3 - Law of contract

What are the requirements for a valid contract?

ALL requirements need to be met for a contract to be valid

How many of the contract law requirements need to be valid for a contract to be valid?

Whether a person has the ability to enter into a contract in the first place

What is contractual capacity?

The general rule is that every legal person has contractual capacity.

There are of course exceptions where some people have limited contractual capacity with restrictions on their capacity to enter into a valid and binding legal contract

What is the general rule with regards to contractual capacity?

minors, married persons, mentally ill, insolvents and intoxicated persons

Who are those with limited contractual capacity?

Children’s Act 38 of 2005 which came into effect in June/July 2007

What is the act that says that a minor is an unmarried person below the age of 18?

The attainment of majority on marriage and keeping this status on death of spouse or divorce are dealt with in the Marriage Act of 1961 which is not affected by the Children’s act 38 of 2005.

Why is the issue of a minor becoming a major on marriage unaffected by the new childrens act?

A minor becomes a major on marriage regardless of their age. This would mean that they would have full contractual capacity.

Even if the marriage is dissolved by death or divorce, they would remain a major (Marriage Act 25 1961 Section 24(2))

How does a minor become a major?

• in the case of infans (under the age of 7), it is a contract made on behalf of a minor

• in the case of a pupillus, it is a contract made by the minor with the assistance of the guardian or on the minor’s behalf by the guardian

What is a duly assisted contract?

The minor will be bound and liable in terms of the contract and NOT the guardian. Guardian will incur no personal liability at all

What is the effect of a duly assisted contract?

What are the details of the Marshall v National Wool Industries Ltd 1924 opd 238 (Sharrock pg 48)?

A minor will not be bound by a duly assisted contract if the contract was inherently prejudicial. The prejudice must be substantial and not trivial.

The contract would still be valid and the minor would still need a court order to get out of it.

When will a minor not be bound by a duly assisted contract?

What are the details of Wool v Davies 1934 CPD 250

Each party gives back to the other what was received under the contract and both parties are restored to the position they were in before the contract.

What is cancellation and restitutio in integrum?

The contract is void - it is as if it has never existed

What is the effect of an unassisted contract for an infans?

The contract is a limping contract:

The minor would not have contractual obligations, but the adult would have contractual obligations

It would not matter is the contract would be to the minors benefit, they would not be bound under the law of contract

what a limping contract means in practical terms is that the minor can choose (with the assistance of a guardian) whether to enforce the contract (ratification) or not (repudiation)

If the minor chooses not to enforce, they and the adult will both not be bound. It would be as if the contract never existed.

The adult party would also be entitled to claim back what they have performed under the contract under unjustified enrichment. Since the contract never existed, there was no legal obligation for the adult so whatever they performed they could ask for it back

What is the effect of an unassisted contract for a pupillus

The contract is deemed to be valid from the time it was originally entered into.

Eg. minor bought motorbike from John on 3 March. It is ratified on 3 August. The contract would be deemed to be valid from 3 march

What is the effect of ratification?

No assistance in required. The court will look at the conduct of the person to see if there has been ratification.

What is the effect of ratification on majority?

What are the details of Stuttaford v Oberholzer 1921 CPD 855 (sharrock pg 50?

What are the three different types of property regimes that govern your marriage in South Africa?

the parties must enter into an antenuptual contract. This would be signed before a notary public and two witnesses.

Without an antenuptual contract, the marriage would automatically be in community of property.

What are the conditions to be married out of community of property or with the accural?

What is the effect of marriage in community of property?

What is the contractual capacity of spouses?

sell, mortgage, lease out, giveaway

What does it mean for Alienate?

manner of alienating usually used for incorporeal assets

what does it mean to cede?

give something as security (eg a watch for cash)

what does it mean to pledge?

what is formal consent?

What is written consent?

what is informal consent?

what is an example of informal consent?

what is the effect of a marriage out of community of property?

What is the contractual capacity for spouses married out of community of property?

what is an insolvent?

what is the contractual capacity of an insolvent?

What is a general dealer in terms of a trader?

what is a manufacturer in terms of a dealer?

What is mental illness and what is this in regards to contractual capacity?

What is a juristic person and what is this with regards to contractual capacity?

What is an offer?

What are the requirements for a valid offer?

What does it mean for an offer to “be made with serious intention of creating a binding legal contract”?

What are the details of an advert in terms of a contractual offer?

What are the details for the case Crawley v Rex 1909 TS 1105?

When can an advert be seen as an offer?

what are the details of the case: Carlill v Carbolic Smoke Ball Co (1892) 2 QBD 484 (HL)

What does it mean for a contract offer to be “complete and clear”

What are the details of the case: Cliff v Electronic Media Network (Pty) Ltd (GJ) January 2016

The offer must not have been ended or terminated before it is accepted

What does it mean for a contract offer to “Still be existence at time it is accepted”?

What is revocation with regards to a contract offer?

what is a “lapse of offer” with regards to a contract offer?

what is “rejection” with regards to a contract offer?

What are the details of the case: Watermeyer v Murray 1911 AD 61?

What is “acceptance” with regards to a contract?

What are the requirements for a valid acceptance of a contract?

What does it mean for acceptance to:”be made by the person to whom the offer was addressed”?

what does it mean for “acceptance to be made knowingly”?

what are the details of the case Bloom v American Swiss Watch Co 1915 AD 100?

what does it mean for “acceptance to be clear and unconditional”?

What does it mean for an acceptance “to be communicated to the offerer in the prescribed manner”?

what is information theory with regards to contract acceptance?

what is expedition theory with regards to contract acceptance?

Under what conditions is the expedition theory valid?

what is reception theory with regards to contract acceptance?

What are the details of the case Jafta v Ezemvelo KZN Wildlife?

What was the outcome of the case Jafta v Ezemvelo KZN Wildlife?

What are points to remember about the theories about when a contract is concluded?

lapse, revocation and rejection

What are the three ways in which acceptance is invalid if the offer comes to an end?

mistakes, misrepresentation, duress and undue influence

these would render a contract either void or voidable

What are the factors affecting consensus?

what is a void contract?

what is a voidable contract?

What is misrepresentation?

What is Duress?

What is undue influence?

What is the process for a person who has been wronged in a voidable contract?

What are the differences between a void and a voidable contract?

What is the responsibility of the wronged party with regards to a voidable contract?

What is a common mistake?

What are the details with regards to the case Bernstein v Goldex 16 (Pty) Ltd 2015 (GP)

What is a mistake with regards to contractual consensus?

What is a unilateral mistake?

What are the details of the case Maritz v Pratley 1894 SC?

summary of mistakes in contracts?

What is a material mistake (common and unilateral errors)

What are some examples of material errors?

What are some examples that are NEVER material errors?

Two situations:

1. if the other party (the one who is not mistaken) knows or ought to have known that the mistaken party had made an error

2. If the other party misled the mistaken party

for it to be a reasonable mistake/iustus, it must meet requirement 1 OR requirement 2 NOT both.

What is a reasonable mistake/Iustus Error (ONLY unilateral mistake)

The mistake was material as to the terms of the contract (12 years versus 2 years lease

The mistake was reasonable because interior (non-mistaken party) ought to have known that horty had made an error and only wanted a 2 year lease given the wording 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. That could only take us to 1983 and not 1993.

what are the details of the case Horty Investments v interior accoustics 1984 (3) SA 537 (W)

What is iustus error and caveat subscriptor for signed contracts?

What are the details of the case George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A)

What are the exceptions to the caveat subscriptor principle?

What are the details of the case Dlovo v Brian Porter Motors Ltd 1994 (2) SA 518 (C)

What are the details of the case Spindrifter (Pty) Ltd v Lester Donovan (Pty) Ltd 1986 (1) SA 303 (A)

What is misrepresentation (common law)?

What is a Fraudulent misrepresentation?

What is a Negligent misrepresentation?

What is an innocent misrepresentation?

When the misrepresentaiton is said or written down.

what is verbal/written misrepresentation?

What is misrepresentation by conduct?

What is misrepresentation by silence (non-disclosure)

1. where the person has told a half truth and creates a misleading impression

2. where a person has, by his conduct, prevented the other party from discovering the true state of affairs

3. where the person has by an earlier statement or conduct, given the other party a certain impression and circumstances have changed

4. where the facts are in the exclusive knowledge of one party

5. common law rule that a seller must disclose latent defects (defects that arent obvious)

What are the exceptions where it is a duty to speak/make full disclosure and if you dont then your silence is a misrepresentation by silence?