CONTENTS OF THE CONTRACT

TERMS
A term of the contract imposes an
obligation to act,or to refrain from
acting, in a particular manner
HOW DO YOU KNOW WHAT THE
TERMS ARE?

i.e. How Do You Know What Is Required
Of You Under The Contract?


= READ THE CONTRACT!




But what if contract silent on
a particular point???


EG: Hire premises R10 000pm, to start 1 April
2011.
No mention condition of premises, when rental
payable, duration of lease.
Is lease invalid?

HOW DO YOU KNOW WHAT
THE TERMS ARE?


EXPRESS + IMPLIED



EXPRESS = Essentialia + Incidentalia
Reached through negotiation or imposed
by supplier/service provider


IMPLIED = 3 WAYS

i. By law (Residual/Naturalia)

ii. On the Facts (Tacit)

iii. By Trade Usage

Terms implied by law
(residual
terms/naturalia)
Only exist in relation to specific types
of contracts (eg
sale/lease/agency)

Only part of contract if contract silent
on point (i.e. in absence express
term to the contrary)!

EG: rental. Law of lease says residual
term that rental payable in arrears.
But most contracts state rental
payable in advance.
TERMS IMPLIED ON THE FACTS
(TACIT TERMS)
1. Are the courts readily willing to read
a tacit term into the contract?

2. What must the court be satisfied of
b4 it will accept that there was a tacit
term in the contract?

3. What test does the court use to
determine whether the parties intended,
at the time the contract was concluded,
to include such a term in their contract?

4. How does this test work?

Eg: West Witwatersrand Areas v Roos
1936 AD

Cf Strydom v Duvenhage 1998 (SCA)
5. Even if the term is necessary to
make the contract a commercially
effective one, does this mean that the
court will always import a tacit term into
the contract?

Eg: Voigt v SAR 1933 CPD


6. Under what other circumstances will
a court NOT imply a term into the
contract?

Eg: FNB v TVL Rugby Union 1997 (W)




TERMS IMPLIED BY TRADE USAGE
1. What requirements must be satisfied
b4 a court will read a term into the
contract on the basis of trade usage?



2. Is knowledge relevant?

Eg: Coutts v Jacobs 1927 (EDL)



Imposed Terms
a. What are imposed terms?

b. Are imposed terms valid and
binding?

Signed Unsigned


Caveat subscriptor Tickets/Notices
& mistake
(Ndlovu/Spindrifter)


c. Common examples of imposed
terms:

no representations made (S51 CPA)
no liability for any harm/damages
caused
no liability for breach common law rights



c. In the case of tickets & notices, what
must party relying on the terms of the
ticket/notice prove to the court?

i. Nature of the document
Chapelton v Barry Urban District Council
1940

ii. Prominence of the notice & writing
Yeats v Hoofwegmotors 1990
Durbans Water Wonderland v Botha 1999
(SCA)

iii. Imposed at or before contract
concluded
Olley v Marlborough Court Ltd 1949






NOT
LIABLE
Durbans Water Wonderland
v Botha 1999 SCA
The amenities which we provide at
our amusement park have been
designed and constructed to the best
of our ability for your enjoyment
and safety. Nevertheless we regret
that the management, its servants
and agents, must stipulate that they
are absolutely unable to accept
liability of responsibility for injury
or damage of any nature whatsoever
arising from negligence or any other
cause howsoever which is suffered
by any person who enters the
premises and/or uses the amenities
provided.
The
amenities
which we
provide at
our
amusement
BUT: COURTS INTERPRETED TERMS
RESTRICTIVELY !!!

Minister of Education v Azel 1995 (A)
I fully understand and accept that all tours and
excursions shall be undertaken at my childs
own risk and I undertake, on behalf of myself
and my child to indemnify, hold harmless
and absolve the Department, principal and
staff of the school against and from any or all
claims that may arise in connection with any
loss/damage to property or injury to the
person of my child in the course of the
tour/excursion, in the knowledge that the
principal and his staff will, nevertheless, take
all reasonable precautions for the safety and
welfare of my child.


Barnard v Protea Assurance Co1998 (C)
no cover if death occasioned by participation in
skin diving or any other sport involving
exceptional risk of accident

CONSUMER PROTECTION ACT
Notice required for certain terms and conditions

49. (1) Any notice to consumers or provision of a
consumer agreement that purports to

(a) limit in any way the risk or liability of the supplier or
any other person;

(b) constitute an assumption of risk or liability by the
consumer;

(c) impose an obligation on the consumer to indemnify
the supplier or any other person for any cause; or

(d) be an acknowledgement of any fact by the
consumer,

must be drawn to the attention of the consumer in a
manner and form that satisfies the formal
requirements of subsections (3) to (5).

S51(1)(c): A supplier must not make a contract subject
to any term if it purports to limit or exempt the
supplier from liability for loss attributable to the gross
negligence of the supplier

(3) A provision, condition or notice must be
written in plain language, as described in
section 22.
(4) The fact, nature and effect of the provision
or notice
(1) must be drawn to the attention of the
consumer
(a) in a conspicuous manner and form that is
likely to attract the attention of an
ordinarily alert consumer, having regard to the
circumstances; and
(b) before the earlier of the time at which the
consumer
(i) enters into the transaction or agreement,
begins to engage in the activity, or enters or
gains access to the facility; or
(ii) is required or expected to offer
consideration for the transaction or
agreement.

(5) The consumer must be given an adequate
opportunity in the circumstances to
receive and comprehend the provision or
notice as contemplated in subsection (1).

2) In addition to subsection (1), if a provision or
notice concerns any activity or facility that is
subject to any risk

(a) of an unusual character or nature;

(b) the presence of which the consumer could not
reasonably be expected to be aware or
notice, or which an ordinarily alert consumer
could not reasonably be expected to notice or
contemplate in the circumstances; or

(c) that could result in serious injury or death,

the supplier must specifically draw the fact, nature
and potential effect of that risk to the attention
of the consumer in a manner and form that
satisfies the requirements of subsections (3) to
(5), and the consumer must have assented to
that provision or notice by signing or initialling
the provision or otherwise acting in a manner
consistent with acknowledgement of the
notice, awareness of the risk and acceptance
of the provision.

Common Contractual Terms


Time terms
Term that states performance due on
date/event that is certain to happen.

Complete house by 31 May 2011.
Deliver car on or before 1 May.
Pay rental 1
st
Monday of every month.
Pay R1million on death of X.

What if no time term?



Common Contractual Terms
Conditions
Term that makes performance, or
continued performance, contract
dependant on happening of an uncertain
future event.
Contract for sale house, subject condition buyer
obtains loan from approved financial institution
for R1.2 million.
Contract to build new university residence,
provided obtain approval from authorities.
Pay maintenance until youngest child turns 25 or
completes university, whichever the earlier.
Scholarship to pay annual university fees till
graduate, provided get 60% average for each
subject.
Suspensive condition valid contract, but
contract only comes into operation IF
condition fulfilled. If not fulfilled, contract
fails.
Resolutive condition Contract valid &
operational but contract terminates IF
condition fulfilled.



Common Contractual Terms
Warranties
Term that confirms (warrants) that a particular
fact is true.
Painting is by Pablo Picasso.
Guitar once owned by Elvis Presley.
Car can reach 180km/h in 10 seconds.

Cancellation Clauses
Term that allows party to cancel for breach
even if breach not material.
Landlord has right to cancel if tenant late with rental
payment.

Penalty Clauses
Term in which agreed penalty (damages)
payable in event breach contract.
What if actual damages higher/lower?
Deduct R1000 per day for each day building completion
overdue.
Add R1000 per day for each day contractor unable to
continue building for stoppages that fault of client.