Chapter 9: Parties to a contract

Question 1

Number of Parties to a binding contract

Answer 1

At least two

-Unilateral contracts are not recognised as binding contract (in SA law)

Question 2

Can a person contract with himself?

Answer 2

The courts have accepted that it is possible for a person to contract with jim or herself when acting in two different capacities. e.g. Where a person, acting in his or her capacity as the agent of corporation, concludes a contract with him or herself in his or her personal capacity.

Question 3

Multiplicity of parties

Answer 3

-Becomes necessary to determine the share of liability of each such co-debtor, and the share of entitlement of each such co-creditor.

Question 4

Factors on who the determination of share of liability depends:

Answer 4

*Variety including
>Intentions of the parties
>Nature of the contract &
>The nature of the performance owed under the obligation (Particularly whether it is divisible or not)

Question 5

Divisible Performance:

Answer 5

Where a seller of 100 Cows has two purchasers.

Question 6

Indivisible Performance:

Answer 6

Where a seller of 1 cow has two purchasers.

Question 7

On what does the divisibility depend?

Answer 7

• The nature of the performance
• The intentions of the parties

*Thus intention overrules physical possibility; it may be possible for someone to sell a collection of old paintings separately, but the seller might want to only sell it as a collective unit, hence making it indivisible.

Question 8

Multiplicity of parties:

Simple Joint liability & entitlement

Answer 8

-Simple Joint liability and entitlement means that each of the debtors is liable only for his or her proportionate share of the performance, and these acres are presumed to be equal.

Question 9

Joint and Several (in solidum) liability or entitlement

Answer 9

• Each co-debtor is liable for the full amount of the debt, and the creditor can accordingly claim the full debt, or any lesser amount of the debt, and the creditor can accordingly claim the full debt, or any lesser amount from any one or more of them (the co-debtors)
• Where one of the debtors pay the full amount of the debt, or more than his proportionate share , he or she has an automatic right of recourse against the co-debtors to recover their proportionate share of the debt.

Question 10

Collective joint liability and Entitlement

Answer 10

• Where co-debtors HAVE to Perform jointly as a collective , the creditor may not demand performance, in whole or in part, from any one of the debtors individually.
• This form of liability would usually arise where performance is indivisible and the intention of the parties is that the liability or entitlement should be as set out above rather than joint and several.

Question 11

Contracts and Third parties:

Answer 11

Even though contracts would generally create rights and duties only for the immediate parties to a contract, third parties will often be involved in or affected by the process contracting and its aftermath.

Question 12

Contracts and third parties: Privity of contract

Answer 12

“A contract generally creates personal rights and duties only for the parties to the contract, and for nobody else.”

• -This principle is to some extent relaxed as regards the creation of rights for third parties since there is nothing inherently objectionable out two persons agreeing to confer a benefit upon a third.
• The fact that a contract creates a relationship that is personal to the parties concerned does not mean that third parties have no duty to respect that relationship.

Question 13

Representation: Contracting through an agent

Answer 13

Principal authorises another person, the agent to represent him or her in negotiating a contract with a third person.

• If negotiations are successful then between principal with the person.
• The agent will have a separate contract with the principal that will govern his or her appointment as P’s agent and that regulates their own relationship.

Question 14

Representation: What is representation on the other hand?

Answer 14

Representation is the phenomenon that occurs when one person concludes a juristic act ON BEALF of another.
-This can occur only when the representer has enough authority, or power to act on behalf of another.

• Where the power or authority is given in writing, it is called “power of attorney”.

Question 15

What does “power of attorney” entail?

Answer 15

• It merely means that the person is authorised to perform on behalf of the Principal, acts wishing the scope of his power,
• Might be a general one (authorises to perform general matters on a daily basis/ general matters) or
• It might be a limited authority to represent the Principal in a specific matter (e.g. in a specific property transaction.)

Question 16

What is a mandate?

Answer 16

A mandate is a contract f which one person gives another a task to perform (e.g; when someone who wishes to sell a house gives a mandate to an estate agent to find a suitable buyer–this would be considered to be a limited one as the task is only to find a buyer and not act on behalf of the Principal

Question 17

What does a contract of agency entail?

Answer 17

A contract of agency entails both mandate and a power to represent the mandator or principal.

Question 18

On what is the legal consequences of agency based on?

Answer 18

*The relationships between the various parties

Question 19

By what is the relationship between principal and agent governed by?

Answer 19

• Largely by common law-principles applicable to the contract of mandate, and is supplemented by terms agreed upon by the parties.
• Thus the nature of the relationship is highly fiduciary and the agent is thus obliged to act entirely in the interest of the principal, and not in his own interest.

Question 20

Relationship between principal and third party.

Answer 20

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