General Principles of Contract

These flashcards cover the key concepts presented in the lecture about contract law and marriage in South Africa.

What are the requirements for a valid contract?

The parties must have contractual capacity, serious intention to contract, communicate their intention, be of the same mind, have a lawful agreement, ensure performance is possible, comply with formalities, and have certainty in terms.

What is the difference between civil, religious, and customary marriages in South Africa?

Civil marriages are conducted by registered marriage officers, religious marriages are performed by religious leaders (valid only if they are registered officers), and customary marriages are recognized under the Recognition of Customary Law Marriages Act.

What is the effect of a marriage in community of property (ICOP)?

Assets and liabilities of each spouse before marriage merge into a single joint estate, and property and liabilities acquired during marriage are jointly owned. If one either spouse is declared insolvent, the single joint estate is sequestrated.

What must parties do to marry out of community of property (OCOP)?

They must enter into an antenuptial contract (ANC) signed before a notary public and two witnesses. This contract decides how the property will be handled in the marriage. Without the ANC you automatically married ICOP.

What are the characteristics associated with an ANC?

Without an ANC, you are automatically married INCOP. If you sign into an ANC, you can choose to marry out of community of property or out of community of property with accrual. It regulates the ownership of assets, the responsibility of debts, the accrual and what is excluded from the accrual calculation.

In what scenario do spouses have contractual capacity in an ICOP?

Both spouses have full capacity to contract regarding the joint estate without consent, unless specific exceptions apply.

What is an unassisted contract for a minor?

A contract entered into by a minor without the consent of a guardian or a parent. The contract is not fully valid and it is not void. It is a 'limping contract' where the minor can choose to ratify (enforce the contract) or repudiate (not to enforce the contract) the contract, binding the other party to their decision.

What happens if a minor misrepresents their age?

The minor can incur obligations under the law of delict due to fraudulent misrepresentation.

What are the requirements for informal consent in an ICOP?

It must be verbal and consent is required for alienating household furniture, receiving money due to the other spouse from trade or occupation, and large donations from joint estate.

What is the effect of a marriage with the accrual system?

Each party retains separate property but the spouse with the smaller growth in estate has a claim to half the value of the difference at dissolution.

What is the impact of insolvency on the ability to contract?

An insolvent may not enter into contracts to dispose of assets in the estate or enter into contracts affecting the estate without trustee consent.

What is alienate?

To transfer ownership of property to someone else. Usually through sale, donation or exchange. Alienation involves the legal transfer of property rights from one party to another, often executed through a formal agreement or transaction.

What is cede?

To transfer a personal right to someone else. Debt Example:

• A owes you R1,000

• So YOU have the right to claim that money.

• You cede that right to your friend

Now:

• Your friend can demand the R1,000 from A

• You can’t anymore ❌

What is mortgage?

A real right over immovable property (like land or house) used as security for a debt.

What is a pledge?

A real right over movable property given as security for a debt. Pledge involves the transfer of possession but not ownership, allowing the creditor to retain the right to sell the property if the debt is not repaid.

What is a formal consent?

A written and signed consent witnessed by two witnesses. Special legal formalities must be followed.

What does it mean to bind him/herself as surety?

It means a person agrees to be legally responsible for someone else’s debt, so if that other person doesn’t pay, you have to.

What are the three transactions where consent is required from the other spouse in community of property?

The alienation of immovable property, signing a suretyship, entering into credit agreements.

What is written consent?

The agreement must be in writing.

What is informal consent?

No special form required. Can be verbal or conduct.

What is the general rule for transactions made without consent in relation to marriage in community of property?

Some transactions require the other spouse’s consent, if that consent is not given then the transaction is invalid. There is an exception however, if the third party (outsider) did not know and could not reasonably have known that consent was missing then the contract is still valid.

What is the rule between spouses married in community of property (with regards to entering into contract regarding the estate)?

If the contracting spouse knew that they would not get consent and the joint estate has suffered a loss, then an adjustment will be made in favour of the other spouse upon dissolution of the marriage. Example if a divorce occurs.

Give an example of a spouse contracting without the knowledge of the other spouse?

The husband sells a valuable asset without wife’s consent. Buyer didn’t know consent was needed. The sale is valid and buyer is protected but the wife can claim compensation later.

What is the effect of a marriage out of community of property?

Each spouse retains their own separate property that they acquired before marriage and what they acquire during marriage. Each spouse remains liable for debts they incurred before and during the marriage. Upon dissolution of the marriage each spouse retains their own separate assets and neither is liable for the others debts and also no capital claim against the other spouses estate.

What is the effect of a marriage with accrual?

Each spouse retains their own separate property that they acquire before marriage and during the marriage. They remain liable for their own debts acquired before and during the marriage and are not liable for each others debts. Upon dissolution, The spouse whose estate has shown the smaller accrual (growth) during the marriage has the right to half of the value of the difference between the two accruals at dissolution i.e cash claim for this amount. Inheritances, legacies and donations excluded from accrual calculation.

Provide an example of claims under marriage of accrual upon dissolution of the marriage?

What is a minor?

A minor is an unmarried person below the age of 18.

What is the effect of an assisted contract?

The minor is bound and liable in terms of the contract not guardian. It is fully valid and enforceable contract against the minor. The only time the minor will not be bound this contract is if the contract was inherently prejudicial, the prejudice however must be substantial.

What is repudiation and what occurs under it?

A minor enters into a contract and then rejects it. The contract then becomes void, because we are treating the contract as if it never existed. The minor is not bound and the adult is not bound either. The minor can then get everything back they gave away and the adult must now claim under unjustified enrichment if the minor was enriched.

What is ratification and what occurs under it?

Later into the agreement the minor approves the contract (usually after reaching majority age). The contract becomes fully valid. The minor is now bound and so is the adult. The contract is treated as if it was valid from the beginning.

What is the effect of an unassisted contract (under the CPA)?

The CPA says that the effect of a minor’s unassisted contract where the Act applies is that it is voidable. The minor is usually protected and the contract if deemed unfair can be set aside. The adult is generally not protected so they must claim under unjustified enrichment.

Insolvent may not, without written consent of the trustee, enter into a contract which adversely affects the estate.

The insolvent person can still make contracts but if the contract could reduce the value of the estate or harm creditors, they need permission from the trustee in writing.

Insolvent may not, without the trustee’s consent, be involved in a business as a general dealer or manufacturer.

Insolvent person cannot freely run a business especially buying/selling goods and producing goods without the trustee’s permission.

How are contracts dealt with under mental illness and intoxication?

If a person is mentally ill to the point that they cannot understand the contract, the contract is void. If someone is so drunk that they do not understand what they are doing the contract is voidable.

What are the characteristics under a civil marriage?

It is governed by the Marriage Act 1961, It is monogamous and is between man and woman.

What are the characteristics under a Civil Union marriage?

It is governed by the Civil Union Act 2006, its is monogamous and can be same-sex marriages or opposite-sex couples.

What are the characteristics under a customary marriage?

It is governed by Recognition of Customary Marriages Act 1998. It can be monogamous or polygynous and is based on African customs. Requirements include: consent of both parties, consent of families, lobola and handing over of the bride. First wife must consent to additional wives otherwise the marriage is invalid.

What are the requirements for a Sepedi customary law marriage?

The appointment of a messenger. The visit by the grooms family to the brides family. The negotiation on the lobola to be paid, the payment of lobola or part of it. The slaughtering of an animal. The crucial element of the handing over of the bride.

What are the characteristics under a religious marriage?

It depends on the religion and may be monogamous or polygynous. Muslim marriages were considered valid only until the Muslim Bill was passed in 2011.

What is the Muslim Marriages Bill about?

IT recognieses and regulates Muslim marriages in South Africa. Muslim marriages were officially recognized like civil marriages. It regulated divorce. It was there to protect spouses. Deal with polygynous marriages.

What happens to your estate when you die, explaining the freedom of testation?

You can decide who gets your property but it is limited by public policy, maintenance of your spouse and children. Under public policy, you cannot include terms that are illegal, immoral or against society’s values. The law protects your spouse and children in the sense that they can ask the estate to financially support them.

What is testate succession (with a will)?

Requirements under the wills act 1953, must be 16+ (the testator, person making the will), it must be written, it must be signed and there must be 2 witnesses. Usually witnesses cannot inherit.

What is intestate succession (no will)?

The law decides who inherits, it is governed by the Intestate Succession Act, Usually the spouse + children inherits then the rest of the family. If the deceased children are dead then per stirpes applies and the child’s children (deceased grandchildren) will inherit their share. If there is no spouse or children then the parents inherit, then siblings and then the extended family.

What is a prodigal?

A person who wastes money recklessly and cannot manage their financial affairs. A person must be declared a prodigal by a court. The court will therefore appoint a curator (curator bonis) to manage this persons affairs. Therefore, the prodigal cannot freely enter into contracts involving property.