locisa1e chapter 09 v1.0
DESCRIPTION
NAMIBIA LAW OF CONTRACT- PARTIES TO A CONTRACTTRANSCRIPT
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© Oxford University Press Southern Africa 2010www.oup.com/za
Dale Hutchison (Editor), Chris-James Pretorius (Editor)
Jacques du Plessis, Sieg Eiselen, Tomas Floyd, Luanda Hawthorne, Birgit Kuschke, Catherine Maxwell, Tjakie Naude
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• Always at least two parties• Unless one party is acting in two different capacities:
– Vaal Reefs Exploration & Mining Co Ltd v Burger 1999 (4) SA 1161 (SCA) at 1170-1171
– Van der Merwe v Nedcor Bank Bpk 2003 (1) SA 169 (SCA).
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• More than two parties• Cf Multiple obligations: each of which has at least one debtor
and one creditor
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• Multiple parties: each obligation may have a number of co-debtors or co-creditors
• Determination of each party’s share of liability/entitlement depends on a number of factors
• Most important of these is whether the performance is divisible or not.
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• Divisible performances: example• Indivisible performances: example• Distinction depends on:
– Nature of performance– Intention of parties.
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• Presumption in favour of simple joint liability and entitlement:– Liable/entitled to proportional share of performance– Shares presumed to be equal
• Release of one co-debtor from performance: – Generally no automatic release of other co-debtor/s
• Performance of more than co-debtor’s share of performance: generally no right of recourse.
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• By express or implied agreement, or by operation of law• Consequences of joint and several liability:
– Each co-debtor liable for the full amount– Creditor can claim full debt or any lesser amount from any co-debtor/s– Performance in full discharges the debt completely– Part-performance discharges the debt pro tanto:
» Balance claimable from any/all co-debtors– Performing party’s right of recourse against co-debtors for proportionate shares of
debt– Release of one of co-debtors: proportionate reduction of liability of remaining co-
debtor/s
• Consequences of joint and several entitlement: same rules apply mutatis mutandis.
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Situation: • Performance is indivisible• Parties intend that co-debtors are to be liable as a collective or
co-creditors are to be entitled as a collectiveConsequence:• Parties cannot act individually – must perform/claim as a
collective.
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Introduction • Privity of contract
– One of cornerstones of law of contract– Principle is not qualified as regards the imposition of duties on third
parties: rationale– But it is to some extent relaxed as regards the creation of rights for
third parties: rationale– Third party’s duty to respect a contractual relationship between others.
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Typical agency situation:
Contract of agency (mandate and authority
Negotiations
Contract
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The parties:• Principal• Agent• Third partyMeanings of ‘agency’:• Contractual relationship between principal and agent• Agent’s representation of principal• Both of the above.
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Representation• A concludes juristic act on behalf of P• Authority of A
– Granted by law: ‘juristic representation’– Granted by P to A usually by contract: ‘conventional representation’– If written: power of attorney: general or special
• Contract between A and P: contract of agency (cf mandate).
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1. Relationship between principal and agent– Covered by law of mandate and terms agreed by the parties– Agent’s position highly fiduciary
2. Relationship between principal and third party– Consensus between P and 3p: refer to state of mind of A– P vicariously responsible for acts of A: qui facit per alium facit per se– P’s knowledge may be attributed to A and vice versa.– Normal situation: contract arises between P and 3p– If A exceeds authority, P not bound by contract except:
» Where P ratifies the contract» Where P is estopped from denying that A had the
necessary authority.
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2. Relationship between principal and third party (continued)– Doctrine of undisclosed principal:
» A personally liable» But P can demand performance from 3p» Or 3p may claim performance from A or P» Cullinan v Noordkaaplandse Aartappelkernmoerkwekers Koӧperasie Bpk 1972 (1) SA
761 (A)» Compare with the unidentified principal
– Non-existent principal: » Contract void ab initio» Except in the case of pre-incorporation contracts:
Companies Act 61 of 1973 s 35 Close Corporations Act 69 of 1984 s 53 (→ Companies Act 71 of 2008).
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3. Relationship between agent and third party– Normal situation– Situation where agent lacks authority or exceeds his or her authority:
» Warranty of authority» Fraudulent or negligent misrepresentation that A had authority» Implied warranty of authority.
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• Practical importance• How does relate to the principle of privity of contract?
– Roman law– Roman-Dutch law– Modern academic debate.
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• A and B can validly contract for the benefit of C (who need not exist at the time)
• Requisite intention to create an enforceable obligation in favour of C• C acquires a right to the benefit upon notification of acceptance• Relationship between A and B depends on the terms of their
agreement• On acceptance of the benefit, C acquires independent right to
enforce performance • C cannot accept a benefit without simultaneously accepting any
reciprocal obligations coupled with it.
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• What must C accept?• Does the stipulatio alteri involve one or two contracts?
– Majority opinion: two bilateral relationships (A–B and B–C)– Alternative view: only one contract, between A and B; C’s right is
conditional or inchoate
Practical legal consequences of the debate as to the proper construction of the stipulatio alteri.
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• Transfer of contractual rights to a third party: cession• Transfer of contractual duties to a third party: delegation• Withdrawal of party and substitution by third party: either by
novation or by assignment.
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• This is possible, but is dealt with elsewhere • Note: the third party does not become a party to the contract
in question by virtue of the performance.
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Subject to agreement of the parties, the debtor may perform to a third party: adiectus solutionis causa
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© Oxford University Press Southern Africa 2010www.oup.com/za