Category Archives: Contracts

Five things to consider when entering into an agreement

DMK-a3BWhen you consider the role that agreements play in governing contracting relationships in business, it is apparent how important it is to ensure that the agreement adequately deals with the different eventualities that may arise. The following are examples of matters that should be considered when entering into an agreement.

Duration and Termination

Often parties neglect to stipulate the length of the agreement, whether it is for a fixed term or for an indefinite period, and to provide for the different ways in which it may be terminated.

An agreement may be terminated because the agreed time period for which it was to endure has come to an end, because one of the parties has failed to perform one or more of its obligations, because one of the parties has breached one or more of the terms of the agreement, or for convenience.

Additionally, an agreement should provide for the rights and obligations of the parties upon termination of the agreement; specifically whether any rights and obligations are to survive the termination of the agreement and whether any compensation or redundancy fees are payable.

Performance Criteria

When setting out the duties of the contracting parties, it is worthwhile to consider whether provision should be made for minimum standards for performance. To do so would bring certainty, as the expectations of the parties would be made express upfront, and this would make for a more harmonious contracting relationship.

Performance criteria can go hand-in-hand with termination, by allowing a party to exit the agreement if the other fails to meet the minimum standards, or they may set in motion remedial measures that need to be taken in order to ensure that goals are reached.

Should You Provide for Arbitration to Resolve Disputes?

In the event that your agreement contains an arbitration clause, this would oblige you to refer any disputes to arbitration. In such a case, if a party wishes to resist the referral of a dispute to arbitration, that party must show special circumstances why the parties’ choice of arbitration as a dispute resolution mechanism should not be respected.

The benefit of arbitration is that there may be a time saving in arbitration proceedings when compared to court proceedings, as the parties don’t have to adhere to court time periods or wait for long periods of time for the case to be heard. However, arbitration is more costly than court action, as the parties are required to pay for the venue for the hearing as well as the arbitrator’s fees.

Who Owns the Intellectual Property?

Intellectual property, or the creations of the mind, includes discoveries, inventions, product names and images associated with products, business knowledge and information.

Most transactions involve the use and/or creation of intellectual property, and as there is value therein, agreements should provide for the ownership of such intellectual property and if necessary, the transfer thereof. In the absence of agreement, the default position with regards to the ownership of intellectual property may not favour the parties.

Should you seek Legal advice?

The particular facts and circumstances surrounding transactions influence the terms of agreements, which is why there is no such thing as a generic, one-size-fits all agreement. It is therefore worthwhile to seek legal advice as to whether the terms of an agreement are suited to the circumstances and whether provision has been made for all reasonably foreseeable issues that may arise.

For more information please contact:

Mercia_BlogMercia Fynn
Associate
Department: Commercial
Merciaf@dmkisch.com
011 324 3025/33

Author: Mercia Fynn

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

Variation and Cancellation of an Agreement by Email

DMK-a3BAn agreement may be varied and cancelled via email, states the case of Spring Forest Trading v Wilberry (725/13) [2014] ZASCA 178.

Where an agreement provides for a variation or cancellation to be reduced to writing and signed by both parties, an email will meet the requirement of writing, and the typewritten names of the parties at the foot of their emails which are used to identify the parties will constitute signatures.

The case where a signature is requirement by agreement must be distinguished from the situation where a signature is required by law. Where the law does not specify the type of signature to be used, an ‘advanced electronic signature’, i.e. a signature which results from a process accredited by an Accreditation Authority, must be used.

For more information please contact:
Mercia_BlogMercia Fynn
Associate
Department: Commercial
Merciaf@dmkisch.com
011 324 3025/33

Author: Mercia Fynn

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.