THE LAW OF CONTRACT – NISKA AND ZELDA’S CONTRACTUAL AGREEMENT Contracts are fundamental to people’s daily lives. Agreements are constantly being entered into by individuals with other individuals, and by businesses with other businesses, to sell or buy goods and services, and to create rights and duties. A contract is simply an agreement binding in law between persons in which they promise to do something, or not to do something, or to deliver something. The law respects the rights of people to agree or contract about almost anything and will generally enforce these contracts, provided they are not illegal, immoral or impossible to perform. Niska and Zelda have been friends since 2003. Niska has been doing farming for the past six years whilst Zelda is the owner of a successful a catering business, named The Luciano, which she has established in 2000. On 12 January 2021, Niska and Zelda decided to enter into a written agreement (for a period of five years) in terms of which Niska has to deliver 100 kilograms (kg) of potatoes every Monday to Zelda’s catering business which is situated in the lush green suburbs of Edendale. For the past two weeks, Niska has failed to deliver 100 kilograms of potatoes to Zelda’s catering business. Zelda is extremely anxious as this is resulting in her losing a number of customers as she was unable to complete several customers’ orders. (Source: Kopel, S. 2017. Guide to Business Law. sixth ed. Cape Town: Oxford University Press).

Advise Zelda with regard to the requirements which need to be satisfied in order to ensure that a contract is valid. Question 2 (20 Marks) Zelda is aware that there are a number of special clauses which are commonly found in contracts such as the indemnity clause and non-variation clause. She would like to know more about such clauses. 2.1 In light of the above, identify and describe some of the clauses commonly found in contracts. (17 marks) Zelda has realised that the agreement between Niska and herself are lacking a number of these clauses. Would you advise to add in these clauses in agreements when contracting in the near future? 2.2 (3 marks) Question 3 (20 Marks) As mentioned above: For the past two weeks, Niska has failed to deliver 100 kilograms of potatoes to Zelda’s catering business. Zelda is extremely anxious as this is resulting in her losing a number of customers as she was unable to complete several customers’ orders. 3.1 In light of the above, advise Zelda whether this constitutes a breach of contract. (2 marks) Provide a discussion on FIVE (5) types of breach of contract that are recognised by South African Courts. 3.2.

When a breach of contract has been established, the aggrieved party may be entitled to cancel the contract, however there are other ways in which a contract will come to an end. Mention and discuss other ways in which a contract will terminate. Question 5 (20 Marks) Zelda is considering entering into an insurance contract in order to insure her catering business. Discuss the essentials of an insurance contract with Zelda.