Formalities (9)

Question 1

Depending on the objects of a particular piece of legislation, the two most common formalities prescribed in legislation?

Answer 1

are that contracts or agreements be reduced to writing, and that they be signed by the parties.

Question 2

The advantages of a written agreement include, but are not limited to the following?

Answer 2

• Reduces possible uncertainties in interpretation and enforcement of the contract
• Could reduce the occurrence of disputes, or prevent parties from being forced to approach a court of law each time a dispute arises
• Defines the roles and responsibilities of each party to the contract

Question 3

Where the legislation requires that an agreement or contract be reduced to writing and signed by the parties, failure to comply with such a prescribed formality will result?

Answer 3

in the contract being void.

Question 4

A written contract must contain all the material terms. The material terms of a contract are known as the following?

Answer 4

• Essentialia: According to Law Teacher 1 (n.d.), the essentialia of a contract is ‘issues which must be clearly stated and clarified before any contract is initiated. Without these essentialia the contract could be severely hampered or end up in court. Disputes can easily arise if not clearly stated’.
• Incidentalia: According to Law Teacher 2 (n.d.), incidentalia terms are ‘not required in a contract, but may be inserted at the discretion of both parties, and can be used to solidify special considerations or criteria’.

Question 5

It must also be noted that in terms of the Electronic Communications and Transactions Act 25 of 2002 (ECT), data messages are now recognised as writing. However, this does not apply in respect of the following contracts?

Answer 5

• Sale of land
• Agreement for a long-term lease of immovable property, in excess of 20 years
• Last will and testament
• Execution of a Bill of Exchange
• Stamp duties

Question 6

An electronic signature could be one of the listed items that follow, as long as what is presented is intended to represent the signature of a party?

Answer 6

Typing of a name at the end of the document
Scanned handwritten signature

Question 7

‘Alienation’ is defined as ‘sale, exchange or donation, irrespective of whether it is subject to a suspensive or resolutive condition’ (section 1(a) of the amended Alienation of Land Act 103 of 1998)?

Answer 7

• A sale: This is an agreement, in terms of which one party undertakes to deliver a thing to another party, in exchange for payment. This is usually in the form of a sum of money.
• An exchange: This is an agreement, whereby the parties agree that each party will exchange one thing for another. Therefore, both parties undertake to deliver a thing to one another.
• A donation: This is an agreement whereby one of the parties agrees to give over a thing to another party, without expecting any performance in return, such as payment of a sum of money or delivery of a thing.

Question 8

The contract in a suretyship agreement is concluded between the creditor and the surety. The suretyship agreement must contain the following material terms, in order to be valid?

Answer 8

• Name(s) of the creditor
• Name(s) of the principal debtor
• Name(s) of the surety
• Nature and amount of the principal debt

Question 9

When persons enter into a marriage or civil partnership in South Africa, without concluding an antenuptial contract (ANC), they are considered to be ‘married in community of property’. This means? .

Answer 9

that the assets of both parties are ‘merged’, and upon divorce or the death of one of the parties, the other party is automatically entitled to a half share of the joint estate

Question 10

An antenuptial contract (ANC) requires compliance with the following formalities?

Answer 10

• It must be in writing
• It must be executed by a notary public (i.e. notarial execution)
• It must be registered

Question 11

Generally, the parties to an antenuptial contract (ANC) have to choose between the following two types of contract?

Answer 11

• antenuptial contract with the operation of the accrual system; or
• antenuptial contract with the exclusion of the accrual system.

Question 12

An antenuptial contract requires compliance with the following formalities?

Answer 12

• It must be in writing
• It must be executed by a notary public (i.e. notarial execution)
• It must be registered

Question 13

Why must parties who wish to be married out of community of property conclude a marriage contract?

Answer 13

The default system is that parties are automatically married in community of property

Question 14

What is the consequence of a contract that fails to adhere to a formality prescribed by legislation?

Answer 14

The contract is void

Question 15

What is the main advantage of being married out of
community of property?

Answer 15

Creditors can’t claim from the separate estate of a spouse should one spouse go insolvent

Question 16

Which one of the following is an essentialia of a contract of sale?

Answer 16

The intention of the parties to purchase and sell a certain object

Question 17

In terms of the Electronic Communications and Transactions Act 25 of 2002, data messages are now recognised as writing. However, this does not apply in respect of certain contracts. For which contract below is a data message not considered as writing?

Answer 17

Last will and testament

Question 18

The Deeds Registries Act provides for the registration of several types of contracts, failing which such contracts?

Answer 18

shall be of no force and effect.

Question 19

Non-compliance with prescribed statutory formalities will usually render?

Answer 19

a contract void.

Question 20

What is the general rule relating to compliance with statutory formalities?

Answer 20

Failure to adhere to formalities prescribed by a statute, may render a contract void.

Question 21

With effect to a contract, the most important question to ask is:

Answer 21

What is the intention of the parties?

Question 22

What type of right is a lessee granted in terms of a long-term lease over land?

Answer 22

A limited real right

Question 23

What was held by the court in the case of Sentrale Ko-
operatiewe Graanmaatskappy Bpk v Shifren?

Answer 23

Non-variation clauses do not transgress public policy and may be included in contracts

Question 24

What is a non-variation clause?

Answer 24

Parties agree that any variations to the contract must be in writing

Question 25

The most important factor to look at when determining
the effect on the contract is the intention of the parties.
Which case stated this principle?

Answer 25

Goldblatt v Fremantle

Question 26

What is the consequence of an antenuptial contract that has not been registered at the deeds registry?

Answer 26

It’s only valid between the parties to the contract

Question 27

The ‘parol evidence rule’ (also referred to as the ‘extrinsic evidence rule’) applies to?

Answer 27

written contracts.

Question 28

This rule is used when the courts are required to interpret a contractual provision that is?

Answer 28

the subject of a dispute between the parties.

Question 29

Parol evidence refers to?

Answer 29

Evidence outside of what is contained in the agreement; for example, verbal conversations between the contracting parties, during negotiations. The rule provides that only the written contract shall be considered in determining the intention of the parties.

Question 30

The parol evidence rule consists of these two distinct rules?

Answer 30

• Integration rule
• Interpretation rule

Question 31

The integration rule determines?

Answer 31

what evidence may be admissible,

Question 32

The exceptions to the parol evidence rule are as follows?

Answer 32

• Where the parties intended that the agreement would only be a partial recording of their contract
• Where the parties want to bring evidence to prove tacit or implied terms
• Where a party wants to bring evidence that the contract is invalid or void (for example, that the contract was illegal; that parties did not agree to terms; that the contract was induced by misrepresentation etc.)
  Where parties want to lead evidence about a subsequent verbal variation of a contract
  Where parties want to lead evidence of a suspensive condition that was not contained in the contract
  Where a party wants to bring evidence of a collateral or connected oral agreement that induced the written contract

Question 33

What was held by the Supreme Court of Appeal in the
case of Dreyer and Another v AXZS Industries (Pty) Ltd?

Answer 33

For an agreement embodied in writing, the written document is conclusive as to its terms

Question 34

What is the parol evidence rule used for?

Answer 34

To interpret a contractual provision that is the subject of a dispute

Question 35

Which two distinct rules is the parol evidence rule made up of?

Answer 35

The integration rule and the interpretation rule

Question 36

Which of the following is an exception to the parol evidence rule?

Answer 36

Where a party wants to bring evidence that the contract was illegal

Question 37

What is the parol evidence rule also known as?

Answer 37

The extrinsic evidence rule

Question 38

Jim and Sue enter into an agreement for the sale of a printer. After the contract has been concluded, Sue alleges that Jim guaranteed orally that the printer could print 30 pages a minute.
Required:
Does Jim’s guarantee form part of the contract?

Answer 38

The dispute usually relates to determining the actual intention of the parties to the contract. Parol evidence relates to evidence outside of what is contained in the agreement. For example, verbal conversations between the contracting parties, during negotiations. The rule provides that only the written contracts shall be considered in determining the intention of the parties to the contract. A party would want to introduce extrinsic (i.e. outside) evidence to support their case, where necessary.

Question 39

Jim and Sue enter into an agreement for the sale of a printer. After the contract has been concluded, Sue alleges that Jim guaranteed orally that the printer could print 30 pages a minute.
Required:
Will a court allow Sue to bring taped evidence?

Answer 39

Sue could apply to court and introduce external evidence such as the taped evidence, in order to prove that this was the intention of the parties.

Question 40

Mo and Kanyi have decided to start a sweet factory together. They have discussed and agreed to their respective duties and how the profits in the factory will be divided. They both decided that their intentions must be reduced to writing, in order to have force and effect. When Kanyi starts writing out the agreement, Mo changes his mind about the contract and he now no longer wants to be involved in the business.
Required:

Has a valid contract been concluded between the parties?

Answer 40

Parties to a contract may decide that in order for their agreement to be valid, certain formalities must be complied with, even though it is not required in terms of prevailing legislation. For example, parties during a negotiation may decide that a valid contract shall only come into existence if a written offer is submitted and signed by the other party. Failure to do so would mean that no contract would have been concluded. Therefore, no contract has been concluded, as the parties decided that in order for the contract to be forced into effect, it had to be reduced to writing.

Question 41

The purpose of rectification is simply to ensure that the common intention of the parties?

Answer 41

is reflected in the agreement.

Question 42

A party who seeks to claim rectification in a court of law must prove the following?

Answer 42

• That the document does not reflect the common intention of the parties
• That both parties intended for the provision to be included, and not just one of the parties
• The true intention of the parties, and how the agreement is to be amended
• That the terms of the agreement are incorrectly reflected – i.e. terms may be mistakenly included, omitted or misstated

Question 43

n instances where a signature is required for a contract
to be valid, rectification cannot be used to validate the
contract. What is an exception to this?

Answer 43

A will that has not been signed by a testator

Question 44

What was the court’s decision in the case of Weinerlien v Goch Buildings Ltd on why an agreement could be rectified?

Answer 44

It contained a sufficient description of the land which was being sold

Question 45

What was the decision of the court on the agreement for the sale of the land in the Magwaza v Heenan case?

Answer 45

Could not be rectified because the property was not described with sufficient certainty

Question 46

Why would parties to a contract apply to court for
rectification?

Answer 46

The intentions of the parties have not been accurately reflected in a written contract

Question 47

What must a party who seeks to claim rectification in a court of law prove?

Answer 47

The document does not reflect the common intention of the parties