CML - Exam Flashcards
agreement must be lawful concepts?
- statutory illegality
- common law illegality
if an agreement is illegal?
it is generally void and court will refuse to enforce it
when is an agreement illegal?
- prohibited by statute or law
- unfair, unconscionable, unreasonable
can a contract be illegal and valid?
yes, and the courts will enforce it even if it is illegal
intention of parliament when deciding legality?
- decide whether parliament intended it to be illegal and void or illegal and valid
factors to look at to prove if an agreement is valid or void (in terms of legality)?
- whether the purpose of the prohibition was to raise revenue for state; will be valid but parties may pay fine
- whether recognition of the agreement would bring about the harm that legislature was trying to avoid
- would it cause greater inconvenience to void than to allow it to stand
- if imposes a criminal sanction = void
(use if majority of the 4 are met)
contra bonos mores contracts?
contracts which are against public good / morals
contracts which are ALWAYS void?
common law illegality
an agreement:
- to commit crime/delict
- which undermines institution of marriage (agree to never marry, one that threatens a marriage)
- in consideration of sexual immorality
- which conflicts with constitution
- that is unconscionable (grossly unfair)
- contracts in RoT (if unpaid)
unconscionable / unfair / unreasonable agreements?
usually upheld by courts as the law’s function is not to assist the bad bargainer
assessing if an agreement is unconscionable / unfair / unreasonable?
- if it is excessively one-sided in favour of supplier
- if it is so against the consumer that it is unfair
- look at MV of g/s and nature of parties
unfairness under CPA?
unfairness does not have to be extreme to be void; just has to point to unfairness
what happens when contracts are void due to illegality?
in pari delicto rule applies: both parties acted illegally and cannot recover what they performed. if one party did not act illegally may recover their performance under unjustified enrichment bc no pari delicto
if initial possibility of performance is impossible?
will be void as soon as entered into. there will be no breach if someone fails to perform.
objectivity vs subjectivity of impossibility?
if objective = void (attached to performance not person); if subjective = not void, person will be in breach
vis maior?
act of God; always objective
casus fortuitous?
unforeseen events beyond the average person’s control; always objective
if one person guarantees their performance?
can be sued for breach if they fail to perform, even if performance is impossible
impossibility under CPA?
same as common law
supervening impossibility?
when the contract becomes impossible for performance after it was entered into. after acceptance, before perf is due
formalities?
when a contract has to be in writing/signed by the parties; most contracts don’t have this
examples of formalities that must be imposed?
- sale of immoveable property = in writing and signed by both parties
- antenuptial = in writing, signed by both, two witnesses
- surety contract = in writing, signed by/on behalf of surety
essential/material terms of the contract?
the essence of the contract; you wouldn’t know what contract it is without them
incidental terms?
non-essential terms
implied terms?
is binding on both parties even if they have not been expressly mentioned in the agreement
three types of implied terms?
- tacit
- terms implied by law
- terms implied by trade usage
tacit terms?
terms implied on facts and they give effect to the common intention of the parties. term may not be in contract, but parties intended that it be included; would not have entered without it
how to see if term is tacit?
curious bystander test = asked, overheard, “of course it is included, we forgor or it was so obvi we didn’t think to mention it = tacit
terms implied by law?
included in certain contracts and binding of both parties; can be excluded/varied by express agreement
implied warranty against latent defects?
- is a term implied by law
- provides that the seller guarantees that the product has no latent defects and if it does, the buyer will have recourse against them, even if seller was unaware
latent defects?
- are not obvious
- buyer could only see it if told / if pointed out
when is warranty against latent defects implied?
in all contracts of sale, even if:
- not expressly mentioned
- parties don’t know about defect
- parties don’t know about term being implied by law
terms implied by trade usage?
implied in business contracts between people of a certain trade; can be excluded by express agreement
requirements for terms implied by trade usage?
must be:
- certain
- reasonable
- not conflict with law
- generally known and continually used by persons in industry
- must not contradict other express provisions in contract
what is a condition?
a qualification which makes the operation/consequences of the contract dependent on an UNCERTAIN future event
time term vs condition?
time term is certain, condition is uncertain
two types of conditions?
- suspensive
- resolutive
suspensive conditions?
operation and consequences of the contract only come into effect once the uncertain future event happens. valid but not enforceable until condition is fulfilled. if condition fails = end of contract = no breach.
resolutive conditions?
valid and enforceable from beginning, but if condition is fulfilled, contract comes to an end
exclusion clauses?
attempt to exclude one party’s liability which the law would otherwise attach to them
cancelling a contract?
general rule is that you can only cancel a contract if breach is material
cancellation cause?
put into a contract to allow cancellation for any breach
penalty clause?
parties will agree in advance what the innocent party will be able to claim as financial loss in the event of breach. they agree on a predetermined loss.
imposed terms?
express terms imposed on a party to a contract even if they have not read or understood them. will = binding.
example of imposed terms?
- exclusion clauses; normally appear on standard form contracts (not specific for you)
caveat subscriptor rule?
general rule which is applied when a person is bound to a contract even if they have not read/understood it. means they’re bound. creates certainty: if signed, they must have read and understood
exceptions to caveat subscriptor rule?
- where the party can prove mistake, will = void
- where the other party knew/ought to have known that the terms did not reflect the signatory’s true intention; could also lead to mistake = void
exceptions to caveat subscriptor rule in CPA?
- the other two
- if exclusion clause is not brought to their attention
- not in plain language
- not given adequate time to read and comprehend the clause
- customer must show consent by signing, initialling, or acting in a way which shows consent
- liability cannot be excluded for negligence
imposed terms in an unsigned contract?
- will be contained in a ticket or notice; will form part of your unwritten contract with the supplier
- governed by CPA (generally the same as common law)
rule for unsigned contracts?
customer is bound by the exemption clauses even if they did not see them / know about them, provided that the seller did everything reasonably necessary to bring it to customer’s attention
requirements for doing everything reasonably necessary?
1) drawn to the attention of customer
2) plain language
3) must be in contractual form if ticket
4) customer must have opportunity to read exemption clause before entering into contract
5) consumer must consent to provision / act in a way that shows consent
tickets?
- quotes, order forms
- NOT receipts, invoices, statements of account
when does a breach occur?
when one party to a contract fails to perform their obligations as required in the terms of contract
debtor?
performance debtor – they must perform
creditor?
performance is owed to them
mora debitoris?
late performance by a debtor = breach
if fixed time performance for contract?
debtor will automatically be in breach if they do not perform by specified time/date
if no fixed time for performance?
if debtor has not performed in a reasonable time, creditor can place him in breach by demanding performance within a reasonable time (written or verbal). reasonable time depends on facts. will be in breach if he doesn’t perform by date of demand.
mora creditoris?
the creditor is in breach for failing to cooperate to allow the debtor to perform timeously
requirements for mora creditoris?
1) debtor must be under obligation to make performance
2) debtor’s performance must be due / time has come for them to perform
3) cooperation of the creditor must be necessary for the debtor to perform on time
positive malperformance?
where the breach is incomplete / there is defective performance
repudiation?
when one party to the contract makes it clear, by words or conduct, that they no longer intend to be bound by the contract and without legal justification. they will be in breach. can overlap w pos malperformance.
prevention of performance?
if the performance of one party becomes impossible due to their own fault / the fault of the other party. the fault party is in breach. not objective bc fault.
remedies for breach?
- specific performance
- cancellation
- contractual damages
specific performance?
- the party not in breach gets a court order forcing the defaulting party to perform in terms of the contract
- can only claim if you yourself performed
when will the court not order specific performance?
- when type of breach is prevention of performance and performance is impossible
- if effect would be unjust / against public policy
- if agreement is of a personal nature
if you cannot claim specific performance?
- can get cancellation instead
- contractual damage instead of/in addition to
cancellation / rescission?
- contract comes to an end
- each party must make restitution
- is considered a very extreme remedy
when will the court allow cancellation?
- if there is a cancellation clause
- if the breach is material / serious
when is a breach material (for mora debit/creditoris)?
if time for performance/demand for performance is stipulated in the contract and time is important
if you cannot claim cancellation?
- claim specific performance
- contractual damages instead of/in addition to cancelling
contractual damages purposes?
to put the person in the position they would have been in had the breach not occurred / if the contract was properly performed
calculation of contractual damages?
includes wasted costs, loss of profits, interest
requirements of contractual damages?
(must meet ALL)
- loss must be financial / monetary (no loss for suffering)
- must be causal connection between loss and breach
- loss must have been reasonably foreseeable (by a reasonable person)
- non-defaulting party has to mitigate their losses (minimize; can’t let it accumulate)
what is the Consumer Protection act?
a law which applies to every sales transaction entered into by a consumer and supplier occurring in the Republic
when does the CPA not apply?
- to g/s supplied or promoted by the state
- the consumer is a juristic person whose asset value/annual turnover is more than R2 mill at the time of the transaction
- if the transaction falls within an exemption granted by the minister
- services to be supplied under a contract
what is a contract of sale?
a contract by which one party undertakes to transfer a thing / the possession of a thing to the other party in return of a purchase price
requirements for a contract of sale?
- same as other contractual requirements
- intention to transfer free and undisturbed possession
- agreement on subject matter
- price must be certain
the passing of ownership in a contract of sale?
- contract does not necessarily mean ownership has passed, must meet requirements
- passes upon receipt of money when cash and upon delivery if on credit
requirements for passing of ownership?
- seller must be owner of the goods
- seller must intend ownership to pass on delivery to the buyer
- buyer must intend to accept ownership and delivery
when does ownership pass for moveable property?
upon delivery of the property unless indicated otherwise
when does ownership pass for immoveable property?
upon registration of registration of title deeds at the deeds office
when does ownership pass for incorporeal property?
upon the transfer by cession
types of delivery?
- actual (made physically available to customer)
- constructive (no physical handover of actual thing; handover of keys)
passing of risk and benefits?
- pass when the contract is perfecta, provided that the parties have not agreed to the contrary
- rule can vary if parties vary it in the contract
effects of rule of perfecta?
if the thing is damaged, at no fault of the seller, and the contract is perfecta, the buyer will be liable to pay purchase price; cannot recover purchase price if already paid
when is a contract perfecta?
- price is fixed
- subject matter must be ascertained / determined (specific item, not generic item in store)
- any suspensive condition to which the sale was subject, has been fulfilled
passing of risk and benefits in CPA?
- it is an implied term that the risk remains with the seller until delivery
- if supplier wants to vary this rule, seller must comply with CPA and give the customer notice of the unfair terms
if a term in contract intends to limit consumer risk/liability in any manner?
- must be brought to their attention
- in plain writing
- must be given time to comprehend/understand it
seller’s duties?
- implied by law (naturalia)
- referred to as residual provisions
list of seller’s residual obligations?
- duty to deliver
- warranty against latent defects
- warranty against eviction
duty to deliver the thing?
- place thing in a deliverable state so buyer can take possession
- supplier must deliver at cost of supplier, unless stated otherwise
- place of delivery usually seller’s place of bus
- customer can inspect goods, can cancel or enforce with no penalties if goods are other than agreed
duty to take care of thing until delivery?
- seller is liable for loss if responsible
- measure of care is more than that which a reasonable person would exercise in the same circumstances
- if seller fails = breach = remedies
what is vacua possessio?
to give free and undisturbed possession of the thing
duty to give vacua possessio?
- seller will not disturb buyer’s use and enjoyment of the thing
- seller warrants that buyer won’t be evicted from thing
- if buyer interferes = remedies
what is eviction?
- lawful dispossession; buyer can hand over or refuse until dispossessed by due process of law
remedies for eviction?
- buyer gets return of purchase price
- damages (value increases, etc)
if there is a warranty against eviction in the contract?
- buyer can only get purchase price back
duty to assume responsibility for latent defects?
- only defects that existed at the time of sale
what is a defect?
- an abnormal characteristic that materially impairs the usefulness of the thing for the purpose that it was sold
latent vs patent?
patent is apparent
remedies for latent defects?
- redhibition (sale = null), applies if sale would not have occurred had the seller known the defect
what can a buyer claim with redhibition?
- return of purchase price
- payment of foreseeable and necessary expenses as a result of sale
- payment of expenses incurred to examine thing to discover the defect
actio redhibitoria?
seller cannot claim consequential damages for additional damage caused by the defect
actio quanti minoris?
reduction of purchase price; where the buyer would have paid less if they knew about the defect. cannot claim consequential losses.
voetstoots clause?
- buyer buys things as is and the clause must be expressed before the contract is concluded
- seller will not be liable for latent defects
- does not protect fraudulent buyers (knew about defect, did not disclose)
consequential losses can only be claimed if?
if the seller manufactures the product themselves
warranty for quality of goods under CPA?
producer, importer, distributor, retailer each warrant that the goods are of good quality. consumer has a right to a good of good quality and safeness
what is a defect under CPA?
any material imperfection in manufacturing the goods/services that renders them less acceptable than persons generally would expect. covers both latent and patent defects; don’t need to inspect.
remedies under CPA for defects?
- if goods not safe and not good quality, consumer can return within 6 months without penalty at expense/risk of the supplier. supplier must, at direction of consumer, repair or replace the goods or refund price paid
- if supplier repairs and problem is still occurring after 3 months they must replace or refund
using both CPA and common law?
- implied warranty and right to return goods are in addition to CPA/common laws
- remedies from both can apply to same set of facts
- seller can extend warranty based on own terms; CPA is in addition to seller’s own terms
if goods are not durable or useable for a long time?
- supplier not protected; they did not comply w regs
buyer’s duties?
- pay purchase price and accept delivery
- paying must be in agreed upon manner and time; seller can claim remedies if breach
- if buyer delays delivery; seller can claim breach for transport costs incurred
