CML - Module 5-7 Flashcards
if a contract is not valid?
- doesn’t meet all requirements
- void = court will not enforce it
- contract does not exist
requirements (1-4) of a valid contract?
- parties must have contractual capacity
- parties must have serious intention to contract
- they must comm their intention with each other
- parties must be of the same mind (no mistakes / misunderstandings)
general rule of capacity?
everyone has contractual capacity – can enter into legal / binding agreements they want with no assistance or limitation
people with limited capacity?
- minors
- married persons
- insolvents
- intoxicated persons
- mentally ill persons
general rule for persons married ICOP?
both spouses have full capacity to contract with regard to the joint estate without consent of the other. consent is, however, sometimes needed.
alienate definition?
sell, mortgage, lease out, give away
cede definition?
manner of alienating used for intangibles
mortgage definition?
borrow money to purchase a property and you will mortgage the property as security for that loan
pledge definition?
use something a security
formal consent definition?
written, signed, two witnesses
surety definition?
person borrows money. their spouse can sign stand surety for the loan, so that if they can’t pay it the borrower can claim from their spouse
formal consent needed for ICOP?
- to alienate / mortgage immovables
- to enter into contract as a credit receiver (can still ratify)
- to bind themselves a surety
when is formal consent not required ICOP?
(if it is part of spouse’s ordinary course of trade)
- to enter into contract as a credit receiver
- to bind themselves a surety
written consent definition?
written, signed, no witnesses
written consent needed for ICOP?
- to alienate, cede, pledge financial assets / inv assets
- to alienate / pledge capital assets
- withdraw money held in other spouse’s name
(can all get consent through ratification)
informal consent?
verbal, cannot be proven
when is informal consent needed for ICOP?
- alienating / pledging household furniture, effects
- receiving money due to the other spouse as a result of their trade, prize, inheritance
- large donations from joint estate
(can get consent through ratification)
if consents overlap?
- use most onerous consent
- requiring the most effort, difficulty
if spouse enters into a contract without required consent?
- contract = null and void
- if third party did not / could not have known that the required consent had not been given, then it is valid, to protect the innocent third party.
if one spouse unreasonably withholds consent?
the court can order that no consent is required from them
if the contracting spouse knew that the other would not consent?
- if estate suffers a loss, the other will get their share of this amount back at dissolution of the marriage
consent in marriage OCOP?
- each party has unrestricted capacity with regard to their own estate only, not the other’s
- not liable for debts incurred by the other spouse, except ones they are jointly liable for household necessities
contractual capacity of an u18 person when they get married?
no contractual capacity, but can become a major when married, regardless of age, and will gain full contractual capacity unless in COP.
what is guardianship?
the control over and admin of the estate of the minor, as well as assistance in the perf of legal acts. gained by both m&f when married, will keep even if divorced
consent of both parents is required for?
- marriage of child
- giving child up for adoption
- removal of child from SA
- application for SA passport for child
- alienation of immovable property belonging to child
if parents are never married? (guardianship)
mother is sole guardians, only her consent is needed for 1-5
when may unmarried fathers be granted the consent rights?
- if he consents to being ID’d as the father
- contributions to upbringing of child
- contributes to child maintenance
for a minor to enter into a valid contract?
must be assisted by guardian – guardian enters into contract on child’s behalf or minor enters into contract with written/verbal consent. must be given before or at the time
implied consent?
look at guardian’s conduct and they show no objection to the contract
effect of an assisted contract? (from Roman Law)
- minor is bound and liable, not guardian
- guardian incurs no personal liability
can a parent enter into a minor’s contract without their consent?
- yes
- the minor will not be bound if the contract is inherently prejudicial (substantial prejudice) and minor will need court order to get out
effect of unassisted contract in common law?
- limping contract (neither valid nor void, minor can choose with assistance whether to enforce or not. choice lies solely with minor)
- bounding if minor chooses, valid from original inception of contract
- no bounding if minor chooses not
ratification?
chooses to enforce the contract
repudiation?
chooses not to enforce
if minor chooses not to enforce unassisted contract?
- contract = void = never existed and minor can recover whatever they gave under the contract. The other party can claim what they gave us unjustified enrichment.
effect of unassisted contract in CPA?
- contract will be voidable so minor can exit with guardian assistance and get back what they gave
fraudulent misrepresentation of minors?
under CPA/comm law, contract will be unassisted and invalid. minor incurs no obligation unless ratification. minor may incur delict claim from wronged party (lying is bad) and wronged party must prove that they were reasonably deceived and suffered a loss bc.
exception for unassisted minor contracts?
16 year olds can open/operate a bank account
when is someone insolvent?
- when sequestrated by high court / bankrupt
- if not = not legally insolvent = no ltd con capacity
what happens when someone is insolvent?
their estate is placed in the hands of a trustee and they no longer have ownership of their assets and the trustee must sell them and distribute proceeds to creditors
general rule for insolvents?
they have full contractual capacity and may enter into contracts without trustee assistance
exceptions for general rule for insolvents?
- contracts ito which he disposes of assets in his estate
- (not w/out written consent) enter into a contract that will adversely effect the estate
- if he enters = contract is voidable at instance of trustee
declared mentally ill?
- all assumed sane, must be declared mentally ill
- no contractual capacity = contracts null and void
- curator looks after their affairs
burden of proving sanity?
on the one wanting to enforce the contract. if proven = valid contract
to get out of contract (mental incapacity)?
it must be proved at the time of contracting, that the person could not understand due to mental illness or was motivated by insane delusion
intoxicated?
- any mind-altering substance?
- person is so intoxicated at the time of contract that they do not knowing they’re entering / cannot understand its terms = void
- person has to be absolutely intoxicated
requirements for consensus?
- parties must have serious intention to contract and must comm this intention with each other through offer and acceptance
offer?
a proposal made by one party to another containing t&cs which binds them contractually if the other person accepts
requirements for a valid offer?
- must be made w srs intention of creating a binding contract
- must be complete and clear
- must still be in existence when it is accepted
examples of offers that are not valid?
- offers made in jest (jokes)
- social arrangements
- adverts
adverts as per common law?
- not an offer – accepter makes the offer, advertiser accepts = contract
- an advert to do business with whoever performs a certain action = offer = reward for something = whoever responds accepts = valid contract
adverts as per CPA?
no bait marketing and no negative option marketing
bait marketing?
- section 30
- if supplier advertises g/s at a certain price they must ensure that there are sufficient g/s at that price for consumers who respond to the advert to buy (and express limits in ad)
negative option marketing?
a supplier may make Jane an offer where she must act to refuse. she cannot do nothing otherwise there is a valid contract and if she doesn’t perform she can be sued for breaching. this is not allowed = no contract = no unjustified enrichment
offer must be complete and clear?
- must contain at least the essential terms of the contract so that unconditional acceptance = contract
- if essentials missing and need to negotiate = not valid
- essential = price, subject, etc
three ways an offer can expire?
- revocation
- lapse of offer
- rejection
revocation?
- revoking the offer
- anytime before accept, after = breach
- must be communicated to be effective
lapse of offer?
- expires
- not accepted in reasonable time / within specified time / death of offeror or offeree / valid at inception but later before acceptance becomes invalid bc of conflicts of requirements
rejection?
saying accept does not = accept (I accept but…)
requirements for acceptance?
- must be made by the person(s) the offer was addressed to
- must be made knowingly / comm to offeror clearly
- must be clear and unconditional
- must be communicated in prescribed manner
- must be made before offer comes to an end
joint acceptance if contract only offered to one person?
not valid
accepted communicated in prescribed manner?
- if prescribed to be verbal acc, then written acc = invalid
- once valid comm = valid at that time and place
what are the three theories to determine when and where contract is concluded?
1) information theory
2) expedition theory
3) reception theory
information theory?
- phone/fax and face-to-face
- this is the default
- acceptance only valid when it is comm to offeror and is concluded when acceptance comes to attention of offeror
expedition theory?
- offers made via post
- if accepted by post, acceptance takes place at time and place that letter is posted
- only applies if postal system is working normally; letter correctly addressed; stipulated that valid when read and no other manner of acceptance allowed
reception theory?
- electronic comm
- contract concluded when offeror rec acceptance – when data enters his IS and is capable of being retrieved by him
ECTA?
electronic comms and transactions act
Section 44 of ECTA?
describes the rights of consumers
prescribed case C85?
- phone call
- i’ll think about it = not acceptance
- debit order rec, paid for two years
- reimbursed her of pmts, interest, bank charges and compensatory award of R500
- complainant accepted
for parties of a contract to be of the same mind?
no mistakes or misunderstandings – mistakes, misrep, duress, undue influence that render a contract void / voidable
unjustified enrichment?
can be claimed by parties in a void contract to get back what they gave under law of contract bc contract was not valid. each party gives back the value of their enrichment at the time of the court case (if you audited their estate, use that amount)
misrepresentation?
when someone enters into a contract due to false statement of fact made by the other party
duress?
when someone enters into a contract due to some threat of violence or intimidation
restitution?
each party restores full performance to the other. both must restore. if they cannot, restore monetary value.
what can the wronged party when misrep/duress/etc?
- can claim restitution
- can abide the contract despite misrep/duress/etc
- choice lies solely with them. contract is valid and binding until a decision is made. if party chooses to end the contract, contract is cancelled.
- must decide in a reasonable time.
if contract turns out void?
cannot claim under law of contract, because contract does not exist. claim under unjustified enrichment.
two types of mistake?
- common = both parties
- unilateral = only one
- both render contract void
common mistakes?
both parties in agreement, but both made a common mistake. must be material to be void. will be valid and binding if not material.
unilateral mistakes?
must be material AND reasonable. will only be valid if both.
iustus error?
reasonable mistake
when is a mistake material?
if the person would not have contracted, had they known the state of the affairs
which items are never a material error?
- an error in motive
- mistakes as to attributes / quality of subject matter (thinking car has a/c but no)
when is an error iustus?
if the non-mistaken party knows/ought to have known that the mistaken party made an error
OR
if the other party misled the mistaken party
caveat subscriptor principle?
if a person signs a contract, even if they have have not read it or understood it, they are bound by it.
exemption clause?
a clause which attempts to exclude one party’s liability under delict / contract
when will common law apply and not CPA?
when the contract is between a supplier who does not sell/lease/offer the particular services in ordinary course of business and consumer is juristic person with NAV/turnover > R2mil.
types of misrep?
- fraudulent = person knows its false
- negligent = person believes truth but was careless and did not fact check to the extent a reasonable person would
- innocent = no fraud/neg
forms of misrep?
- verbal/written
- misrep by conduct
- misrep by silence/non-disclosure
general rule in SA about disclosing info?
there is no duty in law to disclose info
exception to disclosing info rule?
- where person tells half truth and creates misleading impression
- where person by their conduct has prevented the other party from discovering truth
- where person has by early statement/conduct, given the other party a certain impression and circ changed
- where facts are in the exclusive knowledge of one party
requirements for misrep to make contract voidable?
- was a false statement of fact
- induced the contract
- misrep is made up by the other party to the contract
puffery / opinion?
not misrep = not void
consequences of misrep under common law?
- can apply to the court to have contract cancelled and claim restitution or they can abide
- individual can claim under delict for financial loss (none for innocent misrep)
misrep under CPA?
- not allowed by words/conduct/silence – there is a general duty to speak
- opinions may = voidable
- is misrep, court can make any order it thinks
duress requirements under common law?
(must meet all)
- was a threat of considerable harm/evil to the person, their family, property
- threat must be imminent / inevitable
- threat must actually have induced the person to enter into the contract
- threat must be lawful / contra bonos mores
- fear must be reasonable
contra bonos mores?
against good morals / public policy
duress under CPA?
supplier must not use any physical force against a consumer, coercion, duress, take adv, etc due to disability, illiteracy, ignorance, inability to understand. court decides what to do.
undue influence?
- where one party to a contract is able to influence the other to such a degree that he cannot form an indie opinion. similar to duress but no violence.
- may render contract voidable
undue influence requirements under common law?
(meet all)
- one party exercised influence over wronged party
- weakened wronged party’s power of resistance / made easily manipulated
- exercised in unethical manner
- actually induced wronged party to enter into transaction prejudicial to him and which he would not have concluded of his own free will
undue influence under CPA?
supplier must not use any force against a consumer, coercion, duress, take adv, etc due to disability, illiteracy, ignorance, inability to understand. court decides what to do.
