What is a contract?
A contract isn’t just a piece of paper. It has specific, defined elements: it is an agreement entered into between two or more parties with the intention of creating a legal obligation. A contract gives both parties legal protection, in that the other party will be required to perform “their end of the bargain”.
When will you be bound by a contract?
In order for a contract to be legally binding, there are a few requirements:
- There must be consensus between the parties, which means a “meeting of the minds”, or agreement, regarding the respective obligations of both parties.
- Both parties must have the capacity to conclude a contract, both in terms of their age and mental capacity.
- The formalities must be complied with, in that it must be reduced to writing and signed.
- The agreement must be legal and cannot be prohibited or go against public policy.
- Performing the respective commitments must be possible.
- The agreement must contain defined content so that it is capable of being enforced.
If these requirements have been met and you have signed an agreement, you will be bound to that agreement. It is very important to carefully read contracts, or obtain legal advice, before signing.
Are oral agreements binding?
In South Africa, it is actually possible to conclude a verbal agreement. However, certain agreements must be reduced to writing in order to be enforceable, such as an agreement for the sale of immovable property, antenuptial agreements, credit agreements, long-term leases and suretyship agreements.
So, how can you get out of a contract?
One of the ways an individual can get out of a contract is by using their cooling-off right in terms of the Consumer Protection Act. According to the Act, a consumer may cancel an agreement within five days from the date of the transaction or agreement, or from the date of delivery of the goods. The consumer may cancel the agreement for any reason, and the supplier will have to refund the goods within fifteen days.