Have you ever wondered why we need contracts? In today’s life almost everything is transactional and requires a contract one way or another. Examples we are more familiar with include marriage contracts, cell phone contracts, school applications, employment contracts etc. Many people find themselves in sticky situations because they entered into an agreement without fully understanding the nature of the transaction. Furthermore, there is no such a thing as a standard contract, every agreement has its unique terms and conditions which each serve different purposes. It is therefore important for people to at least have a basic understanding and knowledge of contracts and what they entail in modern day transactions.
A contract is a legally enforceable agreement between parties which contains mutual rights and obligations. Contract law in South Africa is the legal framework that governs agreements between parties.
In South African contract law, the validity of a contract is a fundamental concept. A valid and legally binding contract is one that meets all the essential elements required by law, including the following:
- There must be a consensus between the parties. There must be an actual meeting of the minds of the contracting parties.
- The parties must have the capacity to contract. That means the parties should be over the age of majority and of sound mind. Capacity refers to the ability of a party to understand the terms of the contract and the consequences thereof.
- Offer and acceptance.
- There are formalities which must be adhered to such as a contract must be in writing and signed by all relevant parties.
- There must be an element of legality to the agreement. The contract must be in accordance with relevant legislation and in compliance with other statutes.
- The contract must be capable of performance .
- There must be certainty – the terms must be definite.
In contrast, an invalid contract will lack one or more of these essential elements, rendering it unenforceable from the onset. It is crucial for parties to ensure that their contracts adhere to the legal requirements for validity.
For a contract to be legally binding in South Africa, certain elements must be present. Firstly, there must be a valid offer and a corresponding acceptance. Secondly, the parties must intend to create legal relations, emphasizing the seriousness of their commitment. Additionally, the terms of the contract should be clear and capable of performance. Understanding these elements is essential to ensure that a contract is enforceable in a court of law. Although a written agreement is not a requirement for validity, a verbal contract poses challenges in that in the case of a dispute between the parties the aggrieved party must prove the existence and validity of the contract and this may not always be an easy task where the agreement was not reduced to writing. Thankfully in today’s modern world we can rely on tools such as emails, text messages, conversations had on social media and bank statements as evidence of the existence of an agreement between parties, that is why it is important to have some form of paper trail if you wish to maintain some form of record of your dealings with people. Certain contracts must however be in writing in order for them to be valid, these include marriage contracts, sale of land agreements and long-term leases.
Where a party does not perform in terms of the agreement they are said to be in breach, the aggrieved party can then assert their rights by either claiming specific performance, claim damages or opt to cancel the contract in its entirety.
In conclusion, it is important to understand the nature of the agreement you are entering before you affix your signature. Your signature is evidence of your acceptance of the terms and this means you are deemed to have read and understood the contract before signing it. When in doubt you are urged to seek the assistance of an attorney who will draft or review the contract for you and ensure that it accurately reflects your intentions and understanding.
Authored by:
Youllenda Pepu
4th year LLB student
@youllenda
