Law summaries
Chapter 4
Contractual capacity
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Generally, any natural person has the ability to enter into a contract unaided,
however, juristic persons such as companies also have full contractual capacity.
Some natural persons have limited contractual capacity.
Minor’s contractual capacity:
 A minor is any person under the age of 18, a major is anyone that is 18 years
or older.
 A minor has limited legal capacity which in turn limits their contractual
capacity.
 If two minors get married, both become majors, regardless of what occurs
after the marriage occurs.
 When a minor has been emancipated by a court, they are considered majors
by law.
 It is possible for a minor’s guardian to tacitly emancipate the minor, meaning
they can act independently with regard to commercial activities.
 A MINOR UNDER THE AGE OF 7 HAS NO CONTRACTUAL CAPACITY
WHATSOEVER!
 A minor between the age of 7 and 18 may enter into a contract with the
assistance of their guardian.
o A guardian is a person who has legal authority and duty to care for
the person and property of a child. A biological mother has full
parental responsibility and rights in respect of the child.
o If the child is born to a minor who is unmarried, the mother of the
minor is also the guardian to the child of the minor.
o If the father of the child has never been married to the mother of the
child, the court will consider him a guardian if he was living with the
mother or contributed to the maintenance of the child.
 When a guardian consent to a contract on behalf of the minor, the guardian
need only now and consent to the general nature of the contract, they do not
need to know the specific details.
 Once the guardian has consented, the contract is binding between the minor
and the other party.
 THE GUARDIAN DOES NOT INCUR ANY PERSONAL LIABILITY, ALL RIGHTS
AND OBLIGATIONS FALL ON THE MINOR AND OTHER CONTRACTING PARTY.
 An unassisted contract can become an assisted contract through ratification.
o Ratification means to give consent to a contract after a minor has
entered into it.
o A minor can ratify their own unassisted contract when they reach
majority.
o When a minor becomes a major, they have reasonable time to decide
whether or not they will reject or ratify any unassisted contract they
entered into as a minor.
o If a contract is ratified, it becomes legally binding
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Consent by a guardian can either be expressed or implied, meaning that
either a major can verbally express it or express it through writing, and can
also be implied through a guardian’s behaviour.
Contracts can also be ratified through expression or implication.
Instead of assisting a minor, a guardian can enter into a contract without the
minor’s consent or knowledge, however, the guardian must always act in the
best interest of the minor.
If a guardian consents to a minor’s contract and it turns out to be
burdensome to the minor, the contract can be set aside through an
application called resitutio in intregrum (restitution). A minor can do so by
waiting to become a major and bringing the application on his own, or with
the assistance of the guardian or court-appointed representative.
When restitution is granted, each contracting party must give back what they
have received under the contract, in other words, each party’s position
should be restored.
According to common law, if a minor enters into a contract with another
party without the guardian’s assistance, the law protects the minor and holds
the other party liable, thus the contract is voidable.
When a minor enters into a contract without the assistance of a guardian, the
minor is not bound to the contract and is therefore not liable to perform in
terms of the contracts, this is known as a limping contract, and the contract
can only be enforced on the major who has full contractual capacity.
o If the unassisted contract is later ratified by the guardian or by the
minor ratifying it after becoming a major, the contract is valid, and
thus, the minor acquires the rights and duties specified in the contract
and is personally liable.
o If the contract is repudiated by either the minor’s guardian or by the
minor upon becoming a major, the contract does not continue. This
contract is now seen as void, and the minor can recover everything
that has been performed under the contract from the other
contracting party.
o The legal basis for demanding the return of benefits received in terms
of a contract are if there was unjustified enrichment in the case of
money, or if there was rei vindicatio in the case of goods delivered.
 Unjustified enrichment means that someone has been
enriched unfairly or at the expense of someone else
 Rei vindicatio is the legal term for the way in which an owner
can legally recover or get back an object that belongs to him,
wherever he may find it.
o Upon repudiation, the unjustified enrichment and the reclaiming of
one’s property with the rei vindicatio works both wats, meaning the
minor must also pay back any amount by which they were enriched
due to the contract, and has to return any property that he still has
that belongs to the other contracting party.
IF A CONTRACT IS DECLARED VOID, THE PARTIES MUST BE RETURNED TO
THEIR POSITINS PRIOR TO THE CONTRACT BEING FORMED THROUGH
RESTITUTIO IN INTEGRUM.
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Even though a contracting cannot enforce an unassisted contract on a minor
through contract law, other branches of law can be used.
o Unjustified enrichment and rei vindicatio:
 The other contracting party can demand that the minor return
any money and/or property that was delivered to them in
terms of the contract. If the minor has exchanged the goods or
money for something else, that property must be returned.
The minor must also pay the other contracting party the
money they saved for using the other contracting party’s
property. However, if the minor has spent the money they
received from the contract, or the object the minor received in
terms of the contract is damaged, the minor only has to return
what is left of the money or return the damaged property.
o A minor pretends to be a major:
 If a minor fraudulently misleads the other party into believing
that they have contractual capacity, the minor is fully liable to
the other contracting party, in accordance with the law of
delict.
o Tacit emancipation:
 If a minor is living independently and conducting their life as a
major, they are tacitly emancipated by their guardian, and in
turn become a major.
Contract for the supply of goods and services is voidable if:
 The consumer is an unemancipated minor.
 The agreement was made without the consent of the guardian in charge of
the minor.
 The agreement was not ratified by the adult responsible for the minor or the
minor after becoming emancipated or a major.
Contractual capacity of married persons:
 People can get married either in community of property or out of community
of property (with or without accrual).
 Marriage in community of property:
o Separate assets and liabilities of both spouses are joined together in a
joint estate.
o If a couple gets married without drawing up and registering an
antenuptial contract, they will automatically be considered to be
married in community of property.
o Both spouses have an equal share in assets, nut disadvantageously
share each other’s liabilities.
o They can be sued independently or together for the full amount of
liabilities.
o If the joint estate is sequestrated and declared insolvent by the court,
both spouses will be declared insolvent.
o Both spouses have full and equal contractual individually to enter into
contracts concerning the joint estate.
o However some contracts are too important and need the consent of
the spouse not entering the contract for it to be valid.
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o This consent comes in three forms:
 Written consent signed by one spouse and two witnesses:
 Most stringent
 Used for sale or mortgage of immovable property.
 A surety agreement.
 A credit agreement.
 Written consent of the other spouse:
 A spouse must give written consent for the transferring
of valuable assets.
 In the case of the sale of valuable assets that are held
as investments, the other spouse is required to sign the
contract to indicate consent.
 Expressed or implied consensual capacity:
 All the other spouse needs to do, is consent to the
contract.
 Marriage out of community of property:
o They each continue to own their property separately, since it is
separate, they are entitled to deal with their own property as they
wish, meaning they have full contractual capacity with regards to
their own property.
o Both spouses must sign an antenuptial agreement in front of a notary
public.
o The antenuptial agreement must be registered at the Deeds office
within 3 months of the marriage.
o Without Accrual:
 Assets and liabilities of the spouses are kept separate both
before and after the marriage.
 Spouses do not share any liabilities.
o With Accrual:
 The property that the partners bring into the marriage is kept
separate and, while the marriage continues, the assets
acquired, and liabilities incurred during the marriage are also
separate.
 However, if this marriage does come to an end the money or
property gained during the marriage is then shared according
to a percentage, as agreed upon by both spouses.
 Therefore, any earnings during the marriage are shared by the
spouses, but if one party goes insolvent, the other is not
automatically made insolvent.
 Both spouses in a marriage are jointly and severally liable for household
expenses.
Contractual capacity regarding drunken persons:
 If a person enters into a contract while so drunk that he either does not
realise that he is entering into a contract or does not understand the terms of
the contract, he is not bound by the contract, and it is voidable, but he would
have to return what he received in terms of the contract.
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Contractual capacity regarding insolvent persons:
 When the court declares someone insolvent, it issues a sequestration order,
which gives control of a person’s assets to a trustee.
 The insolvent person still has full contractual capacity, and does not need the
written consent of the trustee unless:
o The contract is a contract to dispose of any assets that form part of
the insolvent estate,
o Contracts that negatively affect the insolvent estate,
o Acting as a general dealer or a manufacturer.
 If the insolvent person enters into any of the above contracts without the
consent of the trustee, the contract is voidable at the instance of the trustee.