Chapter 6: Formalities Prescribed by Law Flashcards
1) In general no formalities are required for the formation of a valid contract.
Provided that all the validity requirements are made.
However two exceptions to this general
rule:
1) 1) In respect of certain types of contracts, the law may require that the parties expressed their intention in a prescribed and formal way.
1.2) Such statutory formalities include writing notorial execution and
registration.
2) The parties themselves may agree that their contract will be binding
on them only when certain formalities have been observed.
Sale, exchange and donation of land [S 2(1) of the Alienation of Land
Act of 1981}
1) Writing
2) Signed by both parties or their duly authorized agents, who are
authorized in writing, requirement not applicable to organs of companies
Formalities prescribed by law.
1) Some agreements are invalid if such formalities are not met/complied
with.
2)This generally means that these contracts must be in writing and have been
signed by at least one of the parties
Provisions do not apply to:
1) Sale of land by auction
2) Preference contract Mokone v Tassos Properties CC
3) Option Mokone v Tassos Properties CC
Suretyship [S 6 of the General Laws Amendment Act]
1) Writing
2) Signed by or on behalf of the surety
Executory Donation [S 5 of the General Laws Amendment Act]:
1) Writing
2) Signed by the donor or a person acting on his written authority.
3) Executory donation: One that has not been made, still to be made in the future.
Some agreements are not invalid if formalities are not met, but cannot be
enforced against third parties, such as:
1) Antenuptial contract (Notarially executed and must be registered
within three months of execution)
2) Long-term leases of land (must be registered against the title deed)
S 12 of ECTA: Document or information is in writing if:
1) Document is in the form of data message and is accessible.
2) Provision NOT applicable to:
2.1) Alienation of land &
2.2) Agreements for long-term lease of immovable property in
excess of 20 years.
3) Provision applicable to:
3.1) Suretyship
3.2) Executory donations (Except of land)
3.3) Variation of a contrac
As stated, some statutes require that documents must comply with formalities
these include but are not limited to and are general
1) All material terms of the contract must be in writing not just the essentialia.
2) Terms implied by the law (naturalia) obviously need not be in writing, tacit terms by their very nature also do not need to be in writing.
3) Not all the terms must be in one document.
4) Any variation of the material terms of the contract has to be in writing to
be effective
S13(2) of ECTA-
Electronic signature:
1) Depending on the nature of the transaction a signature may take a form of:
1.2) Simply writing a persons name at the end of an email message.
1.3) Use of complex biometric-identification
technologies
Parties may impose formalities for the creation, variation or cancellation of
the contract.
Examples of such formalities include
1) Parties may agree that an oral agreement is only valid once reduced to writing and signed.
2) Parties may insert a ‘non-variation clause’, which provides that ‘No variation of this agreement shall be of any force or effect unless reduced to writing and signed by the parties’.
3) Parties may agree that the cancellation of the contract shall
only be valid if in writing.
Creation of a contract.
Intention:
1) Facilitate proof or
2) Serve as a formality requirement
Non-variation Clauses: Shifren principle
1) Parties may prescribe formalities for variation.
2) Common practice.
3) Clause “No variation of this agreement shall be of any force or effect unless
reduced to writing and signed by the parties to this agreement”
SA Sentrale Ko-operatiewe Graansmaatskappy Bpk v Shifren:
1) SA Sentrale Ko-operatiewe Graansmaatskappy Bpk v Shifren:
2) Non-variation clause not against public policy.
3)No oral variation will be effective if the clause entrenched both itself and all other terms of the agreement against oral variation.
4)Shifren principle re-affirmed in Brisley v Drotsky.
Potential abuse of non-variation clauses:
1) Restrictive interpretation,
2) Public policy
3) Estoppel.
