QUESTION 1
In 1975, Gin and Tonic got married whilst both had their domicile in England. In terms of the English Matrimonial Causes Act 1973, they were married ex lege out of community of property. In 2024, they visited South Africa and Tonic bought a flat (“voetstoots”) for speculation purposes from Dash without Gin’s consent. Shortly afterward, Tonic realised the property is a poor investment and has since refused to pay the purchase price. Dash now claims the amount due. Fully advise both Tonic and Dash on the capacity of a married woman to contract.
Find the answer to question 1 in the information below, don't forget to add case law as it is from the information:
(i) Capacity to contract
Authority aside, capacity to contract merits special treatment. After all, if one of the parties
lacks capacity to contract then there can be no contract and hence no proper law to use to
determine the contractual capacity of the parties. Moreover, it surely could not be right
that the prospective parties to a contract could by a judicious choice of proper law invest
themselves with capacities which they would otherwise lack.
Given that the proper law is not to govern, determination of the appropriate law is
nonetheless not easy. Contractual capacity as an incident of status ought in principle to be
determined by the personal law, viz the lex domicilii; but such a rule—at least in ordinary
commercial contracts—is highly inconvenient: a shopkeeper can hardly be expected to make
diligent enquiry into the domicile of each of his customers before contracting with them.
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Our old authorities seemed aware of this dilemma, for they spoke with an uncertain voice
on the question of capacity; but it appears that they recognized the need for flexibility and a
rule which varied from one type of contract to other types. Generally they vacillated
between the lex domicilii and lex loci contractus, with an exception in favour of the lex rei
sitae in sales of immovables.
The decided cases, too, have hardly left the law clear and settled. Although it has only
arisen once, in Ferraz v D’Inhaca, it appears that the lex rei sitae will govern in regard to
immovables. All the other cases have involved the sale, loan or donation of movables, and
have left the law unclear.
Hulscher v Voorschotkas voor Zuid Afrika concerned a loan of money contracted in the
Netherlands to a minor domiciled in the Netherlands; when sued for repayment, the minor
raised her incapacity. The court held that the question of the minor’s capacity was to be
determined by the Netherlands law, but since
the locus contractus coincided with the domicilium, the case is of little use in deciding
between the two connecting factors. But what the case did decide was that the proper
law of the contract—which in this case was (possibly) the Transvaal law, for that was where
the loan was to be repaid—did not determine capacity. Innes CJ argued that since the proper law depended upon the choice, or presumed choice, of the parties it could not determine
capacity; for if either lacked capacity, there could be no choice, and, therefore, no proper
law.
Kent v Salmon, the second case in which the question arose, concerned the
contractual capacity of married women. A storekeeper in the Transvaal who had sold goods
to a married woman unassisted by her husband, and had not been paid, sought to enforce
the contract against her, meeting her defence of incapacity with the assertion that since her
husband’s domicile (at marriage, at least) was English, she had a married woman’s
capacities under English law, in terms of which she was bound.
Smith J held, however, that ‘there are strong grounds for holding that in the case of
ordinary commercial contracts … the contractual capacity of the person entering into them is
to be decided, not by the law of the domicile, but by that where the contract is made’.
The learned judge thus went on to apply the Roman-Dutch law. Now what, of course, were
the contractual incapacities under Roman-Dutch law of a woman named under English law?
If she had married under Roman-Dutch law with an antenuptial contract excluding the
marital power, or if she had married under Roman-Dutch law without antenuptial contract,
the position would have been plain. But in the instant case it was unclear. Smith J, however,
considered her position under English law; he held that this was analogous to a wife who
has some property excluded by antenuptial contract from the community, but is otherwise
subject to her husband’s marital power. Such a wife is incapable of contracting without her
husband’s assistance; consequently the storekeeper lost.
It appears to me that Smith J here adopted a means of resolving the problem similar to
that advocated by Huber and Van der Keessel: distinguish between the status—which is
determined by the lex domicilii—and the consequences thereof, which are determined by the
locus actus.
The final case in which the issue arose was Powell v Powell. This concerned the
incapacity of spouses, under Roman-Dutch law, to make valid donations to
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each other. At the time of marriage the spouses had been domiciled in England, but they
subsequently acquired a domicile in South Africa. Thereafter, the husband made a gift of a
motor vehicle to the wife, which he now sought to revoke (as he was entitled to under
Roman-Dutch law); but she claimed the English law applicable, in terms of which the gift
was not revocable.
Ludorf AJ purported to apply the proper law, and came to the conclusion that the lex
domicilii at the time the gift was made governed, viz Roman- Dutch law; thus the gift
was invalid.
Well, what is to be made of all this uncertain authority? Van Rooyen suggests, subject
to certain exceptions, the adoption of a rule long advocated by Cheshire: the
application of the objective proper law, viz the law with which, irrespective of any choice by
the parties, the contract would be most closely connected if there was a contract. But this
suggestion is not without difficulty. Determining the objective proper law is an unpredictable
task and, especially in commercial contracts, certainty is a prime virtue. Van Rooyen’s
suggested exceptions—inter alia, that whatever the proper law might hold if the capacity
exists by the lex domicilii, then the contract is valid—do not make the outcome in any
particular case more predictable.
The rule of the lex loci contractus, however, although more certain, is also
unsatisfactory. Capacity to make some contracts, typically marriage settlement
contracts, which are intended to exist for a considerable period, and are intimately tied to
the personal life of the parties, ought to be governed by the personal law, rather than a
chance lex loci contractus. Moreover, in such contracts the parties ought to be aware of each other’s domiciles, and contract accordingly; they are unlikely to be taken unawares by a
surprise incapacity.
Anton shows that a distinction is drawn in Scots law between mercantile contracts—in
which capacity is governed by the lex loci contractus—and non-mercantile contracts, where
the lex domicilii prevails. This via media ensures that the shopkeeper is not caught
unawares, but that in marriage settlements, and similar contracts, the lex domicilii will be
applicable. There is considerable merit
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in this approach: it is clear, relatively certain, and it avoids the injustices of either extreme.
Moreover, it can readily be refined. Thus the predominance of the lex rei sitae in contracts
for the sale of immovables entails only the addition of an extra category: immovables where
capacity is governed by the lex rei sitae; non-mercantile contracts where the lex domicilii
prevails; and mercantile contracts where the lex loci contractus is predominant. In the
result, the South African cases were correctly decided: all concerned commercial contracts
and in all the lex loci contractus was applied; but Powell is incorrect inasmuch as it suggests
that the South African law applied as lex domicilii rather than as lex loci contractus; and, of
course, in Hulscher it was not decided which law applied when the locus contractus and domicilium differed.
Even where the lex rei sitae or the lex loci contractus is applied, it should not be forgotten that, as Kent v Salmon shows, it may be necessary to have regard to the lex domicilii inorder to determine the status of one of the parties, although the incidents of that status aredetermined by the lex loci contractus.Professor Kahn, however, suggests a combination of most of the approaches discussedabove: a party should be held to have capacity (at least as far as movables were concerned) if he had capacity under his domicilary law, or the lex loci contractus or the objective proper law.
In the case of Gin and Tonic, the issue of contractual capacity arises as Tonic purchased a flat in South Africa without Gin's consent. The capacity of a married woman to contract is determined by the relevant law, either the lex domicilii (personal law), lex loci contractus (law of the place where the contract is made), or the objective proper law (law most closely connected to the contract).
Based on the case law provided, particularly Kent v Salmon, it was held that in the case of ordinary commercial contracts, the contractual capacity of a person entering into them is to be decided by the law where the contract is made (lex loci contractus). In Kent v Salmon, the contractual capacity of a married woman was determined by the law of the place where the contract was made rather than the law of her domicile.
Therefore, in the case of Tonic and Dash, the capacity of Gin to contract regarding the purchase of the flat in South Africa would likely be determined by the law of South Africa (lex loci contractus) where the contract for the flat was made. As a result, Gin's consent may not have been necessary for the validity of the contract.
It is important to note that the determination of capacity may also involve consideration of the lex domicilii to determine the status of the parties, as seen in Kent v Salmon. However, the incidents of that status are ultimately determined by the lex loci contractus.
In conclusion, the capacity of a married woman like Gin to contract in the scenario involving the purchase of the flat in South Africa by Tonic from Dash would likely be governed by the law of South Africa (lex loci contractus) where the contract was made. Gin's consent may not have been necessary for the validity of the contract under South African law.