Contract Law PDF - Week 18-22 March 2024

CONTRACT LAW MR LK THUTSE Date: Week 18 to 22 March 2024 Legal capacity ❑ All persons (natural or juristic) have legal capacity. ❑ Legal capacity is the ability to bear rights and duties. ❖ Arisesfrom legal personalityand not affected by age, etc. ❑ Ability to perform a juristic act (such as contrac...

CONTRACT LAW MR LK THUTSE Date: Week 18 to 22 March 2024 Legal capacity ❑ All persons (natural or juristic) have legal capacity. ❑ Legal capacity is the ability to bear rights and duties. ❖ Arisesfrom legal personalityand not affected by age, etc. ❑ Ability to perform a juristic act (such as contracting) is however limited. ❖ Juristic act creates legal consequences. ❖ Creating, altering and terminating legal rights & duties is a juristic act. ❖ Therefore, it is important to assess a persons contractual capacity to ascertain whether they are able to create, alter or terminate legal rights and duties. Contractual capacity Contractual capacity: is the competence to create rights and duties by concluding a contract with another person or persons. This lecture will focus on the following groups of capacity: Natural Persons Persons without contractual capacity Persons with limited contractual capacity Persons with full contractual capacity Juristic Persons The State Natural Persons without contractual capacity ❑ This category of persons cannot appreciate the nature and consequences of their acts. ❖ Mentally ill persons. ❖ Infans. ❖ Intoxication: May result in the temporary loss of contractual capacity but only if the person was under the influence of drugs or alcohol to a degree that he/she either did not know that he/she was entering into an agreement at all or had no idea of its provisions. ❑ Contracts are void. ❑ Burden of proof: He who alleges. Natural Persons with limited contractual capacity - Minors Minors: ❖ Assisted by parent/ guardian. ❖ Consent from parent/guardian given before, at the time of contracting or even after (ratification: Contract become valid ab initio). ❖ Emancipation of minors: Express or tacit general consent by parent/guardian for the minor to enter into specific type of agreements without obtaining additional consent or assistance. ❖ Minor may without assistance conclude certain agreements: Obtain only rights and no obligations: E.g. Acceptance of a donation. ❖ Rights and duties: Minor and not parent. ❖ Contracts concluded without assistance: Voidable. Natural Persons with limited contractual capacity - Minors Minors: ❖ HC (Upper guardian) can consent: If parent/guardian refuses. ❖ HC can set aside consent. ❖ Minors bound by such consent but contract can be set aside if it can be shown that it was prejudicial to the minor at the time of contracting. Restitutio in integrum ❖ An action to return the parties to the position that they were in prior to contracting. ❖ Can be done, even if guardian assisted, if contract was prejudicial to the minor. ❖ Will be denied if the minor fraudulently pretended to be a major at the time of conclusion of the contract. Natural Persons with limited contractual capacity – Married persons Married persons (In COP): ❖Co-owners of the joint estate in equal and undivided shares. ❖Parties can generally contract on behalf of the joint-estate without consent. ❖However, in certain transactions, the spouses contractual capacity is limited by the Matrimonial Property Act 88 of 1984, these include: ▪ Selling or pledging household furniture, or donating any asset of the joint estate, ▪ Withdrawing money from the other spouses bank account, or selling shares or investments (Written consent) ▪ Selling or encumbering immovable property or binding oneself as surety (Written consent with two witnesses) ▪ Transactions in the ordinary course of business of the other spouses business are exempted from this requirement. Natural Persons with limited contractual capacity - Insolvents Insolvents: ❖ The mere fact a person is insolvent does not necessarily mean that such a person’s contractual capacity is affected. Only once a court has granted an order of insolvency placing the person’s estate under sequestration is his/her capacity limited. ❖ During sequestration, the insolvent person may still validly enter into contracts provided that that person does not purport to dispose off any assets of the insolvent estate. ❖ Furthermore, the insolvent person requires a written consent of the trustee for any contract that is likely to affect the insolvent estate adversely. Natural Persons with full contractual capacity ❑ If a persons does not fall into one of the categories above, then they are considered to have full contractual capacity. ❖Subject to various statutory provisions, such as person who is guilty of fraud being disqualified from being appointed as a company director. Juristic persons ❑ Juristic Persons do have contractual capacity, subject to: ❖Entities such as partnerships and trusts do not have their own contractual capacity, but it is rather the contractual capacity of the partners and trustees which is relied upon. ❖Even juristic persons with contractual capacity need to have natural persons act on their behalf in the exercise of their contractual capacity. These natural persons in turn need to be duly appointed representatives. The state The State and its various organs have contractual capacity. State cannot contract out of its powers and responsibilities. The State’s ability to contract freely is limited owing to various regulations, most notably tender procedures.