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CML1001F: Contract law > Contents of the contract > Flashcards

Contents of the contract Flashcards

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1
Q

What is a ‘term’ of the contract?

A

A term of the contract imposes an obligation to act, or to refrain from
acting, in a particular manner

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2
Q

What does the terms of a contract do?

A

Terms of the contract set out the parties’ respective rights and duties.
What each party is required to do under the contract

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3
Q

How are provisions different to terms of the contract? Provide an example of what a provision can do

A

The provisions that are not terms are clauses that do not impose specific obligations on
either of the parties but can for example provide the identity of the
parties or definitions for words or phrases that are used in the contract
just to provide information on where the contract was concluded.

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4
Q

What is an essential term?

A

Essential terms are terms which are the essence of a contract. In other words, without
these terms you could not identify what type of contract one is dealing with e.g is it a sale or lease or donation etc

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5
Q

In a contract of employment, the essential terms are the __________ and the
__________.
In a contract of sale, the essential terms are the _____ being sold and the
_______.

A

contract
salary
item
price

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6
Q

What is a non-essential term?

A

Additional terms that may be included in the contract but which are not essential

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7
Q

What is an implied terms?

A

An implied term is a term of the contract that is binding on the parties even though they
have not mentioned it expressly in their verbal or written agreement.

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8
Q

What are the three types of implied terms? [3]

A
  1. Tacit terms/terms implied on the facts
  2. Terms implied by law/residual terms/natural terms
  3. Terms implied by trade usage
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9
Q

What is a tacit term or express term?

A

These are terms that are implied to give effect to the common intention of the parties. The term is not expressly mentioned, but it is clear that the parties’ intended the term
to be in the contract.

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10
Q

What does an express term equal?

A

‘Essential’ + ‘Incidental’

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11
Q

What does the court apply to determine if there is a tacit term?

A

CURIOUS BYSTANDER TEST: “Oh, of course it is included but it was so obvious that we didn’t think to mention it.”

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12
Q

Are the courts readily willing to read a tacit term into the contract?

A

The courts will not lightly read a tacit term into the contract i.e. the judge will not
make the contract perfect by adding in tacit terms.

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13
Q

Under what other circumstances will a court NOT imply a term into the contract?

A

The court will not read a tacit term into a contract if it will conflict with an express term

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14
Q

What is a term implied by law or residual terms or natural term?

A

These are terms which the parties have not expressly mentioned but which are
implied by law to certain kinds of contracts.

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15
Q

How are most residual terms varied?

A

Most residual terms can be varied by express agreement between the parties. i.e. if
you don’t want this to apply to your contract, you must say something. It is common to include a a VOETSTOOTS CLAUSE which means the object is sold as is, with defects

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16
Q

What are the ways in which a term is implied by law (residual terms/’natural’ terms) ? [2]

A
  1. Only exist in relation to specific types of contracts (eg sale/lease/agency)
  2. Only part of contract if contract silent on point (i.e. in absence express term to the contrary)!
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17
Q

What is an example of a term implied by law?

A

EG: rental. Law of lease says residual term that rental payable in arrears.
But most lease contracts state rental payable in advance.

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18
Q

What is a term implied by trade usage?

A

These are terms implied in business contracts between people of a certain trade or
industry

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19
Q

What requirements must be met for a term to be implied by trade usage? [5]

A
  1. It must be certain
  2. It must be reasonable
  3. It must not conflict with any law
  4. It must be generally known AND continually used by all persons in that industry
  5. It must not conflict with the express terms of the contract
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20
Q

What is an example of a term implied by law?

A

EG: rental. Law of lease says residual term that rental payable in arrears.
But most lease contracts state rental payable in advance.

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21
Q

What are imposed terms?

A

those terms that are imposed by the law.

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22
Q

What are the types of imposed terms? [2]

A
  1. Signed = Caveat subscriptor + mistake
  2. Unsigned = Tickets and notices
23
Q

True or false imposed terms are not valid and binding

A

False, imposed terms ARE valid and binding

24
Q

What are some examples of imposed terms? [3]

A
  • “no representations made” (S51 CPA)
  • “no liability for any harm/damages caused”
  • “no liability for breach common law rights”
25
Q

What is an exclusion clause?

A

EXCLUSION CLAUSES try to limit or exclude one party’s delictual or contractual
liability or place an additional risk on the other party.

26
Q

What is a ‘standard form’ contract?

A

This is a pre-printed contract i.e. not drawn up on an individual basis by a lawyer. For example, the contract you sign when you take your car to be serviced or when
you go into hospital or indemnity forms

27
Q

What is a Caveat subscriptor?

A

= a person who signs a contract is bound by the terms of the
contract

28
Q

What is the exception to Caveat subscriptor? [6]

A
  1. Where the party can prove mistake and the contract is void
  2. Where the party knew or ought to have known that the terms did not reflect a
    signatory’s true intention.
  3. If the exclusion clause is not drawn to the attention of the consumer. You should put
    the clause in bold print, big font or say “take note”.
  4. If the exclusion clause is not in plain language
  5. If the consumer is not given adequate time to read and comprehend the clause
  6. If the term concerns an activity that is subject to the risk of:
    An unusual nature which an ordinarily alert consumer could not be expected to
    contemplate OR That could result in serious injury or death,
29
Q

How does a consumer show their consent?

A

Consumer must show his consent by signing or initialing the (exclusion)
clause or acting in a manner which shows consent. Just signing is NOT enough

30
Q

What is an unsigned contract?

A

There is no written document signed between the parties, BUT these exclusion clauses
are contained in tickets or notices.

31
Q

What is the rule surrounding tickets and notices?

A

The rule is that the customer is bound by these terms even if they did not actually see
them or know about them, provided that the supplier has done everything reasonably
necessary to bring it to the customer’s attention.

32
Q

What are the CPA (Consumer protection act) requirements for tickets and notices? [6]

A
  1. The writing must be big/bold and the writing must not be covered.
  2. Must be in plain language
  3. Must be in a contractual form in the case of a ticket only
  4. It must be seen either:
    - Before the time of contracting (offer and acceptance), OR
    - Before the person enters into activity, OR
    - Gains access to facility, OR
    - Pays for the transaction
  5. Where a term concerns an activity that is subject to risk of:
    - An unusual nature which an ordinarily alert consumer could not be expected to
    contemplate,
    OR
    - that could result in serious injury or death.
    Must comply with 1- 4 above AND
  6. The consumer must consent to the provision, i.e. would have to act in a way that shows
    consent
33
Q

In the case of tickets & notices, what must party relying on the terms of the
ticket/notice prove to the court? [3]

A

i. Nature of the document
ii. Prominence of the notice & writing
iii. Imposed at or before contract concluded

34
Q

What documents will contract the consumer and which documents will not? [6]

A

Will:
- A quote
- Order form
- A proper ticket, i.e. gives you access or rite of passage eg. Bus ticket or ticket
into Ratanga Junction

Will NOT:
- An invoice
- A receipt
- A voucher

35
Q

How do courts interpret exemption terms?

A

COURTS INTERPRET exemption TERMS RESTRICTIVELY !!! Meaning on a case by case basis

36
Q

Notice required for certain terms and conditions
S___(1)(c): A supplier must _____ make a contract subject
to any term if it purports to _____ or exempt the
supplier from______ for loss attributable to the ______
________________ of the supplier.

A

51
not
limit
liability
gross negligence

37
Q

What does Section 49 (1) of the CPA state about the notice to consumers or provision of a consumer agreement that purports to? [4]

A
  1. (1) Any notice to consumers or provision of a consumer agreement that purports to:
    (a) lIMIT in any way the risk or liability of the supplier or
    any other person;
    (b) CONSTITUTE an assumption of risk or liability by the
    consumer;
    (c) IMPOSE an obligation on the consumer to indemnify
    the supplier or any other person for any cause; or
    (d) be an ACKNOWLEDGEMENT of any fact by the
    consumer
38
Q

How must a supplier make their exclusion terms noticed by the consumer?

A

must be drawn to the attention of the consumer in a manner and form that satisfies the formal requirements of subsections (3) to (5).

39
Q

What does subsection 3 of act 49 of the CPA state?

A

(3) A provision, condition or notice must be written in PLAIN language,

40
Q

What does subsection 4 of act 49 of the CPA state? [2]

A

(4) The fact, nature and effect of the provision or notice
(1) must be drawn to the attention of the consumer—
(a) in a CONSPICUOUS MANNER
(b) BEFORE the earlier of the time at which the consumer—
(i) ENTERS into the transaction or agreement,
BEGINS to engage in the activity, or enters or
gains access to the facility; or
(ii) is required or expected to OFFER
consideration for the transaction or
agreement.

41
Q

What does subsection 5 of act 49 of the CPA state? [3]

A

(5) The consumer must be given an ADEQUATE opportunity in the circumstances to
receive and comprehend the provision or notice as contemplated in subsection (1).

if a provision or notice concerns any activity or facility that is subject to any risk:
(a) of an unusual character or nature;
(b) the presence of which the consumer could not reasonably be expected to be aware or notice
(c) that could result in serious injury or death,

42
Q

What are the types of common contractual terms? [7]

A
  1. Time terms
  2. Condition terms
  3. Warranties
  4. Cancellation Clauses
  5. Penalty Clauses
  6. Exemption / exclusionary clauses
  7. No variation Clauses
43
Q

What is a time term?

A

Term that states performance due on date/event that is certain to happen.

44
Q

What if there is no time term?

A

This means that either party can terminate the agreement at any time, for any reason

45
Q

Define a condition term

A

A qualification which renders the operation and the consequences of the contract dependent upon an uncertain future event.

46
Q

What is a ‘Suspensive’ condition?

A

valid contract, but contract only comes into operation IF condition fulfilled. If not fulfilled, contract fails. Not in breach if you don’t fulfill the condition.

E.g Contract for sale house, subject condition buyer obtains loan from approved financial institution for R1.2 million.

47
Q

What is a ‘Resolutive’ condition?

A

Contract valid & operational but contract terminates IF condition fulfilled

E.g Pay maintenance until youngest child turns 25 or completes university, whichever the earlier.

48
Q

Define a warranty

A

Term that confirms (warrants) that a particular fact is true.

E.g Car can reach 180km/h in 10 seconds.

49
Q

Define a cancellation clause

A

Term that allows party to cancel for breach even if breach not material.

E.g Landlord has right to cancel if tenant late with rental
payment.

50
Q

What is the general rule for cancellation clauses?

A

The general rule is that you can only cancel a contract if the breach is MATERIAL, i.e.
serious. To get around this, parties insert a cancellation clause which allows you to cancel for any breach, even if it’s not material.

51
Q

What is a ‘penalty’ clause?

A

A penalty clause is when they agree in advance what the non-defaulting party can claim
in the event of breach.

E.g Deduct R1000 per day for each day building completion overdue.

52
Q

What is a Exemption / exclusionary clauses?

A

These are terms that are implied to give effect to the common intention of the parties. The term is not expressly mentioned, but it is clear that the parties’ intended the term
to be in the contract.

53
Q

When will a non-/no variation clause be effective?

A

if a contract is written – This is a clause that states that no variation of the contract will be valid unless it is in writing AND signed by both parties

54
Q

What if there is no variation clause?

A

If there is not a no-variation clause, then the parties can change their terms verbally.

CML1001F: Contract law (10 decks)

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