6 Types of Contracts



HIRE PURCHASE CONTRACT/CONTRACT OF SALE

*This contract takes place between the buyer and a seller when a credit transaction takes place
*The seller undertakes to deliver the goods.
*The owner remains the buyer of the goods until the full price has been paid (last installment)
*If then buyer misses one installment, the buyer gives one months notice that the installment is due
*If the buyer fails to pay, the seller repossesses the goods and keeps all the installments paid as well

CREDIT AGREEMENTS WITH RETAILERS/CREDIT AN OPEN ACCOUNT

Retailers enter credit agreements and lay-bye contracts with customers
Agreement is done when customers don’t have cash to buy goods
Customers open an account and decides to the option of paying in six months interest free or 12months with interest
The retailer allocates maximum credit limit (amount that the customer cannot exceed when purchasing goods using the card)
The customer undertakes to pay installments regularly at agreed payment dates usually last day of the month
If the customer fails to pay the business immediately stops allocating the credit and can taken further steps, like handing the account to the debt collectors (i.e. lawyers)

LEASE OR RENTAL CONTRACT/AGREEMENT

· This agreement takes place between the owner of the property and the client who wants to use the property
· The following items are usually leased or rented out:
-buildings
-equipment
-vehicles
-ball gowns and costumes etc
-cell phones
· The client pays for the use of the item and does not obtain the owner’s rights
· Lease or rent fees are usually paid in advance i.e. beginning of the period (month)
· Such contracts are for a certain period and fixed amount of rent is paid to the land lord








RENT to BUY:

· Sometimes some items are leased or rented to be purchased at the end of a certain period

· The tenant is given an option of renting for a specific period which he/she owns after a certain period (e.g. Vodacom offers 24months contract and after that the client owns the phone)

CONTRACT WITH COMMERCIAL BANKS

· This is regarded as contract too, because
· When you open the savings account or fixed deposit with the bank, the bank undertakes to you’re your money safe and pays you the amount of interest agreed.
· The same way when the bank lends you money you undertake to pay back the loan and interest charged by the bank

CONTRACTS WITH THE GOVERNMENT

Government enterprises can also be part of the contracts i.e.:
· Municipality undertakes to deliver clean water regularly and community has duty to pay for the water used
· TENDERS:
The company who has won the tender to build RDP HOUSES on behalf of the government under takes to deliver the size and quality of houses at an agreed period
And the government undertakes to pay the building contractor an agreed amount for the houses built


EMPLOYMENT CONTRACTS

· Employment contracts are signed between the employer and the employee (worker)
· The employment contract should comply with or be based on legal rules.
· The following are the common laws governing employment:
1. Basic conditions of employment act (BCEA)
2. Labour relations act (LRA)
3. Employment equity act (EEA)
Common issues addressed by these laws include the following among others

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