Chapter 7 Flashcards
(20 cards)
Legality:
1) Agreements seriously entered into should be enforced (Sanctity of contract/ Pacta sunt servanda)
2) Agreements contrary to public policy
cannot be enforced.
Public policy is informed by:
1) Legislation.
2) Common law.
3) Good morals and
4) Public interest.
ILLEGAL CONTRACTS THAT ARE VOID
1) Agreements that are contrary to good morals (Contra bonos mores) or against public policy
Sasfin (Pty) Ltd v Beukes:
1) Agreements which are clearly inimical of
the interest of the community, whether
they are contrary to law or morality, or
run counter to social or economic
expedience, will accordingly, on the
grounds of public policy not be enforced.
Public Interest in legality:
1) The interests of the community/ society
as a whole are of paramount importance.
2) Public Policy: No fixed meaning
3) Courts considers all relevant interests to
decide whether a specific agreement is
against public policy or not.
4) Interests conflicting/ competing: The
courts will strike balance.
Barkhuizen v Napier:
1) The correct approach in challenging the
constitutional validity of a contractual
term is to determine whether the term is
contrary to public policy as informed by
the constitutional values-particularly
those contained in the Bill of Rights
Contracts void because their mere conclusion is contrary to statutory provisions, good morals or public policy:
1) Statutory prohibitions.
2) Pacta (Pactum) successoria.
3) Agreements that oust the jurisdiction of the courts
Performance in contracts must be legal:
1) Contracting with a party to commit a crime (robbery, kidnapping, murder) OR a delict.
2) Where contract can be carried out in a lawful and unlawful manner: Presumption is that it was intended to be carried out in a lawful manner.
3) The purpose and object of the contract must also be lawful.
Examples of illegal or invalid contracts:
1) Contracts against good morals
2) Statutory illegality
3) Constitutional invalidity
4) Pacta de quota litis, Champerty and
maintenance
5) Unfair contracts
6) Unfair enforcement of contracts
Contracts against good morals:
1) Good morals refers to good behavior in
community.
2) Immoral and sexually reprehensible
conduct: An agreement to pay a
‘prostitute’ for sexual intercourse or
insurance of a brothel.
Case example of contracts against good morals:
1) Maseko v Maseko
1) It was morally reprehensible because; it was designed to mislead
potential or existing creditors as to the plaintiff’s worth;
2) Undermine the institution of marriage
3) Perpetuated fraud against the court in divorce proceedings.
4) Court remarked that he first ground was both immoral and against public policy (Interaction).
Statutory illegality:
1) Statute may prohibit certain types of agreements or the inclusion of certain provisions in an agreement.
2) Consequently, such agreements or provisions in an agreement will
not have any legal force.
3) Contracts aimed at circumventing statute are illegal and thus void.
S 90 NCA: Certain clauses in a credit agreement are illegal and there are remedies available.
1) Sever the unlawful contractual provision from the agreement;
2) Alter the agreement to render it lawful; or
3) Declare the agreement entirely unlawful.
What if the statute does not expressly stipulate that a contract or contractual provision of a certain nature is void?
1) Then it ought to be determined whether the legislature impliedly intended the nature of an agreement or provision to be void
S 51 of the CPA:
Prohibits a number of clauses in consumer contracts
Gambling and wagering:
S 16(1) National Gambling Act:
1) Bets arising from unlawful gambling activities are unenforceable and does not expressly state that wagering contracts are void.
2) Looking at the overall intention of the legislature, it seems it is implied that wagering contracts arising from unlawful
gambling activities are void.
Pacta de quota litis, Champerty and
maintenance:
1) GR: Invalid
2) Exception: Concluded in good faith to assist litigant.
3) Contingency Fees Act?
Unfair contracts
1) Contracts must be fair & reasonable to the parties.
2) Various factors are considered in determining the (un)fairness of a contract or contractual provision:
3) Bargaining power…Courts exercise a discretion
Barkhuizen v Napier:
1) Fairness, justice & reasonableness cannot be separated from public policy.
2) Public policy takes into account the necessity to do simple justice between individuals, informed by the concept of Ubuntu
CPA:
1) Prohibits supplier from offering goods or services at an unreasonable price or on terms that are unfair, unjust and
unreasonable
