What does it do?
Parties decide which court is competent to hear a specific case. When it comes to criminal matters serious matters cannot be heard by lower courts and must be referred to higher courts. When it comes to civil matters there are monetary limits to which courts can hear a matter.
The following monetary limits apply:
Small Claims Court – Up to R15 000.00
Local Magistrates Court – Up to R 200 000.00
Regional Magistrates Court – R 200 000.00 – R 400 000.00
Thereafter you usually must take your case to the High Court. The High Court can be much more expensive to litigate out of as you require the assistance of an advocate to present your case. You will now be paying for two rather than one legal counsel. For this reason we suggest and sometimes draft our Kleva Contracts, so that parties agree to the jurisdiction of the magistrates court even if the monetary value is higher than R 400 000.00.
Kleva Contracts sample wording:
he parties submit all their disputes arising out of or in connection with this Agreement to the exclusive jurisdiction of the Courts of South Africa
What does this clause do?
It outlines the circumstances under which parties may end their legal relationship and withdraw from any obligations under the agreement. Sometimes this is linked to the duration of the agreement, for example, if an agreement is for 12 months in duration it will terminate as soon as the 12 month period has passed.
However, if the agreement is not for a fixed term you will want to negotiate and decide how to exit the relationship. Termination clauses are often on notice (for example the parties may cancel the agreement by giving each other 30 days notice in writing) or on breach (for example the parties can exit the relationship if the other party has committed a specific breach).
You may also find that some contracts are drafted in a one sided manner only allowing one party to cancel the agreement on notice. Make sure that you discuss termination and record your decision in your agreement.
Real life example:
You are hired as a consultant for a six month period on a project for Engineering Co 5. Your contract terminates automatically after six months but also provides for termination on notice of at least two weeks, during which you must render services and be paid for those services, or they may terminate the agreement if you are in breach.
The Consumer Protection Act has changed the common law around termination of contracts by providing a wide range of cooling off periods especially if the agreement was entered into after direct marketing and it provides relief (section 14) for getting out of fixed term contracts such as cellphone contracts by giving 20 business days notice. A reasonable cancellation fee may be charged.
Kleva contract sample wording:
This Agreement shall automatically terminate on 1 July 2018.
1.1 Either party may also terminate this Agreement on two weeks’ written notice. The Consultant shall be paid for all Services properly rendered to the termination date.
1.2 Despite clause 1.1 above Engineering Co 5 may terminate this Agreement summarily for any reason valid in law or if the Consultant:
1.2.1 is guilty of conduct which is likely to bring Engineering Co 5 into disrepute;
1.2.2 is convicted of any offence involving dishonesty;
1.2.3 is convicted, whether in the Republic of South Africa or elsewhere, of theft, fraud or forgery;
1.2.4 is disqualified under any law from carrying on their profession.
1.3 Should either party breach any term of this Agreement and not remedy the breach within 7 (seven) days after receiving written notice to do so, then the innocent Party may, without prejudice to any other rights which it has either in terms of this Agreement or at law, cancel this agreement and claim any damages, which may have arisen out of the breach…
What does this clause do:
One of the first questions a person entering into a contract must ask themselves is: “what happens if the other person doesn’t perform or breaks their promises?”, for example by not paying or not delivering the goods.
The parties must decide what happens if they don’t perform or perform incorrectly and set out those requirements in writing. Usually the innocent party can ask for a remedy, such as termination of the agreement, damages and so forth, or choose not to carry out their part of the agreement.
To ensure fairness, a breach clause usually includes a requirement that notice must be given to the party who is in breach and that they must be given a period of time to perform, although the parties can also agree to immediate termination if there is a breach.
A breach clause also ordinarily lists some remedies for breach like “specific performance” or a claim for damages.
Real life example:
You order 20 bags of cement from a shop, ABC Hardware, which agrees to deliver to your home. You sign their terms and conditions and agree that the deal will be cash on delivery. They deliver 20 bags and you pay them cash. After they leave you realise they have dropped off 20 bags of fertilizer instead. You read the terms and conditions and write them a letter requesting that they remedy the improper fulfilment of the agreement within seven days, failing which you are entitled to cancel the agreement and request your money back.
Kleva sample wording:
1 If any party (the “defaulting party”) fails to comply with any provision of this Agreement on time, the other party (the “innocent party”) may notify the defaulting party in writing of such failure and demand compliance by the defaulting party of the relevant provision of this Agreement within 10 (ten) days of being notified.
2 The failure to comply with any provision of this Agreement, on time, is deemed to be a material breach of this Agreement. If the defaulting party does not remedy the breach within 10 days of being called upon to do so then the innocent party can, without prejudice to its other rights:
2.1 enforce specific performance of the defaulting parties obligations in terms of this Agreement;
2.2 claim any damages it has suffered as a result of the breach by the defaulting party or,
2.3 To cancel this Agreement without prejudice to any claim it may have for damages as a result of the breach by the defaulting party”