Theme 3 PT 2 Flashcards
FORMALITIES
1) GR: There are no formalities prescribed for the formation of a valid contract
2) However, in respect of certain transactions formalities may be imposed by law (objective)
3) in terms of freedom of
contract the parties themselves (Self-
imposed) can agree to impose their own
formalities (subjective)
FORMALITIES: IMPOSED BY LAW INCLUDE:
1) Writing,
2) Registration and
3) Notarial execution.
3.1) Notarial execution: Drafted by a
Notary Public (+ singed and witnessed
in his\her presence).
3.2) Contract kept in the notary protocol.
FORMALITIES IMPOSED BY PARTIES
INCLUDW:
1) Writing
2) Signing
FORMALITIES IMPOSED BY LAW
1) Some agreements are invalid if such
formalities are not met/complied with.
2) This generally means that these contracts
must be in writing and have been signed
by at least one of the parties.
FORMALITIES IMPOSED BY LAW
EXAMPLES:
1) Sale, exchange and donation of land [S 2(1) of the Alienation of Land Act of 1981]
2) Suretyship (Writing + signed by surety, not creditor)
3) Executory donation (must be signed by
donator\donor)
4) Executory donation: A promise to donate
property at a future date
FORMALITIES IMPOSED BY LAW
1) Writing.
2) Signed by both parties or their agents
acting on their written authority.
3) Requirement not applicable to organs
of companies (Managing director) as
they are not agents
Sale, exchange and donation of land [S 2(1) of the Alienation of Land Act of 1981]
1) Contracts for alienation of land usually
have significant value: Formalities aim to
promote certainty and to reduce dispute
between parties.
Provisions DO NOT apply to:
1)Sale of land by auction.
2) Preference contract [Mokone v Tassos
Properties CC]
3) Option [Mokone v Tassos Properties CC]
Suretyship [S 6 of the General Laws
Amendment Act]
1) Writing
2) Signed by or on behalf of the surety.
3) Non-compliance: Contract is VOID.
Non-compliance:
1) Contract is VOID.
2) One party rendered performance: Recover. [s 28(1)]
3) Full performance rendered by both parties: Contract VALID ab initio [s 28(2)]
Executory Donation [S 5 of the General Laws Amendment Act]:
1) Writing.
2) Signed by the donor or a person acting on his\her written authority.
3) Executory donation: One that has not been made, still to be made in the future.
Some agreements are not invalid if formalities are not met, but cannot be enforced against third parties, such as:
1) Ante Nuptial Contract (ANC)
2) Notarially executed and must be
registered within three months of
execution)
3) Long-term leases of land (must be
registered against the title deed).
FORMALITIES IMPOSED BY LAW
WRITING IN ELECTRONIC
CONTRACTS
1)12 ECTA: Document or information is in
writing if: Document is in the form of data
message and is accessible.
2) S 4 (4) ECTA: Accessible in a manner
usable for subsequent reference.
FORMALITIES IMPOSED BY LAW SIGNATURE IN ELECTRONIC CONTRACTS
1) S 13(1)and s 1 ECTA:
▪ If signature is required by law without identifying the type of signature, it must be a an advanced electronic signature: A signature in a form prescribed by the
Director-General of the Department of
Communications.
2) S 13(3) ECTA:
▪ Signature self-imposed: Use of appropriately reliable method to identify party and to indicate his/her approval of the electronic communication.
Provisions (ECTA) NOT applicable to:
1) Alienation of Land &
2) Agreements for long-term lease of
immovable property in excess of 20 years.
EXAMPLES OF SUCH FORMALITIES INCLUDE:
1) Parties may agree that an oral agreement is only valid once reduced to writing and signed.
2) Parties may insert a ‘non-variation clause’, which provides that ‘No variation of this agreement shall be of any force or effect unless reduced to writing and signed by the parties’.
3) Parties may agree that the cancellation of the contract shall only be valid if it is in writing (+signed).
4)Non-compliance: Contract VOID.
Provision applicable to:
1) Suretyship.
2) Executory donations. (Except of land).
3) Variation of a contract.
CREATION OF A FORMALITY
REQUIREMENT (WRITING + SIGNED)
INTENTION:
1) FACILITATE PROOF OR
2) SERVE AS A FORMALITY REQUIREMENT
3) DOUBT OF THE PARTIES INTENTION:
Rebuttable presumption [FACILITATE
PROOF: Goldblatt v Fremantle
NON-VARIATION CLAUSES: Shifren principle:
1) Parties may prescribed formalities for
variation.
2) Common practice.
3) Clause “No variation of this agreement shall be of any force or effect unless reduced to writing and signed by the parties to this agreement”
SA Sentrale Ko-operatiewe Graansmaatskappy Bpk v Shifren
1) Non-variation clause not against public policy.
2) No oral variation will be effective if the clause entrenched both itself and all other terms of the agreement against oral variation
3) Shifren principle re-affirmed in Brisley v
Drotsky
Brisley v Drotsky
1) Potential abuse of non-variation clauses: (a) Restrictive interpretation
(b) Public policy
(c) Estoppel
Non-cancellations:
1) Prescribe formalities for
cancellation of an agreement (Writing and signed)
Impala Distributors v Tanunus Chemical
Manufacturing Co (Pty) Ltd
1) Prescribes the procedure for mutual cancellation of the contract.
2) Does not prevent unilateral cancellation for breach of contract.
3) To be enforceable, a cancellation clause requires a non-variation clause, otherwise the parties could orally agree to vary the cancellation clause
