Hayzil and Michael conclude a written agreement of sale in terms of which Hayzil sells her car
Question:
Hayzil and Michael conclude a written agreement of sale in terms of which Hayzil sells her car to Michael for R 20 000, payable in five instalments of R 4000 each beginning July till December 2023. The parties agree that Hayzil will deliver the car to Michael immediately and that the instalments are to be paid at the end of each month. Hayzil received the contract from her lawyer who advised her that the contract is a standard contract of sale. Hayzil’s lawyer also informed her that the contract includes the following clause:
“11.5. No variation of the terms of this contract will be of any effect unless it is reduced to writing and signed by the seller and the purchaser.”
Both Hayzil and Michael read and signed the contract. They each kept a copy of the agreement. After paying four instalments, Michael informs Hayzil via telephone that he has lost his job and therefore he will only be able to pay R 1500 instead of the R 4000 as the final instalment. Hayzil feels sorry for Michael and orally agrees to change the total purchase price to R 17500. The parties do not record this variation in writing in the contract of sale. Three months later, Hayzil calls Michael to request the ‘other R 2500’. Michael is shocked by this and reminds Hayzil that she agreed to reduce the purchase price to R17500. Hayzil ended the phone call by threatening to institute legal action against Michael if he does not pay the R 2500 plus 20% interest in 30 days from date of call. Michael approaches you for advice as he is worried that Hayzil may be successful in a court of law if she institutes legal action against him for the R 2500 plus the 20% interest.
Required:
1 Discuss the general rule that applies to formalities and identify the type of formalities depicted in the above scenario.
2 With reference to case law and the relevant principle, fully discuss the legal effect of the parties’ non-compliance with clause 11.5 of their contract.
3 Based on your answer in 2 above, comment on whether Hayzil will be successful in a court of law if she proceeds to institute legal action against Michael.