Law of Contract: Consensus

Copyright 2026 edition.
Institution: North-West University, South Africa.
Note that no part of this presentation, including video, audio, or other material, may be reproduced or distributed in any form or in any way without written permission from NWU.
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Definition: A contract is defined as “an agreement entered into by two or more persons with the intention of creating a legal obligation or obligations.”
- This indicates that a contract must be binding in law on all parties involved.

Bilateral or Multilateral: A contract is necessitated to be either bilateral or multilateral in nature.
Promises and Undertakings: It entails promises or undertakings from one or both parties.
Reciprocity: Most contracts entail a form of reciprocity and can be understood as a bargain. However, it cannot be enforced unless it is supported by consideration (something of value must be promised in return).
Principle of Contractual Freedom: This principle states that parties can agree to any lawful terms that are possible.
Consent: Contracts are consensual and based on some form of agreement.
Bonae Fidei: Contracts must embody good faith principles.

Define, explain, and give examples of the following:
- Offer: A proposal made by one party to another.
- Acceptance: The act of agreeing to the terms of an offer.
- Consensus: Mutual agreement between parties.

For an Offer to be Valid:
- Must be clear, certain, and unambiguous.
- Must include essential terms.
- Must meet any necessary formalities.
For Legal Acceptances:
- Must be communicated and reflect a clear agreement to the offer.
For Consensus to be Reached:
- Must involve mutual assent from all parties with a true intention to create a legal obligation.

Conditions for Existence:
- All parties must have a true intention of forming an agreement.
- Respective wills must be cooperative and identical.
- Aim to create a legal obligation resulting in rights and duties.

True Consensus: Achieved explicitly or tacitly by the parties.
Assumed Consensus: Terms implied by the parties, may not be explicitly stated.
By Operation of Law: Consensus may be established by legislation that mandates agreements.

Offeror:
- Shows intent to enter into a contract.
- Makes a definite offer.
- Communicates the offer to the offeree.
- Example: "I’ll pay you $50 an hour to edit my book on Mesoamerican sewing techniques."
Offeree:
- Shows intent to accept the offer.
- Communicates the intent to accept by proper means.
- Must state acceptance that mirrors the terms of the offer.
- Example: "I’ll take the editing job."

Definite: Specific enough to know what the terms are.
Complete: Includes all necessary terms.
Clear and Certain: It must be understandable without ambiguity.
Compliance with the Consumer Protection Act:
- Prohibits negative option billing and bait marketing.
- Provides for a cooling-off period for certain contracts.
- Regulates catalog marketing.

An offer may be directed at a specific person or group, or may be a public offer.
Advertisements typically do not constitute offers; they are considered invitations to engage in business unless they promise a reward, which then can constitute an offer.
The status of proposals and tenders depends on the parties' intentions, ascertainable by circumstances.
Auction scenarios:
- In a simple auction (not subject to conditions), a bidder is making the offer.
- In an auction with reserve, the potential purchaser is making the offer; while in a no-reserve auction, the auctioneer is considered to be making the offer.
- Auctions subject to conditions create two potential contracts: adherence to auction conditions and the substantive sale contract.

An offer may be terminated by:

The offeree rejecting the offer (either expressly or through a counter-offer).
The offeror revoking the offer prior to acceptance.
The death of either party before acceptance.
Expiration of the prescribed period by the offeror or a reasonable duration in the absence of a specified period.

Requirements for Acceptance:
1. Only the offeree may accept; identity is crucial.
2. Acceptance must be clear, certain, and unambiguous.
3. Must meet any formalities as determined by the offer.
4. Acceptance terms must match those of the offer.
5. The offeree must have actual knowledge of the offer to accept.
6. Notice of acceptance must typically be provided to the offeror.
7. The offeree must demonstrate a genuine intention to be bound.

Initial Offer: Offeror makes an offer.
Acceptance: Offeree accepts the offer without conditions.
Counteroffer: If the offeree changes or adds terms, this creates a counteroffer rather than acceptance.
Further Outcomes:
- The original offeror may accept the counteroffer unconditionally, establishing a contract.
- If the original offeror changes or adds terms to the counteroffer, it reverts to a new counteroffer.
- If declined, no contract exists.

Is acceptance communicated?
- YES → proceed to "Is it clear and certain?"
- NO → INVALID OFFER.
Is it clear and certain?
- YES → proceed to "Is there an intention to be legally bound?"
- NO → INVALID OFFER.
Is there an intention to be legally bound?
- YES → proceed to "Is it in response to the offer?"
- NO → INVALID OFFER.
Is it to the benefit of the offeree?
- YES → proceed to "Is it unqualified?"
- NO → INVALID ACCEPTANCE.
Is it unqualified?
- YES → proceed to "Is there a prescribed mode of acceptance?"
- NO → INVALID ACCEPTANCE.
Is there a prescribed mode of acceptance?
- YES → Offeree must use the prescribed mode.
- NO → Offeree may use any mode (as long as it is not disadvantageous for the offeror).