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Welcome back to another chapter of DID YOU KNOW? where we breakdown everything business and finance simply for SMEs to understand. In this three-part miniseries we focus on the legal side of your small business so that you are protected from service providers, corporates, government (tenders), and supply chain suppliers.  No matter what business you are running every entrepreneur needs to have basic legal knowledge.

So sit back, relax, and get ready to be schooled in the art of business law that will make you a formidable entrepreneur when it comes to knowing your rights as a small business owner in South Africa.  Whether you are small or medium, working in any profession, you should be protected from others who would find ways to be dishonest.

We have broken it down into three different categories:

  • Contractual Law
  • Commercial Law
  • Intellectual Property Law


The history of contract law dates back to Ancient civilizations – Ancient Greek and Roman to be more specific. Plato devoted little attention to forms of an agreement but recognised the same basic categories for canceling agreements as exist today. Roman law identified discrete categories of a contractual transaction, each with its own requirements, which needed to be fulfilled for promises to be enforced. The general kind, stipulation, required various words to be used to generate an obligation or a contracts letters where it could be written down. There were four categories of consensual agreement, and four kinds of contracts creating property rights, such as a pledge or a secured loan. More than appeared from the general rules in Ancient Greece, Roman law represented an early division between specific kinds of contract, depending on the transaction’s nature.

The history of contractual law is one of complexity so I have just briefly highlighted who we can thank for the concept of contract law.  If you wish to know more about the subject matter you can use the link below to gain a deeper insight into a very fascinating subject for your small business.

For additional information: Click Here

What is contractual Law?

Contract law provides a legal framework within which persons can transact business and exchange resources, secure in the knowledge that the law will uphold their agreements and, if necessary, enforce them. The law of contract underpins private enterprise in South Africa and regulates it in the interest of fair dealing.

When it is used?

A contract often goes through a negotiation process that ensures both sides are getting the best deal possible.  Good negotiation should lead to a mutually successful outcome that prevents conflicts down the line and sets the foundation for a strong partnership moving forward.

Why should you use it?

They serve as a record of commitments for both parties.  At their very core contracts are a relationship between two parties who agree to work together and forge a connection that if fostered well and is beneficial to both sides can last years. A contract is the visual representation of that relationship.   Contracts also hold each party to their original agreement.

Different types of contracts for small business:

If you’re a business owner, you’ll come across several types of business contracts, covering everything from equipment leases to employment agreements. However, most business contracts fall into one of three categories: general business, sales-related, and employment.

General business contract:

  • Partnership Agreement
    • A partnership agreement spells out the relationship between partners, as well as their individual obligations and contributions to a business.
  • Indemnity Agreement
    • An indemnity agreement is a contract in which one person agrees to indemnify, or “hold harmless” another person for damages resulting from a specific agreement. For example, a kennel owner might ask pet owners to sign an indemnity contract to prevent lawsuits if a pet is hurt by another animal at the kennel.
  • Non-Disclosure Agreement
    • Nondisclosure agreements give a business owner legal status if a vendor, supplier, service provider, independent contractor, or employee share proprietary or confidential information about your business
  • Property and Equipment Lease
    • These contracts spell out the terms and conditions of a lease for a building or piece of equipment, including monthly payment, deposits, terms, maintenance agreements, and other related items.

Sales-related contract:

  • Bill of sale
    • A bill of sale is a hybrid legal document that transfers the title of a piece of property and serves as evidence that a legal agreement (contract) was reached about the terms of the sale. For example, vehicles are commonly transferred via a bill of sale.
  • Purchase Order
    • A purchase order is a legally binding agreement that allows you to purchase an item or quantity of items at an agreed-upon price point and specifies the delivery date and payment terms.
  • Security Agreement
    • A security agreement pledges an asset or piece of property as collateral to secure a loan. In the event of a default, the asset is forfeited to the lender.

Employment contracts:

  • General employment contracts
    • An employment contract spells out the relationship between you and your employee, including duration, compensation, benefits, grounds for termination, and any other issues that relate to your specific business such as ownership of work produced.
  • Non-compete Agreement
    • A non-compete agreement specifies a period in which an employee is prohibited from competing with your business once he or she leaves your company.
  • Independent Contractor Agreement
    • Government and corporations have strict criteria for determining whether a business relationship is with an employer/employee or an independent contractor. If you enter into a relationship with a person to provide a particular service or complete an individual project, you’ll likely need an independent contractor agreement that lays out the terms and conditions for that project or service.

We have all these contracts available as we have spent the time to have them drawn up for small business owners to use. We can provide training on how to best utilise these contracts for efficient business practice so let us know by e-mail to receive your contract bespoke to your business needs. We also believe that the following article will shed light on why contracts are so important in your business so why don’t you give it a read as well.

For additional information: Click here

We have come to the end of part 1 of this three-part miniseries and would like to express the following thought – South Africa has one of the best law systems in Africa and the world but we cannot seem to use it the way it was intended due to multiple reasons.  When it does work for a person or business there is a stigma attached to it so let’s do it right from the very beginning by putting the necessary steps in place to protect you, your business, and your family from any unforeseen danger, stay tuned and informed until next time.

Yvette Pugin

Yvette Pugin


A force to be reckoned with: Qualified Senior Bookkeeper with 40 years experience in Administration, both in Corporate and the SME space. Having started working in the 1980’s when computers were still a dream; her experience was gained with manual systems. After working with SME Suppliers in the corporate environment, it became apparent that there is a need for not only education, but system management for SME’s.