Common Law of Contract South Africa

The Common Law of Contract in South Africa: A Guide for Businesses

Contracts are an essential part of any business transaction in South Africa. Whether you are a small business owner or a multinational corporation, understanding the common law of contract is critical to your success.

What is the Common Law of Contract?

The common law of contract refers to the principles and rules that govern the formation, interpretation, and enforcement of contracts in South Africa. These principles are derived from judicial decisions in cases over the years and form the basis of the law of contract in the country.

What are the Requirements for a Valid Contract?

For a contract to be valid, it must meet four essential requirements:

Offer: One party must offer to enter into a contract.

Acceptance: The other party must accept the offer made.

Intention: Both parties must have the intention to create a legally binding agreement.

Consideration: Something of value must be exchanged between the parties, such as money, goods, or services.

It is important to note that a contract can be in writing or oral. However, certain contracts, like those for property transfers and suretyships, must be in writing and meet specific formalities.

What are the Types of Contracts?

There are several types of contracts in South Africa, including:

Sale of Goods: A contract for the sale of goods involves the transfer of ownership of goods from the seller to the buyer.

Lease Agreements: A lease agreement is a contract between the property owner and the tenant, where the landlord gives the tenant the right to occupy the property for a specific period.

Service Contracts: Service contracts are agreements between a service provider and a client for the provision of services, such as consulting, marketing, or cleaning.

Employment Contracts: Employment contracts are agreements between an employer and employee and outline the terms of employment.

What are the Consequences of Breaching a Contract?

If one party breaches a contract, the other party may seek damages or specific performance. Damages are compensation for the loss suffered, while specific performance is a court order to fulfill the terms of the contract.


Understanding the common law of contract is essential for any business to avoid legal disputes and protect their interests. Whether you are drafting a contract or enforcing one, it is crucial to consult with a legal expert to ensure compliance with the law. By understanding the requirements, types, and consequences of contracts in South Africa, businesses can make informed decisions and protect their interests.