Article by listed attorney Fawzia Khan
One of the common misconceptions many people have is that a contract must be in writing before it’s considered binding and valid. The rule under South African law is that a contract may be oral or in writing. The main difference between a written contract and an oral one is that it is easier to prove the existence of a written contract. As with every rule there are off course certain exceptions. In terms of the Alienation of Land Act, a person cannot agree to sell or buy any land or house (immovable property), unless there is signed a written contract between the purchaser and seller, setting out the terms of the agreement. Similarly, suretyship agreements, credit agreements, ante nuptial (marriage) contracts, leases over ten years, and contracts for executionary donations must be reduced to writing and signed by the parties to the contract, for it to be valid and compliant with our laws. Whilst our courts recognize that generally parties are free to contract with each other as they wish, there are certain laws, which will impact on this privity of contract. These include the requirements that a contract must not be illegal, contra bonis mores (that means against public policy or norms) or impossible to perform.
A contract comprises of an offer and an acceptance, where there is an intention to create a legal obligation by the parties concerned. The offeror is the person making the offer, the offeree is the person accepting the offer. Both the offeror and offeree must have the same understanding (the legal phrase used is “ad idem”) regarding the terms of the contract. In the case of marketing and advertising products or services, it is interesting to note that an advert is not considered an offer but rather an invitation to do business. The person who wants to conclude a contract must also satisfy certain legal requirements. He or she must have mental and contractual capacity. This means that the person must be sane and not under the influence of any drugs or alcohol which could alter his ability to fully appreciate what he is agreeing to. A person 18 years and older can sign a contract, whilst minors can sign contracts, duly assisted by their parent or guardian. There must be an intention to contract freely and voluntarily. Any misrepresentation by either party will render a contract void. Anyone who is coerced or bullied into signing a contract will have a defence of duress. For obvious reasons, it is always recommended that contracts be reduced to writing so that in the event of a breach of the contract one avoids any difficulty in proving the existence of the contract as well as the terms of the contract. Know your rights!
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