What makes a Contract legal in South Africa

what makes a contract legal in SA

Contracts are created to enforce an agreement between two or more parties. A contract creates legal obligation, meaning that the terms thereof can be enforced by the law. It is important to recognise what makes a contract valid. 

What is a contract?

As stated above, a contract is an obligatory agreement between two or more parties. It is an agreement that is defined by law and not simply a promise. Contracts are most commonly written, but can also be oral. Written contracts in the form of electronic communication, such as email, sms, and Facebook or WhatsApp messages, are considered valid.

It is recommended to have verbal/oral contracts be reduced in writing. This is to provide proof of the terms of the agreement in the case of a dispute.

Lease agreements, employment contracts, sale agreements, loan agreements and partnership agreements are some common types of contracts.

What makes a legal contract?

In order to be considered a valid contract, it must conform to 6 specific requirements. These requirements are as follows: 

  1. Capacity – The parties must have the capacity to contract.
  2. Offer and Acceptance – For an offer to be valid it has to be specific, clear, and complete. The person who receives the offer must accept it without any conditions or doubts, and they have to consciously agree to it. They also have to follow any legal rules or requirements set by the person who made the offer.
  3. Certainty – The terms of the agreement must be clearly defined and specific. If they’re not, the agreement is considered vague and a court won’t support it. The people making the agreement must reach a consensus on these terms. 
  4. Formalities – Some contracts will require certain formalities. These can be prescribed by the parties themselves or by the law. It may be required that a contract be presented in writing and be undersigned by all parties.
  5. Possible – The contractual obligations must be possible for performance – A contract cannot ask for the impossible to be performed. 
  6. Lawful – The agreement must be lawful and cannot go against public policy. A valid contract cannot create an obligation that is illegal.

If a contract does not meet the above requirements it will be considered invalid. An invalid contract cannot be enforced by law.

What is a breach of contract?

When you make a contract, both parties have specific obligations they need to fulfill. If one party doesn’t do what they agreed to do, it’s called a breach of contract. This can have serious consequences. If a party breaches the contract, the other party may seek legal remedies such as damages or specific performance.

It’s better to avoid breaching a contract than dealing with the consequences. Even if a person enters into a contract with the best of intentions, it can be hard to fulfil all the obligations. It’s a good idea to have a contract lawyer help create the contract to make sure it’s clear and everyone can meet their obligations.Ensure that every contract signed is valid and  that it is possible to meet all obligations. Let us help to ensure your contracts meet the necessary requirements. Contact us today for expert contract advice.