The law of contract

Question 1

What are the requirements to enter into a valid contract? [2]

Answer 1

1. Contractual Capacity
2. Intention to contract

Question 2

What are factors that can render a contract void, voidable or unenforceable? [5]

Answer 2

-Mistake
-Misrepresentation, duress, undue influence
-Illegality
-Impossibility of performance
-Formalities

Question 3

What are your rights and duties under the contract and how do you fail to perform your duties? [2]

Answer 3

• As stated in the contents of the contract
  -Breach of contract

Question 4

Who has full CONTRACTUAL CAPACITY?

Answer 4

On the coming of age, i.e. on reaching his/her 18th birthday, an unmarried person attains majority and legally acquires full contractual capacity.

Question 5

WHAT ‘LIMITS’ CC? [3]

Answer 5

a) Age (minors)
b) Marriage
c) Insolvency; Mental Illness; Intoxication.

Question 6

Who are married persons? [3]

Answer 6

a) ICOP
b) OCOP with accrual
c) OCOP without accrual

Question 7

Who are minors?

Answer 7

Children under 18

Question 8

Do minors have contractual capacity?

Answer 8

i. 0-7 = NO CC (called infans)
ii. 7-18 = Limited (these children are called pupillus)

Question 9

Can minors effect contract with assistance?

Answer 9

= Bound unless ‘inherently prejudicial’

Question 10

Under common law, what is it called when a minor enters a contract without assistance and are they bound by it?

Answer 10

a ‘limping’ contract = Major bound BUT minor’s parents can: 1. Ratify or 2. Repudiate

Question 11

What does ratify mean?

Answer 11

sign or give formal consent to make the contract valid

Question 12

What does repudiate mean?

Answer 12

Refuse to accept; reject

Question 13

Under the consumer protection act, can minors enter a contract without assistance?

Answer 13

Voidable at option of the minor

Question 14

What is the children’s act of 38 of 2005? [3]

Answer 14

parent or other person (guardian) of a child must:
a.) administer and safeguard the child’s property and property interests;
b.) assist or represent the child in administrative, contractual and other legal matters; orc.) give or refuse any consent

Question 15

What is the consumer protection act 68 of 2008?

Answer 15

Agreements with persons lacking legal capacity are voidable at the option of the consumer

Question 16

contracts with a minor can be made void if at the time the agreement was made the consumer was an ____________ minor

Answer 16

unemancipated

Question 17

True or false, contracts with a minor can be made void if he agreement was made without the consent of an adult responsible for that minor

Answer 17

True

Question 18

Contracts with a minor can be made void if; the agreement has not been ________

Answer 18

Ratified

Question 19

What exception can give a minor full contractual capacity?

Answer 19

A minor becomes a major on marriage, regardless of his/her age.

Question 20

What are the issues with “married persons”? [2]

Answer 20

A) Property division on termination marriage.
B) Contractual capacity of spouses during marriage.

Question 21

In ICOP, (Joint ownership assets + Joint liability debts!), what happens to property on termination of marriage?

Answer 21

On termination (death or divorce): 50/50 split, excluding damages awarded one spouses for non-financial loss; inheritance/donations excluded from joint estate by testator/donor.

Question 22

What is the effects of marriage in ICP? [4]

Answer 22

1. The assets/liabilities belonging to each spouse before the marriage are merged into a
   single, joint estate upon marriage.
2. Property acquired during the marriage becomes jointly owned. Liabilities acquired
   during the marriage become joint liabilities.
3. Upon dissolution of the marriage, by death or divorce, the joint estate is divided
   and each is entitled to half. It could be a negative half due to debt.
4. Upon insolvency, both spouses are declared insolvent by the court

Question 23

What is happens to property on insolvency?

Answer 23

Insolvency: joint estate and separate estate (if any) both spouses assets fall into insolvent estate!

Question 24

In marriage ICOP, what happens in terms of contractual capacity? [2]

Answer 24

-Both spouses have full CC iro joint estate
-BUT: Permission needed for some contracts

Question 25

What permission is required by spouses in ICOP?

Answer 25

Types of permission: verbal, written, written + 2 witnesses. NB = s15 Matrimonial Property Act!

Question 26

In ICOP, what requires verbal verbal consent? [3]

Answer 26

i. Sell or pledge furniture or other effects common household ii. Receive any money, income, pension due to other spouse by virtue of their profession, trade or business iii. Receive proceeds of an insurance policy or annuity for other spouse

Question 27

In ICOP, what requires written consent? [2]

Answer 27

i. Sell or pledge jewelry, coins, stamps, paintings or other assets held mainly as investments ii. Sell, cede or pledge shares, stocks, debentures, insurance policies *

Question 28

In ICOP, what requires you to have a written consent and 2 witnesses? [4]

Answer 28

i. Sell immovable property or mortgage/grant servitude/other real right over immovable property ii. Buy immovable property in installments* iii. Buy goods on credit under National Credit Act * iv. Stand surety for third party *

Question 29

True or false, For exceptions, No permission needed if * contract entered into by one spouse inordinary course trade, profession or occupation

Answer 29

True

Question 30

When is permission not needed?

Answer 30

IF CONTRACT NOT LISTED IN S 15 MPA (Matrimonial properties act), NO PERMISSION NEEDED!

Question 31

Presumption: all persons presumed to have full _______ capacity.

Answer 31

Mental

Question 32

When is someone seen to be mentally ill/incapable?

Answer 32

All persons are presumed to be sane/of sound mind, unless they have been declared mentally ill in terms of the Mental Health Care Act by the high court

Question 33

Exception: if person declared incapable managing own ______ by Court, then onus on person alleging _______(i.e. on person seeking to uphold the contract).

Answer 33

affairs capacity

Question 34

What states that you have mental capacity when making the contract? [3]

Answer 34

-At time -contract concluded -question of fact

Question 35

When are you seen to "lack capacity"?

Answer 35

Lack capacity if “incapable of properly understandingthe nature of the contract and appreciating the rightsand obligations created by the contract”. (i.e. fulllegal implications of actions)

Question 36

Effect of contract concluded by mentally ill person, insolvent or intoxicated person: =______.

Answer 36

VOID

Question 37

True or false, Insolvency is a question of fact (not of law).

Answer 37

FALSE, it is a question of law (not fact). Notinsolvent unless High Court has made an order declaring you to be insolvent.

Question 38

When is someone declared insolvent?

Answer 38

Once the court sequestrates someone they are insolvent

Question 39

What are the contractual capacity exceptions for someone that is insolvent? [4]

Answer 39

1. He cannot dispose of any assets in the insolvent estate. not his anymore, the trustee is keeping it to divide it between the creditors he couldn’t pay). 2. He cannot, without the consent of the trustee, enter any contract which may negatively/adversely affect the estate. 3. He may not, without the consent of the trustee, be involved in the business of a trader who is a general dealer (e.g. Pick ‘n Pay) or manufacturer (e.g. builder). 4. He cannot work as a chartered accounting or director of a company

Question 40

What is intoxication a question of in terms of contracts?

Answer 40

A question of fact (not law).

Question 41

Why is intoxication a reason for a contract to be made void?

Answer 41

The mere fact that someone is more easily manipulated when slightly intoxicated will not make the contract void.

Question 42

In marriage OCOP or OCOP with accrual, what is required?

Answer 42

anti-nuptial contract (ANC) The ANC must be signed before a notary public and 2 witnesses.

Question 43

What is the effect of marriage OCOP?

Answer 43

- Each party retains as their own separate estate what they acquired before and during the marriage. - Each party remains liable for debts acquired before or during the marriage. They are not liable for each other’s debts. - Upon dissolution of the marriage, by death or divorce, each party retains their separate estate. They each retain their own assets and are liable for their own debts. - When the marriage dissolves neither party has a claim against each other.

Question 44

What is the effect of marriage OCOP with accrual?

Answer 44

-Exactly the same as out of community of property -The spouse whose estate has shown the smaller accrual (growth) during the marriage has the right to half the difference between the two accruals at dissolution.

Question 45

What does the contractual capacity look like in OCOP and OCOP with accrual? [3]

Answer 45

1. Each party has unrestricted power/full contractual capacity with regard to their own estate. 2. Neither party/spouse has any power with regard to the other estate. 3. They are not liable for each other’s debts with one exception, they are jointly liable for household necessaries.