Chapter 10 PT 2.3

Question 1

Suspensive and resolutive conditions:

Answer 1

1) These conditions must be fulfilled
before a contract or specific provisions come into effect.

2) The contract or its clauses are suspended until the condition is met

Question 2

Example of Suspensive conditions

Answer 2

1) For example, A purchase agreement for a house may be contingent upon the buyer
obtaining financing from a bank. The contract becomes fully effective if the buyer secures the loan (the suspensive condition).

Question 3

Resolutive Conditions (condition subsequent):

Answer 3

1) These conditions result in the
termination of the contract or some of its terms if they occur. The contract is valid until the resolutive condition occurs

Question 4

Example of Resolutive Conditions:

Answer 4

1) For example, an employment contract may terminate automatically if the company is sold.

2) The sale of the company is a resolutive condition leading to the termination of employment contracts

Question 5

Potestative Conditions:

Answer 5

1) Depend on the will of one of the contracting parties.

2) Such conditions are generally frowned upon if they are purely potestative, meaning entirely within the control of one party.

Example: For example, a contract will only continue if the seller “feels satisfied” with the partnership after six months. This is a purely potestative condition and might be seen as unfair.

Question 6

Casual Conditions

Answer 6

1) Depend on chance or an external event that is not under the control of
either party.

2) For example, a farming supply contract might include a clause conditional on a certain amount of rainfall occurring by a specific date, which is outside the control of both parties

Question 7

Mixed Conditions:

Answer 7

1) Involve a mix of potestative and causal elements, depending on both a
party’s will and an external event

2) For example, a performance bonus in a contract might be contingent on the company achieving a certain profit level (external event) and the discretion of the board of directors (potestative element)

Question 8

Interference in the fulfilment of conditions:

Answer 8

1) Interference occurs when a party takes action to prevent the fulfilment of a condition (whether suspensive or resolutive) that would otherwise benefit the other party.

2) Such interference can lead to legal disputes, as it may be considered a breach
of contract

Question 9

Should a party do so-

Answer 9

1) The condition is deemed to have been fulfilled or not, as the case may be.

2) This is according to the doctrine of fictional fulfilment of a condition

Question 10

Scott v Poupard:

Answer 10

1) Where a party to a contract, in breach of his duty, prevents the fulfilment of a condition upon the happening of which he would become bound in obligation and does so with the intention of frustrating it, the unfulfilled condition will be deemed to have been fulfilled against him.

Question 11

Time Clause:

Answer 11

1) A time clause postpones or fixes the date for performance.

2) A time clause is thus a contractual term that makes the existence of an
obligation dependent on an event or time that is certain to arise in the future.

3) This differs from a condition in that here, the event is certain and not uncertain, although time clauses can also be suspensive or resolutive.

Question 12

Suppositions:

Answer 12

1) Parties may conclude a contract on the supposition or assumption that a certain state of affairs exists

2) These are often unstated beliefs or expectations that parties hold regarding the circumstances or future events related to the contract.

3) However, if only one of the parties has the supposition in mind, it will be legally
irrelevant and tantamount to an error in motive

4) For example, a second-hand copy of the latest edition of a textbook

Question 13

Modal clauses:

Answer 13

1) A Modal (or modus) is a term that imposes a duty on the recipient of performance to do something in the future.

2) The obligation comes into being upon the conclusion of the contract.

3) Failure to comply with a modal clause constitutes a breach of contract.

4) The usual principles relating to breach apply

5) For example, a commonly used modal clause is if someone makes a donation subject to a modus.

Question 14

Exemption clauses:

Answer 14

1) An exemption clause (also known as an indemnity or limitation of liability clause or
disclaimer) is used in a contract to limit or exclude one party’s liability under certain
circumstances that would otherwise be imposed upon them

Question 15

Exemption clauses 2:

Answer 15

1) Exemption clauses are valid and enforceable except where they purport to exclude liability for fraud or injury caused intentionally.

2) These clauses must be written and strictly interpreted by courts if they limit liability for gross negligence or other serious misconduct.

Question 15

For example, in a gym membership contract, an exemption clause might state:

Answer 15

1) The member agrees and acknowledges that the gym shall not be liable for any injury, loss, or damage suffered by the member arising from any activities carried out during the membership period, except where such injury, loss, or damage is the direct result of the gym’s gross negligence

Question 16

For example, in a service agreement, a non-variation clause could read:

Answer 16

1) No amendment or consensual cancellation of this agreement or any provision or term thereof or of any agreement, bill of exchange, or other document issued or executed
pursuant to or in terms of this agreement will be binding unless recorded in a written
document and signed by the duly authorised representatives of both parties

Question 16

Non-variation clauses:

Answer 16

1) A non-variation clause stipulates that any changes or amendments to the contract must be in writing and signed by all parties

2) This clause is intended to prevent informal, oral modifications of the contract.

3) It provides a clear method for any changes and helps to avoid disputes about whether valid amendments have been made

Question 17

Governing law clauses:

Answer 17

1) A governing law clause is a term that purports to regulate which system of law will govern the legal relationship of the parties under the contract.

2) Commonly encountered in agreements that contain a foreign element (for example, where the parties are from different countries) and are generally valid and enforceable

Question 18

It extends only to –

Answer 18

1) The law governing the intrinsic validity
2) Effect and interpretation of the contract
3) Questions of contractual capacity

Question 19

Governing Law Clause

Answer 19

1) The objectively applicable law determines formal validity and legality. It does not permit the parties to evade a mandatory provision of the law with which the contract has its closest and most real connection.

2) In the absence of such a choice of law by the parties, whether express or tacit, the contract will be governed by the legal system with which it objectively has the closest and most real connection.