CONTRACTS and DISPUTES

In everyday life people enter into agreements on a daily basis.

Said agreements normally formally establish all parties’ rights and obligations pertaining to a common objective or project.

An example would be an employment agreement in terms of which an employee will perform duties instructed by the employer in return for remuneration by the employer – in this regard, both rights and obligations are created for both parties, a quid pro quo if you will.

In legal terms, the aforesaid agreement is termed a contract.

Broadly speaking, a contract is a legally binding agreement that recognises and governs the rights and duties of the parties to the agreement. A contract is legally enforceable because it meets the requirements and approval of the law.

In South African law, a contract has the following requirements in order for it to be deemed valid:

  1. CAPACITY: The parties must have the capacity to contract;
  2. CONSENSUS: The parties’ intent in their minds must match (or at least appear to match) on all material aspects of their agreement;
  3. Legality: The agreement must be lawful – in other words it cannot be prohibited by law or common law;
  4. FORMALITIES: Wherein exceptional cases, it requires that the agreement should be in a certain format (for example, in writing and signed), these formalities must be respected. And adhered to;
  5. POSSIBLE: The contractual obligations must be possible of performance –a valid contract (subject to circumstance) cannot come into being if the performance is impossible from the ‘get go’ (ab initio);

Parties entering into prospective contracts need to adhere to the aforesaid requirements in order for the contract to be legally enforceable – however, the agreement should also be worded in such a way as to provide for enforceability, as well as some form of redress from the infringing (‘breaching’) party.

A contractual dispute occurs where parties have contradictory understandings over the provisions of a contract and one party seeks specific performance, or damages, or both, from the other party.

Where parties aren’t able to resolve the dispute amicably or through some sort of dispute resolution, usually provided for in the contract, the parties approach the relevant court for relief.

Disputes of this nature require professionals to scrutinise the caveats, interpretations, and wording of the agreement with astute attention to detail.

Should you require assistance in drafting a contract or should you be in a contractual dispute and require assistance in understanding or enforcing your rights, our office is available to provide you with the necessary guidance and assistance.