B Com 2 HR Business Law What is a contract Definition An agreement that creates a legally enforceable obligation Discussion All contracts are agreements but not all agreements are contracts The Requirements of a Valid Contract ID: 487878
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Slide1
Contracts
B Com 2 HR Business LawSlide2
What is a contract?Slide3
Definition
An agreement that creates a legally enforceable obligationSlide4
Discussion
All
contracts are agreements but not all agreements are contractsSlide5
The Requirements of a Valid Contract
Lawfulness
Contractual Capacity
Serious Intention to Contract
Communication of Intention
Certainty of terms
Parties of the Same Mind
Physical Possibility of Performance
Complies with Formalities
ConsensusSlide6
Lawfulness
Freedom of Contract
Generally all agreements lawful unless prohibited by statute or common law
Contra bones moresSlide7
Contractual Capacity
Capacity refers to competence in the eyes of the law to:
Have rights and duties
Perform juristic acts
Incur civil or criminal liability for wrongdoing
Sue or be sued in their own name – called legal standing or
locus
standi
in
judicoSlide8
Factors Affecting Contractual Capacity
Age
Marital Status
Mental Capacity
Intoxication
Prodigals
InsolvencySlide9
Intention to Contract
Serious intent to contract
A “ meeting of the minds”
A reasonable and serious promise
An offer as opposed to an invitation to make an offer or a statement of intent to do businessSlide10
Communication of the Intention
Can be verbal or in writing or by conduct (implied/tacit agreement)Slide11
Offer & Acceptance
Offer
Consistent with essentials of contract
Must be communicated
By
offeror
to
offeree
Must contain/define all material terms
Can I accept by saying “ yes”?Slide12
Offer & Acceptance
Revocation
Lapsing
Rejection
Request for information
Counter-offer
Options Slide13
Offer & Acceptance
Acceptance
Must be consistent with contract
Offeree
must have capacity & intend to contract
Acceptance must be communicated
Acceptance must be unconditional
Acceptance must be in prescribed mannerSlide14
Certainty of Terms
Must not be so vague as to be uncertain
Causes of uncertainty
Unlimited options
Vague language creates uncertainty
No actual contract
Unspecified factual details
Rules of Interpretation
Plain ordinary meaning of words
Ambiguity interpreted in context of whole agreementSlide15
Parties of the Same Mind
Mistake or error
Unilateral mistake – one of the parties misunderstands a specific aspect of the contract while the other party is aware of the true facts
Common
mistake – both parties misunderstand the same term, fact or aspect of the contract
Mutual
mistake – both parties misunderstand different terms or aspects of the contractSlide16
Possibility of Performance
Objective vs Subjective impossibility
Only objective impossibility leads to
voidness
Initial impossibility – void if objectively impossible
Supervening impossibility – void if impossible due to
vis major
or
causus
fortuitusSlide17
Formalities
General rule – no formalities required
Certain legislation prescribes formalities – Alienation of Land Act, Credit Act
Parties can also agree on formalities – written agreement
etcSlide18
Void vs Voidable
Void – contract does not come into being because of some fatal flaw
Voidable – contract comes into being and is valid and enforceable until set aside by court because of some flawSlide19
Mistake
Only a mistake of fact can cause contract to be void
Mistake of fact can relate to nature of contract, identity of subject matter, attributes of subject matter or identity of parties
Can be a common, unilateral or mutual mistake
Common mistake must be material
Mutual or unilateral mistake must be material
& reasonable Slide20
Misrepresentation
A false statement of fact by one person to another concerning the contract & which induces person to contract
Types of misrepresentation
Innocent
Negligent
Fraudulent
In all cases, the contract is voidableSlide21
Duress
Person induced to contract by threat of violence
Contract voidable
Contract to detriment
Only agreed because of duressSlide22
Undue Influence
Person induced to contract because of special relationship that existed
Eg
; family member, pastor, attorney
etc
Voidable if:
Contract to detriment