Chapter 8 - Terms of a Contract

Question 1

The term of a contract

Answer 1

The term in the contract defines the contractual obligation to which the parties bind themselves and which they can enforce against each other.

Stipulations that are agreed upon expressly or tacitly.

Question 2

Express terms

Answer 2

Parties may incorporate turns into the contract by means of articulated declaration of intent.

Either in writing or verbally

These words must convey that essential terms that are material to a contract

Question 3

Tacit terms

Answer 3

Read into a contract if it is reasonable and necessary for proper functioning

Inferred from situation and circumstances

Question 4

Implied terms

Answer 4

Included in the contract through operation of law.

These are obvious so it’s not necessary to include

Question 5

Essentialia of a contract

Answer 5

They serve to identify a particular type of contract as belonging to a class or category.

E.g in a contract of sale the object and purchase price are essential and cannot be excluded.

Question 6

Naturalia

Answer 6

These terms which the law attaches to a contract of particular class and these terms may be excluded by the parties.

E.g. Warranty is implied but may expressly be excluded.

Question 7

Incidentialia

Answer 7

Special requirements or additional terms in the contract

E.g with payment of money - stipulating payment terms or instalments

Question 8

Time clauses

Answer 8

Please refer to the happening of a certain future event.

A resolutive time clause stipulates duration of a contract, after which it ceases.

Eg. Fixed period contracts of employment

Question 9

Suspensive time clauses

Answer 9

This is where the agreement suspends the date of payment until a certain date in the future.

E.g. an agreement that permits a person who purchases a car to take the vehicle now but only start paying later.

Therefore duty to perform is postponed until a determined moment in the future.

Question 10

Conditions

Answer 10

Who’s refer to a uncertain future event

Question 11

Suspensive conditions

Answer 11

This suspense the operation of a contract until the fulfilment of a specified condition.

For example Diane agrees to pay jack 1 million for his house subject to successfully applying for, and securing, and mortgage bond from her bank within 60 days after concluding the contract.

Question 12

Resolutive conditions

Answer 12

This type of condition does not to suspend the operation of the contract, but rather insures that the contract operates until the fulfilment of a condition.

Diane agrees to let her flat to Jack until he finds a house to live in.

Question 13

Warranties

Answer 13

A warranty is an additional obligation to normal performance of a product or service as promised. May be expressly excluded.

However the national credit act and the consumer protection act prohibits such exclusions in certain circumstances.

Question 14

Cancellation clause

Answer 14

This allows a contracting party to cancel an agreement.

Question 15

Penalty clauses

Answer 15

This is where a contract fails to bring the works or sections thereof to practical completion on the date or dates stated in the schedule.

Contractor shall be liable to the employer for the penalty per calendar day for non-completion of the works for each segment at a rate stated in the schedule.

A penalty clause liquidates the damages and one does not have to prove that amount of damages suffered.

Question 16

Forfeiture clauses

Answer 16

This is the type of penalty clause. Forfeiture cause main title the salad to cancel the contract and keep any monies paid by the buyer.

In this case a buyer who breaches the terms of the contract will lose his right to claim restitution of these monies.

The court may be asked to exercise its discretion to reduce the penalty if it is deemed to be unnecessarily harsh.