Are all the “i’s” dotted and “t’s” crossed in your Contract…?

All the Important things you need to know about Contract Law

Contract law provides a legal framework within which persons can transact business and exchange resources, secure in the knowledge that the law will uphold their agreements and, if necessary, enforce them. South African contract law is essentially a modernised version of the Roman-Dutch law of contract, which is itself rooted in canon and Roman laws. In the broadest definition, a contract is an agreement two or more parties enter into with the serious intention of creating a legal obligation. The law of contract underpins private enterprise in South Africa and regulates it in the interest of fair dealing.

For an agreement to serve and to be recognized as a valid and binding contract, it must meet the following requirements:

• CAPACITY: The parties must have the capacity to contract.
• OFFER & ACCEPTANCE: For an offer to be valid, it must be: Definite, Complete, Clear and Certain. For an acceptance to be valid, it must be: Unconditional; Unequivocal; Consciously accepted by the person to whom it was addressed; Compliant with any formalities set by law or the offeror.
• CERTAINTY: The agreement must have certain and definite terms. Contracts that are not certain are vague, and a court will not uphold them. There must be consensus between the contracting parties.
• FORMALITIES: Certain contract require certain formalities – e.g: a contract for sale of land must be in writing; similarly, suretyship agreements, credit agreements, ante nuptial (marriage) contracts, leases over ten years, and contracts for executionary donations must be reduced to writing and signed by the parties.
• POSSIBLE: The contractual obligations must be possible of performance – There can be no contract to do something that is impossible.
• LAWFUL: The agreement must be lawful and not against public policy. Like impossibility, there can be no valid contract to do something illegal.

The general rule is that a breach must be ‘material’ before the other party can get out of the contract. There is no rule for telling when a breach is ‘material’ – it will almost always depend on the facts of the case. A ‘material’ breach is a ‘serious’ breach: a failure in an important part of the agreement.

REMEMBER: It is very important that you read your contracts before signing them because the general rule is that you are bound by what you sign, whenever possible, look for assistance in doing so.