Parties enter into contracts on a daily basis. More often than not, we encounter a situation in which one party exercises dominance over the drafting of a contract. This leaves some in a disadvantaged position. Many people conclude contracts every day and a majority of them are unknowledgeable of what the contract actually entails.
Contracts are supposed to be a safety net for the parties if or when a contracting party is found to be in breach. However how can one rely on any provision of the contract if they do not understand their recourse?
What is a contract?
A contract is a legally binding agreement between at least two separate parties. In general terms a contract brings about certain obligations and duties and furthermore, creates specific rights.
In order for a contract to be regarded as legally binding, certain requirements must be met for the legal creation of same.
What are the requirements for a valid, binding contract?
- Parties must agree to the contract i.e. ad idem (a meeting of the minds);
- In order for a party to enter into a contract, they have to possess the necessary capacity to do so. This means that persons who are minors, incapacitated or who are under curatorship lack this capacity. In respect of corporations, only a person who has been given the authority to enter into an agreement on behalf of the company may do so. A contract that has been entered into by any of the aforementioned persons will be found to be void;
- Should it be necessary for certain formalities to be applied. Certain types of contracts require that particular formalities need to be complied with in order for the document to be legally binding. If these formalities are not complied the contract will not be considered valid;
- In the eyes of the law, a contract must be seen as legal. A contract cannot override legislation nor include terms or conditions which constitute illegal actions;
- Obligations and duties to be carried out as a result of the contract must be able be performed; and
- The contract must have clear and definite terms.
Can consensus be reached where content is not truly understood?
As all contracts are consensual in nature, it is of the utmost importance that both parties adhere to this requirement. However, it now brings about the question of whether the layperson would truly understand the content of the contract that they would be entering into. Should this factor be in the negative, can it be said that consensus has indeed been reached? The dominating contracting party quite possibly could rely on the fact that the layperson would generally skim over the content and proceed to sign the contract in any event. Because the layperson does not understand what they are reading, they simply sign the contract. It can therefore be regarded that there may not be a true 'meeting of the minds.' This too applies when a person wishing to enter into a contract sources the expertise of a professional drafter. A person may not understand all the content that has been included in his/her contract.
When considering all previous contracts entered into by parties who were unsure of the terms they agreed to, it can be questioned whether consensus was ever truly present. Perhaps the understanding is that – because the principle performance was understood by both parties regardless of any other terms present, a valid contract came into being.
For the masses
The majority of our population are not educated in the ways that require one to adequately understand the 'in's and out's' of a contract. Further, over 50% of the South African population are not proficient in the English language therefore, where a person struggles to speak the language, can we expect them to understand the written text? The repercussion therefore is that a lack of understanding will lead one to being bound by a contract to which they do not want to be bound to or cannot perform in terms of. Many a time a party will have to refer back to the agreement but will be unable to fully interpret any content that may be relevant.
Due to the above factor, it is important to note who the 'audience' (the persons who will be bound by the contract) of a particular agreement is. Lawyers are not supposed to make matters more complicated with long superfluous language but rather, should endeavour to simplify matters where it is evident that the majority of the parties involved require such simplification. Therefore, it should be the first port of call to practice with the objective to ensure concise understanding and interpretation. In that way, a party will enter into the contract fully aware of what is expected of them, what to expect from the other contracting party, what it entails to be in breach (if any) and possible available remedies afforded by the contract. It must be borne in mind that a person's day to day individual and business transactions cannot always revolve around the assistance or knowledge of a lawyer and it should be viewed that it is our duty to enable a party to be self – reliant / self – thinking in certain instances.
The plain language movement is something that has not fully come to the attention of many. Therefore, there are still advancements that are to be made in order to bring about this change into the drafting of legal documents as it relates in instances where laypersons are involved.
It can be said that the drafting skills and techniques of lawyers have been hardwired into them. Thus, when it comes to drafting, lawyers draft in a way that is understandable to them. However, it is not to say that drafting in plain text does not require any degree of skill. To be able to reduce the content in plain and simple language requires deep understanding of the principles being applied and the purpose behind them. As Elbert Einstein says, "if you can't explain it simply, you don't understand it well enough."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.