En­forc­ing Your Con­tract: Home­work – What To Do Before You Go Ahead

Tourism Tattler - - LEGAL -

The sev­enth ques­tion is whether the par­ties to the con­tract have the com­plied with any pre­scribed for­mal­i­ties – in other words cer­tain pre­req­ui­sites may be pre­scribed in the con­tract in ques­tion or by statute. If these are not com­plied with the con­tacts may be void or void­able.

Let's look first at re­quire­ments that may be con­tained in the con­tract in ques­tion and here I will fo­cus on clauses that you are likely to find in a ‘generic' ba­sis in many con­tracts you may come across in your daily life or busi­ness prac­tice:

Law – The con­tract may stip­u­late which law ap­plies re­gard­less of where the con­tract is signed, the na­tion­al­ity of the par­ties or where the goods or ser­vices are pro­vided. This is an ex­tremely use­ful clause and can have a ma­jor im­pact on rights, li­a­bil­i­ties and more im­por­tantly the cost of lit­i­ga­tion.

Ju­ris­dic­tion – as for ‘Law' above.

Dis­putes – Con­tracts of­ten have a fairly ‘stan­dard' ar­bi­tra­tion clause but do not be fooled: ar­bi­tra­tion is not cheap and in many cases ri­vals lit­i­ga­tion from a fee per­spec­tive (although there are many ben­e­fits)! Ac­cord­ingly it is my view that a dis­pute clause is prefer­ably and it should fol­low the fol­low­ing se­quence which the par­ties will be by def­i­ni­tion be obliged to fol­low (The con­tract should also pre­scribe time frames for each phase): (a) se­nior man­age­ment to meet and dis­cuss pos­si­ble amicable so­lu­tions (Such meet­ings could be ‘with­out prej­u­dice' and ‘off the record'; (b) Fail­ing that the mat­ter can be sub­mit­ted to me­di­a­tion by a mu­tu­ally agreed me­di­a­tor; (c) Fail­ing that ar­bi­tra­tion via (I would sug­gest) the Ar­bi­tra­tion Foun­da­tion of South Africa BUT such a clause must al­ways be qual­i­fied to the ef­fect that ei­ther party may under cer­tain cir­cum­stances bring an ur­gent court ap­pli­ca­tion.

En­tire agree­ment – when the con­tract has such a clause, it is im­per­a­tive to con­sider whether there are/were any pre­sen­ta­tions, ‘sales pitches', ‘mar­ket­ing blurb', etc that gave rise to the con­tract and which was/were a de­ci­sive fac­tor in the de­ci­sion to en­ter into the con­tract. If so these should ei­ther be de­tailed in the con­tract or at­tached as ad­den­dums/an­nex­ures. Change – par­ties of­ten en­ter into con­tracts that have clauses of this na­ture and then de­spite that, make or agree to changes ver­bally with­out then re­duc­ing such to writ­ing, sign­ing (all the par­ties) it and at­tach­ing it as an ad­den­dum! When ‘the wheels come off' ref­er­ence to such a ver­bal amend­ment will be in vain! Waiver/re­lax­ation – The ef­fect of such a clause is that the ex­cep­tion proves the rule e.g. a land­lord may make one ex­cep­tion/ concession to the pre­scribed terms of the lease agree­ment but such ex­cep­tion will be of no avail in fu­ture events and can­not be re­lied upon as an im­plied/tacit con­sent to fu­ture de­vi­a­tions from the ex­press terms.

Now look first at re­quire­ments that may be pre­scribed by statute – here are some ex­am­ples:

• The Alien­ation of Land Act 1981 re­quires that all con­tracts per­tain­ing to prop­erty trans­ac­tions have to be in writ­ing. This also ap­plies to for ex­am­ple the ex­er­cise of a first right of re­fusal con­tained in such a con­tract, e.g. the right to buy land/prop­erty that is the sub­ject of a rental/lease agree­ment – I had a client who ex­er­cise such a right ver­bally and then tried to en­force it of no avail! This also ap­plies to time share, share block agree­ments and even lease agree­ments if for a pe­riod of more than 10 (ten) years – the lat­ter must be recorded in the deeds of­fice. Ante-Nup­tial con­tracts not only have to be in writ­ing but must be also be at­tested to by a no­tary public and recorded in the deeds of­fice.

The Gen­eral Law Amend­ment Act of 1956 re­quires sure­ty­ship agree­ments to be in writ­ing.

The Na­tional Credit Act does not specif­i­cally re­quire credit agree­ments (as de­fined) to be in writ­ing but it is im­plied and they may in any event not be ver­bal. • • •

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