Clearing Up Contractual Terms

Contracts

At some point in our lives we will inevitably all conclude some sort of contract, be it with a bank, a landlord or any number of service providers. All of these contracts will usually contain certain terms which, to many people, usually don’t make much sense. Below, are just some of the most popular ones to assist you in more clearly understanding the terms of a contract which you are agreeing to.

Wavier

“The Waiver”, “Non-waiver”, “No Waiver” or “Waiver and Extension” clause aims to ensure that when either party fails to hold up its side of the contract and the other party fails to enforce its rights in terms of the contract, the failure of the latter does not result in a waiver of those rights or remedies which they have when the breaching party breaches the contract.

A party to the contract may decide not to adhere to the provisions of the contract on any particular occasion, for example, the acceptance of late payments without insisting on a penalty. In an event such as this, this clause provides that the person who relaxed the terms does not waive its rights to insist upon strict compliance with terms of the contract in the future simply because it had deviated from the enforcement of those terms in the past.

Non-variation

“The Shifren”, “No Variation” or “Non-variation” clause is a clause in a contract which aims to ensure that any casual amendments to the contract are of no consequence.

A party to a contract may verbally discuss with the other party to the same contract to accept payment into a banking account which is not the one specified in the contract. Making such a verbal agreement does not amount to an amendment of the original contract and the original contract cannot be “varied” by such a verbal agreement.

Such a clause can sometimes allow for amendments as long as they are in writing. The use of this clause was confirmed in the S A Sentrale Ko-op Graanmpy Bpk v Shifren decided by the then Appellate Division (now called the Supreme Court of Appeal) wherein the Court held that such a clause does indeed protect the agreement from amendment where that amendment is not permitted by the clause. The use of such a clause usually prevents the so-called “he said-she said” argument by ensuring the amendments do not take place or only take place in writing.

Breach

A “Breach” clause goes by many different names, but will always deal with the breach of the contract in which it is contained. The breach clause will specify the terms which the parties abide by should either find themselves in breach of the contract.

Most frequently in some sort of credit or loan agreement, if the person which is to pay off the debt fails to do so, the person who has provided the loan or credit will be entitled to claim the entire amount owed at once.

Breach clauses are greatly varying in the terms which they set out, but will always set out the rights of the parties if a breach should occur.

Whole Agreement

A “Whole Agreement”, “Entire Agreement” or “Integration” clause sets out the scope of the agreement. This clause indicates to courts the intention that what is defined as the Agreement or Contract represents the complete and entire, or "Fully Integrated" agreement.

A fully integrated agreement is the opposite of a non-integrated, or a partially-integrated agreement in that it replaces or supersedes any earlier agreements between the parties. For the most part, a fully integrated agreement cannot be supplemented by additional terms. Furthermore, the integrated agreement already contains all the provisions and terms by which the parties deem to be bound by and any terms not contained in the agreement do not for part of the contract.

Severance Clause

The “Severance Clause” is aimed at attempting to keep the contract in tact should a court find that certain of the terms of a contract are contrary to law. Such a clause will usually state that each term in the contract is to be deemed completely separate and severable from the rest of the contract.

In using such a clause, the intention of the parties is that if a court should find that such a clause be contrary to law, it does not mean the whole contract is invalid and this clause may be removed without affecting the rest of the contract in any way.

There remain a multitude of clauses not explained above; these aim to only assist to grasping some of the most common terms. For assistance with any contractual queries, feel free to contact us so we may assist you in clarifying any concerns you may have about a contract you have, or will be entering into.