Capacity to Act
What is contractual capacity?
The legal ability to enter into binding agreements (e.g., minors have limited capacity).
What is consensus in contract law?
Mutual agreement (meeting of the minds) between parties on all material terms.
Define objective impossibility with an example.
Performance is impossible for anyone (e.g., selling a destroyed painting at contract signing).
What is the legal consequence of an unlawful contract?
It’s void ab initio (treated as never existing), and courts will not enforce it.
How do tacit terms become part of a contract?
Inferred from parties’ conduct (e.g., paying rent monthly implies a monthly lease).
True or False: An insolvent person can freely enter into new contracts.
False—they need permission from trustees/liquidators.
Give an example of a situation where an offer lacks serious intention.
A joke ("I’ll sell my house for R10!") or exaggerated statement.
A farmer’s crop is destroyed by a hailstorm before delivery. Valid excuse?
Yes, if unforeseeable and not due to negligence (e.g., no protective netting).
What makes a contract unlawful under South African law?
If it violates statutes (e.g., selling illegal drugs) or common law (e.g., contracts against public policy/good morals).
Can parties agree to add formalities (e.g., writing) even if not required by law?
Yes—if they agree the contract is binding only when formalities are met
How does intoxication affect capacity?
If severe, it voids the contract if the intoxicated party couldn’t understand the terms.
Explain the difference between an offer and an invitation to do business.
An offer is a definite promise to be bound (e.g., "I’ll sell my car for R50,000"), while an invitation to do business is preliminary (e.g., a store advertisement).
How does supervening impossibility differ from initial impossibility?
Supervening occurs after contract formation (e.g., hailstorm destroys crops); initial exists at signing.
How does good morals (boni mores) affect contract validity?
Contracts violating societal morals (e.g., selling a child) are void, even if not illegal.
Give an example of an implied term.
A baker must supply bread fit for human consumption (implied by law).
Name three parties with limited capacity to contract.
Minors, intoxicated persons, insolvents.
In Bloom v American Swiss Watch Co., why did the plaintiff fail to claim the reward?
He was unaware of the reward offer when providing information, so no consensus existed.
What four elements must a party prove to claim impossibility?
Absolute impossibility, unforeseeable, caused by act of God/third party, no fault of their own.
Give an example of a contract void for being against public policy.
A contract requiring an employee to never work in their industry again after leaving the company (unreasonable restraint of trade).
When must a contract be in writing to be valid?
When required by law (e.g., land sales under Alienation of Land Act) or agreed by parties