Basic Business Law. Lesson 3. Contract Interpretation

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1.1.2 Tickets Typically a supplier of goods or services will issue the customer with a document setting out certain provisions which the supplier wishes to incorporate in the contract. – Often an exemption clause. One way of introducing these terms is thru the issuing of a ticket. The law holds that, even if the customer was unaware that there was writing on the ticket he will be bound by the contract incorporating the terms in question, provided the supplier did what was reasonably necessary to bring the terms to his attention. The following provisions apply: • The ticket must be handed over before the agreement is concluded. • The ticket must be a document in which a reasonable person would expect to find terms. For example, terms would be expected as part of a quotation, but not as part of an invoice, or an account statement. • The writing must be prominent//clear. • The customer must be given an opportunity to examine the ticket. 1.1.3 Notices Instead of issuing a ticket, a supplier can exhibit, at the place where the contract with the customer is concluded, a notice setting out one or more provisions which he wishes to include in the contract. The law holds that even if the customer did not see the notice or, if he did not read it, he will be bound by the provisions in question, provided the supplier did what was reasonably required to bring them to the notice of the customer. As in the case of tickets, some provisions apply: • Notification must be contemporaneous (at the same time) with contract formation • The notice must be conspicuous (on show) • The writing must be prominent • The provisions must be noticeable • The customer must be given an opportunity to read the notice Nothing prohibits a supplier from both displaying a notice and issuing a ticket containing terms. 1.2 Implied terms 1.2.1 Tacit terms These are terms that exist to give effect to the parties' common intention. A court will not lightly intervene to remedy a deficiency in a contract, but if the suggested term is necessary to give effect to the common intention of the parties it will be read into the contract, even if the parties did not actually think of the term or a situation in which it would come into operation. The court usually applies the curious bystander test to determine the intention of the parties. This test poses the question: what would the parties have said if, at the time of contracting, a bystander had asked; 'what will happen in such a case'? The test requires that, when asked about it, they should immediately and unanimously agree on the term to govern it. The court cannot imply a term in the following cases: 2
• Where provision for a hypothetical situation was made and the suggested term would conflict with the express provision, • where the required term is not capable of clear and exact formulation, • where either of the parties would have wanted to consider/discuss the matter further or • where the parties would have expressed different views on what the outcome of the hypothetical situation would be. 1.2.2 Terms implied on the basis of a trade usage A recognised trade usage will be incorporated in a contract as a term thereof, irrespective of whether the parties knew of the usage or not. The requirements are the following. • The usage must be certain. • It must be reasonable and not contrary to the law. • It must be generally known, and universally and uniformly adhered to, within the particular trade or branch of commerce concerned. • It must be consistent with the other provisions of the contract. Example Havoc breaks out at the fresh produce market when the new assistant, Jimmy Rules, refuses to give greengrocer, Jack First, a free sampler box of grapes. Jack had been coming to the same market for ten years and he has always received a free sampler box if he ordered 15 boxes or more of any fruit. Jimmy Rule is clearly not aware of the “free sampler box” rule at the market, but as this unwritten rule has been in place for a long time and if all the other requirements as set out above is met, he will be obliged to give Jack a free sampler box of everything he ordered more than 15 boxes of. 1.2.3 Common-law rules There are common-law rules concerning co-parties. Where two or more parties agree to render a performance, the common law will determine the extent of each party’s liability in the absence of an agreement. The same applies to the rights of co-creditors. Other common law rules govern performance and these will be used to determine what a party must do to discharge his contractual liability where it is not made clear by the contract itself. Some special contracts are also governed by common law rules. For example sale- and lease agreements have a set of terms which are known as the naturalia of that particular category of contract. Example Peter Onions, a new greengrocer in town goes to the local market to buy fruit and vegetables. He arrives at 06:10 and finds that there are already ten other greengrocers waiting in line for their trucks to be loaded. As he pulls up, a gap opens up in the line and he moves into the gap. This greatly upsets the men behind him, who accuses him of rudeness and calls him names that cannot be reproduced in a textbook. There is a common law concept that you must wait in line for your turn. This rule is not written down anywhere, but we all adhere to it. So if some of the men behind Peter don’t get the products they came for because of Peter’s action, they would have a claim for delictual damages against him. 3
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Basic Business Law. Lesson 3. Contract Interpretation

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