Chapter 6 - The Agreement Must Be Possible Flashcards
Legal possibility
Defined as an agreement that is permitted by law.
A contract is unlawful or illegal when its conclusion is forbidden by statutory or common law.
Contracts contrary to common law
An agreement can be contrary to common law because it is legally impossible to conclude or it is against good morals or public policy.
Impossibility to execute
- buying/ selling what cannot be privately owned E.g Ocean
Contrary to good morals
- an agreement is contract to a communities perception of what is proper and decent
E.g. contracts promoting illicit sexual services
Contrary to public policy
When contract is harmful to the interests of public at large
Courts take into account the values of the constitution to invalidate a contract against public policy.
Examples of contracts contrary to public law
Agreements involving the misuse of the administration of justice
- eg not to report a crime, bribing public officials
- these contracts are void
Agreements involving crimes and delicts
- an agreement to commit a crime is against Public law and is unenforceable.
- contracts are void
Agreements affecting the safety of the state
- agreement between an SA citizen and an enemy state to supply weapons to their country
- contracts are void
Agreements restraining a persons freedom to participate in legal transactions
- voidable
- ante nuptial agreements are an exception to the rule where parties may bequeath( leave property to a person) a spouse
Agreements affecting a persons freedom to trade
2 types
- purchaser of business undertakes a seller so they can’t carry on business in competition in a certain geographical area
- Where a contract in restraint of trade protects trade secrets and commercial contracts.
Restraint of trade
- Freedom to freely participate in commerce
- Freedom to contract - takes precedence
Contracts in restraint of trade are valid and enforceable, however if restraint is unreasonable, it will be contrary to public policy, thus making the contract valid but unenforceable.
The party claiming unreasonableness must prove it.
Contracts contrary to public law - Gambling contracts
Define gambling - one party undertakes to render performance if an uncertain future event, dependant on chance or luck occurs.
- also known as wagering and gaming.
Lotteries act and National Gambling Act
- the acts provide that regulated gambling contracts are valid and enforceable.
Unregulated gambling contracts are subject to COMMON LAW which states that they are contrary to public policy and are therefore unenforceable.
Contracts contrary to statute
Contracts are contrary to statutory law if they are forbidden by legislation because they are considered harmful to society.
Legislation adds criminal sanction.
Eg. buying or selling uncut diamonds, weapons or ammunition without a license.
Contracts contrary to statute are void if legislation intent is such.
Contracts which infringe constitutional right
May be illegal and unenforceable if it does not meet the limitation clause requirements ie. The limitation should be reasonable and justifiable
Consequences of illegality
Common law
- an unlawful or illegal contract under common law is void.
But certain illegal contracts are not invalidated by their illegality but merely unenforceable.
Statutory law
An illegal contract under statutory law is will be void if the intention of the statute is plain.
Consequences of illegality
Illegal agreements: no party may claim promised performance from the other.
This rule is never relaxed, even if the other party has performed there is no claim for damages.
Par delictum rule
- A person who has performed in an illegal agreement cannot claim back performance on the grounds of unjustified enrichment.
This rule may be relaxed if public interest requires such( eg. there is no equal guilt)
Possibility and certainty of performance
The performance of rights and duties from the agreement must be objectively possible at the conclusion of the contract
The performance should also be certain and ascertainable
Object possibility to perform
Before months will be impossible if it is objectively impossible to perform at the conclusion of the contract
Eg the Cow that Thandi sells to Paul has already died.
Contract is void from beginning.
Objective impossibility to perform
- totally impossible for anybody to perform
Subject impossibility to perform
- impossible for a specific person to perform
Supervening impossibility of performance
This your first an instance where a valid contract was concluded that due to an act of God or state the continuation of performance has become impossible.
In such cases the contract terminates
Rendering performance impossible
This is a form of breach of contract
There is a subjective impossibility to perform, where one party caused the impossibility.
Depending on the extent of the impossibility, the contract maybe cancelled and damages may be claimed.
Difference between indivisible performance and divisible performance
Indivisible performance - where performance must be rendered in its entirety
- The delivery of a new car
Divisible performance - where one can perform in separate units. Eg buying two items and they are separately delivered.
Indivisible performance cannot be converted into divisible performance, but the divisible performance can be converted into indivisible performance.
Eg Set of encyclopaedias
