Dale Hutchison (Editor), Chris-James Pretorius (Editor) Jacques du Plessis, Sieg Eiselen, Tomas Floyd, Luanda Hawthorne, Birgit

Kuschke, Catherine Maxwell, Tjakie Naude

Oxford University Press Southern Africa 2010 www.oup.com/za

 General rule: no formalities required Exceptions:

Statutory formalities prescribed for formation of certain types of contracts Formalities prescribed by the parties themselves for formation, variation or cancellation of contracts, or waiver of contractual rights

Formalities v facilitation of proof.

 Usual formalities: writing and signature General comments:

All material terms must be in writing Naturalia and tacit terms need not be in writing Terms do not all need to be in one document Variation of material terms must be in writing Can estoppel be raised against a party who misleads another by agreeing to an oral variation, only later to rely on the formal invalidity of the variation? If formalities are not complied with, the contract is void; any performance in terms of a void contract may be recovered with an enrichment action.

 Failure to comply with these formalities contract void Alienation of land Section 2(1) of the Alienation of Land Act 68 of 1981 Purpose of legislation Signature on behalf of a party Sale of land by auction Suretyship A contract between a surety and the creditor of another in terms of which the surety will perform to the creditor should the debtor fail to do so.

Section 6 of the General Law Amendment Act 50 of 1956 Written document signed by surety Purposes of legislation.

Donation Section 5 of the General Law Amendment Act 50 of 1956 Written document signed by donor (or representative with written authority granted before 2 witnesses) Purpose of legislation Applies only to executory contracts of donation.

 Failure to comply with these formalities contract valid but not enforceable against third parties Antenuptial contracts Section 87(1) of the Deeds Registries Act 47 of 1937 Notarial execution and registration.

Long leases of land Section 1 of the Formalities in Respect of Leases of Land Act 18 of 1969 Registration against the title deed of the land Applies to leases for periods of more than 10 years Required for lease to have effect against a creditor or successor under onerous title of the lessor Third parties bound if aware of lease: doctrine of notice.

 Section 12 of Electronic Communications and Transactions Act 25 of 2002 General rule: requirement that a document be in writing is met if it is in the form of a data message and is accessible Exceptions: alienations of land, long leases of land Section 13(2) of the Act: electronic signatures can serve as wet signatures Section 13(1) of the Act: where signature required by law, an advanced electronic signature is required in relation to a data message

Creation of the contract Purposes of reducing contract to writing:

Facilitation of proof Formal requirement for validity viz agreement not binding until reduced to writing and signed A question of fact But there is a presumption that they intended merely to facilitate proof

Which purpose did parties have in mind?

Leading case: Goldblatt v Fremantle 1920 AD 123 In absence of contrary intention, electronic contract (in terms of s 12 of the Electronic Communications and Transactions Act) should comply with stipulated formality of writing.

Even if parties intended writing to be a formal requirement, they can orally or tacitly agree to do away with this agreement

 Parties can prescribe formalities for variation of their contract Standard practice: inclusion of non-variation clauses in written contracts SA Sentrale Ko-operatiewe Graanmaatskappy Bpk v Shifren1964 (4) SA 760 (A): non variation clauses valid; no oral variation effective Potential injustice in practice: attempts at amelioration or circumvention of the principle Brisley v Drotsky 2002 (4) SA 1 (SCA): affirmed Shifren decision Non-variation clauses and freedom of contract.

 Parties can prescribe formalities for cancellation of their contract: Impala Distributors v Taunus Chemical Manufacturing Co (Pty) Ltd 1975 (3) SA 273 (T) Standard practice: inclusion of non-cancellation clauses in written contracts Such clauses restrictively interpreted They only apply to cancellation by mutual consent To be effective, a non-cancellation clause must be coupled with a non-variation clause: Impala Distributors case.

 Unconscionable conduct in practice courts have sought to limit the application of the principle in various ways: 1. Restrictive interpretation
Non-variation clauses narrowly interpreted Examples of legal acts that do not amount to variation:
Informal cancellation Certain types of waiver.

2. Where enforcement would be against public policy

Non-variation clauses will not be enforced, for example:
Where a party fraudulently relies on the clause Perhaps where enforcement would be so unfair as to be detrimental to the interests of the community: Brisley v Drotsky and the principle in Sasfin v Beukes 1989 (1) SA 1 (A).

3. Where a party is estopped from enforcing a non-variation clause

No reported case where this defence has been successfully raised; writers have conflicting views.

 Definition: clause to the effect that no latitude or indulgence shown or extension of time granted by the creditor should be construed as a waiver Effect: valid and effective, but strictly construed.

 Oxford University Press Southern Africa 2010 www.oup.com/za