1.1 Nature and Basis of Contractual Liability (Chap 1).docx

1.1 Nature and Basis of Contractual Liability (Chap 1).docx...

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1. NATURE AND BASIS OF CONTRACTUAL LIABILITY Readings: Chapter 1 pg. 1 - 41 1.1 Nature of contract: The concept of contract; distinguished from other agreements, such as social agreements and “gentlemen’s agreements”; the importance of a serious intention to contract ( animus contrahendi) . A contract is an agreement entered into by two or more persons with the serious intention of creating a legal obligation or obligations. A contract is an obligatory agreement (obligations are created) and should be distinguished from absolving agreements (obligations are discharged or extinguished) and real (or transfer) agreements (rights are transferred). A valid and binding contact meets the following requirements: There is consensus between the parties The parties have capacity to contract Required formalities are observed The agreement is legal Performance is possible The content of the contract is certain A contract has characteristic features: it is a juristic act (the law attaches the consequences intended by the parties). It is necessarily bilateral or even multilateral. It entails promises or undertakings on one or both sides (to make a certain performance – to give something ( dare ), to do something ( facere ), or to refrain from doing something ( non facere ) – or it may be a warranty that a certain state of affairs exists. Most contracts entail reciprocity (one party’s performance is promised in exchange for the other parties performance). The modern concept of contract is generalised : an agreement does not have to be of a specific type before it will be enforced. Contractual parties are required to conduct their relationship in a manner consistent with good faith ( bona fides ).
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1.2 Contract and the law of obligations: The concept of a legal obligation; civil and natural obligations; sources of obligations; contract compared with delict & enrichment. The law of contract forms part of the law of obligations. An obligation is a legal bond between two or more persons, obliging the one (the debtor ) to give, do or refrain from doing something to or for the other (the creditor ). The right created by an obligation is a personal one (a ius in personam ), as opposed to a real right. If an obligation is enforceable by action in a court of law, it is a civil obligation , as opposed to the less common natural obligation , which in unenforceable. The primary sources of obligations are contract and delict. A delict is wrongful and blameworthy conduct that causes harm to a person. There is a close similarity between breach of contract and a delict. Both are civil wrongs that may give rise to a duty to pay damages as compensation. Certain conduct may constitute both breach of contract and delict. There is then concurrent liability and the plaintiff may sue on either basis.
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