Have you ever wondered what it takes to form an enforceable contract?
In South Africa, the requirements for a valid contract, include:
- Offer and acceptance: There must be a clear offer made by one party and accepted by another party.
- Intention to create a legally binding agreement: The parties must have the intention to enter into a legally binding agreement.
- Capacity: All parties to the contract must have the legal capacity to enter into an agreement. This means they must be of legal age and not under any form of duress or undue influence.
- Formalities: Certain contracts may require specific formalities, such as being in writing or signed by both parties.
- Legality: The contract must not be illegal, against public policy or in violation of any law.
- Certainty: The terms of the contract must be clear and not vague or ambiguous.
- Possibility: The parties must be able to carry out the performance, objectively speaking. Their subjective means is irrelevant.
- Consideration: There must be something of value, such as money, goods or services, that is to be exchanged between the parties. In some contracts it flows in one direction, for instance in a donation. In others, it may not even be exchanged between the parties to the contract, but with a third party as beneficiary, commonly referred to as a stipulatio alteri.
In practice there can be many interpretations of a contract, however when entering any contractual arrangement it would be wise to keep these requirements in mind.
Should you need professional assistance with the drafting or interpretation of a contract, or litigating based on one, get in touch and find out how we can be of value to you.
