Chapter 9 Flashcards
Common Contractual Terms
What are common contractual terms?
There are certain terms that are commonly included in contract, these affect the way in which the contract operates and indicate what happens if there is a dispute.
What are the groups of common contractual terms?
The following are the groups of common contractual terms:
• Clause about whether or when a contract will take effect or end.
• Clauses about contractual obligations.
• Entrenchment clauses, which makes the contract more difficult to change.
• Clauses about how to resolve disputes.
What can clauses about “whether or when a contract will take effect or end” subdivided into?
The terms in the first group of common contractual terms, known as clauses about whether or when a contract will take effect, continue to operate or end can include: conditions, time clauses, suppositions and cancellation clauses.
Define a condition.
Condition is a contractual term that indicates whether a contract will start or continue to operate. A condition describes a future uncertain event, rather than something that may or may not exist at the time. (Death is not a condition as it is certain to occur at some point).
What are the two types of conditions? Explain them in detail.
The two types of conditions are suspensive conditions and revolutive conditions.
• A suspensive condition suspends or delays the operation of a contract until the condition is made or the future event occurs.
• A resolution condition is immediately binding on the parties but comes to an end should the future uncertain event occur (pg. 158 - look at eg). When a resolution condition happens, the parties have to return whatever they receive from each other up to the time the condition occurred.
Note: a valid contract is created on agreement. It is only the operation of the contract that requires the condition to be met.
Define a time clause.
A time clause is one in which the right or duties of a contract start or end at a specific time or after a specific time, which is certain to occur.
Name and explain the two types of time clauses.
The two types of time clauses are suspensive time clause and resolutive time clause.
• A suspensive time clause indicates when a duty has to be performed. (Death can be an event, even though the date is unknown).
• A resolutive time clause indicates when a contract will come to an end. (Resolutive time clauses will bind both parties until the specified time is reached).
Define a supposition.
A supposition is a contractual term that states that the contract will only become operative if a given situation exists or has occurred.
*The difference between a condition and a supposition is that a supposition relates to a possible present state of affairs rather than a future one.
Define a cancellation clause.
A cancellation clause enables a contracting party to cancel the contact if the other contracting party failed to do what they agreed to.
What does the group of common contractual terms related to contractual obligations include?
Warranties, exclusion clauses, modi and penalty clauses.
Discuss warranty.
(Also talk about tacit and expressly agreed warranties)
A warranty, also called a guarantee, binds a contracting party to extra duties relating to the quality, quantity or other aspects of the thing being contracted.
Tacit warranties are imposed by law in certain context, parties will be bound by these unless they expressly say that they will not be bound.
Expressly agreed warranties are those that are directly included in the contract.
What is an exclusion clause?
When are these clauses regarded unenforceable by courts?
An exclusion clause states that a contracting part is excluded from a liability in stated circumstances. However, if a court finds such a clause unfair against the other contracting party, or against public policy, then they can deem it unenforceable.
Explain modi and state the difference between a modus and a condition.
A modus is an extra condition as to how something must be used or done - it is used to restrict how something maybe used.
A modus is different from a condition in that if a condition is not met then the contract does not go into operation.
Note: the creation of the contract is not dependent on the modus being performed.
What is a penalty clause? What is the party who failed to perform in terms of the contract called?
A penalty clause allows contracting parties to agree in advance about what will happen if they fail to fulfil their duties in terms of the agreed contract.
The person who fails to perform in terms of the contract is called the defaulter.
What is an acceleration clause and how is it different from a penalty clause?
An acceleration clause applies to contracts where the debtor has to pay instalments and states that all instalments become payable immediately if the debtor is late with one instalment.
The difference between acceleration clause and penalty clause is that acceleration clause does not add or replace the debtor’s liability, the debtor just has to pay earlier.
