Giving Color To A Silhouette - Enforcing A Verbal Contract | Legal Articles

 

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Giving Color To A Silhouette - Enforcing A Verbal Contract

Verbal contracts are recognized and binding in South African law. Nonetheless, it still remains the burden of the claimant to prove the existence of such a contract where disputes have arisen. This is not easy, as the party who is alleged to have breached the contract will certainly not give in to anything easily, but try to beat the allegations of the claimant by all means necessary.

A verbal contract is like a silhouette, you may see that there is something or someone standing over there, but it may be difficult or impossible to identify who or what exactly that is. It may be evident that the parties shook hands to some form of agreement, but the actual terms and conditions will be an uphill task to deduce with certainty.  

We strongly advise parties to reduce agreements into writing for obvious reasons e.g. certainty and ease of reference. However, in a case where a contract was concluded verbally, how do parties go about enforcing it? It is important to distinguish between contracts that are partially in writing and partially oral, and those that are wholly oral. The importance of this distinction will be realized further below.

Most written contracts contain the “whole agreement clause” and the “non-variation clause.” The former seeks to exclude any other terms outside the agreement that was signed, whilst the latter has the effect that should parties agree on newer developments after executing the original agreement, such updates may only become effective once reduced to writing and ratified by the parties as part of the original contract.

What then is the position when a party to a written contract relies on “verbally agreed” terms as part of the written contract? The Courts are guided by what is known as the Parol Evidence Rule, which basically says that where parties have reduced their agreement into writing, external evidence to add, modify or contradict that particular contract is inadmissible. In the case of Mike Ness Agencies CC t/a Promech Boreholes v Lourensford Fruit Company (Pty) Ltd (922/2018) [2019] ZASCA 159 the Supreme Court of Appeal upheld this position where a party relied on alleged verbal undertakings that contradicted the written contract.

It is important however to note that what the parole evidence rule prevents are verbal undertakings that seek to contradict, vary or alter the written agreement. Where the oral undertakings being relied on are merely supplementary to the written contract and not effectively modifying or contradicting it, the Courts may allow such as was upheld in the case of Affirmative Portfolios CC v Transnet Limited t/a Metrorail 2009 (1) SA 196 (SCA).

Each case therefore, is decided on its own merits.

With regards to wholly oral agreements, the claimant must prove the existence of such a contract first, then the obligations and terms that flow from it may follow thereafter. Proving the existence of a verbal agreement may require a credible witness, firstly, who can attest to its existence. Secondly, proof of communication between the parties after the conclusion of the verbal agreement may assist in proving its existence. For example, where parties entered into an oral agreement and then few days later communicated via emails, WhatsApp messages, recorded telephone calls etc, all these may help to prove the existence of the contract where it is disputed.    

These communications may also assist the Court to decide on the obligations that flowed from the conclusion of the contract, on a balance of probabilities. As an example, if the Plaintiff produces an email that says “I kept my end of the bargain, you need to deliver the car now,” and thereafter the Defendant replies “Give me time,” it may assist to prove the fact that the Plaintiff paid the purchase price for the car in the event the Defendant denies this fact.

Ultimately, it shows how important it is to reduce agreements into writing because in as much as parties trust and are excited about one another, the reality of life is that people change their minds. Close family members sometimes go against their own word when confronted by disadvantage sometimes.

 

We assist with a wide array of contracts from Commercial Contracts, Lease Agreements as well as Offers to Purchase amongst others. Our Litigation Department is manned by lawyers who have extensive experience in Contract Law. Our approach is comprehensive and professional.  

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The information and material published on this website is provided for general purposes only and does not constitute legal advice. We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages.

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