Chapter 5: Contractual Capacity

Question 1

Discuss legal capacity

Answer 1

A person or legal subject is the bearer of rights and duties. Therefore the person has legal capacity. All persons, being natural or juristic persons have legal capacity. Human beings are recognised as natural person ( from birth to death) while juristic person is an abstract person created in law, such as company that is created by registration.

Question 2

Explain contractual capacity

Answer 2

▪️The competence to perform a juristic act ( e.g. conclude a contract)
▪️The capacity consists of the following components:
- the ability to for a will or intention
- the ability to act sound judgement in accordance with such a will, meaning to realise the nature and extent of the consequences of the act

Question 3

What is a natural person?

Answer 3

▪️All human being are natural person. Legal capacity status differs. The status of a natural person is determined by his qualities(age and sex) and his circumstances(marriage or insolvency). The law and in certain instances the person himself can determine his status. Their status determines legal capacity.

▪️Person without contractual capacity
▪️inatural person who has limited contractual capacity
▪️person with full contractual capacity.

Question 4

Describe different persons without contractual capacity

Answer 4

1. Person under the age of seven ( parents or guardians manage rights and duties)
2. Mental health care user (administrator manages rights and duties)
3. Persons in a state of automatism or under the influence of medication or alcohol

Question 5

Discuss person under the age of seven contractual capacity

Answer 5

Infants do has no contractual capacity but has legal capacity but cannot perform any legal or juristic act in terms of which he obtains rights and duties. His parents or guardians may act on his behalf for purpose of the administration of the estate and for his maintenance and support, certain acts may not be performed by or behalf of infants. Children obtain rights and duties from the parents/guardian’s conduct.

Question 6

Explain mental health care user contractual capacity

Answer 6

In our law, every person is presumed to be sound mind, unless proof to the contrary is brought by someone claiming or alleging a mental deficiency at the time of conclusion of a contract. Person alleging that this not the case, nears the burden of proof. When a person is classified as involuntary mental health care user that person is presumed to lack contractual capacity. Anyone claiming otherwise bears the burden to prove the presence of capacity. A mentally incapacitated person has no contractual capacity and any contract entered into by such person is void ( confirmed by Ito Consumer Protection act)

Question 7

Discuss person in a state of automatism or under the influence of medication or alcohol

Answer 7

A person who is unable to form an intent due to the influence of drugs, alcohol, is unable to realise the consequences of his actions, does not have any contractual capacity while this state persist. A person must be intoxicated to a degree that he is virtually unconscious and cannot be held responsible for his actions.

Any juristic act performed while in such conditions is null and void. Any party who has already delivered performance according to the terms of contract may claim performance be returned to him as no legal obligation exists in terms of which performance had to be delivered. Where return of the performance is not possible, the other party is liable on the basis of unjustified enrichment.

However, when a person is still has the ability to form a will despite the intake of drugs or alcohol his contractual capacity is not affected. The person claiming incapacity because of intake of substance has to prove it. If a someone due to long term substance abuse is not capable of handling his affairs satisfactory and administrator may be appointed to manage his estate. Could be classified as mental health care user. The degree of intoxication must be determined at the time of performance of each juristic act.

Question 8

Which persons have limited contractual capacity?

Answer 8

▪️Minors

▪️Married person

Question 9

Discuss minors limited contractual capacity

Answer 9

▪️minor is a person between the ages of 7 and 18.
▪️They may attain majority in 3 possible ways :
- by turning 18 years of age
-by conclusion of valid marriage
- through an order of court

Question 10

What are the contracts binding upon minors in terms of limited contractual capacity ?

Answer 10

▪️where the minor has full contractual capacity
▪️where the minor acts with consent or assistance of parent or guardian
▪️where the guardian acts on behalf of the minor
▪️where additional consent above and beyond consent of parent/guardian is require
▪️prohibited acts
▪️emancipation
▪️minor pretends to have attained majority

Question 11

When does a minor have full contractual capacity?

Answer 11

A minor can in certain situations act without the consent or assistance of his parents/guardians, where he obtains only rights and no duties through his actions. Should the minor have certain duties in terms of the contract, he has to act with the assistance or consent of his parents/guardians, meaning the contract must only be to the minor’s advantage. If it’s in his disadvantages, the transaction can be set aside and restitutio in integrum must take place.

Question 12

Explain the contractual capacity of minor in terms of the minor acts with consent or assistance of parent/guardians

Answer 12

All juristic acts can be performed only with the consent of the minors parents/guardians. The parents/guardians has to help the minor in such as way to supplement the minors lack of capacity and advise him at the time of performance of the juristic act. The parent/guardians can also consent to an act by the minor before, during or after it is performed. If the consent is given after the performance of the act, this is called ratification. After attaining majority the minor can also ratify any juristic which he performed before attaining majority. Ratification renders the act valid and binding as if it was done with required consent or assistance at the time of performance of the act.

Question 13

Explain contractual capacity of minors in terms of the guardian acts in behalf of the minor

Answer 13

The parent/guardian may perform certain valid and binding acts on behalf of the minor, the minor then obtaining the rights and duties that arise from these acts. The minor does not have to know about the acts, nor consent to or participate in them, or even cooperate with the guardian. These acts may only be to benefit of the minor, should it be detrimental in any way, the act may be set aside and the minor may claim restitutio in integrum. Certain contracts may never be concluded on behalf of the minor without his cooperation.

Question 14

Explain the additional consent above and beyond consent of parent/guardian is required in terms of contracts binding upon minors

Answer 14

For some juristic acts the additional consent of another person, above and beyond that of the both the parents or that of the guardian has to be obtained .

Question 15

What is the prohibited acts in terms of contracts binding upon minors?

Answer 15

Certain juristic acts may never be performed by or on behalf of a minor.

Question 16

Discuss emancipation in terms of contracts binding upon minors

Answer 16

A minor can be emancipated ( entitled to act independently in certain business transactions). A general consent, express or tacit, must be given by the parent/guardian which then entitles the minor to act in certain economic spheres without obtaining additional consent or assistance. The minor has full contractual capacity for all juristic acts performed in these spheres. The consent given by the parent/guardian can be revoked at any time. The minor’s status then reverts to one of limited contractual capacity. The parent/guardian’s mere aloof attitude will not constitute consent. Consent has to be given expressly or tacitly. Emancipation does not cause the minor to attain majority/full contractual capacity in all walks of life. If any transaction is to the minors detriment, they are entitled to claim restitutio in integrum. The other requirements for emancipation is that minor must have the ability to act independently. In certain cases, emancipation is forbidden by law.

Question 17

What happens when minor pretend to have attained majority?

Answer 17

Where a minor fraudulently pretends to have attained majority, he is bound to his acts if he had really attained majority at the time the act was preformed. This misrepresentation can be made directly or by suggestion. He is held bound to his actions even where they were to his detriment, and he is not entitled to claim restitution.

Question 18

Discuss restitutio in integrum

Answer 18

If a contract concluded by or on behalf of a minor is in any way prejudice to him, the minor is entitled to restitutio in integrum. Meaning that where the contract is set aside, the parties are entitled to be placed in the position they were in before conclusion of the contract consented to. This is even be the case where the Master of the High Court, or even a court, approved an act that binds the minor. In addition the court can also order the parties to pay compensation for the use of performance that had already been delivered to them.

Question 19

Which three instance a minor cannot claim restitutio in integrum?

Answer 19

1. Where, at the time of performance of the juristic act, the minor fraudulently pretended to be a major.
2. Where the minor ratifies the act after attaining majority. Ratification can take place expressly or by conduct
3. Where the action has prescribed (contractual actions usually prescribed after 3 years)

Question 20

What type of instance a minor is not liable for his juristic acts in the following?
Hint: Contracts not binding upon minors

Answer 20

▪️where the parent/guardian acts in his own name, or exceeds his authority when acting on the behalf of the minor, or acts without obtaining the required additional consent from ( e.g. high court)
▪️where the minor acts as his parent/guardian’s representative
▪️where the minor acts on his own without consent or assistance

Question 21

Explain the instances where the parent/guardian acts in his own name, or exceeds his authority when acting on the behalf of the minor, or acts without obtaining the required additional consent from ( e.g. high court)

Answer 21

If the parent/guardian acts in his own name, his own personal estate obtains the right and duties flowing from these actions. If the parent/guardian acts in behalf of the minor, the latter’s estate will obtain the rights and duties, bar the exceptions mentioned in emancipation. If the parent/guardian exceeds his authority, he himself and not the minor, will be held liable

Question 22

Explain the instance where the minor acts as his parent/guardian’s representative

Answer 22

The parent/guardian’s estate will obtain the resulting rights and duties, irrespective of the fact that the minor actually performed the act. The ordinary legal principles of agency are applicable here.

Question 23

Explain why minor are not binding to contract when the minor acts on his own without consent or assistance

Answer 23

The minor will not be held liable for acts which he performed on his own without the required consent or assistance, due to his inadequate powers of judgement and limited contractual capacity, bar the exceptions of emancipation, where the minor may act independently and create a binding contract.

Question 24

In which situations where the possible execution and enforceability of contracts concluded by the minor without consent, assistance or ratification. In terms of contract not binding upon minors

Answer 24

▪️where none of the parties has performed neither one can claim performance from the other, as no contractual obligation exists between them that creates a duty to perform. Where ratification takes place, but, the legal obligation exists and the parties may claim performance from each other. Minors can still claim restitution at later stage if it appears that the contract was in fact to his detriment.

▪️where the minor performed, yet the other party didn’t, if ratification did not take place the minor may claim that the party returns whatever the minor performed. When ratification has taken place, but, the other party is entitled to retain what the minor delivered to him, yet is obliged to deliver whatever his performance is, to the minor. The minor can still claim restitution if contract is to his detriment.

▪️where the other party delivered full or partial performance to the minor before ratification, the other party cannot claim counter performance from the minor pending ratification. The other party may claim that the minor returns whatever was delivered to the minor. Where the thing delivered to the minor has depreciated in value, or has been alienated or destroyed by him, the other can only claim from the minor on the grounds of unjustified enrichment.
The rules for this events:
- the minor is only enriched if it is at the other party expense
- the minor must be enriched in the amount of the actual increase to his estate at the time the action is instituted
- where the minor is still possession of the performance, the value of such a performance on date institution of action may be claimed
- where the minor sold the performance, the amount of the purchase price still remaining at the time the action is instituted may be claimed
- where money was delivered to the minor, the balance of what is left at the time the action is instituted may be claimed
- where the minor exchanged the performance for something else, the substitute may be claimed from the minor
- the minor can be liable for expenses saved, meaning for those expense which his estate would have incurred in any event
- the minor is liable to pay either his own enrichment, or the impoverishment caused to the other party, whichever is the smaller

Question 25

What is married person?

Answer 25

Marriages can be concluded in 2 ways, either in community of property or out of community. If parties want to be married out of community, they have to conclude an antenuptial contract (ANC) either verbally or in writing before their marriage. To be enforced, the contract must be in writing, signed notarially executed and registered in the Deeds office within 3 months from the date of marriage. If couple don’t conclude contract their marriage is automatically recognised in community marriage.

Question 26

What were the performance can the wife perform before December 1993 without the husband assistance?

Answer 26

▪️acts in terms of which she obtained only rights and no duties
▪️where she obtained substitutive consent from court
▪️where she concluded contracts for the purchase of household necessaries
▪️where she acted as public trader (for her own business or trade)
▪️where statutory provisions enabled her to act on her own ( take out life insurance on her life)

Question 27

Discuss marriages before the 1 November 1984 in relation of in community of property

Answer 27

All the parties’ assets, obtained before and after date of marriage, fall into 1 joint estate. The spouses own the estate equally in undivided shares. For all juristic acts performed before December 1993, the husband still retained marital power, and the wife had only limited contractual capacity similar to that of a minor. She could only perform juristic acts with the assistance or consent of her husband. The husband was the sole administrator of the estate, and was entitled to manage and alienate all the assets. However, he had no power over the wife’s person, and was not in the position of her parent/guardian.

Question 28

Discuss the extent of consent a husband can bestow on his wife in terms of in community of property marriage before 1 November 1984

Answer 28

The husband’s consent could be obtained before, during or after (ratification) the wife’s act. If the wife acted without the required assistance or consent from the husband, the other party to contract was bound thereto and could not. But the contract did not bind either the wife or the joint estate. Where the other party had already delivered his performance, he could institute a claim against the estate on the grounds of unjustified enrichment.

Question 29

Distinguish the two elements that are excluded from of community of property in terms of the Marriages before 1 November 1984, namely community of property and profit and loss

Answer 29

▪️where only community of property is excluded, 3 estates are formed, namely the estate of the wife until date of marriage, the estate of the husband until date of marriage, and the third estate containing profit and loss accumulated by the parties as from the date of marriage.

▪️should both community of property and profit and loss excluded, only 2 estates are formed, namely the husband’s estate and the wife’s estate which exist separately.

Question 30

Did husband’s have martial power before 1 December 1993 in terms of out of community of property?

Answer 30

Yes, unless it was specifically excluded in the antenupital contracts. Upon the commencement of the General law Fourth Amendment Act, the martial power of the husband was abolished completely. He can no longer have any power and does not have to exclude it expressly in the antenuptial contract.

Question 31

Discuss Marriages concluded after 1 November 1984 in relation to in community of property

Answer 31

The Matrimonial Property Act 88 of 1984 had the effect of rendering the relationship between husband and wife comparable to that of a partnership. The husband’s martial power has been abolished completely by Section ll of Chapter ll for the Matrimonial Property Act 88 of 1984. Both spouses have, in terms of Chapter ll ad lll of the Matrimonial Property Act 88 of 1984, equal capacity to manage the joint estate powers regarding the estate. In order to protect the spouses reciprocally, the Matrimonial Property Act 88 of 1984 requires that the consent of the other spouse must in certain instances be obtained before the juristic act which bind the joint estate can be performed. As from 1 December 1993 such consent is also required in case of marriages concluded before 1 November 1984

Question 32

What are the different forms of consent, when discussing marriages in community property after 1 November 1984?

Answer 32

▪️consent without formalities
▪️written consent
▪️written consent attested by two witnesses.

Question 33

Discuss out of community of property marriage after the 1 November 1984

Answer 33

The husband and the wife each have their own estate in respect of which they have complete contractual capacity. Unless the accrual system excluded in the antenuptial contract, it applies automatically ( Matrimonial Property Act 88 of 1984 section 2)

If the accrual system is excluded, 2 completely separate estates exist. Each spouse has complete capacity regarding his/her own estate. If however the accrual system is not excluded, the same position applies while the marriage subsists. Only upon dissolution of the marriage through divorce or death, is accrual to the estate shared.

There can never be a negative growth or accrual. If the initial nett value exceeds the final nett value, the accrual is zero and cannot be a negative value.

The Matrimonial Property Act 88 of 1984 requires the spouse to contribute to the expenses of the joint household pro rata according to their financial abilities. Where one spouse pays more than his/her pro rata share, he/she has a right to recourse against the other spouse

Question 34

Explain other persons with limited contractual capacity

Answer 34

A person who has the habit or inclination to dissipate or fritter away his finances and who does not have the ability to handle his own affairs properly can be declared prodigal by court. An administrator or common-law curator can be appointed for such a person, who is then deemed to be in the position of a minor regarding his estate. The consent or assistance of the administrator or curator is required before he can conclude juristic acts which are binding upon his estate. Other juristic acts can be performed independently. He can also act on his own of obtains only rights, and duties from his actions. This limitation on person’s contractual capacity can only be lifted by an order of court

Question 35

What is persons under curatorship or administration?

Answer 35

Any person who cannot manage his or her own affairs, due to some or other disability, illness, an accident or lack of interest, can be placed under curatorship or administrator can be be appointed to assist the person in handling his affairs.