What does it do?

The point of an entire agreement clause is for it to be clear that the agreement does not include any terms not written down that might have been discussed during negotiations or that may have been included in past agreements between the parties or any subsequent representations made between them.

Real life example:

Abby purchases a car from a second hand lot cash.  She asks all the questions she wants answers to and then agrees on a price and fills out the necessary paper work, including a sales agreement.  Having signed the agreement she asks the sales representative whether the vehicle has a service plan included.  The sales person says that it does. This representation is made after the conclusion of the agreement and is not recorded in writing between the parties.  If the agreement has an entire agreement clause Abby will not likely succeed in trying to enforce the inclusion of a service plan.

Kleva Contract sample wording:

This Agreement is the whole agreement between the Parties. No terms or conditions not contained in this Agreement can be relied on.

What does it do?

The Waiver clause allows a party to strictly enforce its rights in terms of an agreement even if it has been lenient in the past, in other words, it confirms that leniency does not result in a waiver of its rights.  This is because a party may not always want to enforce all its rights under an agreement at a point in time but do not want to lose the right to do so later.

Real life example:

Llewellyn rents an apartment to his friend Tim. Their rental agreement states that the rental must be paid on or before the 25th of the month.  Tim pays late occasionally, usually around the 1st or 2nd of the month.  Llewellyn overlooks this and does not mention it.  Having a waiver clause in the agreement means that because Llewellyn has been lenient does not mean he cannot strictly enforce his right to payment on or before the 25th in the future or use any of the remedies in the agreement as a result of this breach by Tim.

Kleva Contracts sample wording:

WAIVER 

No waiver will constitute a waiver of rights in respect of any later breach of the same or any other provision

 

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”

 

What does this clause do?

It limits the liability of one or more parties for specific loses or the amount of the loss.

Generally in law you will be responsible for any failure to perform an agreed obligation or any loss that naturally arises out of any act or failure to act.  Because business involves risk parties will often agree to a limitation of liability clause to limit the loss that they will incur to each other if something goes wrong or if they don’t perform.

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The parties ability to limit their liability is limited by common law and legislation.  You cannot exclude liability for fraud or intentional acts by the contracting party for example.

Note: it is possible and quite common to have one sided limitation of liability clauses where one party excludes all their liability.

You will have different types of limitation of liability for example:

  • Excluding losses arising from the happening of certain events or if one of the parties doesn’t perform.
  • Excluding specific types of losses like consequential or indirect or unforeseeable harm;
  • Limiting the legal causes of action and the loss arising from, for example no liability arising out of delict, breach of contract or negligence.
  • Limiting the extent of liability for example to a maximum of the contract value or a monetary limit.

You should read these carefully to see what harm is excluded if something does go wrong.

Real life example:

You take your children a water park called Splash City.  The sign that is prominently displayed at the entrance and on your ticket states:

DISCLAIMER:   I/We enter Splash City and participate in any or all activities at my/our own risk and indemnify and absolve Splash Co (Pt) Ltd, its shareholders, directors, management and staff members of any damage or loss to my/our personal property, physical injury or death (or that of my spouse, children, family members). Splash Co will not be held responsible or liable for any accident or incident or resultant medical or emergency care or assistance including those listed/stated here.

Legislation:

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The Consumer Protection Act requires that any assumption of risk or limitation of liability is brought to the attention of a user when contracting. Make sure that you bring any indemnity clauses to the attention of the other party (if they are an individual or a company with a turnover less than R2million) or they may not be bound!  A good way to do this is to ensure that they sign along side it and to make sure that it is prominent.

 

What does this clause do?:

In an agreement one party (or both parties) agree to reimburse the other party for any harm or loss or to release the party from any liability when an event occurs.

In simple terms one party will agree to take on the loss for the other or step into their shoes if they suffer a loss or a claim from a third party.  Indemnities can be expensive so they should be read carefully so you know what you are taking on.  All indemnities will be different depending on the contract and the relationship between the parties.

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In some cases you might want to get insurance to make sure that you are covered if you have to indemnify the other party.

Real life example:

You are a designer and create a logo for Wizard Potato Chips.  In your agreement with Wizard you agree to assign all copyright to them and that you have not infringed the intellectual property of any third party in designing the logo.  You also agree to indemnify them against any claims by third parties against them for use of the logo and agree to defend the court case on their behalf.  When designing the logo you copied an existing logo from Slays Chips.

Slays sues Wizard for copyright infringement.  You would be required to defend the court case on their behalf, pay the legal costs and, if Slays wins the case, pay any damages awarded against Wizard on its behalf.

Legislation:

\"""""\"

The Consumer Protection Act requires that any assumption of risk or limitation of liability is brought to the attention of a party when contracting. Make sure that you bring any indemnity clauses to the attention of the other party (if they are an individual or a company with a turnover less than R 2 million) or they may not be bound!  A good way to do this is to ensure that they sign along side it and that it is prominently worded.

Kleva sample wording:

the First Party will indemnify the Second Party, against all losses, excluding any indirect or consequential losses, and all liabilities, claims, actions, damages, expenses reasonably incurred and costs (including legal fees) arising out of or related to any breach of this Agreement by the First Party or any of its Representatives

 

 

 

 

A warranty is:

A promise in an agreement by one party to another that all matters disclosed are true and will happen.

When will you use them:

A list of warranties that each Party gives to the other is useful in an agreement as you can then hold a Party accountable if a promise turns out to be untrue or a promise made is not fulfilled.

As most agreements contain “general law stuff” or boiler plate clauses which exclude any warranties not contained in the agreement or in writing between the Parties you want to have each Party explicitly state what they warrant in writing.  If a Party has made any promises to you which are not recorded in the Agreement the Party will not be obliged to fulfil them for example if when buying a car the sales person says “of course there is a service plan”, unless it is recorded it writing they won’t be bound.

Real world examples:

If you are entering into a Sale Agreement for a car you might want the seller to warrant they are the legal owner of the vehicle and/or have the right to sell the vehicle and pass ownership to you and that the car is not burdened in any way as security for a debt.

Sample wording from a Kleva Contract:

 “The Seller gives to the Purchaser the following undertakings and warranties ( “the Warranties”), that:

(a) the Seller is and on the Closing Date will be able to give free and unencumbered title to Asset to the Purchaser;

  • the Seller is and on the Closing Date will be the sole owner of Asset;
  • the Asset is, at the Closing Date, not subject to any hire purchase or credit agreement, lease, pledge, lien, hypothec, mortgage, notarial bond or other encumbrance…”
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