The consequences of contracts concluded by unassisted minors : a comparative evaluation

Watt, Ilze Jr (2012-12)

Thesis (LLM)--Stellenbosch University, 2012.

Includes bibliography

Thesis

ENGLISH ABSTRACT: It is a general principle of the law of South Africa that an unassisted contract of a minor is unenforceable against the minor. Although it binds the other party, the minor is not bound. The minor will only be bound if the contract is enforced by his guardian, or if the contract is ratified by the child after attaining majority. This implies that the other party is in a rather unfortunate position, since the effectiveness of the contract will remain uncertain until the guardian of the minor decides to enforce or repudiate the contract, or until the minor ratifies it after attaining majority. The other party may not resile from the contract during this interim period. Should it be established that the contract has failed, the question arises to what extent the parties are obliged to return performances made in purported fulfilment of the contract. In terms of the law of South Africa, the prevailing view is that these claims are based on unjustified enrichment. However, the extent of these claims differs. In principle, both parties’ liability will be limited to the amount remaining in its estate, according to the defence of loss of enrichment. But the application of the defence is subject to an exception that does not apply equally to the parties. Had the other party known or should the other party have known that the enrichment was sine causa, yet continued to part with it, he will be held liable for the full enrichment. However, this exception does not apply to the enrichment liability of minors. In other words, whether the minor knew or should have known that the enrichment was sine causa, he would still be allowed to raise the defence of loss of enrichment. Furthermore, the rules applicable to minors’ enrichment liability applies to all minors, and no scope is left to consider the specific circumstances of each minor. It is accepted that there are two competing principles relating to minors’ unassisted contracts. On the one hand, the law must protect the minor from his immaturity and lack of experience. On the other hand, the law must protect the interests of the other party. It will be seen throughout this study that the determination of how to balance these competing principles is not an easy task. The key aim of this thesis is to investigate the principles governing the unwinding of unassisted minors’ contracts in South Africa. A comparison will be made with the principles applied in other legal systems, in order to identify similarities and differences in the approaches and, to establish what underlies the differences in the various approaches. Germany, England and Scotland have been chosen for comparison for various reasons. First, they share some historical roots, and they represent three major legal traditions, namely the civil law, common law and mixed legal systems, of which South Africa also forms part. Secondly, both England and Scotland have experienced recent legislative reform in this regard, which implies that their respective legal systems should be in line with modern tendencies, and consequently they may provide a valuable framework for possible reform in South Africa. In Germany, although mainly regulated by rather older legislation, there have been interesting developments in the determination of consequences of failed contracts. Hellwege has argued that the unwinding of all contracts should be treated similarly, regardless of the unwinding factor. He has also suggested that in order to prevent the accumulation of risk on one party, and to ensure that the risk is placed on the person who is in control of the object, the defence of loss of enrichment should not be available to any party. His reasoning and suggestions is dealt with in more detail in this thesis. This study argues that the current strict approach applied under South African law regarding minors’ unassisted contracts needs to be re-considered. The current approach is dated and is not in line with modern tendencies and legislation. No proper consideration is given to minors’ development into adulthood or personal circumstances of the parties. It is submitted that in the process of re-consideration, some form of acknowledgement must be given to minors’ development towards mature adults. It is submitted that this would be possible by introducing a more flexible approach to regulate the enforceability and unwinding of minors’ unassisted contracts.

AFRIKAANSE OPSOMMING Dit is ‘n algemene beginsel van die Suid-Afrikaanse reg dat ‘n kontrak aangegaan deur ‘n minderjarige sonder die nodige bystand van sy ouer of voog onafdwingbaar is teenoor die minderjarige. Die minderjarige sal slegs gebonde wees indien die kontrak afgedwing word deur sy voog, of indien die minderjarige self die kontrak ratifiseer nadat hy meerderjarig word. Dit impliseer dat die ander party in ‘n ongunstige posisie is, aangesien die werking van die kontrak onseker is totdat die voog besluit om die kontrak af te dwing of te repudieer, of totdat die minderjarige dit ratifiseer nadat hy meerderjarig word. Gedurende hierdie interim periode mag die ander party nie terugtree uit hierdie kontrak nie. Sou dit bepaal word dat die kontrak misluk het, ontstaan die vraag tot watter mate die partye verplig word om prestasies wat reeds gemaak is, terug te gee. In terme van die Suid-Afrikaanse reg is die meerderheidsopinie dat hierdie eise gebaseer is op onregverdige verryking, maar die omvang van die partye se eise verskil. In beginsel is beide partye se aanspreeklikheid beperk tot die bedrag wat steeds in sy boedel beskikbaar is, weens die beskikbaarheid van die verweer van verlies van verryking. Maar die toepassing van die verweer is onderworpe aan ‘n uitsondering wat nie op beide partye geld nie. Indien die ander party geweet het of moes geweet het dat die verryking sine causa was, maar steeds afstand gedoen het van die verryking, sal hy aanspreeklik gehou word vir die volle verryking. Hierdie reel is egter nie van toepassing op die minderjarige se verrykingsaanspreeklikheid nie. Met ander woorde, indien die minderjarige geweet het of moes geweet het dat die verryking sine causa was, en steeds afstand gedoen het van die verryking, sal hy steeds die verweer van verlies van verryking kan opper. Bowendien, die reels van toepassing op minderjariges se verrykingsaanspreeklikheid is van toepassing op alle minderjariges, en geen ruimte word gelaat om die spesifieke omstandighede van elke minderjarige in ag te neem nie. Wanneer ons kontrakte aangegaan deur minderjariges sonder die nodige bystand, oorweeg, word dit algemeen aanvaar dat daar twee kompeterende beginsels van belang is. Aan die een kant moet die reg die minderjarige beskerm teen sy onvolwassenheid en gebrek aan ondervinding. Aan die ander kant moet die reg ook die belange van die ander party beskerm. Dit sal deurlopend in hierdie studie gesien word dat die behoorlike balansering van hierdie twee beginsels nie ‘n maklike taak is nie. Die hoofdoel van hierdie tesis is om die beginsels wat die afdwingbaarheid en ontbinding van minderjariges se kontrakte in Suid-Afrika, wat aangegaan is sonder die nodige bystand van ‘n voog, te ondersoek. ‘n Vergelyking sal getref word met die beginsels wat in ander regstelsels toegepas word, om sodoende die ooreenkomste en verskille te identifiseer, asook om te bepaal wat hierdie verskille onderlê. Duitsland, Engeland en Skotland is gekies as vergelykende jurisdiksies vir verskeie redes, naamlik hulle historiese gebondenheid en die feit dat hulle drie groot regstradisies (die kontinentale regstelsel, die gemenereg en die gemengde regstelsel) verteenwoordig. Bowendien het beide Engeland en Skotland onlangse wetgewende hervorming ondergaan in hierdie sfeer van die reg, wat impliseer dat hierdie regstelsels waarskynlik in lyn sal wees met moderne tendense. Gevolglik kan hulle ‘n waardevolle raamwerk skep waarbinne moontlike hervorming in Suid-Afrika mag plaasvind. Alhoewel Duitsland grotendeels nog deur ouer wetgewing gereguleer word, het dit ook ‘n reeks interessante verwikkelinge ondergaan in die bepaling van die gevolge van kontrakte wat misluk het. Hellwege argumenteer dat die ontbinding van alle kontrakte dieselfde hanteer moet word, ongeag die onderliggende ontbindende faktor. Hy stel ook voor dat om te verhoed dat die risiko op slegs een party geplaas word, en om te verseker dat dit eerder gedra word deur daardie party wat beheer het oor die voorwerp, die verweer van verlies van verryking nie vir enige party beskikbaar moet wees nie. Sy redenering en voorstelle word in meer besonderhede in hierdie studie bespreek. Hierdie studie argumenteer dat die huidige streng benadering wat in Suid-Afrika toegepas word met betrekking tot kontrakte aangegaan deur minderjariges sonder die nodige bystand van ‘n voog, heroorweeg moet word. Die huidige benadering is verouderd en is nie lyn met moderne tendense en wetgewing nie. Bowendien word geen behoorlike oorweging gegee aan minderjariges se ontwikkeling tot volwassenheid nie, en die partye se persoonlike omstandighede word ook nie in ag geneem nie. Daar word argumenteer dat in die proses van heroorweging, ‘n mate van erkenning gegee moet word aan minderjariges se persoonlike ontwikkeling. Daar word verder argumenteer dat ‘n meer buigsame benadering toegepas moet word ten opsigte van die regulering van die afdwingbaarheid en ontbinding van hierdie kontrakte.

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