Chapter 10 PT 2.2

Question 1

Tacit contracts:

Answer 1

1) Refer to contracts inferred from the conduct or circumstances of the parties involved.

2) Such contracts arise from the parties’ actions, which suggest a mutual intention to enter into an agreement

Question 2

Examples of Tacit Contracts

Answer 2

1) For example, a homeowner regularly pays a gardener monthly to maintain their yard without a written or spoken agreement outlining this arrangement.

2) The gardener continues to provide the service, and the homeowner continues to make regular payments.

Question 2

Additional information on tacit conracts:

Answer 2

1) A tacit contract is formed based on their ongoing conduct, implying an agreement that the gardener will maintain the yard monthly in exchange for payment.

2) Why? Both parties act in a manner that suggests a mutual understanding and
agreement, thus forming a tacit contract enforceable by law.

Question 3

Implied Terms:

Answer 3

1) Certain terms may not be explicitly written down in a contract but are
nevertheless considered part of the agreement.

Question 4

Namely, they may be implied by :

Answer 4

1) Operation of law (ex lege).
2) By custom or trade usage.
3) From the facts surrounding the agreement of the parties (ex consensu).

Question 5

Terms implied ex lege: (by operation of law)

Answer 5

1) As the law incorporates these terms into a contract regardless of the parties’ will, they may be regarded as imposed terms, as seen in the Alfred McAlpine & Son
v Transvaal Provincial Administration case.

Question 6

This category is further divided into:

Answer 6

1) Terms implied by common law
2) Terms implied by statute

Question 7

Terms implied by common law:

Answer 7

1) Terms deemed part of certain types of contracts based on legal precedent and principles of fairness and efficiency.

2) For example, the common law duty of mutual trust and respect

Question 7

Terms implied by statute:

Answer 7

1) Terms are mandated by legislation, and parties to a contract must include them in their agreements, often for public policy reasons.

2) For example, the Basic Conditions of Employment Act imposes various terms on employment contracts.

Question 8

Terms implied ex consensu: (tacit terms)

Answer 8

1) Tacit terms, or terms implied by mutual agreement, are terms that, while not expressly stated, are nonetheless understood to be part of the contract by the conduct or the circumstances of
the parties involved

Question 9

The courts often employ the officious bystander test to ascertain whether a contract contains
a tacit term

Answer 9

1) Suppose an impartial bystander had been present when the parties concluded their agreement and had asked them what would happen in a situation that they did not foresee and for which their express agreement consequently did not provide.

2) If they agreed that the answer to the stranger’s question was self-evident, they are taken to have meant to incorporate the term in their contract and to have tacitly agreed on it.

Question 10

In deciding whether a tacit term is to be imported into a contract:

Answer 10

1) The term sought to be imported must be distinct from an unambiguous express term of the agreement.

2) The term must have a clear and exact formulation

Question 10

Imputed intention

Answer 10

1) A tacit term may, therefore, express not only the parties’ actual intention but also what they may be presumed to have intended

Question 11

If the parties are engaged in a particular trade and they know that there is a trade usage governing their transaction -

Answer 11

1) They are taken to have tacitly incorporated it into their contract.

Question 12

If one of the parties knows of the trade usage but the other does not, the latter may still be bound -

Answer 12

1) ‘if the trade usage is shown to be uniformly and universally observed within the trade concerned, reasonable and certain, and does not conflict with positive law … or with theclear provisions of the contract.’

Question 13

Material Terms:

Answer 13

1) Not all terms in a contract are equally important; those deemed vital to the
performance of the obligation are called material terms.

2) The other party may cancel the contract when a material term is breached.

3) BUT breach of a non-material clause, unless otherwise stated, only amounts to
damages

Question 14

Conditions:

Answer 14

1) A term that qualifies a contractual obligation by making its operation
and consequences dependent on whether an uncertain future event will happen or not.

2) The conditions fulfilment is not enforceable and merely expresses the parties’ agreement on what will happen to the obligations in the contract if an uncertain future event occurs.

3) The crucial question is whether an uncertain event will occur and not when it will occur

Question 15

Positive Conditions:

Answer 15

1) These conditions require that a specific action be performed for
the contract or a part of the contract to become effective.

2) The fulfilment of a positive
condition involves performing an act

Question 16

Example of Positive Conditions:

Answer 16

For example, a sales contract states that the ownership of a car will only be transferred to the buyer once the seller receives the full payment.
Here, the full payment is a positive
condition that needs to be fulfilled.

Question 17

Negative Conditions:

Answer 17

1) These are the opposite of positive conditions and require that a
specific action not occur.
2) If the action does occur, it can void the contract or suspend its
operation.

Question 18

Example of Negative Conditions:

Answer 18

1) For example, a lease agreement might include a condition that the tenant shall not sublet the property. The contract remains valid if the tenant does not sublet the property.