Contents of a contract

Question 2: what do parties have to do in terms of the contract

- Obligations (rights and duties) created by the contract

Terms and obligations

- When parties enter into a contract, their agreement can be broken down into
various terms
- Terms are the things that create obligations

Contents of contracts
Resolving desputes about terms

Express
1. Which terms (incorporation)
2. Interpretation (concerns with meaning of express terms)
3. Ratification (correction of document) – eg: its put 2 million instead of 200k. provided
requirements for rectification is met, if parties had an actual requirement that
differed from terms in contract
- Express terms are terms on which the parties agreed expressly, in spoken words or in
writing.
- Rectification only apply if its written
Implied
- Terms that form part of contract by some sort of legal rule, eg: this is a term of this
type of contract eg: trade usage as terms based on contract. If you can prove
- Implied terms become part of a contract by operation of law, if the parties did not
agree (either expressly or tacitly) upon their inclusion or exclusion.
Tacit
- Tests for reading in tacit terms, there is very high bar, if nothing else works then turn
to tacit.
- Tacit terms are terms on which the parties did not agree expressly, but which are
read into the contract because of the parties’ actual or imputed (fictional) intentions.
- Actual or imputed deemed shared intention, both parties agreed to term if they
thought to put it into term
Not a term/void

*always start with express terms and exhaust everything under express terms before
moving onto implied terms then tacit terms

Express terms
Incorporation
- Verbal contracts are terms parties express and intent to become valid

Written contract = biggest difference with contract with incorporation of express terms
is distinguishing actual term and pre-contractual agreement
- Are statements terms of the contract: if it turns out to be true there would be a
breach, if its not a term then all one has is remedies for misrepresentation. This is
 not the same, MUST ACTUALLY INTEND TO BECOME TERMS or if its pre-contractual
agreement.
1. parol evidence rule = if contract is written down you don’t look to any evidence
outside the terms of the contract, so you can sue for breach if its in contract you cant
if it’s in pre-contractual agreement.
2. Incorporation by reference = incorporate terms by merely referring to them you
don’t have to attach it, if contract refers to other terms in the contract that you don’t
understand then it’s up to the individual to try understand it
3. Caveat subscription
- Person who signs the contract are bound to the contract for all the terms whether
they want to agree or not, ALWAYS CHECK WHAT YOU SIGN.
4. Ticket case
- Documents containing contractual terms was not signed by the party
- Eg: parking at your own risk signs – if they brought it to your attention you are bound
to the terms whether you agree to it or not

Parol evidence rule

- You cant bring any evidence that might change the rules of the terms of the contract
- No verbal evidence that contradicts or alters contract
- Union government v vianini ]absa v micheals bid-a-house

Exceptions to rule:
1. Partial record
o If parties intend for it to be a complete record
2. Implied and tacit
o Parol evidence rule is only about incorporation of express terms not implied
terms. Incorporation of express terms is NB, but invalidity of contract does
not relate to express terms
3. Invalid contract
4. Collateral agreement
o Does it actually change the terms of the written agreement,
5. Suspensive condition
o If the following happens then XYZ would follow, so you can bring evidence of
suspensive condition
o Eg: I sell my dog, if she is pregos you must give me the puppies, this is
uncertain and may happen in the future. But only if the uncertain thing
happens will you have to give it to me
6. Simulation
o Pretend agreement, not really what the parties intended. Assimilated
agreements are invalid if courts will give effect to legitimate agreements
7. Rectification
o Rectification if the documents were incorrect
8. subsequent variation
o Can bring evidence of subsequent variation or rectification, as parol rule is
only about incorporation of rule when agreement was formed
Exercise 6.4

a. Bongi assures Andile that BVI would be prepared to match the lowest insurance premiums that Andile
can find.
b. Parol evidence wouldn’t allow him to change terms of the contract as it is not a
written agreement but rather a verbal agreement
c. Rectification - The rule does not apply to claims for rectification of the document. If a party alleges
that the document incorrectly reflects the parties’ intentions,
Suspense of agreement –
Partial record -
*choose which one would have the best chance of success, only the relevant one

Interpretation
- when there is a dispute over what the individuals mean then you look at the
interpretation of the words (meaning of words – one cant insert words that are not
part of the possible meaning of the text
- analyse ordinary meaning (when parties dispute what is meant)

Unitary approach – cumulative effect bothma botho transport + natal joint municipality
- We look at all relevant considerations at all time, look at things outside written
document an
1. Wording
- cant use interpretation to read in meanings but there are no specific words to be
attatched to
2. Context
- Nature and purpose of the context
- Surrounding circumstances shed light on meaning of words (minds of parries when
they contracted)
- Evidence to identify certain things refered to in the contracts
- Circumstances leading up to contract also impacts the case, what does working
order mean (ONLY) it should be capable of working for a substantial period of time.
In circumstances of case, working order
- Cant bring evidence of what was said during negotiations as that was pre-contractual
statements so it was irrelevant what was said in negotiations as well as HOW
PARTIES THEMSELVES interpreted it. As interpretation must be a LEGAL process

Tshwane city v blair athol

SCA said there are certaib types of evidence that cant be heard regardless of context, these
types of evidence includes:
a. Expert evidence (about the meaning of the terms) you cant hear evidence aboyt
what the parties throught it means. As this is a legal process you don’t need to care
about what the parties THOUGHT
b. Evidence prior negotiations before contract was concluded between parties
 o This is not allowed as it reflects on what they discussed and not what they
agreed upon, WHAT THEY WROTE IN WRITTEN CONTRACT IS WHAT THEY
ACTUALLY AGREED UPON, don’t look at discussion
o ALWAYS FOCUS ON WHAT IS WRITTEN,
o Although prior negotiations can be heard for rectification and clarification.
But for interpretation one must look at what the contract ACTUALLY MEANS
FACTS: blair wanted to start a complex but there was no municipality in the area there was
no water or sewage system, so they wanted to get water to the complex they building. The
municipality then said that they must build the infrastructure from the current municipality
to the complex – pipes and water reserved etc.
- In consideration with the above, municipality claimed that they would charge them
the normal rate and the developer then claimed that since they were building their
own infrastructure they should be charged LESS THAN THE NORMAL RATE FOR
COMPLEXES.
- Athol then said the contract said in consideration of everything that was done, and
they will still be charged the normal lower rate of the municipality?
- SCA wanted to show the impact of the evidentiary approach and how much time it
wastes when you analyse prenegotiations

UJ city case
- Con court case that said you can listen to the evidence of negotiations for the
purpose of interpretation, but the didn’t expressly over rule the other cases
Capitec buildings case
- SCA complained about the city, saying they are messing up the city
- Reinforces the idea that when you are talking about interpretation you are talking
about the meaning of words, you cant interpret when there is no words
- Eg if you sell your shares and you may be required to buy back the shares – this
means that you must consent to the sale and do so with good faith. But there is no
words in the clause to indicate one must consent. You can possibly use tacit terms,
but you cant use interpretation to add in words that are not there.

3. Cannons
a. Quitable
b. Contra proferentem
c. Validity
o Interpretation of validity, there is 2 meanings one is valid and the other is
invalid, so interpret in way that is legal. If the meaning is unclear, then it
should be interpreted in one way
d. change of language
o if language changes from one thing to another thing since it means they don’t
mean the same thing
o there is a reason for why words are changed, IT MEANS SOMETHING
DIFFERENT
o capitec case
e. euisdem generis
 o Things of the same type/kind , so when we have a general word that could
mean many things that are accompanied by things of the same type. Then
general word will be taken to mean things of the same type
o *things of the same kind.
f. expression unius
o if they expressly refer to one thing, the opposite thing is not validn
o if you say something expressly then opposite thing is excluded

exercise 6.6
a. peaches would not jave been included as it specifically only mentions citrus fruits
b. yes you would

exercise 6.7
Exercise 6.7
A leases premises from B for purposes of running a fish and chips take-away business. The
lease contains the following clauses:
‘1. The premises are let for the purpose of running a fish and chips take-away business, and
the tenant (A) may not use it for any other purposes.
17. Thetenant(A)maynotmakeanymajoralterationstothepremiseswithouttheconsentof the
landlord (B).’
A makes the following changes to the premises without the consent of B:
 Tiles are installed on the walls in the front part of the shop.
 Automatic water sprinklers are installed in the ceiling to put out fires.
 A wooden partition is installed between the kitchen and the bathroom area.
B argues that these changes are ‘major alterations’, and that A breached the contract by
failing to get his permission before making them.
Using the various canons of construction, interpret the phrase ‘major alterations’ in the
following scenarios. For each scenario, identify the appropriate canon of construction, and
explain how it will be applied.
(a) In terms of health and safety regulations, it is illegal to use the premises for a take-
away shop unless these changes are made to the premises.
- major alterations meaning, it would be illegal to run the fish and chips shop if major
alterations are made.
Canon: validity = way to make it valid, it would be illegal to run a fish and chips shop.
He cannot use the premises for purpose. Interpret it as not major alterations. Does
landlord have to consent
Expression unius =

(b) A obtained B’s verbal consent to the changes before he made them. However, B argues
that the consent must be in writing. The contract also contained the following clause:
‘19. A may notsubletthepremiseswithoutB’swrittenconsent.’
- He doesn’t need B’s consent to sublet
- Sublet you need written consent, anything else you can use any form of consent.
- Cannons = change in wording, wording is different because he
- *construction also refers to interpretation
c. The contract contained the following definition clause:
 - Alteration to the structure of the building changes, look at which things would be
structural changes – “tiling the walls, this doesn’t change the actual structure”. He
puts in automatic sprinklers so this doenst change structure again. *STRUCTURE IS
THING THAT SUPPORTS BUILDING.
- Wooden partition doesn’t change structure as the framework of the building is the
same
‘ ‘‘Major alterations’’ includes an addition to the area or change in height or the removal of
part of the building, or any change to the structure, such as the construction or removal or
cutting into of any wall or part of a wall, floor including a mezzanine floor or other support,
or a change to or closing of any required means of access, etcetera.’
what is major alterations

exercise 6.8
A concluded a contract for the insurance of his car, with B insurers. The contract contains
the following terms:
‘1. A (the insured) under takes to maintaint he carinaroadworthycondition.
2. The vehicle will only be usedfor private,socialordomesticpurposes.
-look at what this means and the context which is it used
-are there other terms in the contract to cover what could be meant by private,
social…
- Purpose is
3.The following uses are specifically excluded: hiring to other parties, driving instruction for
reward, racing, carriage of passengers for hire or reward etcetera.’
o To get paid for the use of the vehicle, ect = means a wide variety of things
and possibly includes being paid for use of vehicle.
o You are not being paid for use of vehicle, thus this is not excluded.
o Conon =
At the time of the conclusion of the contract, the agent for B insurers told A that the car
could only be used for private purposes, like driving to social occasions. On his way to work,
A was involved in an accident and suffered R30 000 worth of damage to his car. However,
when A claimed compensation from B insurers, they indicated that driving to work was not
covered under the policy.
Advise A.
Driving to work would be covered

Rectification
Rectification occurs when a written contract, which incorrectly reflects the parties’
common intention, is rectified (corrected) to reflect the parties’ consensus.
- Show that there was a common intention, that wording differs to intention and that
there is a credible explanation for the document being drawn up incorrectly. (must
be something that is relevant)
- If you prove the above then you can rectify document

Contracts subject to prescribed formalities

- You can rectify if contract looks like a valid contract, does it look like it complies with
formalities, if it doesn’t look like valid contract then you cant rectify.
Exercise 6.9
Credible explanation: why did he sign the contract when it clearly stated that he wouldn’t
become owner, but both apparently parties agreed that he would. Thus document was
drawn up to say the opposite to what was actually agreed.
- If he can prove all 3 of the above factors to rectify the document then the
rectification will be valid:
a. Common intention of parties
b. Document incorrectly reflects intention
c. Credible explanation for why document was wrong

Exercise 6.10
- Test for rectifying contract that’s subject to statuatory: CONTRACT MUST LOOK LIKE
VALID CONTRACT
Can only re
Contents of contracts

1. Express
- Incorporation (which terms forms part of the contract [express, implied or tacit
terms])
- Interpretation (meaning)
- Rectification (correction of document)
2. Implied
- Incorporation (which terms)
3. Tacit
- Incorporation (which terms)
4. Not a term/void

Exercise 6.14
Tacit terms
- It must past the test for tacit terms, the subtest is the precious bystander test. It is a
test that is so obvious that if a nosy bystander would say yes
- Officioys bystander test = look at specific factors being:
o Ease with which tacit term is formulated = this forms the basis of the
contract, the particular tacit term here is to protect the property of the
business wherever it is, reasonable distance. There needs to be a limitation
o Look at the narrow lense. Protectinf the property of the business, thus
phoning the police would not be very onerous as its not much extra, when
they see somebody trying to rob the land.
o Would term fit in with the express terms and the scheme of the contract –
the contract does say what people must do, because this is in their line of
sight the purpose of the contract is to protect the shop. So look at argument
for how it fits in with the overall scheme. For when an individual wants to try
enter the property
o Surrounding circumstances = conduct of the … this is what is problematic for
the shops, as the guards should have done something since this is the terms
of the contract. This counts against this being a racit term so weigh it up. This
may sway individuals, its not conclusive on its own
o Does the clause only serve the benefit of one party or is there a benefit for
the other party, MUST SHOW IT BENEFITS BOTH. This is for the benefit of Mr
Moroko, but is there any benefit for the security company? They woud suffer
reputational harm and lose potential customers in the future since the
robbery happened directly in front of the security guards. But if you want
extra services you must pay for it, thus it requires extra resources and cash
from the payer.

Thereafter weigh up all these factors, and weigh up the conclusions. If this
weighs more heavily then the other factors.
o Therefore,
-
Tacit Terms
- Terms that are read into a contract to fill the gaps that parties did not expressly
agree upon
o Unexpressed terms = terms that are so obvious parties didn’t think necessary
to include them
o Imputed terms = terms parties did not think about, but if they had they
would have agreed on them
- Terms are read into contract based on parties actual/imputed common intention

Exercise 6.12
The tacit terms that could be argued for is unexpressed terms where is it so obvious that the
mother thought she did not need to tell the baby sitter not to invite her boyfriend over since
its not appropriate or normal. As well as telling her not to cook the expensive stake when as
a baby sitter it should be common curtesy not to eat the most expensive food in the freezer

Test
Courts only read tacit terms into the contract if it’s a necessary implication of the contract,
term cant just be reasonable or convenient. For the court to decide if the term is a necessart
implication of the contract, it uses 2 tests:
1. Officious bystander test
2. Business efficact test
Special terms

Terms qualifying obligations – they don’t create obligations, but they suspend or terminate
its operation
Warranty = contractual obligation that imposes absolute obligation on party if it’s not
fulfilled
Exclusion clauses = excludes liability a party would normally have
- Clauses that are probably necessary but used to exploit the other party

Terms qualifying obligations (suspends or terminates enforceability)

1. Time clause
2. Conditions
3. Suppositions
o Something that has already happened or relates to something in the present.
We distinguish, there are ways to get around non-conformation
The difference between time clause and conditions
Time clause is certain to happen (relates to a future event, that we are CERTAIN WILL
HAPPEN) while conditions is uncertain to happen (future event that we are NOT CERTAIN is
going to happen)

Nature of conditions

Suspensive = pbloigation is suspended or postponed, ir cant be enforced till or if the

contract occurs
Resolutive conditions = immediate obligation but it lapses if the future event occurs (if
condition is fulfilled, if condition is not fulfilled the condition continues)

Distinction between condition and term

Term creates obligations, if you don’t comply with obligatiin while a condition qualifies
obligation that either suspends it or terminates it. The contract merely lapses for a
suspensive condition

Exercise 6.17
a. the contract is breached, since the obligation is that the roof does not leak.
b. But if it was a term of the contract, the seller has an obligation to make the roof leak
free, this is then a breach. When you draw up the contract you must make it clear
about the consequences. IF THE ROOF LEAKS THEN THE SALE LAPSES, or if the roof
leaks then the seller if obligated to fix the contract
- When drawing up contracts then make sure everything is as clear as possible
If the contract is bnot fulfilled usually the contract lapses
1. Condition can be waived by 1 party, if condition is there SOLELY FOR HIS BENEFIT and
notifies the other party before the contract lapses
2. Fictional performances, 1 party pretends or makes a breach occur

Cause non-fulfilment

A therefore decides not to co-operate with GB I

B can hold A to the contract based on fictional fulfilment with reference to lekup prop, with
reference to the first requirement being deliberate prevention, A deliberately prevented the
getting the loan to meet the contract because his conduct caused the deliberate prevention
of attaining the loan from GB bank when he made sure he was rude to the staff, failed to
show the non-fulfilment of the condition. Furthermore there was a breach of duty as by
preventing getting the loan this caused a breach of duty, as he was unable to pay the 100k
which then resulted in being unable to. He needs to secure the loan so he needs to take
positive steps to ensure the loan. Furthermore, his conduct was the cause as he was rude to
them, if he acted differently he would have gotten the loan as they were on the verge on
getting the loan. So his abnoxious behaviour resulted in the non-granting of the loan.
Therefore we pretend the condition has been fulfilled, so the buyer is bound to the scure
rhe loan as they were on the verge of granting it

- Was your conduct the cause of the wrong performance, what would have
happened if he acted differently, would condition would have been fulfilled if he
acted differently the conduct would not have been the cause

Supposition
- Past or present