Law of Contract

Unit 6 (Contractual Capacity)

(2023)
Introduction and Overview to Contractual Capacity

What is Contractual Capacity?

“it is the competence to create rights and duties by concluding

contract with another person / persons” (Hutchison & Pretorius)

• Natural people?
• Legal capacity can be impacted by:
✓ Attributes; or
✓ Circumstances.

Footnote 2
Introduction and Overview to Contractual Capacity

• Contractual capacity is the ability to create rights and duties by concluding a contract with
another party.

Natural Persons Juristic Persons State

Persons without contractual

capacity • Some artificial
entities have
contractual
capacity

Persons with limited contractual • Some artificial

capacity entities do not have
contractual
capacity

Persons with full contractual

capacity

Footnote 3
Natural
Person
 Natural Persons
Persons without Contractual Capacity
• Mentally ill

✓ Cannot appreciate the nature & consequences.

✓ Administrator can act on their behalf.

✓ Section 39(1)(a) of the CPA

• Infans

✓ These are persons under the age of 7.

✓ Guardian can sometimes act on their behalf.

• Intoxicated

✓ Does not know they were entering into a transaction or did not have an idea of the
provisions etc.

✓ It is not enough for the their judgement to be impaired.

✓ Note exception in Hutchison & Pretorius!

Footnote 5
Natural Persons
Persons with Limited Contractual Capacity

• Contract with the assistance or consent of another person.

• Minors (Note commentary in Hutchison & Pretorius)

✓ Between ages of 7 and 18.

✓ Assistance or consent of guardian to contract.

✓ Ratification?

✓ Emancipation?

✓ Section 39(1)(b) of the CPA.

WHAT IS THE DIFFERENCE BETWEEN RATIFICATION AND

RECTIFICATION?

Footnote 6
Natural Persons
Persons with Limited Contractual Capacity

• Married Persons (Note: commentary in Hutchison & Pretorius)

✓ Contractual capacity of persons married out of community of property are
remain unaffected.
✓ Persons married in community of property bind the joint estate and certain
transactions require the consent of the other spouse.

Formalities
Links to Unit 7 -
✓ Section 15 Matrimonial Property Act requires:
▪ Informal consent
▪ Written consent
▪ Written consent with two witnesses

For further explanation, see the following article Van Eck, M “Citing spouses
married in community of property in contracts” Without Prejudice March 2022,
34-35.

Footnote 7
Natural Persons
Persons with Limited Contractual Capacity

• Insolvent Persons (Note commentary in Hutchison & Pretorius)

✓ The insolvent may enter into contracts provided that he does not dispose of
any of the assets of the estate.

✓ Insolvent requires written consent of the trustee.

• Prodigals (Note commentary in Hutchison & Pretorius)

✓ Contractual capacity of a prodigal resembles that of a minor.

✓ Curator’s assistance and consent.

✓ If a prodigal contracts without the curator’s assistance the the contract is

voidable.

Footnote 8
Juristic
Person
Juristic Persons
• This can be described as an artificial entity.

• Juristic persons with contractual capacity, includes:

✓ Companies.

✓ Close Corporation.

✓ Bodies incorporated by statute.

✓ Certain voluntary associations.

• Will act through their representatives.

• Not all juristic persons have contractual capacity.

Footnote 10
State
The State

Contracting Party Contracting Party

State as Contracting Party

Citizen / Corporate Citizen as Contracting Party

Footnote 12
Concluding
Thoughts

“Keep going, don’t give up – you can

do it!”

– Prof. M