Consensus continued Contractual Capacity Factors influencing Consensus Parties

Consensus continued. . . Contractual Capacity

Factors influencing Consensus � Parties reached consensus in a situation where they would not have concluded the contract had they been aware of the real circumstances. � In such cases the contract is null and void or voidable if the prejudiced party elects do so. � If the contract is null and void – no legal obligation is created. � Factor which influence consensus are: ◦ ◦ Error Misrepresentation Duress Undue influence

Error � This is a misunderstanding / misconception by one or more of the parties regarding certain facts, events or circumstances. � Error in motive (reason for conclusion of the contract: ◦ Party errors regarding the reason which motivated the conclusion of the contract. ◦ This does not influence the validity of the contract. ◦ If error was caused due to misrepresentation by the other party – such a contract is voidable due to misrepresntation and not error.

�Error as to the contents / existence of the contract ◦ Error regarding the person with whom the

�The Iustus-error approach �We have to determine if the error was a reasonable and fair mistake / error before consensus will be set aside. �The person claiming error must prove that error was both material and reasonable. �Material = substantial enough to influence consensus. �Reasonable = if it could objectively be excused in law.

Misrepresentation �A false statement of fact made either expressly or tacitly. This can be done intentionally or negligently. � Contracts = voidable if the misrepresentation has influence upon the motive or reason for the conclusion of the contract. � Misrepresentation must be material and persuade the other party to conclude the contract. � A person claiming misrepresentation must prove that a false statement was made. � A mere expression of opinion however is not a misrepresentation. Puffing does not constitute misrepresentation.

Remedies � If the prejudiced party decides to elects to avoid the contract no contractual remedies are available. � Restitution and Delictual damages can be claimed. � Damages can be claimed for intentional and negligent misrepresentations, but not innocent misrepresentations. � Eg. Contract of Sale: ◦ Actio quanti minoris – price reduction is claimed for damaged due to misrepresentation. If buyer wished to continue with the contract. ◦ Actio redhibitoria – prejudiced party claims full restitution and damages.

Duress � Duress can cause a person to do something which they would normally not have done. � It could be so serious that he acts without being aware of what he is doing – vis absoluta (loses contractual capacity temporarily, thus contract null and void) � In less serious situations a person is influenced to do something he would not have done if he was not under duress. vis compulsiva (contractual capacity is retained , thus contract voidable) � Requirements: ◦ ◦ ◦ Other party to the contract must be responsible for the duress. Duress must have caused the conclusion of the contract. Duress must consist of a wrongful threat of damage / harm. Contract must be prejudicial to party under duress. Threat must be of an imminent or inevitable evil.

Undue influence � Consensus was improperly obtained. � Requirements: � One contracting party must have obtained influence over the other party. � Influence must have weakened the prejudiced party’s resistance and rendered his will pliable and open to manipulation. � Influence must have been used in an unconscionable manner. � Influence must have convinced the prejudiced party to reach consensus to his own detriment. � Prejudiced party reached consensus which he would not have done had there not been undue influence.

Contractual Capacity � Legal capacity: � Capable of bearing legal rights and duties. � Eg. Infans has legal capacity, but not contractual capacity. � Contractual capacity: � The competence to perform a juristic act. � 2 components of contractual capacity: ◦ The ability to form a will ◦ The ability to act with sound judgement in accordance with such a will.

Natural and Juristic persons All human beings are natural persons, but their legal capacity / status may differ. � Status is determined by a persons qualities (age, sex, etc. ) and circumstances (marriage, insolvency, etc. ) � Status determines contractual capacity. � ◦ Person’s without contractual capacity ◦ Person’s with limited contractual capacity ◦ Person’s with full contractual capacity � Juristic persons are artificial persons created by law eg. Company, CC, etc. ◦ A separate legal identity with its own legal personality is awarded to such a juristic person. ◦ A juristic person is established with certain aims and objectives in mind and must act within the authorised powers given (intra vires vs ultra vires) ◦ A juristic person acts through a representative or organs, which are always natural persons.

Persons without Contractual Capacity � These persons cannot perform any jusristic act. ◦ Persons under the age of 7: ◦ Infans has legal capacity but no contractual capacity. ◦ A parent / guardian may act on his behalf for the purpose of administration of the estate and for his maintenance and support. ◦ Mentally incapacitated persons: ◦ Every person is presumed to be sound of mind, unless the contrary is proven. ◦ Mentally deficient persons =certified and declared to be unsound of mind by the High Court. ◦ Contracts concluded by these persons are null and void unless at the time of conclusion they had all their mental faculties. ◦ These persons have legal capacity and can aquire rights / duties by juristic acts performed by his curator on his behalf.

◦ Persons in a state of automatism or under the influence of medication or alcohol: ◦ Person is unable to form intent and realise the consequences of his actions due to the influence of eg. Epilepsy, alcohol, medication, etc. ◦ No contractual capacity exists while this state persists. Juristic acts performed in such a condition is null and void. ◦ Performance delivered must be returned or if that is not possible he is liable in terms of unjustified enrichment. ◦ The person claiming contractual incapacity must prove it.

Persons with limited Contractual capacity � These persons can only perform juristic acts with the assistance of another person. � The assistance supplements the inadequate powers of judgement of the person with limited contractual capacity. � Minors: � All natural persons between 7 an 18 years. � Majority can be obtained by ◦ turning 18; ◦ conclusion of a valid marriage (majority status remains in case of devorce); ◦ through an order of court. �A minor must be assisted by a parent / guardian when performing a juristic act, or obtain consent before / after (ratification) he acts.

Contracts binding upon minors � Where minor has full contractual capacity: � Where minor acts with consent or assistance of parent / guardian: � Where guardian acts on behalf of the minor: ◦ Only rights and no duties are obtained. If any duties are obtained the assistance of the parent / guardian is required. If contract is not to the benefit of the minor – restitutio in integrum. ◦ Supplement the minor’s lack of capacity and advise him at the time of performance of the juristic act. ◦ Juristic acts by minors can be ratified by parent / guardian. ◦ Rights and duties are obtained by the minor due to act of the parent / guardian. ◦ Act may only be to the benefit of the minor – if not restitutio in integrum.

� Where additional consent above and beyond consent of the parent / guardian is required: ◦ Consent of the Master of the Supreme Court is required for eg. Sale of immovable property < R 100000; >R 100000 consent of High Court required. � Prohibited acts: ◦ Eg. Marriage. � Emancipation: ◦ Consent to act independantly, this may revoked at any time. ◦ Majority not obtained. � Minor pretends to have attained majority: ◦ Minor is bound as if he has majority status, and a claim for restitution not available.

Restitutio in integrum �A contract concluded on behalf of a minor which is prejudicial to the minor - Restitutio in integrum can be claimed. � Contract is set aside and parties placed in the position they were in before conclusion of the contract. � Minor cannot claim restitution: ◦ Minor acted fraudulently. ◦ Minor ratifies contract after majority is obtained. ◦ Action has prescribed.

Contracts not binding upon minors � Where parent / guardian exceeds authority: � Where minor acts as representative of parent / guardian: � Where minor acts without consent or assistance: ◦ The minor will not be held liable. ◦ Principles of Agency apply. The agent will not be held liable. ◦ Minor liable if ratification takes place. ◦ If minor already performed – restitution is claimed, unless ratification takes place. ◦ Performance delivered by other party – no counter performance can be claimed, minor returns performance with possibility of claim in terms of unjustified enrichment.

Married Persons � Marriages before 1 November 1984: ◦ In community of property: ◦ One joint estate, owned equally in undivided shares. ◦ Before 1 December 1993 – husband still retained marital power, thus wife had limited contractual capacity. ◦ Out of community of property – community of property excluded: ◦ 3 estates formed. ◦ Out of community of property – community of property and profit and loss excluded: ◦ 2 estates existed. ◦ Before 1 December 1993 – husband still retained marital power, unless excluded by an antenuptial agreement.

� Marriages ◦ ◦ ◦ after 1 November 1984: In community of property: Both spouses have equal capacity to manage the joint estate. Consent required in some instances to protect spouse. Out of community of property: 2 seperate estates with accrual system.

Other persons with limited contractual capacity � Prodigals: ◦ Habit or inclination to dissipate away his finances. ◦ Placed under curatorship by court and limitation on contractual capacity can only be lifted by an order of court. � Persons under curatorship: ◦ Unable to manage own affairs due to disability, illness, etc. ◦ Curator assists in handling of the affairs, contractual capacity not affected in any way. � Insolvency: ◦ Contractual capacity limited regarding acts such as selling assets without consent of trustee. ◦ Contractual capacity regarding eg. Marriage is not affected.

Persons with full contractual capacity � Has full contractual capacity to perform juristic acts.

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