"A VERBAL CONTRACT ISN'T WORTH AS MUCH AS THE PAPER ITS WRITTEN ON!"

It is an aspect which is taken likely when entering into a contract. Some individuals draft their own contracts without understanding the elements of the contract. People often say “How hard is it to draft a contract?”; “Why pay someone to do it as it is simple?”. Well in my experience, without promoting my profession, these people usually end up at the Attorneys to assist in complications after the fact. Googling or copying and pasting to create a contract without understanding the legal implications will eventually lead to spending more money to resolve the issues than actually ensuring that it is done by a professional in the field revolving around the contractual elements. The same goes without saying by signing a contract without consulting someone in the professional field. As I say, if you want something done right, do it correct from the beginning.

 Personally, I come from a family where a simple word of mouth is regarded as a ‘man of his word’. I drafted a contract once for my father whom did not understand the reasoning why his two page contract was not sufficient compared to my thirty seven (37) page contract. 

A contract is more than a simple agreement between parties. There are many elements to consider when contracts are entered into and failing to acknowledge these elements will result in catastrophic aftermath domino effect that could not only effect yourself, but those dependent on you financially.

 Contractual law is an on-going changing aspect which regularly undergoes changes and renewals of which require to be adapted as undergoing a process of thoughtful changes and renewals as they adapt and legislation is continuously being changed and challenged. This progression of revolution presents a challenge since the diverging of the law need to be understood and kept up to date.

Aspect of contractual law is broad and contains unlimited issues, but I will breakdown certain elements to consider when you enter into a contract or have a contract drafted as well as leaving you with the ‘old school temperament” that a contract not a simple as one may think. These elements should assist in getting a better understanding of what is required to draw up a contract and also how this will have an impact on any party that do not comply with a contracts.

 What is a Contract (Agreement)?

A verbal agreement is not suffice. The purpose of a contract is to create an enforceable obligation between two or more parties with the purpose to create a form of guarantee which binds the parties to performing and executing action if performance is not complied with. 

 Why is it necessary to have a contract?

A written contract serves as proof of the content of the agreement made between parties. If changes are made during the course of the Agreement; amendments can be made and recorded which provides a track record and not result it a “he said she said scenario”. A written contract with amendments will ensure that a record is maintained of how the agreement was understood; explained and by having parties sign the agreement it serves as proof that parties to the contract accepted the terms and content of the Agreement.

Should there be any dispute raised during the course of the contractual period, it would be easier for litigation (legal action) in court. Confidence between parties is not satisfactory and therefore a “safe-net” in the form of a written understandable agreement should be ensured in cases where breach of the confidence occurs.

REQUIREMENTS FOR A BINDING CONTRACT

In order for a contract to be binding and effective, there are a few requirements to note.

1.      The parties must have the capacity to contract. Parties entering into a Contract needs to have the right: to enter into a contract; to perform juristic acts with legal significances and to be sued or be sued.

2.      There must be a clear understanding of the intent that all aspects of the agreement are the same for the parties. Both parties must understand what they are entering into. The contract cannot be entered into if the parties are not on “the same page”, in other words, a contract is made one-sidedly.

3.      The necessary formalities need to be complied with, such as the agreement should be in a certain in writing and signed by both parties.

4.      The parties must have seriously intended that the agreement will result in terms which    can be enforced.

5.      The agreement must be in line with the regulatory Acts, Statutes; Case Law and Common Law. There should be no conflict with the legal aspects required by law.

6.      The agreement must have assured and fixed terms as well as understandable content in order to ensure that the obligations can be performed.

 OBJECTIVES OF a contract?

The main objective of the contract is to secure parties rights; obligations and performance.  We are in slight economic crises and parties depend on the objectives of the contract to be met in order to secure them financially. 

 When there is a delay in the fulfilment of the contractual obligations, the parties are to rely on the Agreement as to what recourse should one of the parties be in breach of the Agreement. To ensure that profitmaking enterprises are able to be secured, the parties have to be aware that failing to comply with the terms of the contract will result in legal action in order to ensure that the agreement is fulfilled. Legal action provides certain devices to impose undertakings, or alternatively ensure that suitable reimbursement to be compensated when one of the parties is in breach of the Agreement.

The purpose of an agreement relying on the possibility of legal action is not only to ensure that obligations and performances are guaranteed, but also to ensure that parties keep to their word; principles and ethics when the contract was initially concluded. Contract form the foundation of reserved initiatives and it controls the performance of reasonable and authentic businesses.

 BREACH OF CONTRACT

As much as we would like to live in a world where people keep to their word, it is unfortunate that in most cases, some people are not ‘man of their word. A party to an agreement may fail to uphold to their obligations under the contract. There are various forms in which parties may break the terms of a contract. It usually depends on the type of contract, but the basic forms of breach may be as follows:

 Ordinary breach:

This form of breach is common in that it is where a party to a contract in essence failures to fulfil or comply with the terms of a contract. All terms are prone to rupture either in positive obligations or negative obligations. 

 Breach in terms of negative obligations usually occurs in cases in which defaulting party executes a performance which he or she may not execute. For example, this kind of negative obligation occurs in Lease Agreements, in which a tenant sub-leases the property and the Lease Agreement explicitly states that the tenant may not sub-lease the property.

 Breach in terms of positive obligation, can take various forms, depending on whether the applicable obligation is positive or negative. The requirements of positive obligation are that the defaulter must have performed part of an obligation or the performance by the defaulter must have been lacking or imperfect. For example, where goods are delivered by the defaulter are of the wrong excellence or amount.

 Mora

“Mora” is a legal term which is best describe as when defaulter suspends performance without legalized justification of a contractual obligation or fails to perform an obligation on time. There are various types of mora. I will focus on just two main types that usually occur.

1.      Mora creditoris:

It is the party, namely the party to whom the performance is due, who fails to cooperate timeously with the debtor in order to allow the debtor to fulfil his obligations in terms of the agreement.  

 2.      Mora debitoris:

 It is the unlawful abandonment of a defaulter (namely the debtor) to complete a timeous performance of positive obligation, regardless of the failure to perform.  

 Prevention of Performance:

Where obligation in terms of the contract is made impossible to be performed after the contract is executed, due to the fault of either party. This contract is not dismissed, but the party that is to render the performance, is responsible for making performance impossible and is therefore guilty thereof.

Repudiation:

This form of breach occurs when a party in the contract commits a breach of contract by words or conduct, and without a valid lawful excuse, unmistakeable objective to prevent the contract or any obligation thereof to be performed.

 These are just some aspects to consider the next time you think a contract is simple. As mentioned, contractual law is widespread and has more aspects to it than just duty and performance, but rather a document to secure all aspects which prevents one from ending up in a legal battle to prove your rights. Thoroughly read all your contracts. I really mean thoroughly. Ensure your contracts cover your rights. You can enter into a contract which could have had implications for yourself or drafted contracts that did not protect your rights. This is a mistake most make and taking it as likely as eating and drinking will result you in spending money, when you shouldn't have had to spent money, in order to rectify problems later.

 As the quote by Jean de la Bruyere, a French Philosopher:

"Avoid legal battle beyond all things; they pervert your conscience, impair your health, and dissipate your property.” 

(NOTE: this article is for information purposes only. Each case depends on merits of matter and should be consulted with an attorney)