THE SOURCES OF LIABILITY

The sources of liability

There may be various underlying causes for liability for an action or omission. These may be the breach of a contract or contractual term; committing a delict; contravention of a statute (legislation); or sui generis, which means those that do not involve any of the rest and are based on court decisions.

This article deals with the distinction between contract and delict.

1. Contract

A contract or agreement is entered into between two or more parties and has the effect of creating reciprocal obligations.

The following must be present to establish a legally valid contract:

• Consensus, which is also known as the meeting of the minds
• Contractual capacity, which means that parties should be able to contract and not be a minor or insolvent
• Formalities must be complied with, for example reducing a contract of sale of immovable property to writing
• It must be possible for both parties to perform the agreement
• The contract must be lawful

In many instances contracts are void or invalid from the outset. In others the contract is only voidable. This is an important distinction as it may affect the aggrieved party’s ability to claim and is based on the specific contract terms involved. For example, in the case of an agency agreement, such as a sales representative, the principal will be liable to the client and not the agent or representative.¹

Instances of void contracts:

• Lack of consensus by, for example, mutual mistake;
• A defect going to the root of the contract;
• One or both party’s inability to perform from the outset; or
• Unlawful contracts.

On the other hand, instances related to misrepresentation are voidable. This means that a party can approach a court to challenge the validity of a contract.

Despite the above, South African courts generally follow the maxim pacta sunt servanda (contracts shall be enforced); or the strict liability approach, which aims to prevent parties from not honouring their obligations.

In addition, the courts generally award damages for breach of contract on the basis of restitution in integrum, which means to be placed in the position one was in prior to the agreement. The courts will award damages as they are proven and quantified accordingly. Damages may be patrimonial, or monetary; or non-patrimonial, such as pain and suffering.