Christie's

Law of Contract

in

South Africa

Seventh Edition

by
GB BRADFIELD
BCOM LLB (Natal, Durban) LLM (Cape Town)
Associate Professor, Department of Commercial Law, University of Cape Town
Attorney of the High Court of South Africa

Original text by

RH CHRISTIE
QC MA LLB (Cantab) FCIArb FAArb

D* LexisNexis1
 CONTENTS

Page
Preface v

Chapter 1: Historical introduction 1

1.1 Theories of contract 1
1.2 The Roman concept of contract 3
1.3 The Roman-Dutch concept of contract 6
1.4 The modern South African concept of contract 8
1.5 Current issues 12
1.5.1 Introduction 12
1.5.2 Unfair contracts 12
1.5.3 Public policy and the effect of the Constitution 18
1.5.4 Consumer legislation 23

Chapter 2: Agreement 27
2.1 Proof of agreement 28
2.1.1 Two or more parties 28
2.1.2 True agreement 29
2.1.3 Quasi-mutual assent 31
2.1.4 Approach to ascertaining agreement 36
2.1.5 Time and place of contracting 36
2.2 Offer 37
2.2.1 Introduction 37
2.2.2 Animus contrahendi (intention to contract) 37
2.2.3 Offer unequivocal 40
2.2.4 Preliminary negotiations 40
2.2.5 Advertisements, circulars, catalogues, price tickets 48
2.2.6 Calling for tenders 52
2.2.7 Auctions 55
2.2.8 Communication of offer 58
2.2.9 Termination of offer 59
2.2.10 Options and rights of pre-emption 66
vii
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2.3 Acceptance 70
2.3.1 Necessity for acceptance 70
2.3.2 Who may accept 71
2.3.3 Knowledge of offer 73
2.3.4 Acceptance unequivocal 74
2.3.5 Acceptance must correspond with offer 75
2.3.6 Method of acceptance 78
2.3.7 Silence as acceptance 80
2.3.8 Communication of acceptance 82
2.3.9 Contracts made by post 85
2.3.10 Telegrams 90
2.3.11 Telephone, telex, fax, e-mail etc 92
2.4 Contracts without offer and acceptance 94
2.4.1 General 94
2.4.2 Tacit contracts 96
2.5 Offer and acceptance without contract 106
2.5.1 General 106
2.5.2 Lack of animus contrahendi (intention to contract) 106
2.5.3 Agreements that cannot in law be contracts 108
2.5.4 Agreements that the courts are unable to enforce 109
2.5.5 Initial impossibility 109
2.5.6 Contracts void for vagueness 112

Chapter 3: Formalities 123

3.1 Introduction 123
3.2 Formalities decided on by the parties 125
3.3 Formalities required by law 129
3.3.1 General 129
3.3.2 Alienation of land 131
3.3.3 Executory donations 147
3.3.4 Contracts of suretyship 149
3.3.5 Miscellaneous contracts 153
3.3.6 Notarial execution 153
3.3.7 Registration 154

Chapter 4: Conditional contracts 155

4.1 What is a condition? 155
4.1.1 Promise dependent upon past or present fact 156
4.1.2 Modal clauses {modus) 157
4.1.3 Time clauses (dies) 157
4.1.4 Terms of the contract 159
4.1.5 Conditions destructive of the contract 162
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4.1.6 Suspensive and resolutive conditions 164
4.1.7 Onus of proof 165
4.2 Pending fulfilment of the condition 166
4.2.1 Suspensive condition 166
4.2.2 Resolutive condition 167
4.3 Fulfilment and non-fulfilment of conditions 167
4.3.1 What amounts to fulfilment 167
4.3.2 Time for fulfilment 169
4.3.3 Resolution of uncertainty by other events 170
4.3.4 Effects of fulfilment and non-fulfilment 170
4.3.5 Fictional fulfilment and non-fulfilment 173

Chapter 5: Terms of the contract 179

5.1 Ascertaining the terms 179
5.1.1 Proof. 180
5.1.2 Distinction between terms and other statements 182
5.2 Implied and tacit terms 186
5.2.1 Terminology 186
5.2.2 Terms implied by law 187
5.2.3 Terms implied by trade usage 190
5.2.4 Tacit terms 196
5.3 Written terms 205
5.3.1 Signed documents - caveat subscriptor. 205
5.3.2 Unsigned documents - the'ticket cases' 210
5.3.3 Exemption clauses 216
5.4 Interpretation 225
5.4.1 Parol evidence or integration rule 226
5.4.2 Extrinsic evidence in aid of interpretation 239
5.4.3 Approach to interpretation of contracts 240
5.4.4 Rules of interpretation 256

Chapter 6: Parties to the contract 265

6.1 Contractual capacity 265
6.1.1 The State 266
6.1.2 Corporations 267
6.1.3 Married persons 268
6.1.4 Minors 271
6.1.5 Mentally unfit persons 287
6.1.6 Intoxicated persons 290
6.1.7 Insolvents 291
6.1.8 Prodigals 292
x Christie's Law of Contract in South Africa
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6.2 Plurality of parties 293
6.2.1 Co-debtors 294
6.2.2 Co-creditors 299
6.3 Privity of contract 302
6.4 Contracts for the benefit of a third party 303
6.4.1 Development of the contract for the benefit of a third party 303
6.4.2 Requirements for enforceability 305

Chapter 7: Misrepresentation and fraud 315

7.1 General effect of misrepresentation and fault 315
7.2 Misrepresentation 316
7.2.1 By whom the misrepresentation is made 316
7.2.2 The meaning of 'misrepresentation' 318
7.2.3 Misrepresentation by silence 322
7.2.4 Misrepresentation must be material 326
7.2.5 The intent with which the misrepresentation is made 328
7.2.6 Misrepresentation must induce the contract 330
7.3 The effect of misrepresentation on the contract 332
7.4 Fault and damages 341
7.4.1 Fault 341
7.4.2 Measure of damages 344

Chapter 8: Duress and undue influence 349

8.1 Duress 349
8.1.1 Introduction 349
8.1.2 Requirements 351
8.1.3 The effect of duress 358
8.1.4 Duress by a third party 358
8.2 Undue influence 359
8.2.1 Introduction 359
8.2.2 Requirements 359
8.2.3 The effect of undue influence 361
8.2.4 Undue influence by a third party 362
8.3 Consumer legislation 362

Chapter 9: Mistake 365

9.1 The meaning of 'mistake' 365
9.2 Unilateral mistake 366
9.2.1 Introduction 366
9.2.2 No knowledge imputable to the other party 367
9.2.3 Knowledge imputable to the other party 370
9.2.4 Unilateral mistake caused by the other party 372
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9.3 Mutual mistake 375
9.4 Common mistake 379
9.4.1 The meaning of'common'mistake 379
9.4.2 Rectification 383

Chapter 10: Illegality and unenforceability 391

10.1 Introduction 392
10.2 Statutory illegality and unenforceability 392
10.3 Common-law illegality and unenforceability 401
10.3.1 Contracts injurious to the State 407
10.3.2 Contracts injurious to the administration of justice 408
10.3.3 Contracts encouraging crime, delict and other unlawful acts 414
10.3.4 Contracts injurious to the institution of marriage 417
10.3.5 Pacta successoria 419
10.3.6 Restraint of trade 420
10.3.7 Gambling 439
10.3.8 Miscellaneous contracts 444
10.4 Illegality of purpose 446
10.5 Effects of illegality 448
10.5.1 Severability - special applications 448
10.5.2 Severability in general 451
10.5.3 Unenforceability 454
10.5.4 Collateral and connected transactions 458
10.5.5 Recovery of money or property 460

Chapter 11: Performance 467

11.1 The effect of performance 467
11.2 Tender of performance 468
11.3 By whom performance may be made 471
11.4 To whom performance may be made 472
11.5 Performance in forma specifica or per aequipollens 475
11.6 Payment of money 477
11.6.1 General 477
11.6.2 Guarantee of payment 479
11.6.3 Methods of payment 480
11.6.4 Payment by instalments 484
11.7 Reciprocal obligations and the exceptio non adimpleti contractus 486
11.7.1 The principle of reciprocity 486
11.7.2 Incomplete performance 491
11.7.3 Quantum meruit 493
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11.8 Appropriation of payments 494
11.9 Time of performance 498
11.10 Place of performance 498
11.11 Proof of payment 500

Chapter 12: Discharge and variation 503

12.1 Introduction 503
12.2 By act of the parties 504
12.2.1 Termination by notice 504
12.2.2 Variation and discharge by agreement 506
12.3 Variation and discharge by operation of law 547
12.3.1 Supervening impossibility 547
12.3.2 Set-off {compensatio) 552
12.3.3 Merger {confusio) 559
12.3.4 Prescription 560
12.3.5 Insolvency, liquidation 580
12.3.6 Death 583

Chapter 13: Mora and breach 585

13.1 Mora and breach generally 585
13.1.1 Forms and effects 585
13.1.2 Breach of contract and delict 587
13.2 Mora 589
13.2.1 The concept of mora 589
13.2.2 Time for performance 590
13.2.3 Consequences of mora 599
13.2.4 Mora creditoris 605
13.3 Breach 607
13.3.1 Forfeiture clauses 607
13.3.2 Material breach of an essential term 607
13.3.3 Anticipatory breach and repudiation 610
13.3.4 Instalment contracts 613

Chapter 14: Remedies for breach 615

14.1 Introduction 616
14.2 Specific performance 616
14.2.1 Definition 616
14.2.2 Plaintiffs entitlement to specific performance 618
14.2.3 When specific performance will not be granted 619
14.2.4 Specific performance and damages 626
14.2.5 Miscellaneous points on specific performance 627
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Page
14.3 Interdict 628
14.3.1 Introduction 628
14.3.2 Interdict as a form of specific performance 629
14.3.3 Interdict to protect other rights 632
14.4 Declaration of rights 634
14.5 Cancellation 636
14.6 Damages 641
14.6.1 Causation 641
14.6.2 The nature of damages for breach of contract 642
14.6.3 Nominal damages 647
14.6.4 Prospective damages 649
14.6.5 'Once and for all' rule 650
14.6.6 Remoteness 651
14.6.7 Mitigation of damages 655
14.6.8 Collateral benefit principle 656
14.6.9 When damages to be calculated 657
14.6.10 Plaintiff must not be over-compensated 658
14.6.11 Apportionment of damages 659
14.6.12 Damages in particular cases 660
14.7 Conventional Penalties Act 661

Bibliography 667

Table of cases 673

Index 789