By Aleshia van der Ploeg, Director VDP Legal Consulting (Pty) Ltd
When you sign an agreement, the general rule is that you are bound by what you sign – this is why it is very important that you read your contracts before entering into them and, whenever possible, appoint an attorney to assist you.
Contracts and agreements often contain standard terms that are meant to protect one party. These terms can be unfair to the other party. It is generally advisable to negotiate in order to exclude these terms, but even if you are unable to do so, this guide should help you identify them and to keep an eye out for them!
1. WARRANTY & GUARANTEE CLAUSES
This is a type of promise which provides assurance by one party to the other party that specific facts or conditions are true or will happen, ie: the party promises that the product will do what it is supposed to do. If you provide a ‘warranty’ or ‘guarantee’ in a contract and break such promise, you will be in breach of the contract.
EXAMPLE: “The Seller warrants that at date of signature hereof it is not aware of any factors in respect of its business, products, customer satisfaction or other dealings with its customers and suppliers that could negatively impact on the smooth and profitable operation of the Business.”
2. VOETSTOETS CLAUSE
A ‘voetstoots’ or ‘as is’ clause means that you are buying the goods as they appear. In other words, they exclude the seller’s liability for ‘latent defects’. A ‘latent defect’ is a problem with goods bought that existed when the parties entered the contract, which was not visible after a ‘reasonable’ inspection. Currently, the law protects consumers from latent defects, unless the seller has included a ‘voetstoots’ clause in the contract. It is important to properly inspect the goods before you buy them if there is a voetstoets clause.
EXAMPLE: “The Property is sold voetstoots in the condition in which it stands and the Seller gives no warranty with regard thereto, whether express or implied.”
3. ‘NO REPRESENTATIONS’ CLAUSE
A ‘no representation’ clause protects one party from the consequences of any statement they made before or after entering the contract with you. Often, when a party is trying to get you to sign a contract, they may say or do things to try to convince you to enter the agreement. Sometimes these statements are harmless, but sometimes they may be about an important part of the contract. If they later turn out to be untrue or misleading, such a party will point to this clause to protect themselves. Make sure you get any such statement or promise in writing!
EXAMPLE: “The Buyer acknowledges that it has not relied on any statement, promise or representation made or given by or on behalf of the Company which is not set out in the Contract or is not signed by an authorised representative of the Company”
4. NON-VARIATION CLAUSE
A ‘non-variation’ clause holds the parties to the written contract by stating that any change to the contract that is not in writing is not binding. It is important that if you wish to make any change to the agreement, to make sure you comply fully with the clause and do not simply accept the other party’s verbal permission.
EXAMPLE: “No alteration or variation of these terms and conditions shall apply, unless expressly agreed to in writing and signed by each party”
5. EXEMPTION/NON LIABILITY CLAUSE
A general exemption clause excludes or limits a party’s liability for many situations. These are often meant to protect the party from the consequences of their dangerous or careless conduct.
EXAMPLE: “In no event will the Company be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of the Company’s services, nor shall the Company be liable for any negligence on its part or that of its servants or agents in carrying out any of its obligations.”
Aleshia van Der Ploeg LLB (RAU) was admitted as an Attorney of the High Court in South Africa in 2006. She is a member of the Law Society of the Northern provinces. She has 10 years post-qualification experience in corporate, commercial, labour and general law. She practised as an attorney and served as a Director before forming her own consulting firm. www.vdplegal.co.za | Email aleshia@vdplegal.co.za
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The recent invasion of the Ukraine got me thinking about the affect war has on all our contracts as well as our insurance. Unfortunately war is never good news.