Generic Terms in Agreements

Generic Terms in Agreements

While it is not possible to be aware of every type of agreement and its related terms, it is recommended to be aware of some of the generic terms which often appear in contracts. While each contract’s content will differ depending on its context, the terms listed below are some of the more common terms. There are many sources available for template contracts that may be appropriate for smaller and less formal transactions. However, be aware that contracts are best drafted by professionals to cater to your individual circumstance.

Clauses detailing terms and conditions, as well as, rights and obligations should be clearly defined as well as the instances where they may be subject to change. Always be aware of terms and conditions – many people merely gloss over the terms without giving the necessary special attention. Legislation may also provide certain terms and conditions depending on the nature of the industry which can be administrative (filling in certain forms) and/or procedural – a common term relates to BBBEE requirements and state participation. Any changes to material contracts should also be catered for by having a clause or clauses which indicate(s) how effective amendments will be made. Often amendments on the contract itself would include initials being made by the contracting parties though it is recommended that amendments be detailed in a separate document and signed accordingly to avoid confusion.

A termination clause that terminates the rights and or obligations of a contract and should provide the instances whereby a party may terminate its obligations to the contract. In the case of labour law, such clauses may also provide that the terminating / terminated employee provide additional performance upon termination such as inventory schedules, schedules of accounts receivable and payable, reports, projections, etc. The termination process and reasons would also be included in this section. From an employer’s perspective, you may wish to have a detailed and proper institutional memory mechanism detailing where company information is kept, who has access to it and to provide for transferring structures.

Restraint of trade clauses may become more common with the advent of job migration (locally and internationally). Such clauses prevent a person/employee from carrying on with their profession and trade for a certain time over a certain geographical area. More complex and high-level occupations will often contain more stringent restraint clauses. The restraint must be related to a  relevant trade, namely, a clause restraining a car salesman from being a tailor would not likely be enforceable.

A restraint’s period will usually depend on the nature of the industry – longer commitments of customers will generally give rise to a longer restraint period while the instance of the business being of a fluctuating nature will not give rise to long restraint periods. Further, the geographic area may also depend on the employee’s influence on the company. The test to determine the reasonableness of restraint was set out in Basson v Chilwan and Others 1993 SA 742 (A) and asked –

  • Does the employer have an interest worthy of protection after the termination of the agreement?
  • If so, is that interest threatened by the employee?
  • Does such interest weigh qualitatively and quantitatively against the interest of the employee not to be economically inactive and unproductive?
  • Is there an aspect of public policy having nothing to do with the relationship between the parties that requires that the restraint be maintained or rejected?

Other terms include consequences for breach, duration of the contract, confidentiality, remuneration, governing laws, methods of service, and communication.

If you need any assistance in drafting or ensuring contract enforcement, do not hesitate to contact us to assist you.


Faure Swanepoel


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