General principles of contracts series; (part 9) formalities

A "formality" is a procedural requirement, imposed by the law, that has to be adhered to for a contract to be binding. Some examples of this might be that the contract must be in writing, that it must be registered at a particular office, that it must be published in the Government Gazette, that it must carry a revenue stamp, and so on.

The starting point, however, is this: as a general rule, no formalities are required for a valid contract to come into existence. Please note that it is a myth that oral contracts are invalid - as a general rule, oral contracts most certainly are binding (even if they are more difficult to prove than written contracts). That is the rule, therefore any formalities imposed by law are the exceptions, and these exceptions are usually brought in by legislation (acts of parliament).

The most important exceptions (i.e. contracts that do require formalities in South African law), for our purposes, are the following:

I) transfer of copyright: in terms of the Copyright Act 98 of 1978, the sale, transfer or alienation of a copyright must be in writing. That means that, unlike most contracts, a verbal agreement to transfer the Copyright in your song to someone else is not binding. The contract does not come into existence until it has been written and signed;

II) transfer of immovable property: an agreement to sell a piece of land or a building must be reduced to writing, signed and registered before it is valid;

III) suretyship: (the assumption of someone else's debt if they cannot pay it). This contract must be in writing.

And thus ends our discussion on the five requirements of a valid contract, namely consensus, capacity, physical possibility, legal possibility and (where necessary) formalities. In the next instalment of the series, we move on to the rest of the law of contract.