Mercantile Law 102 - Consensus

Vocabulary flashcards focusing on contractual consensus, offers, acceptances, special terms, case law, and theories of contract formation based on Mercantile Law 102 theme 2.

Six Requirements for a Valid Contract

1. Consensus (Agreement) between the parties; 2. Contractual Capacity; 3. Compliance with all required formalities; 4. Clear and certain terms; 5. Possibility of performing the obligations; 6. Legality of the contract.

Consensus

The agreement reached between parties through communication and negotiation; it serves as the foundation of a contract.

Offeror

The person who makes a proposal setting out the terms on which they intend to conclude a contract.

Offeree

The person to whom an offer is made and who accepts or rejects the offer.

Offer

A proposal made by an offeror setting out the terms on which they intend to conclude a contract with the offeree.

Acceptance

An unconditional, unambiguous agreement by the offeree to the terms contained in an offer.

Intention (in Law of Contract)

The state of a person's will when acting, specifically directing their mind to reach a binding agreement that can be enforced legally.

Essentialia (Contract of Sale)

The material elements essential to a valid contract of sale, specifically agreement on the identity of the parties, the item sold, and the price.

Lucy v Zehmer

A court case establishing that an offer made after consuming alcohol is legally binding if the party was not so drunk that they could not understand the nature and consequences of the document signed.

Crawley v Rex

A court case holding that a shopkeeper displaying goods is merely inviting the public to do business rather than making a binding offer to sell to anyone who enters.

Carlill v Carbolic Smoke Ball Company

A landmark case establishing that an advertisement offering a reward creates a binding general offer to the public that is accepted by performance of the conditions.

Gentleman's Agreement

An informal understanding between two parties based on trust, reputation, and good faith that relies on personal honour and is not legally binding or enforceable.

Bloom v American Swiss

A case ruling that an offeree cannot accept an offer unless they are aware of it; providing information without knowledge of an advertised reward does not yield a valid acceptance.

Counteroffer

A response to an offer that varies its terms, which acts as a rejection of the original offer and creates a new offer.

Hyde v Wrench

A court case establishing that a counteroffer terminates the original offer, preventing the offeree from accepting the original offer at a later stage.

Revocation

The withdrawal of an offer by the offeror before the offeree has accepted it, which must reach the offeree prior to acceptance.

Option Contract

An agreement where the grantor undertakes to keep the primary offer irrevocable for a specified period of time.

Right of First Refusal

A contract (also known as a preferential right or right of pre-emption) where a grantor agrees that if they decide to enter into a contract in the future, they will make the offer to the grantee first.

Yeats v Hoofweg Motors

A case establishing that an 'owner's risk' sign in a workshop is binding if the business took reasonable steps to display it clearly so a reasonable person ought to have been aware of it.

Section 49 of the Consumer Protection Act 68 of 2008

A statutory provision requiring limitation of liability clauses to be fair, in plain language, drawn to the consumer's attention before contracting, and specifically signed if risky activities are involved.

Central South African Railways v McClaren

A court case establishing that limitation clauses printed on a ticket do not bind the recipient if the ticket is not a document a reasonable person would expect to contain contract terms.

Chapelton v Barry Urban District Council

A case ruling that an indemnity clause printed on the back of a ticket functioning merely as a receipt does not form part of the contract.

Information Theory

A contract rule applied to face-to-face and phone communications stating that a contract is concluded at the place and time where the offeror hears and understands the acceptance.

Expedition Theory

A contract rule applied to traditional postal acceptance stating that a contract is concluded at the exact time and place where the offeree posts the letter of acceptance.

Reception Theory

A contract rule applied to faxes and electronic communications stating that a contract is concluded when the acceptance reaches the offeror's address or server.

S v Henckert

A legal case applying the information theory to telephonic negotiations, ruling that the contract is concluded where the offeror hears and understands the acceptance.

Electronic Communications & Transactions Act 25 of 2002

Legislation dictating that contracts concluded by electronic means are complete when the data message enters the offeror's information system and is capable of being retrieved.