Theme 2 PT 1 Flashcards
VALID CONTRACTS:
1) Agreements between parties that comply with the prescribed validity requirements.
2) Create legally enforceable rights and duties for both parties.
VOID CONTRACTS:
1) Agreements that do not comply with the validity requirements.
2) Contracts are non-existent and therefore not legally enforceable.
VOIDABLE CONTRACTS:
1) Voidable contracts contain a legal flaw to the disadvantage of one party, but the contract remains in effect (because it is valid in principle) until that party seeks to declare it void.
2) Voidable contracts may arise through misrepresentation, some instances of mistake, non-disclosure, duress, or
undue influence.
3) The aggrieved/wronged party may choose to uphold the contract or set it aside.
PARTIALLY VOID CONTRACTS: SEVERABILITY:
1) Contract is partially invalid.
2) Reason for invalidity only affects certain parts of the contract? The court will decide whether the invalid parts of the contract may be severed (separated).
3) Overall test: Whether the parties would have still entered into
the contract.
CONSENUS/AGREEMENT:
1) The minds of the parties must
meet (or at least appear to meet) on all material aspects of their agreement.
AGREEMENT BETWEEN THE PARTIES=CONSENSUS
1) Parties must have the same understanding regarding all the terms of the contract, if there is any uncertainty or vagueness: consensus not reached.
ESTABLISHING CONSENSUS:
1) Analytical tool of OFFER AND ACCEPTANCE, which helps us determine when and where a contract was concluded, if any.
GENERALLY:
1) Consensus is reached via
NEGOTIATIONS between parties.
NEGOTIATIONS:
1) Are declaration of
intention to contract by the parties.
DECLARATION OF INTENT:
1) EXPRESS declaration of intention: Intention to contract derived from words (written or verbal).
2) IMPLIED declaration of intention: Intention to contract
derived from actions or behavior.
3) Silence can also signify agreement but only in exceptional
circumstances.
Case Regarding Silence: McWilliams v First Consolidated Holdings
1) Silence can signify an agreement where previous dealings between the parties make it reasonable to interpret a failure to respond as an acceptance of an offer.
WHAT IS AN OFFER?
1) A proposal to contract.
2) It is a declaration by the offeror of his intention to conclude
(become a party to) a contract.
3) All the terms on which offeror is prepared to contract are set out
in the offer
Offer can be made to which parties?
1) Specific person
2) Group of people
3) General public (e.g. Rewards).
WHAT IS THE LEGAL EFFECT OF AN OFFER?
1) Offer is a unilateral declaration, so it does not create any binding obligations.
2) However, should the offer be accepted – the terms stipulated
in the offer become binding.
3) Offer may be withdrawn, unless it is subject to an option.
OFFER REQUIRMENTS FOR A VALID OFFER
1)The offer must be FIRM.
2) The offer must be COMPLETE.
3) The offer must be CLEAR AND CERTAIN
The offer must be FIRM:
The offer must be made with the serious intention to create legally binding obligations
The offer must be COMPLETE:
1) The offer must contain all the material terms of the proposed contract.
2) There cannot be further matters still to be negotiated – “nothing is agreed until everything is agreed”.
The offer must be CLEAR AND CERTAIN:
1) If offer is vague – it fails to provide a reasonable clear indication of
what the offeror has in mind –no acceptance can create a binding
obligation.
2) Agreement = Void for vagueness
However note:
3.1) If terms capable of reasonable interpretation – court can and will have
regard to intrinsic evidence and rules of interpretation to determine
meaning/ intention.
3.2) If intention to be bound can be shown – courts reluctant to render invalid.
The Consumer Protection
Act 68 of 2008 (CPA):
1) CREATES FURTHER REQUIREMENTS FOR A
VALID CONTRACT
2) PLAIN AND UNDERSTANDABLE LANGUAGE
Offer must DISCLOSE whether
goods are RECONDITIONED or
GREY- MARKET goods:
S 25 of the CPA
1) If a person offers to supply any goods that have been reconditioned, remade or
rebuilt and bear the trademark of the original producer or supplier must indicate this clearly.
NEGATIVE OPTION
MARKETING IS
PROHIBITED:
▪S 31 of the CPA:
1) Supplier cannot promote any
goods or services on the basis that the goods & services are to be supplied UNLESS the consumer declines the
offer.
COOLING OFF PERIOD:
▪ Applies to direct marketing only.
▪ S 32(1) of the CPA
1) Marketing must have occurred at a place
other than their usual place of business.
2) Onus on offeror to notify offeree of S 16 –
offeree entitled to rescind any contract
concluded, by notice, in writing within 5
days of the date on which the agreement
was concluded or the goods delivered
(whichever is later).
