PVL3702-summary of notes Law of Contract (University of South Africa)

PVL3702-summary of notes Law of Contract (University of South Africa) lOMoARcPSD| Page 1 of 88 LAW OF CONTRACT STUDY UNIT 1 1. Distinguish between a contract and unjustified enrichment. (5) A contract is an agreement entered into with the intention of creating an obligation or obligations. A contract is therefore a fact, an event. From a contract, arises an obligation or obligations. Undue enrichment is a principle of our law that no-one should unjustifiedly be enriched at the expense of another. Here undue enrichment means that there is no valid legal ground for the one's obtaining a benefit at the expense of the other. 2. State the requirements for the formation of a valid contract. (5) (1) There must be agreement (consensus) or ostensible agreement between the parties. (2) The parties must have capacity to act. (3) The performance must be possible at the time the contract is entered into. (4) The conclusion of the contract, the performance and the object of the contracting parties must be lawful (the contract must in other words be legal). (5) Constitutive formalities must be complied with. 3. Distinguish civil obligations from natural obligations. (5) Whereas a civil obligation may be enforced directly by recourse to a court of law, a natural obligation may not . A natural obligation does, however, have some legal effect: it is a legal relationship as opposed to a merely moral relationship, and just as in the case of a civil obligation, it can be validly discharged, is capable of indirect enforcement by way of set-off and can serve as the basis of an accessory contract such as suretyship. An example of a natural obligation is a contractual obligation that requires a minor who acted without the necessary consent, to perform something, or an obligation which requires the payment of a wagering or gambling debt. 4. Distinguish between a contract and an obligation. (5) A contract is an agreement entered into with the intention of creating an obligation or obligations. A contract is therefore a fact, an event. A contract is, however, not a simple fact but rather a legal fact, that is a fact or set of facts to which the law attaches consequences. Obligations thus arise from legal facts. From a contract, arises an obligation or obligations. An obligation is a juristic bond in terms of which the party or parties on the one side have a right to a performance and the party or parties on the other side have a duty to render that performance. In other words it is a legal relationship between two or more legal subjects. Downloaded by Phumudzo Mamatsinya () lOMoARcPSD| Page 2 of 88 5. Distinguish between agreements creating obligations, agreements extinguishing debts and real agreements. (5) • Agreements creating obligations (contracts) Agreements of this nature are nothing but contracts. This is by far the most important of the three agreements • Agreements extinguishing a debt An agreement extinguishing a debt is one in terms of which an obligation is terminated, for example release or discharge. Discharge is achieved by the debtor's performing what he has undertaken to perform with the consequence that the obligation concerned is terminated in a natural way. • Real agreements A real agreement is an agreement whereby a right is transferred. Real rights, for example ownership, are transferred by delivery (movable property) or registration. • Overlapping of obligationary, extinguishing and real agreements Obligationary, extinguishing and real agre