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    • The world is constantly evolving to allow for the continual progression of technological advancements, and with the advent of the internet the law
      has become more accessible than ever. The introduction of online legal agreements initially resulted in global legal uncertainty regarding
      whether electronic contracts concluded by electronic means can be recognized as valid and enforceable agreements.

      This article will provide a broad overview of the requirements necessary for an effective agreement concluded electronically as well as the extent
      to which the existing rules of the legal system are applicable to the formation of an electronic agreement.


  • 1. Agreement meaning

    • 1.1 How to draw up a legal contract

      • There are numerous websites on the internet that provides for legal contract template / agreement templates that can be used in either the
        business or personal environment. Most of these websites cater for countries outside South Africa and at a cost.
        The FREE contracts provided on this website is specifically for South African's by South Africans.
        With no cost to download and use as per your requirements. These boiler-plate forms
        appear to be a cost effective means of avoiding hefty legal fees. However, you must be cognisant of whether the online agreement
        you enter into is in fact legally binding upon any and all parties involved thereto. To confirm this for your specific requirements, ask one of our attorneys to assist you with your contract.

        Download the contract and submit it online to an attorney by selecting the specific legal authority category and location for further assistance, on www.LawyersEzyFind.co.za


        Consequently it is important to understand what the core essence of an agreement is, without which, it would be rendered invalid.
        This is conveyed by briefly exploring the elements of a valid agreement1, as follows:

        1.1.1 An legal agreement template consists of an offer by the offerer (seller/ service provider) to the offeree (buyer/client) to buy goods or services for an agreed price or fee;

        1.1.2 The legal agreement template becomes binding when the offeree accepts the offer;

        1.1.3 There must be an intention to contract freely and voluntarily;

        1.1.4 The parties wishing to conclude a legal contract must have the necessary mental and contractual capacity, and the parties
        must be 18 years or older (unless assisted by parent/guardian);

        1.1.5 The legal agreement template must be lawful and not prohibited by statute or common law; and

        1.1.6 The legal agreement template must have definite or determinable content so that the obligations thereto can be ascertained and enforced.

        Provided that the abovementioned elements are fulfilled the legal contract template / legal agreement template you wish to conclude, whether written or electronically, should be considered valid and enforceable in law.

        ___________________________________________________________
        1 Hutchison and Pretorius The Law of Contract in South Africa (2012 ) 6

        1.1. What is a lease agreement?


        A lease agreement is a reciprocal contract in terms of which the lessor undertakes to grant to the lessee the temporary use and
        enjoyment of a thing, wholly or in part, in exchange for compensation.

        The object being leased – any movable, immovable, corporeal or incorporeal available on the market may be leased. The parties
        must be in agreement as to the subject matter of the contract. The object must be determined or determinable at the time the contract is concluded.

        Compensation – the parties must agree on a determinable amount for compensation.

        Duration of the lease – the period of the lease must be temporary. The lease period can be indefinite, where either of the parties can
        terminate the agreement with the necessary notice.

        There are three types of lease agreements recognised in South African law:

        • leasing of movable/immovable property;
        • leasing and hiring of services;
        • leasing and hiring of work to be done.

        1.2. What is a service level agreement?



        A service level agreement is an agreement or contract between an organization and their service provider that sets out the obligations
        and expectations of the relationship.

        Importance of having a service level agreement in place: • It sets out clear and measurable guidelines – the agreement
        should the record the common understanding between the service provider and the customer. This results in an amicable
        relationship between the parties.

        • Recourse for failure to perform obligations – the agreement should provide the consequences for failure of the service
        provider to perform their obligations under the agreement.

        • Peace of mind – having a written contract ensures that the parties are able to enforce their rights more easily.

        A service level agreement is a type of contract and the law of contract is therefore applicable to such agreements.

        1.3. What is a prenuptial agreement?



        A prenuptial agreement, also known as an antenuptial agreement, is a legal contract that regulates the terms and conditions of a
        marriage between prospective spouses. The contract must be entered into prior to the marriage in order to be valid.

        A prenuptial agreement can either include or exclude the accrual system.

        An agreement excluding the accrual system entails that one spouse will not have a claim against the estate of the other spouse
        in the event of dissolution of the marriage.

        An agreement including the accrual system entails that both parties share in the accrual (growth) of the other’s estate from the
        commencement of the marriage until the dissolution of the marriage. Each party will be entitled to exclude the value of the
        estate which he/she brought into the marriage and only share the accrual during the marriage.

        1.4. What is the Paris Agreement?



        The Paris Agreement was adopted by 195 countries on the 12th of December 2015 at the 21st session of the Conference of the
        Parties to the United Nations Framework Convention on Climate Change (UNFCCC CoP21) held in Paris from 30 November 2015 to 13 December 2015.

        The agreement was adopted to address climate change and its negative impacts, and aims to substantially reduce global
        greenhouse gas emissions in an effort to limit the global temperature increase.

        The agreement was the product of eight years of negotiations, starting in Bali in 2008. The impacts of climate change have
        become increasingly visible over the last years, with extreme weather events from floods to droughts reoccurring more
        frequently. The urgency and pressure to finally conclude a meaningful and effective global climate agreement was palpable
        throughout the meeting in Paris.

        After overcoming many different hurdles the negotiators came up with a final agreement that could be adopted by consensus aimed
        at combating climate change and adapting to its impacts.

        1.5. What is a credit agreement in terms of the National Credit Act?



        In order for the agreement to be classified as a credit agreement for purposes of the National Credit Act 35 of 2005 it must have
        two essential characteristic. Firstly, credit must be extended with some deferral of repayment or prepayment and secondly, the
        credit provider must impose a fee, charge or interest with respect to deferred payments, or the credit provider must give a discount with respect to prepayment.

        Three types of credit agreements are distinguished in the Act:

        • A credit facility – this is a cheque account overdraft, a credit card or retail store card limit or a line of credit.

        • A credit transaction – this is a form of payment deferral that attracts fees, charges or interest with respect to the deferred payment.

        • A credit guarantee – this is an agreement where the guarantor agrees to pay what another person owes in terms of a credit
        agreement should the debtor default.

  • 2. Is a verbal agreement legal?

    • It is strongly recommended to have a written agreement drawn up as verbal agreements offer little to no definitive record of the details of the
      agreement discussed between the parties. However, verbal agreements are no less binding than written agreements, and are recognised in
      South African law.

  • 3. The legal validity of e-commerce / online legal agreement between two parties

    • The term e-commerce or electronic commerce is defined as an agreement/contract concluded wholly or in part through
      communications over computer networks, by email, through websites, by electronic data interchange and other electronic
      combinations2.

      This type of agreement falls into three broad categories. Firstly, the sale of physical goods, which mostly arise when a website on the
      internet is used as a modern day cyber shopping mall. The second category is the legal contract for the supply of digitized products, such
      as software or multimedia products. The last category is the supply of services and/or facilities, such as video conferencing or giving of
      professional advice over the internet.

      The principles of legal contract law apply to these online agreements and to be valid, they must comply with the elements of a valid
      agreement as outlined in paragraph 1.1 above.

      ___________________________________________________________
      2Smedinghoff Online Law: The SPA’s Legal Guide to doing business on the internet (1996) 79

  • 4. The basic structure of a contract

    • A legal contract template will typically contain the following clauses3:
      lease agreement template, service level agreement, offer to purchase template also refered to otp contracts,
      loan agreement template all follow the same structure.
      3.1 parties to the contract – identify and describe the parties accurately to avoid any uncertainty;

      3.2 the nature of the legal contract and the heading – the content of the contract will indicate its nature;

      3.3 recitals and preambles – this is not compulsory but it may be helpful to explain the background of the legal contract;

      3.4 date of agreement – the date on which the agreement was signed;

      3.5 sequence of clauses – this will affect how the legal contract is understood;

      3.6 specific clauses – the breach clause, exemption clause, guarantees and warranties, suspensive clause (contract is
      suspended until an obligation is fulfilled) and resolutive clause (contract is terminated upon fulfilment of the obligation);

      3.7 general clauses – amendments, delegation (transfer of rights), waiver, domicilia citande et executandi (address
      where legal notices can be sent), jurisdiction, alternative dispute resolution;

      3.8 signatures – signature blocks for both parties and the witnesses should be used at the end of the legal contract.
      Generally, there are no set legal rules or requirements that require contracts to be drafted in a particular way. Therefore, it must be
      noted that the format and structure of a contract, as set out above, will merely serve as a guideline to providing contractual documents
      with a clear and logical framework.

      ___________________________________________________________
      3 Hutchison and Pretorius The Law of Contract in South Africa (2012 ) 395

  • 5. Online media statistics in South Africa4

    • 5.1 The table below depicts the percentage of internet users in the South African population for the current year as well as
      internet users who search for products and templates online.

      Item

      Percentage

      Year

      Internet users

      71.4% of the population

      2020

      Internet users searching products and templates online

      43% of the population

      2020

      5.2 The diagram below depicts the statistics of the average website that provides online templates for either business or
      personal use. The diagram shows us the sheer volume of templates that have been downloaded, and this number
      continually elevates.

      When using these online templates there are a few considerations to keep in mind. Firstly, reading through a template will highlight
      most of the important issues that need to be addressed. However, there are key provisions that should be prepared by an attorney
      that is not provided for in the template.

      Secondly, you need to be cautious when changing any clause in the template. Generally, changing one clause in the template will
      require additional changes to be implemented, and a failure to make such changes could result in the agreement becoming
      ambiguous, contradictory or even unenforceable.

      ___________________________________________________________
      4www.statista.com

  • 6. Online contracting: Germany vs. United States vs. South Africa

    •  

       

      Governed by:

      Requires:

      Restrictions on electronic legal contracting

      Germany

      German Law

      Valid offer and acceptance

      ·       Acquiring shares in a company

      ·       Purchasing property

      United States

      Uniform Electronic Transactions Act, 1999

      Valid offer and acceptance

      ·       Purchasing property

      ·       Suretyship agreements

      South Africa

      Electronic Communications

      and Transactions Act 25 of 2002

      Valid offer and acceptance

      ·       Purchasing property

      ·       Execution of a will

      The table above provides us with a basic understanding of a few similarities we share with other countries in the e-commerce field.
      The alignment of the South African law with international law and instruments will ensure global legal compliance. The adoption of
      useful legal principles from other jurisdictions, such as the United States, may be a way forward from our rigid approach to electronic contracting.

  • 7. Electronic Communications and Transactions Act

    • The passing of the legislation of Electronic Communications and Transactions Act5(hereinafter referred to as “the ECTA”)
      initiated the basic premise that digital communications are no less valid than paper-based communications.

      The main aim of the ECTA is to promote legal certainty in respect of electronic communications and transactions. It has
      fully entrenched the position that digitally negotiated and electronically signed legal contracts are fully valid and enforceable.6

      However, it needs to be noted that the ECTA provides for four different instances where the electronic signing of an agreement
      would be invalid:

      7.1 Concluding an agreement for the alienation (disposal) of immovable property;7

      7.2 Concluding an agreement for a long term lease of immovable property in excess of 20 years;

      7.3 The execution of a bill of exchange as defined in the Bills of Exchange Act;8

      7.4 The execution, retention and presentation of a will or codicil as defined in the Wills Act.9

      South African courts and commentators still have the obligation of exploring the issue and restrictions of an electronic signature as
      contained in the ECTA and whether the stringent requirements of an advanced electronic signature may have to be done away with.
      If there is one thing that the national lockdown has highlighted, it is the need for South African law to recognize electronic signatures to
      authenticate important legal documents.

      ___________________________________________________________
      5 Act 25 of 2002
      6S. Mason Electronic Signatures in Law (2012)
      7Alienation of Land Act 68 of 1981
      8 Act 7 of 1953
      9 Act 34 of 1964
      10 Hance and Balz Business and Law on the Internet (1997) 164

  • 8. Agreement synonym : Shrink-wrap, Click-wrap and Web-wrap Agreements

    • As a result of the leaps we have taken in the development of technology we are required to take note of special procedures
      that have been established on the internet for purposes of legal contract formation. One of these procedures is the electronic
      data interchange (“EDI”).

      EDI was developed by trade partners who wished to trade in a secure environment using specialised computer networks.10EDI
      entails a highly structured form of messaging and pre-determined fields as well as an ongoing relationship whereby the parties
      usually have an interchange agreement in place which sets out the basis for the exchange. Hence EDI contracts are undoubtedly
      valid legal contracts and are binding on both parties.11

      More recent developments include agreements with an electronic agent: shrink-wrap, click-wrap and web-wrap agreements. Often
      when a legal contract is concluded online, either through a website or by e-mail, terms are incorporated into it through the use of these
      so-called click-wrap and web-wrap agreements.

      A shrink-wrap agreement, also known as ‘blister pack’ agreements become valid and enforceable when the plastic
      shrink wrap is broken and/or the software package is installed.

      Akin to the concept of shrink-wrap agreements are the click-wrap agreements, which are also known as ‘web wrap’ agreements. If
      an online consumer wishes to purchase products offered through an e-shop he/she will be instructed to ‘click’ on certain icons
      indicating his/her acceptance of the terms.

      Despite the fact that no common law exists to confirm the validity and enforceability of such agreements section 22(1) of the ECTA
      states that an agreement is not without legal force and effect merely because it was concluded partly or in whole by means of
      data messages.

      Furthermore, Section 24 of the ECTA provides for the valid expression of intent to make an offer or acceptance by means of
      a data message (information generated, sent, received or stored by electronic means) and is not without legal force merely
      because it is in data form and without an electronic signature.

      In practical terms, you can download an electronic contract from a website and use the “sign and scan” approach whereby the
      parties sign, scan and email the contract in order to have a physical copy on hand. Our law allows for electronic signatures
      and electronic records to have the same legal effect as physical (or wet ink) signatures and physical records.

      The recognition of online agreements has paved the way for organizations to move towards operating in a paperless
      environment and take advantage of the simplicity that comes with concluding contracts electronically.

      ___________________________________________________________
      10 Hance and Balz Business and Law on the Internet (1997) 164
      11 Hofman J. Cyber Law: a guide for South Africans doing business online (1999)

  • 9. Jurisdiction over online legal agreements

    • Jurisdiction is the legal term used to describe the power or competency of a court to hear and decide disputes.12 In order for
      the court to exercise jurisdiction there are two requirements that must be satisfied. Firstly, the court must have the authority to hear
      the matter (a link between the court and the parties in the matter or the cause of the matter), and secondly the court must have the
      power to enforce its judgment (the court should only exercise jurisdiction if compliance with its judgment can be expected).

      Electronic commerce, however, by its very nature is transborder. It does not acknowledge geographical borders or jurisdictional
      principles that recognise state, unions and trade areas but only networks, domains, servers and clouds.

      The general rule is that a contract must be determined according to the lex loci contractus (law of the place where the contract is
      made)of the last legally relevant act.

      The ECTA adopts the reception theory for receipt of electronic communication, meaning that contracts are formed at the time
      when, and place where, the offeror receives acceptance of the offer, but acceptance of the offer does not have to come to the
      knowledge of the offeror for a legally binding contract to arise. This theory applies to prevent any disadvantages to the offeree.

      However, it is important to note that jurisdiction will remain a worldwide legal uncertainty as there may be instances where one
      or more parties to the online agreement are in different jurisdictions.

      It would be in the interest of all states in the world to draft another model law that specifically deals with disputes arising from
      contracts concluded or delicts committed on the internet.

      ___________________________________________________________
      12Ewing Mcdonald & Co v M & M Products Co 1991 (1) SA 252 (A)

  • 10. Model Law on Electronic Commerce (1996)

    • The Model Law on Electronic Commerce (hereinafter referred to as “MLEC”) was the first legislative text to adopt the fundamental
      principles of non-discrimination, technological neutrality and functional equivalence that are widely regarded as the founding
      elements of modern electronic commerce law.

      The principle of non-discrimination ensures that a document would not be denied legal effect, validity or enforceability solely on the
      grounds that it is in electronic form.

      The principle of technological neutrality mandates the adoption of provisions that are neutral with respect to technology used, which
      aims to accommodate any future development without further legislative work.

      The functional equivalence principle lays out criteria under which electronic communications may be considered equivalent to paper- based
      communications. It sets out the specific requirements that electronic communications need to meet in order to fulfil the same purposes and functions of the traditional paper-based system.
      The MLEC aims to facilitate the use of e-commerce by removing legal barriers to electronic transacting. It prescribes the
      procedures that may be interchanged into national laws to provide equal treatment for both paper-based document users as well as
      computer-based information users.

  • 11. Conclusion

    • In our technologically advanced era the law has now entrenched the recognition of electronically concluded agreements which is in
      line with the execution of valid legal acts. However, these new paradigms give rise to legal challenges which are caused by legal
      aspects of electronic commerce and thereby necessitates the need for legal regulation.

      It would be most beneficial to draft a standardized model law based on electronic contracts which would be applicable to all the
      different jurisdictions of the world. This would lead to a reasonable structure of legal contract formation in e-commerce with respect to the
      borderless nature of the internet.


      ___________________________________________________________
      Hi, I’m Kailash Pillay, an attorney from the city of Johannesburg. My passion for the law
      stems from a desire to improve upon the lives of the vulnerable who fall prey to a
      corrupt system.
      I studied at the University of Johannesburg where I obtained my Bachelor of Laws
      degree, the starting point to the long journey of becoming a legal practitioner.
      This profession has taught me to persevere through the complexities of the law and to
      continually develop my skills as a legal professional.