Case
law
Legislation
Examples
General Principles of Contracts
Valid Contracts
In
order
for
valid
a
1.
2.
3.
4.
5.
6.
7.
8.
The
The
The
a
contract
contract
parties
the
and
parties
have
must
parties
The
agreement
must
of
The
agreement
The
agreement
will
must
the
must
must
contractual
of
be
be
comply
be
to
each
other ;
;
;
contractual
obligations
with
certain
any
in
its
must
formalities ;
terms
have
contract ;
;
mind
same
requirements
it.
intentions
capacity
the
lawful
the
to
their
certain
,
enforce
to
intention
serious
law
in
refuse
communicate
must
The
Performance
a
binding
and
courts
have
must
parties
valid
be
to
be
possible ;
to
be
met.
All
the
requirements
must
be
met
,
if
one
requirement
is
missing
,
then
there
will
normally
not
be
Valid Contract
Crawley v Rex 1909 TS 1105
A shopkeeper advertised a certain brand of tobacco at a cheap price. Crawley (a customer) entered the shop and
offered to buy some, and the shopkeeper sold it to him. Crawley then came back later and offered to buy some
more. The shopkeeper refused to sell it to him. (The shopkeeper thought that as Crawley was buying so much
tobacco, that he must be buying it to set up some competing business.) Crawley refused to leave the shop without
the tobacco. And they got into an argument, which almost ended in a punch up!
Crawley argued that the advert was an offer and he was now accepting it and so there was a valid contract and the
shopkeeper had to sell the tobacco to him, or otherwise he would be in breach of contract.
The court held that the advert was not an offer. It was just an invitation to do business. Therefore, when Crawley
responded to the advert, he was the one making the offer, which the shopkeeper was entitled to reject or accept.
(You never have to accept an offer). So the shopkeeper did not have to sell the tobacco to Crawley.
One person says to another person, “If you can find me something decent to watch on Netflix, I will eat my shoe!”
Looking at the facts and the context, you would see that this is clearly a joke. The whole thing is totally ridiculous. There is no
contract and if the one person does find something decent to watch on Netflix, the other person won’t be in breach for not eating
their hat!
Tebello says to Sinikiwe, “Do you want to go to the movies on Saturday night?”
That is just a proposal, not a valid offer. So if Sinikiwe says yes, that is not an acceptance which will lead to a valid contract.
So if Tebello cancels the date, that is not a breach of contract and Sinikiwe can’t sue him. Obviously!
Carlill v Carbolic Smoke Ball Co (CSB) (1892) 2 QBD 484 (HL)
This is what the important parts said: “£100 reward will be paid by the Carbolic Smoke Ball Co. to any person who
contracts ... influenza (flu)...after having used the ... smoke ball according to the printed directions (3 x / day for 2
weeks). £1000 is deposited in ... Bank, showing our sincerity in the matter”
Mrs Carlill used the medicine as directed for more than 3 weeks and still got flu. She then claimed the £100 in terms
of the advert. The company refused to pay. Mrs Carlill took them to court and she argued that the advert was an offer
and therefore she “accepted” it by taking the meds as directed and still getting the flu. Therefore, there was a
contract between her and the Smoke Ball Company and therefore she must be paid the £100 or they would be in
breach. The court agreed with her.
Cliff v Electronic Media Network (Pty) Ltd (GJ) January 2016
Gareth Cliff was a judge on SA Idols. Each year he entered into a new contract with
them in this regard. On 4 January 2016 Cliff posted a tweet: “People really don’t
understand free speech”.
In light of recent social media and a range of publications, this was interpreted by many
as racist. M-Net then announced that Cliff would not be a judge on the 2016 season of
Idols as this statement was not good for their brand. The case did not deal with issue of
whether statement was racist. The issue before the court was: was there a contract in
existence with M Net and Cliff at January 2016 regarding him being a judge on Idols
2016. If so then M-Net had essentially terminated the contract “without due process”,
and they were in breach of their contract with Gareth Cliff.
M-Net argued that they had not yet signed the written contract and therefore no
contract existed and so there was no breach. Cliff said they had agreed on his fee, but
certain issues remained outstanding, for example the 10 days he needed off to go
overseas etc.
The court held a valid oral contract had been established. and the other issues not yet
agreed upon were merely “peripheral”, not essential terms.
So there was a valid contract between Cliff and M-Net for him to be a judge on Idols
2016.
Requirement
1
3
It
:
be
must
in
the
at
existence
time
is
it
accepted
Revocation
revocation
means
the
offer
any
attempt
2
the
the
revoked
at
any
has
if
it
offer
time
valid
a
by
the
to
prior
offeror
acceptance
will
acceptance
constitute
a
Can
not
hasn't
death
of
where
the
been
been
occur
accepted
offere
the
offer
within
accepted
is
,
valid
within
the
that
provided
at
reasonable
a
time
it
time
time
specified
acceptance
was
made
,
for
has
and
Rejection
express
counter
contract
:
acceptance
not
yet
then
later
In December 2021, Japan offers to host the Olympic Games in Tokyo in June
2022 = valid offer. But before the Olympic Organising Committee accepts the
offer, there is a Covid 19 outbreak in Japan and all international travel in and
out of Japan is banned until December 2022. So at that point, the offer is
legally impossible and so the offer is no longer valid, and cannot be accepted
by the Olympic Organising Committee.
3
of
breach
Offer
expires.
it
after
revoke
to
of
offer
of
be
can
Lapse
withdrawal
rejection
offer
Jo says to Sam, “Will you marry me?”
Sam says, “No.”
Express rejection, offer comes to an end.
Jo offers to sell her laptop to Sam for R3500. Sam responds by saying, “I
accept your offer, but I am only prepared to pay R3000.” Even though Sam
has used the word “accept”, he has not actually accepted Jo’s offer. Jo’s offer
was to sell the laptop for R3500 not R3000. So Sam has actually rejected Jo’s
offer.
if
such
taken
,
before
a
time
has
been
specified
place
it
has
been
accepted
,
it
A offers to sell his house to B. Before B accepts, A dies. The offer
is now expired and B can no longer accept it. But if B had
accepted the offer before A died, then there would have been a
valid contract of sale and the death of A has no effect on the
validity of the contract. The executor of A’s estate will just have to
sign all the paperwork transferring the house to B and the money
from B will go into A’s estate to be distributed to his heirs.
conflicts
with
one
of
the
essential
requirements
for
a
valid
contract
You offer to sell your business premises to Mr Green. Mr Green then decides to buy it jointly with Mr Blue,
and he and Mr Blue sign the acceptance. This is not a valid acceptance as was not accepted solely by Green
to whom offer addressed, but also by Mr Blue. So no there is no valid contract.
This seems strange, because it probably does not matter to you that the offer is accepted by Mr Green and
Mr Blue (instead of just Mr Green) and it probably does not in any way prejudice you. But that is the law.
Bloom v American Swiss Watch Co 1915 AD 100
American Swiss, a jewellery store, was robbed and some jewellery was taken. The company placed an
advert in the newspaper offering a reward to anyone who could provide information to the police
regarding the theft. Now, let’s stop here and think: was that advert an offer or just an invitation to do
business?
The advert was an offer (like Carlill’s case and the advert for the cat in the example above). Mr Bloom
had not seen the advert in the newspaper, but just because he was a good person, went to the police
with information he had about the robbery, and which helped them find the culprits. At some later
point, after he had given the information, Mr Bloom found out about the advert and the reward. He
then claimed the reward from American Swiss. But, American Swiss refused to pay him the reward.
The matter ended up in court. The court held that as Mr Bloom had not known of the offer (advert)
when he gave the information it was not a valid acceptance, because the ‘acceptance’ was not made
knowingly i.e. the offer had never been communicated to him.
Therefore, there was no valid between American Swiss and Mr Bloom and so American Swiss was not
liable to pay him the reward.
X in New York phones Y in Cape Town and offers to supply him with certain goods. It is 11pm on
Thursday evening in New York and 7am on Friday morning in Cape Town. We need to figure out when
and where Y’s acceptance is taken to have validly taken place i.e.is it on Friday morning in Cape Town
when Y says “Yes”; or is it on Thursday evening in New York when X hears the acceptance?
This may have important implications in terms of which country’s laws govern the contract, legality and so
on.
X in New York phones Y in Cape Town and offers to supply him with certain goods. It is 11pm on
Thursday evening in New York and 7am on Friday morning in Cape Town. During the phone call Y
accepts. Remember X is the offeror.
In terms of the information theory, Y’s acceptance is valid only when and where X hears the acceptance.
So this will be in New York around 11pm on Thursday evening. So the contract is concluded on Thursday
evening around 11pm in New York.
Y in London makes an offer via the post to X in Durban on the 1 March. X posts the letter of acceptance
on 15 March in Durban. The letter of acceptance reaches Y on 21 March in London. The contract is
concluded in Durban on 15 March when X posts the letter of acceptance. So the contract is concluded
before Y even knows about the acceptance.
So if Y tries to revoke the offer after 15 March, then in fact he will be in breach of contract, because there
was a valid contract the moment X posted the letter of acceptance in Durban on 15 March.
Jafta v Ezemvelo KZN Wildlife (2008)
J was offered a job by Ezemvelo via email. He had to accept the offer by end of December 2006 or it would
expire. He tried to accept the offer by sending an email from an internet café on 29 December. The email never
reached Ezemvelo, it bounced and J was aware of that. Also on 29 December he received an SMS from the HR
(human resources) officer at Ezemvelo to say he must accept the offer by 31 December or it would expire. Jafta
then on the same day sent an SMS in response to the HR officer essentially accepting the offer and telling her
he had sent an acceptance email which bounced. She (the HR officer) received the SMS.
Nonetheless, Ezemvelo subsequently appointed someone else. The issue was, was there a contract with Jafta
and if so when was it concluded? Did he accept before the end of December?
The court said J could respond/accept via SMS, because he was responding via SMS to the SMS sent by the HR
officer. But the case seems to go further to say that even if J had not received an SMS from Ezemvelo HR, he
could have validly responded to the email offer via SMS as it is also a form of electronic communication.
So when J’s SMS reached the HR officer’s inbox (message box) on 29 December, that was a valid acceptance
and that is when the contract was concluded. Even if the HR officer had not yet opened or read the messagereception theory.
So there was an employment contract on 29 December between Ezemvelo and J. Ezemvelo was therefore in
breach and J could claim damages.
Consumer
General
CPA
Communications
Transactions
and
ECTA
Act
:
Electronic
transactions
electronic
Critical
egislation
Act
Protection
Electronic
An
of
pieces
ey
:
The
is
contract
ETCA
concluded
must
be
the
by
governed
are
the
at
read
ECTA
when
time
together
with
and
the
where
place
CPA
there
as
the
are
acceptance
provisions
received
is
CPA
the
in
by
that
the
(reception
offeror
will
apply
to
certain
theory
contracts
Supplier
not
defined
generally
the
in
accepted
ETCA
as
but
,
person
any
who
offers
goods
for
services
sale
hire
exchange
on
Consumer
natural
any
ETCA
if
the
does
online
person
not
enters
who
protect
customer
juristic
is
a
into
an
electronic
transaction
with
a
supplier
(ECTA)
persons
juristic
person
then
,
the
CommonLaw
would
apply
the
web
in
ordinary
course
of
business
(CPA)
On 1 March, Jane orders 5 pairs of Jeans and 6 T-shirts from Woolworths online. The next day she realises that she got carried
away and does not need that amount of new clothes. So she can cancel the order within 7 days after receipt of the goods or
even sooner (but not later).
She does not have a valid legal reason for cancelling, but the cooling off period allows her to cancel and it does not amount to
breach. She will get a full refund and must return the goods.
On 1 March 2022 Jane signs up online to do a course at UNISA during 2023. Jane does not feel like doing that course anymore,
so she can cancel her contract with UINSA within 7 days after the conclusion of the contract i.e. by 7 May.
She will get a full refund and she is not in breach (even though her reason for cancelling in not valid in law).
Don’t worry about counting days as an exact science, just know the 7-day periods.
1.
2.
3.
4.
5.
6.
7.
8.
9.
James orders 5 pencils from Loveletters Online Stationery with James Leach engraved on them.
Contractual Capacity
The
There
·
·
·
·
general
rule
four
are
Married
is
key
that
every
legal
where
exceptions
has
person
individuals
full
have
contractual
limited
capacity
contractual
,
other
in
capacity
words
,
you
can
enter
into
any
legal
binding
and
contract
that
you
:
pers OnS
Minors
Insolvents
Mentally
;
intoxicated
and
·
sell
,
or
enate
Cede
:
:
mortgage
give
persons
,
a
lease
the
transferring
away
intangible
such
you
borrow
immorable
as
you
mortgage
security
the
purchase
to
money
property
and
the
under
Pledge
:
a
for
the
property
house
loan
,
give
a
the
thing
of
rights
and
contract
a
:
something
loan
rights
Or
assets
as
benefits
Mortgage
alienating
of
manner
out
with
will
as
the
security
intention
be
given
for
that
back
want
,
without
assistance
limitation
Married Persons
Marriages
Formal
·
consent
Written
·
·
Property
of
Community
in
consect
Informal
consent
Transactions
without
Marriages
out
of
Community
of
Property
Marriages
out
of
Community
of
Property
contractual
capacity
·
·
·
Each
has
party
Exception
*
of
consent
unrestricted
household
fac tual
In
terms
·
to
·
to
·
·
their
to
regard
Accrual
to
So
estate
.
own
they
do
not
the
need
their
of
consent
spouse
to
do
with
anything
necessaties
Consent
of
alienate
enter
transaction
a
themselves
bind
immovable
mortgage
or
into
Property
Matrimonial
the
by
witnessed
ActMPA
formal
,
witnesses
two
consent
is
for
required
:
property
credit
a
as
consent
under
receiver
a
credit
agreement
in
of
terms
the
National
Credit
Act
2005
:
store
credit ;
credit
surety
a
as
signed
and
written
a
Ratification
Ordinary
Written
·
course
Alienate
cede
,
business
Alienate
Withdraw
or
pledge
or
don't
don't
·
of
Consent
but
·
those
enquiry
Ormal
·
with
subject
need
need
pledge
money
consent
consent
jewellery
held
shares
any
in
,
coins
the
sell
to
the
if
,
insurance
,
shares
act
paintings
name
of
policies
listed
done
is
fixed
on
other
deposits
JSE
connection
capital
etc
the
in
,
spouse
or
or
to
with
deal
the
investment
any
with
a
spouse's
deposit
trade ,
in
a
in
financial
one's
business
or
own
at
bank
,
building
society
or
post
name
occupation
assets
office
financial
institution.
at
a
bank
investment
assets
card
assets
.
Neither
party
has
any
contractual
capacity
with
regard
to
the
other
spouse's
estate
Minor
Void Contracts
Voidable Contracts
Types of Mistake
1.
A sells B a sealed container of oats. Both believe that it contains rice and rice is what they
want to buy and sell. So the parties are in agreement, but they are mistaken as to the
subject matter of the sale i.e. they think it is rice but it is actually oats. The contract is void,
it never existed. So each party can claim under unjustified enrichment (NOT restitution).
A has spent half the purchase price on some apples which he has eaten. So A will only
have to return half the purchase price to B, as that is the amount by which he has been
enriched at the time of the action. In other words, if you audited A’s estate at the time of
the action, then he would only have half the purchase price sitting in his bank account to
list under assets from this transaction.
B will have to return whatever he has left of the oats (even if he can only return a quarter or
less).
2.
Bernstein v Goldex 16 (Pty) Ltd 2015 (GP)
Mr Bernstein was a trustee of the Bernfin Trust. Goldex was company which owned a piece land at the Vaal Dam and they were
developing a luxury housing estate on it known as Waterford Estate.
The Trust entered into an agreement of sale in terms of which it bought a plot in Waterford Estate from Goldex. Both parties thought
the plot included a particular boathouse. And the Trust really wanted the boathouse.
It turned out that the land on which the boathouse was situated did not actually form part of the Waterford Estate land at all. There had
been a mistake. Therefore, Goldex could not transfer the boathouse land to the Trust because they did not in fact own that portion of
land.
Neither the Trust nor Goldex were aware of this at the time = common mistake Therefore the contract of sale between the Trust and
Goldex was void.
Maritz v Pratley 1894 SC
There was an auction. This is an old case (keep that in mind for context). So imagine an old
fashioned auction with the bidders sitting in the audience and the auctioneer standing on a
stage where the items for sale are displayed as he calls them out for auction.
Lot 1208 was a marble mantelpiece/ table on which stood Lot 1209, which was a mirror.
The labels were very small.
So the tags with the lot numbers are tiny. If you were in the audience, you would not be
able to read them. The auctioneer put the table/mantelpiece up for sale and sold it to
Pratley.
But Pratley was not happy. Why? Look at the diagram, what do you think he thought he was
buying?
Pratley thought that he had bought the mantelpiece and the mirror together as one item.
The could held that the sale was void due to unilateral error. Only Pratley was mistaken, the
auctioneer was not.
Horty Investments v Interior Acoustics 1984 (3) SA 537 (W)
Horty Investments rented out business premises to Interior Acoustics. So H was the landlord, and Interior was the tenant. There were verbal negotiations and later
the contract was reduced to writing. Clause of 1 of the written contract provided that the lease period would begin on 1 May 1981 and would continue for a period
of two years. During that period no notice of termination could be given. Clause 2 provided that notice could not be given before 1 May 1993. Date was a typing
error and should have read 1 May 1983.
H had intended that the lease would only last for two years. Interior however said that they genuinely believed that the lease would run for 12 years when they
signed the lease.( I think Interior must have been lying about that, it is pretty obvious that the date was a typo.)
H applied to have contract set aside on the basis of mistake. H said they (H) were mistaken i.e. they (H) did not want a 12-year lease.
What kind of mistake are we dealing with here = unilateral as only H claimed to be mistaken. Interior said there was no mistake and the lease was supposed to be
for 12 years.
As we are dealing with a unilateral mistake, to render the contract void, the mistake must be both material and reasonable/iustus.
- Is it material?
- Is the mistake reasonable?
In other words, did Interior (the one claiming they are NOT mistaken) know or ought to have known that the mistaken party, H, had made an error?
ANSWER:
- Material?
o Yes. It relates to the terms of the contract (i.e. 12 years vs 2 years)
- Reasonable?
o Yes.Thenon-mistakenpartyoughttohaveknownthatHhadmadean
error and only wanted a 2-year lease given the working of Clause 1 of the lease which read that the lease would begin on 1 May 1981 and continue for a period of
2-years (i.e. to 1983 and not 1993)
George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A)
Mr George hired a room at the Fairmead Hotel. He was asked to sign the hotel register which contained terms
and conditions and formed his contract with the hotel. Mr George signed it without reading it. One of the
clauses in that contract was that the hotel would not be liable for any losses suffered by the guests.
George later had some things stolen from his hotel room and he sued the hotel for the loss. The hotel claimed
that they were not liable for George’s loss, as there was the clause in the hotel register which exempted them
from liability.
George argued that the clause did not apply to him because he did not read the contract (hotel register) and so
he was unaware of the clause. The court held that due to caveat subscriptor he was bound by the contract and
therefore the clause, even if he had not read it, and so he did not succeed in suing the hotel for his loss.
But the courts have developed certain exceptions to the general principle of caveat subscriptor. In these
exceptional cases, if a person signs the contract without reading it or understanding it he may not be bound.
There is no a closed list of exceptions, but these are the ones courts have looked at so far. So there may be
others it all depends on the facts of the case.
Dlovo v Brian Porter Motors Ltd 1994 (2) SA 518 (C)
Mrs Dlovo took her car to be repaired at Brian Porter Motors. She was asked to sign what they referred to as a job card in order to authorise the company to do the
necessary repairs. Mrs Dlovo signed without reading it through. There was a clause on the job card in small writing which said that the company would not be liable for
any loss or damage to owners’ vehicles.
While the car was in for repairs it was stolen from the Brian Porter premises. The car was recovered by the police, but it had sustained further damage as the thieves had
got into an accident with Mrs Dlovo’s car.
Mrs Dlovo sued Brian Porter Motors for the amount of the further damage. Normally, Brian Porter Motors would be liable under delict as their negligence had caused the
car to be stolen. Brian Porter accepted that they were negligent regarding the safety of the car but argued that they were not liable due to the clause in the “job card”.
The clause excluded (exempted) them from liability for loss or damage to the vehicle. They argued that Dlovo had signed the job card and so she was bound by the
exemption clause in terms of caveat subscriptor.
TERM: Exemption/Exclusion Clause – a clause that attempts to exclude one party’s liability under delict and/or contract.
The court found in favour of Mrs Dlovo for the following reasons:
1. There was a unilateral error. Mrs Dlovo was mistaken.
2. She was mistaken as to the terms of the contract i.e. she had not seen or read the exclusion clause.
3. A mistake as to terms is a material mistake (see list on page 9 -10)
4. Brian Porter Motors ought to have known that Mrs Dlovo was mistaken as to the nature and terms of the document. They told her she was signing a job card to authorise repairs. The reasonable person would not think the job card was a contract containing terms and conditions. (see page 10 and Horty case)
5. Therefore her mistake was a iustus error.
6. Therefore the contract was void due to unilateral mistake
7. Therefore the contract does not exist and therefore, caveat subscriptor cannot apply and the clause can’t exist.
8. Also Brian Porter Motors should have drawn her attention to clause as it was hidden in the job card, where the reasonable person does not expect to find contractual terms.
9. Therefore no contract or clause existed to exclude Brian Porters’ delictual liability.
10. Therefore they were liable to pay her damages for the car.
Misrepresentation
Types of Misrepresentation
Forms of Misrepresentation
Requirements to Render a Contract Voidable
Consequences of Misrepresentation
Misrepresentation: Consumer Protection Act
Duress
Duress - Common Law
Duress - Consumer Protection Act
Undue Influence
Undue Influence- Common Law
Undue Influence- Consumer Protection Act
Illegality
Illegality and its effects on Contracts
Contents of a Contract
Common Terms
Imposed Terms
Breach of Contract
Cancellation
Damages