Business LawCommercial law Legality Possibility of performance Formalities

Business Law/Commercial law Legality, Possibility of performance & Formalities

Contracts must be lawful � Generally speaking all agreements are lawful unless prohibited by statute (legislation) or the common law. A contract that is unlawful will be void.

Lawfulness � Examples of contracts that are unlawful (and thus void) because they are prohibited by statute are: ◦ A contract to sell liquor without a license ◦ An employment contract to employ a ten year old child

Unlawful contracts � Certain contracts are unlawful because they are against the common law or because they are against the accepted morals of society. We refer to these contracts as being against public policy or against the good morals of society. The Latin term for this is contra bonos mores.

Eg………. � Examples of contracts that are unlawful because they are contra bonos mores are: ◦ An agreement restricting someone from marrying someone else ◦ An agreement made with the intention to defraud the public.

Remember ……. par delictum rule � Ex turpi causa � The

Possibility of performance � Initial impossibility � Supervening impossibility ◦ Casus fortuitus ◦ Vis Maior �Must be objectively impossible

Formalities � Although the general rule is that no formalities are required, there are certain cases where specific types of contracts require certain formalities. The most common type of formalities that may be required are: � That the contract be in writing; � That the contract be signed in front of a Notary Public, and; � That the contract be registered somewhere, normally the Deeds Office.

Formalities � Examples of contracts that require formalities in order to be valid are: ◦ The sale of immovable property (land buildings) – the Alienation of Land Act 68 of 1981 requires such contracts to be in writing, signed by the parties and to be registered at the Deeds Office;

◦ Ante nuptial contracts – the Deeds Registries Act 47 of 1937 requires these contracts to be signed in front of a Notary Public and be registered at the Deeds Office in order to be valid against third parties.

◦ Suretyship agreements – the General Law Amendment Act 50 of 1956 requires a suretyship agreement to be in writing and signed by the surety.