Category Archives: Contract Law

Exemption Clauses: Changes in the Legal Landscape

Much has changed in the legal landscape surrounding exemption clauses from when the landmark case of Durban’s Water Wonderland (Pty) Ltd v Botha 1999 1 SA 982 (SCA) was decided. In that case, the court had to decide on the enforceability of a disclaimer notice when the plaintiff and her daughter were flung from a jet ride in an amusement park. The SCA held that, since the defendant had done whatever was necessary to bring the notice to the attention of the plaintiff, the notice could be incorporated into the contract between the plaintiff and defendant, and the disclaimer notice was upheld... Read More

Shipping Law: Co-ownership in Unregistered Vessels

Section 15 of the South African Ship Registration Act 58 of 1998 provides for ownership of shares in a South African ship by co-owners.

Registration of vessels on the SA Ship Register (as opposed to mere SAMSA certification) and the shares therein has various benefits, including a public recordal and prima facie proof of ownership in the vessel. It also allows the vessel to legally sail beyond the South African territorial waters as well as various other legal benefits and consequences... Read More

Property Law: Purchasing and bonding a property in a foreign currency

From time to time, foreign investors may wish to secure loans made to South African property owners by means of a mortgage bond and in some cases, the lenders requires the mortgage bond to reflect the amount of the loan in a format with which they are familiar, i.e. a foreign currency of their choice.

Similarly, a foreign purchaser may require that a property purchased in South African is concluded in a foreign currency.  Allan West examines the situation where the parties insist that these amounts are reflected in foreign currency values in the deeds office. .. Read More

Credit Law: Collecting prescribed debts to which the National Credit Act applies

Under the post-1994, democratic dispensation, courts have shown an increased tendency to interpret legislation from a pro-consumer stance. This has produced favourable results in that there has been a decrease in the number of one sided transactions being concluded between large corporations and unwitting consumers. However, the corollary of this is thousands of invalidated contracts and millions of Rands in written-off debts in circumstances where credit providers and companies that concluded agreements in good faith. This harsh commercial climate has placed a demand on attorneys that represent the corporates in question to be incredibly knowledgeable and highly skilled in drafting agreements and collecting debts that stem from the same... Read More

Contract Law: Pre-Emptive Rights: Mokone v Tassos Properties CC and Another

FACTS

A written agreement of lease was concluded between Tassos and Ms Mokone on 1 March 2004 for a one year period. Contained in this agreement was a pre-emptive clause. Once the lease period lapsed an oral agreement on the same terms and conditions as the written lease was entered into. On 3 May 2006 a manuscript was used to extend the lease by means of endorsement in terms of which ONLY a representative of Tassos signed.

A deed of sale was then entered into between Blue Canyon Properties and Tassos this meant that the property was sold to Blue Canyon without allowing Ms Mokone to exercise her right of pre-emption... Read More

Property Law: Agricultural Land: Options no longer an option

The Subdivision of Agricultural Land Act[1] (“the Act”) prescribes that an owner of agricultural land must first apply to the Minister of Agriculture before subdividing such land. The purpose of the Act is manifest in that its object is to control and prevent the loss of sub-division of agriculturally useful farmland into uneconomic units.[2] Along with this physical prohibition, and for purposes of this article, section 3(e)(i) of the Act prohibits any portion of agricultural land from being sold or advertised for sale, unless the Minister has consented thereto in writing... Read More

Contract Law: Crookes Brothers Ltd v Regional Land Claims Commission for the Province of Mpumalanga : The importance of interest clauses

Interest is a vital consideration when contemplating the provisions of a contract. This was made clear in the judgment of Crookes Brothers Ltd v Regional Land Claims Commission for the Province of Mpumalanga and Others. In this case, the parties had entered into an agreement of sale which included a clause providing that interest was to be levied against the Purchaser in the event that it did not make timeous payment. However, the Supreme Court of Appeal’s (“SCA”) interpretation and application of the clause reached farther than a plain reading of the provision... Read More

Law of Contract: The legal status of emails: Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash and Another

Do emails have the same legal status in law as paper-based documents and conventional  signatures? This question was addressed in the Spring Forest Trading-case.

Two parties, Wilberry and Spring Forest, entered into several agreements in terms of which mobile dispensing units were used in Wilberry’s car wash business.

Following a dispute, the validity of the cancellation of a number of agreements between the parties by exchange of e-mails, was relevant. The agreements contained the standard clauses providing that the agreements may only be cancelled in writing and signed by the parties... Read More

Contract Law: Cancelling a contract without a termination clause

An agreement that is reduced to writing is preferred because it is easy to prove the express terms of the contract. However, a party who sues on a contract must prove its terms, which can become a challenge when the term in contention is a cancellation clause that is not in the contract. Two Supreme Court of Appeal (‘SCA’) cases are analysed to illustrate what the court considers when deciding on tacit termination clauses.

In Cecil Nurse vs. Bongile Nkola 2008 (1) ALL SA 428 (SCA) the court had to determine which suretyship agreement was binding on Mr Bongile Nkola (‘the respondent’)... Read More

Contract Law: Waiver of a right to cancel: Sewpersadh v Dookie [2008] 1 All SA 286 (D)

A sale agreement had been entered into in regards to the purchase of a property. The material terms of the agreement were that the purchase of price would be paid via installments over a 24 month period. The respondent then breached the terms of agreement when he failed to pay the full purchase price. In light of such failure to pay, the applicant sent a letter to the respondent demanding compliance within seven days.

The applicant asked the court for the ejectment of the respondent from the immovable property on the ground that the agreement of sale had been cancelled... Read More

Contract Law: Suspensive conditions and the Kovacs-case

The case of Kovacs Investments 724 (Pty) Ltd v Marais (323/2008) [2009] ZASCA 84 is critically analyzed with a deeper view of suspensive conditions in an agreement of sale.

In dispute was, inter alia, whether an agreement of sale in respect of immovable property had lapsed due to non-fulfilment of suspensive conditions contained in the deed of sale.

A written agreement of sale was concluded on 29 July 2005 in terms of which the respondent sold a commercial section of a building in Bellville, Cape Town for the purchase price of R18 454 041 to the appellant... Read More

Contract Law: Effective cause revisited

The transfer process of a property can be exciting for the host of involved parties but what starts off as a zealous stream of positive energy can turn into a disaster. In the competitive real estate industry, if an agent finds himself in a situation where his commission is not certain due to the intervention of competing agents who may actually eventuate a sale despite the initial agent’s hard work.

If Agent A who introduces a prospective buyer to a property which Agent A has a mandate to sell and if he further invests a substantial effort to bring that sale to fruition, he will have earned his commission and a seller who entertains another Agent B (Agent B who may have actually eventuated the sale) will then be liable for double commission and he will have only himself to blame for not protecting himself against such risk... Read More

Property Law and Contract: Contractual Unfairness and the Constitution

In the recent as yet unreported case of Bondev Holdings Midrand (Pty) vs Mulatedzi Alton Madzhie and others delivered by Acting Judge CR Jansen on 19 December 2016  in the Gauteng High Court, important contractual issues in a constitutional perspective were addressed in an insightful and ground-breaking judgement.

The applicant, a property developer, sold a vacant residential plot to the first respondent in January 2012. The first respondent paid the purchase price from loan finance raised, but failed to commence with construction of a dwelling on the property as required in terms of the deed of sale... Read More

Estate Agents: No Fidelity Fund Certificate, No Commission?

Section 34A of the Estate Agency Affairs Act 112 of 1976 requires that an estate agent must have been issued with a valid Fidelity Fund Certificate before he or she will be entitled to remuneration or other payment arising from the performance of any duties of an estate agent.

In the recent High Court judgment of Crous International (Pty) Ltd v Printing Industries Federation of South Africa an estate agent claimed commission from his principal following the successful sale of its immovable property... Read More

The Law of Agency: Makate and the Vodacom blunder

Kieren Sharpley considers the impact of the recent case of KN Makate v Vodacom on the law of agency in South Africa. Known as the  “The Please Call Me -case”), it sought to clarify the confusion surrounding the principles of actual authority, apparent or ostensible authority and when estoppel should be invoked as an appropriate case.

The case also narrowed the definition of debt as contained in the Prescription Act, and reaffirmed that pacta de contrahendo (agreements to agree or to contract in the future) were enforceable in South African Law... Read More

Repudiation of a contract: the role of reasonable perception

Repudiation is contractual conduct which is similar to and to a degree extends over the traditional contractual conduct which amounts to breach of contract.

 Repudiation has been expressed to be a party’s demonstration, by words or conduct, and without lawful excuse, of an unequivocal intention no longer to be bound by the contract or by any obligation forming part of it, which if accepted by the innocent party, entitles the innocent party to cancel the agreement.

 In the early half of the century, following a line of cases, it was held in SCHLINKMANN v VAN DER WALT 1947 2 SA 900 (E) when defining the conduct of repudiation the Court held that repudiation “in the main is a question of intention of the party alleged to have repudiated” and quoting the English case of Freeth v Burr held that the “true question is whether the acts or conduct of the party evince an intention no longer to be bound by the contract”... Read More

SCA issues landmark ruling that email negotiations and typed email signatures now binding

Our Supreme Court of Appeal ruled on 21 November 2014 that oral negotiations between parties that have been reduced to writing in the form of emails constitute an agreement to cancel their written agreements.

The court went further and found that typewritten names of the parties at the foot of emails constitute ‘data’ that is logically associated with the data in the body of the emails, as envisaged in the definition of an ‘electronic signature’.

Although these signatures should not be confused with an advanced electronic signature, they satisfy the requirement of a signature and have the effect of authenticating the information contained in the emails... Read More

Rouwkoop clauses: not always what one expects it to be

In the recent decision of Royal Anthem Investments 129 (Pty) Ltd v Yuen Fan Lau and Shun Cheng Liang (941/2012 [2014] ZASCA 19 (26 March 2014) the court interpreted a rouwkoop clause in a deed of sale to mean that the words “to keep” refers to an amount received and held by the seller and does not include the deposit paid to the conveyancer.

The judgment dealt with the sale of an immovable property where the purchaser paid a deposit and transfer duty to the conveyancing attorney... Read More

International news: lender Wonga sent fake law firms’ letters threatening its customers

England and Wales Law Society said reports that payday lender Wonga issued letters from fake law firms were alarming. They urged the public to verify credentials when approached by what appear to be professionals. Read the full article here.. Read More

The “one-pager” and the “cut-and-paste” demon

Contracting parties often misunderstand comprehensive- and well drafted contracts to be expensive and unnecessary, believing that the notorious “one-pager” is as effective.

Legal practitioners are regularly confronted with such requests, or are mandated to deal with contracts previously properly drafted by a lawyer, but which have subsequently been mutated by the “cut-and-paste” demon into a document brimming with now irrelevant legalize and most of the essentialia of the contract missing. In short: litigation paradise!

The main problems of these contracts are that they do not properly reflect the true intention of the parties and material terms of the contract are inevitably omitted... Read More

Residential Leases: Cancellation Penalties and the CPA

The introduction of the Consumer Protection Act (“CPA”) not only affected several of our established common law principles (caveat subscriptor; freedom to contract, the passing of the risk rule; the parol evidence rule and voetstoots clauses), but it is also responsible for a new thinking on residential leases.

One such important aspect is the restriction of the landlord’s remedies upon a tenant’s early termination of a residential lease concluded between natural persons. Previously an attempted early termination of a lease was regarded as a repudiation of the contract by the tenant, resulting in the landlord’s right to accept the repudiation, cancel the lease and claim damages from the tenant... Read More

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