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Chapter 12 - Consumer Law

What is a contract?

A contract is an agreement between two (or more) people where one person offers to do something and another person accepts that offer. So, when a seller agrees to sell and a buyer agrees to pay for goods and services, they have entered into a contract. For example, a shop-owner offers to sell a jersey for a particular price. A person agrees to pay the price that the shop-owner is asking and pays for the jersey. There is now a contract between the person buying the jersey and the shop-owner.

It is important to understand how a contract is made and how it can affect the rights of the buyer or the seller.

What are the requirements for a contract?

• There must an agreement between the people about what each person must do in terms of the contract. In other words, there must be an offer by one person and an acceptance by the other. The offer must be serious and definite, not vague. For example, Khanya says to Anne, 'I will buy your car some time in the future if it suits me.' Anne agrees to this. There is no contract because the offer was not serious or definite.
• The person making the contract must have the legal power to enter into the contract.
  Examples of people who don't have legal power to enter into contracts are:
  • children under 7 years
  • people who are mentally insane
  • people who are very drunk or drugged
• A person cannot enter into a contract if it is impossible to carry out what is in the agreement. For example, someone agrees to sell you a house and you agree to buy that house. But the house gets washed away in a flood before you sign the agreement. So, it is impossible for the contract to be enforced because there is no house.
• The contract should be legal and not contra bonos mores. In other words, it should not be illegal or go against the morality of society. For example, if a person agrees to hijack a vehicle in return for money, the contract is void. It is not a proper contract.

Can a minor enter into a contract?

According to the Children’s Act (No 38 of 2005) which came into effect on 1 July 2007, a minor is someone under the age of 18 years. A minor who enters into a contract without the consent of the parents or guardian does not have to keep to the contract. But, if the minor says he or she is older than 18, then the person who entered into the contract with the minor can sue for damages.

See Problem 1: Minor entering into a contract.

Married people and contracts

Both men and women must say what their marital status is when they fill in forms.

See The rules of civil marriage.

Married people who are married in community of property have joint administration of the things the couple own. To protect each spouse, the other partner's written permission is necessary for big things like buying or selling a house, signing credit agreements or withdrawing money from accounts in the other spouse's name.

In a marriage out of community of property, the husband controls his own separate estate and the wife controls hers.

Before 1 November 1984 the husband had the marital power in some marriages. This meant the wife could not sign contracts without her husband's consent. In 1993 the Fourth General Amendment Act was passed, which did away with marital power of a husband over his wife.

Written and spoken contracts

Contracts can be written or spoken. Many contracts need not be in writing, for example, daily activities like buying food in a shop, using public transport and going to the movies. Other contracts must be in writing or the courts will not enforce them. Examples are sale of land, long leases (more than 10 years), credit agreements, marriage contracts and contracts of apprenticeship.

However, it is usually better to have a contract written down. This is because it can be difficult for parties to prove the terms of a verbal agreement if there is a disagreement later on. If you are going to be a party to a verbal agreement – it is safer to have a third party present that can help to support your claim if there is ever any disagreement

Breaking a contract

Breaking a contract is called breach of contract. A breach of contract happens when one person does not do what she or he promised to do in the contract. The other person can then choose to end the contract. For example, a seller agrees with a buyer that the seller will deliver goods on a certain day. On that day the goods don't arrive. The delay was not the buyer's fault. This means that the seller 'breached the contract'.

There is also a breach of a contract if a person says or does something which makes it clear that they will not carry out their part of the contract. For example, a person promises to sell something to you and then sells it to another person.

There is also a breach if a part of the contract takes place, but something else in the contract is not carried out. For example, a customer orders certain goods and when they arrive it is clear that the goods are of a poor quality. The seller broke the contract because he or she sent poor quality goods instead of the good quality ones agreed on.

See Problem 2: Breaking a promise.

What happens if there is a breach of contract?

The law will help the innocent person if there is a breach of contract.

These are the legal options:

• specific performance
• interdict
• suing for damages
• cancellation and suing for damages

Specific performance

Specific performance means the court orders the guilty person to do what was promised. For example, the court orders a builder to finish building a house.

Sometimes the court will not order specific performance. This will happen if:

• it is impossible for the guilty person (the person who broke the contract) to do what was promised;
• paying money is a better way of compensating the innocent party;
• it would be unreasonable or unjust to make the guilty person carry out the contract.

If the court orders the guilty person to carry out the contract, then the person must do this. If the person does not do what the court orders, he or she will be in 'contempt of court'. The person could get a fine or a prison sentence.

Interdict

You can get an interdict from the court against a person who broke a contract with you. An interdict is a court order which prevents the guilty person from doing something or orders the guilty person to do something.

See Interdicts.

Suing for damages

Instead of cancelling the contract, the innocent person can decide to sue the other person for damages. This means you can claim money if you lost out in any way because the contract was broken.

Cancellation and damages

One person can cancel a contract if the other person has not carried out an important part of the contract. Once the contract is cancelled nobody has to carry it out. The innocent person can also sue for damages.

See Problem 3: Breach of contract.

When does a contract end?

A contract ends when:

• each person in the contract does what they promised to do, or
• each person in the contract agrees to end the contract, or
• one person in the contract breaks the contract or cancels the contract, or
• one of the people in the contract dies