persona.

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BIBLIOGRAPHY

Anonyms (Time not stated). The presumption of negligence [online]. Website: Department Water Affairs, Republic of South Africa. Available from: http://www2.dwaf.gov.za/webapp/Documents/ForestFire/192.168.10.11/nvffa. nsf/1974327a06c616da42256dff0046dc16/4cebe8548525b66a42256dfe0074 beed/$FILE/Presumption%20of%20negligence.ppt#283,1,The presumption of negligence [Accessed 07 August 2011]

Anonyms (Time not stated). The Evidentiary Burden [online]. Website: factoidz. Available from: http://factoidz.com/the-evidentiary-burden/

[Accessed10 August 2011]

Anonyms (2011). Introduction to the Theory of Law. South Africa: Association of Arbitrators, Southern Africa

Bhana, Bonthuys and Nortje (2010). Business Transactions Law. 2nd Impression. South Africa: Juta Law

Bois, Bradfield, Himonga, Hutchison, Lehmann, Roux, Paleker, Pope, Merwe and Visser (2011). Willes Principles of South African Law. 9 th Edition. South Africa: Juta Law

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Introduction to the Theory of Law & Law of Contract Christie & Bradfield (2011). The Law of Contract in South Africa. 6 th Edition. South Africa: Lexis Nexis

Kleyn and Viljoen (2011). Beginners Guide for Law Students. 4th Edition. South Africa: Juta Law

Plessis and Hees (2009). An Introduction to Law. 3rd Edition. South Africa: Juta Law

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