BSCI 111:

STUDY
LAW OF
CONTRACT
SECTION 2.1

2024-05-22
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2
 WHERE DO I FIND MY
LEARNING OUTCOMES?

TEXTBOOK
• 2.1: eFundi
• 2.2 & 2.3: Chapter 4 in Business Law [par:4.01 - 4.106] =
[p:62 – 78]
 Terms in contracts 4
• Terms are
stipulations, incorporated into the contract,
TERMS & which the parties have agreed upon and
CONDITIONS which bind them to perform.
APPLY…
• Terms comprise both
CLAUSES
the stipulations that the parties include in their
WITHIN A contract (negotiations) and
CONTRACT
those provisions which are included by operation
of law (not against any act/rule/regulation).

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5
Terms may be classified as:
• essentialia
• naturalia or
• incidentalia

Essentialia:
Distinctive terms used to identify or classify a contract. The
essence of a contract without which a contract cannot subsist (be
in place) and if the essence is "not included" into the contract:
there is either no contract or a contract of a different kind.
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• Naturalia

• terms automatically included, by operation of law (ex lege),

• are based on what is fair and reasonable:
• Parties may exclude or vary naturalia by express agreement (in writing).

◦ Incidentalia:

additional terms agreed upon expressly by the parties which

supplement or modify the rights and duties incorporated by law into a
particular contract.
DISCUSSING THE LEARNING 2024-05-22

OUTCOMES
7 " for performance to take place, something
must happen/occur/take place: in the future"

Time clauses
Definition: A time clause (dies) is
1) a contractual term
2) which makes the existence of an obligation/performance
3) dependent on an event or time
4) that is certain to arise in the future.
 8

An example of a suspensive time clause:

Real life example
Advert:
A car buyer to take the purchased
SUSPENSIVE vehicle now, but only commence
TIME payment in three weeks.
CLAUSE
• In other words, the agreement suspends
the date of payment until a certain date
in the future.

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RESOLUTIVE TIME CLAUSE

1. ….the duration of the contract,

2. ….then the contract will cease.
Although it comes into existence and is performed right away, it
will at a certain future point be resolved and the obligation
terminated.

Real life example

• Lease contracts
• Fixed period contracts of employment
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CONDITIONS:

• Conditions are usually classified as:

the effect (something must happen) of the
fulfilment of the:
• condition
• obligation
• performance
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11

• A suspensive condition:
suspends the operation of all or some of the obligations
flowing from the contract until the happening of a
future, uncertain event.
• A resolutive condition:
terminates all or some of the obligations flowing from
the contract upon the happening of a future and
uncertain event.
EXAMPLE:
EXAMPLE: SUSPENSIVE CONDITION

The following conditions are common examples of a

suspensive conditions:

•A condition requiring the purchaser to obtain approval of a

loan from a financial institution, within a specified period, to
finance the acquisition of the property.

•A condition that provides that the buyer first needs to sell his
existing property.
EXAMPLE: RESOLUTIVE CONDITION

- A practical example of a resolutive condition which stipulates

that, if the seller does not provide proof that the building
plans for the property sold have been approved by the
relevant authorities by a specific date, the agreement will
terminate.
- The fulfilment of such a condition renders the agreement null
and void. In other words, if the seller does not provide the said
proof by the agreed date, all the rights and obligations of the
parties shall immediately cease to exist, and the parties may
then need to be restored to their respective pre-contractual
states.
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Cession clause:

Cession is an act of transfer of a personal

right or claim.
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Requirements
• The cedent must have a primary claim
against the debtor.
• The cedent must be entitled to dispose of
that personal right.
• The personal right must be capable of
cession
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17
Interpretation of clauses

Self Study slide 18 -23

18 STEP 1 2024-05-22

• Step 1:

• The intention of the parties

• "The golden rule applicable to the interpretation of all
contracts is to ascertain and to follow the intention of
the parties"
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• Step 2:

• Textual context – Clauses we are dealing with…

1) Resolutive Time or Condition clause

2) Suspenisuve Time or Condition clause
3) Cession clause
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• Step 3:
Parol evidence rule / The rule against extrinsic evidence
and
Rectification.

• Where the parties have decided that a contract should be recorded in

writing, their decision must be respected and the resulting document
accepted as the sole evidence of the terms of the contract.
• … if a written contract incorrectly reflects the preceding oral agreement or
the true intention of the parties due to an oversight or mistake, the parties
can claim the correction or rectification of the written document in order
to reflect their agreement correctly….
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21

How is rectification claimed?

• Extrinsic evidence allowed
• Including negotiations

to convince the court to order the document's rectified.

 LASTLY
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When all rules are exhausted

• If a court, having gone through all the rules of
interpretation, is still unable to give meaning to the
contract (in which case it must have been too poorly
written to admit of any interpretation), it will be
declared void for vagueness.
• Pro non scripto.
http://study.com/academy/less
on/parol-evidence-rule-definiti
on-examples-purpose.html
 •The terms: 24
• “extrinsic evidence” and
• “parol evidence rule”
THE
OPINION •are neither essential nor helpful to answer
OF SOME questions about the terms of a written
contract.
SCHOLARS:
•The inquiry should focus on balancing the
weight to be given to text with that to be
given to context.

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25 PRACTICAL APPLICATION:
• Abel King signs a contract with Barty
Prince in terms of which he sells Monde-
Monde (a Art Gallery), subject to certain
conditions.
• No time is fixed for the fulfilment of the
condition.
• What is the legal position?
26
According to Botha J in Design
and Planning Service v Kruger
1974 1 SA 689 (T) , it is
“inconceivable that the parties
could have intended the contract
to remain in a state of
suspension indefinitely” in such
a situation.
This will not be the case if there
is something in the contract
which negates the implication of
such a term.
05/22/2024
Once a reasonable time for
fulfilment of the condition has
lapsed, the contract is
discharged automatically by
virtue of an implied term to
that effect.
Ordinarily, no action on the part
of either of the parties
equivalent to a placing in mora
of the other in relation to the
fulfilment of the condition is
required before the contract
comes to an end.
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28

STUDY UNIT 2.2

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29
30

The different forms of breach:

• Delay by the debtor (Mora
Debitoris)
• Delay by the creditor (Mora
Creditoris)
• Positive malperformance
• Repudiation
• Rendering performance impossible

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1. MORA DEBITORIS

A debtor in delay to perform in terms of the

contract
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• A and B agreed that A would build a patio for B.

• The date of completion : 1 April 2012
• 1 April 2012: The building work was not
completed.

• 1....Agreed
• 2....Patio = performance
• 3....Date/time = performance
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CHECKLIST

• Performance is still possible

• The Debtor does not perform in time in terms of the contract
[Timeframe wherein the debtor was supposed to do something. No further
demand necessary. If there was no specific time mentioned in the contract for the
performance, further demand (for the debtor to perform), in writing or orally, is
necessary. This further demand then forms the basis for mora.]
• The performance is due and enforceable → To which the debtor has no
defense
• The delay to perform is the fault of the debtor - The debtor must have
acted either intentionally or negligently
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2. MORA CREDITORIS

The creditor, due to his fault, fails to accept (or

fails to co-operate) proper performance by the
debtor
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• A and B agreed that A would commence with the

building of the patio on 1 April.
• They agreed that B would purchase the building
material.
• On 1 April A arrived at B's house only to find that
B has not purchased the material. Consequently A
could not start with the work.
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36
What happens if performance is not possible
because the creditor hindered the debtor?

• Where parties have to perform simultaneously

(reciprocity)
• the defendants’ remedy = exceptio non adimpleti
contractus
• the defendant has the right withhold his performance
until the other party performs
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CHECKLIST: MORA CREDITORES

a) Performance is still possible

BUT because of the creditors conduct, performance is
rendered impossible = breach of contract

b) Creditor delays performance

If the creditor through his lack of co-operation renders
performance impossible= breach of contract
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c) Performance due and enforceable

GENERAL RULE: Creditor is under no obligation to accept
performance or to co-operate IF performance is not yet due
and enforceable.
d) Proper performance offered by debtor
e) Delay due to creditor’s fault
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3. POSITIVE MALPERFORMANCE

There is performance, BUT not the performance

agreed upon.
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40

A ordered building material from Beautiful Wood

Manufacturers.
They agreed that the material would be made of solid
oak.
On the day when the (wood) building material was
delivered, A noticed that it was not made of oak, but
of another cheaper type of wood.
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4. REPUDIATION

A behave in such a way so that the

reasonable person will also concludes that
A does not intend to fulfill his part of the
contract.

The test is an objective test.

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42

• A and B agreed that B and his team will work at a

daily rate of R100.00 per worker until the completion
of the patio. Time limit was also agreed: no more
than 14 days for completion of the patio.
• After 6 days B informed A that they were no longer
prepared to deliver at R100.00 per day but only at
R105.00 per day.
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5. RENDERING PERFORMANCE
IMPOSSIBLE

There is a valid contract, but through culpable

conduct, a debtor renders his own performance
impossible, or a creditor, through his own
culpable conduct, renders performance
impossible for the debtor.
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44

• A ordered 200 slabs of wood from B.

• World Wildlife Trust protest action against
cutting of oak trees.
• During this period B must by another form of
wood or oak at a higher price.
• B delivers only 100 slabs of wood.
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45 CASE STUDIES TO LINK WITH SS

2.3
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46 LG 2.2 & 2.3

Criteria/ Advise her with reference to the following aspects:

• Identify the form of breach of contract
• Define the form of breach of contract
• List requirements for the form of breach of contract
• Apply the requirements to the facts of the case study
• List the possible remedies by operation of law
• Apply the remedies to the case study
• Identify and list any contractual remedies
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47

Remedies will be induced as a term(s) of the contract

Remedies by operation of law:

• For the fulfillment of the contract

• For the cancellation of the contract

• Damages
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48

Remedies agreed upon [to extend the remedies are available in law]:

• Penalty clause in the contract [for fulfillment or cancellation]

• Contractually agree to cancel the contract in the event of a breach

(lex commissoria: for cancellation)

• Acceleration clause (to claim specific performance)

 49 HANDOUT 05/22/2024

Form of breach: Mora Mora Positive Repudiation Rendering

Debitoris Creditoris Malperformance performance
impossible
Committed by: Dt Ct Dt Dt/Ct Dt/Ct

Relates to: Time for Time for Content of Intention to Possibility of

performance performance performance honour the performance
contract

How committed? Dt fails to Ct fails to Dt performs Party shows Party makes

perform on co-orperate badly intention Performance
time on time not to be impossible
bound

Fault required? Yes Yes Sometimes No: Yes

Objective -
test

Remedy?
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Innocent party's Remedy. When available: Additional

Options? remedies

(1) Terminate Remedies Law Lex commissoria o Damages

Contract Remedies Agree in Contract o Interest

General: Cancellation Mora DT

 Lex Commissoria
 Demand & Notice

Repudiation

Positive Malperformance

 Lex Commissoria
 Serious breach

Rendering performance
impossible

Mora CT
 Lex Commissoria
 Demand plus rescission
notice
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Innocent party's Remedy. When available: Additional

Options? remedies

 Exceptio non
adimpleti  Failure to perform –
(2) Keep in place contractus MD/MC

 Positive malperformance

Remedies Law  Repudiation

Remedies Agreed

 Specific
performance Court order o Damages

o Interest

 Interdict Court order

GROUP WORK
 53 05/22/2024

• Penny and Mr Darcy conclude a written agreement for the lease of

Mrs Darcy's apartment at the payment of R5000 rent payable on the
15th day of every month. The address where payment must take
place is included in the terms of the written agreement. Mr Darcy
mistakenly indicates his ex wife's estate address in the terms of the
contract and not his own address. On the 15 of March, Penny arrives
at Mrs Darcy's ex wife's estate address to effect payment of the
R5000 but is unable to perform in terms of the contract due to the
incorrect address provided. Penny comes to you for advice on
whether breach of contract has taken place.
REMEDY?
Mora
Exceptio creditoris
non adimpleti contractus(Delay of the creditor)
54
• Penny and Mr Darcy conclude a written agreement for
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the lease of Mrs Darcy's apartment at the payment of

R5000 rent payable on the 15th day of every month.
The address where payment must take place is
included in the terms of the written agreement. After
receiving her paycheck on 14th March, Penny informs
Mr Darcy that she will not pay him the R5000 rent
because she doesn't want to. Mr Darcy comes to you
for advice on whether breach of contract has taken
place.
Repudiation
REMEDY?
1. SPECIFIC PERFORMANCE
2. CANCELLATION
55 05/22/2024

• Penny and Mr Darcy conclude a written agreement for the lease of Mrs Darcy's
apartment at the payment of R5000 rent payable on the 15th day of every month.
The address where payment must take place is included in the terms of the written
agreement. Included in the written agreement is a clause which stipulates that Mr
Darcy may claim all outstanding rent once Penny is in delay with payment.
• After having received her paycheck on the 14th of March, Penny takes her friends
to the local bar and proceeds to become severely intoxicated. Upon waking the
following morning (15 March) she realises that she has no funds left to pay her
rent and decides not to pay her rent. Mr Darcy comes to you for advice regarding
this situation after not having received payment from Penny by 20 March.

Mora debitoris (Delay of the debtor)

REMEDY?
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• Amanda and Michelle conclude a written contract in terms of

which Amanda will deliver a rare orange rattlesnake to
Michelle on the 18th March 2015. In return Michelle will
make the payment of R5000 to Amanda on 12 March 2015.
Their written contract stipulates that Michelle may cancel the
contract only if the wrong performance is rendered and only
after 15 March 2015. On the 15th of March 2015 (and after
having received the payment of R5000) Amanda arrives at
Michelle's office with a rare white rattlesnake. Michelle comes
to you for advice on whether breach of contract has taken place.
Positive Malperformance
REMEDY?
57 05/22/2024
• Mr Visser and Michelle conclude a written agreement for
the sale of two elephants. In terms of their agreement
Michelle will pay R1 million for the two elephants
which will be delivered by Mr Visser on Saturday, 7
March 2015. On Friday, 6 March, Mr Visser attends the
birthday party of a prominent political leader and at this
birthday party, the two elephants are shot and barbequed.
Michelle comes to you for advice on whether breach of
contract has taken place.
Rendering performance impossible
REMEDY….Can the Elephants [agreed on] still be delivered if they were
barbequed and eaten…?
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58
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59 CLASS PARTICIPATION
True or False?

The remedy for termination of a contract

is referred to as cancellation.
True or False?

When a party to a contract requires

specific performance ito the contract,
he/she can just ask for performance.
True or False?

A contract can not be kept in place when

rendering performance impossible is
the form of breach of contract.
True or False?

Exceptio non adimpleti contractus is a

remedy that is used when requiring
fulfilment of a contract / keeping the
contract in place.
 SS 2.1: Paragraphs ito
Performance

NOTE
SS 2.2 & 2.3: Paragraphs ito
Breach and Remedy

SS 2.4: Assignment 1 [eFundi]