Part B - C (1.1 - 1.3)

Question 1

What is a contract

Answer 1

An agreement between 2 or more parties that gives rise to legally binding and enforceable rights and duties between them.

Question 2

What is agreement (consensus)?

Answer 2

presupposes the meeting of minds - both parties are aware and understand agreement between them

Question 3

How do courts determine if there was consensus?

Answer 3

There needs to be a valid offer from party A and a valid acceptance from party B

Question 4

What is an offer and what are the requirements for it to be valid?

Answer 4

An offer is a proposoal setting out terms on which the offerer is willing to contract with the offeree.

Requirements for a valid offer:
1. Complete, clear and unambiguous
There is no doubt about subject matter of offer. How would a reasonable person have made this offer?

2. Clear intention to contract
   Intend to create a binding legal obligations.
3. Still in existence
   Offer can be revoked (before there was a valid acceptance), lapsed (falls away with natural passage of time or have a built in life span) or rejected (by offeree. if they want to counter offer, they can reject and make a new offer, becoming the new offeror).

Question 4

What are the requirements for a valid acceptance?

Answer 4

1. By the offeree
   Not by another party who was not directly identified in the offer
2. Made knowingly
   Acceptance cannot be inadvertent. “Good samaritan”
3. Unconditional
   Would a reasonable person understand what is being accepted? Silence is not acceptance - CPA prohibits negative option marketing
4. Mirror image of offer
   Cannot accept different or additional terms to what was offered (reject and counter offer). Can partially accept and accept balance of terms before offer revoked or lapses.
5. Communicated
   General rule: (information theory) - acceptance valid once offeror has knowledge of acceptance.

Post: (expedition theory) - acceptance valid once posted (if authorised)

Email and SMS (reception theory) - ETCA - acceptance valid the moment message is received by offeror and can be retrieved and processed by offeror

Question 5

Exception to breach of contract (ECTA)

Answer 5

Consumer has 7 days to withdraw from a contract already in place without penalty

Question 6

Exception to breach of contract

Answer 6

CPA (s16)
If offer made via direct marketing - 5 days to withdraw from contract (seller in ordinary course of business and consumer)

CPA (s17)
Bookings, reservations, orders subject to a reasonable cancellation fee
Only no fee if person is physically unwell (hospitalised) or died

Question 7

What are the two factors that can influence consensus?

Answer 7

Mistake
- 1 or both parties are mistaken about facts underpinning the contract (appears to be consensus, but no consensus was actually reached)
- a contract made be void

Misrepresentation
- 1 party of the contract makes a false statement of fact before or at the time the contract was entered into. (there is consensus, improperly reached)
- contract voidable

Misrepresentation can lead to mistake

Question 8

Difference between a void and voidable contract?

Answer 8

VOID
- Contract never existed
- Contract can be void through mistake, illegality and a lack of capacity
- Contract is UNFORCEABLE (no ratification)
- Can only claim back performance under law of unjustified enrichment

VOIDABLE
- contract did exist, but because of a flaw innocent party has right to withdraw
- contract can be voidable through misrepresentation, duress, undue influence and lack of capacity
- innocent party has election - ratify or rescind (restitution)

Question 9

What is mistake?

Answer 9

Mistake of facts on which contract was made (when consensus reached)

Question 10

Name the two types of mistake

Answer 10

Common mistake
- both parties are mistaken

Unilateral mistake
- one party made mistake

Question 11

Requirements for a common mistake to render contract void?

Answer 11

Must be a material mistake

A. General principle - mistake is material if mistaken party would not have entered into the contract if they new the true state of affairs

B. Specific precedent

1. Error in actual type of contract (negotio)
   - material
   - eg lease vs donation contract , 20 year instead of 2 year contract
2. Error in corpore (subject matter)
   - material
   - eg buying car vs buying motorcycle
3. Error as to terms of contract
   - material because terms were not actually agreed upon
4. Error in persona (other party)
   - sometimes material when identity of person is important (eg employment contract)

4.Error in motive
- never material (think of house broken into example)

5. Error in substantia (quality)
   - not material (eg of something purchased)

Question 12

Requirements for a unilateral mistake to render a contract void?

Answer 12

Mistake must be material and “iustus error” (reasonable)

1. If party seeking to uphold the contract knew the other party was mistaken
2. If party seeking to uphold the contract should have known other party was mistaken
3. If party seeking to uphold the contract induced the mistake by misrepresentation (does not matter if statement of fact is made innocently or on purpose (fraudulent or negligent))

Question 13

Requirements for error as to terms of contract to be material and caveat subscriptor rule

Answer 13

Caveat subcriptor - let the signatory be ware
- it is up to you read terms of contract thoroughly

EXCEPTION
- can be a iustus error if there is a specific duty to point out specific terms of the contract

Question 14

What is rectification and when does it apply?

Answer 14

Rectify- mistake made on paper (not in minds of parties)

Apply to court to get mistake rectified.

Burden of proof lies on applicant (person who wants mistake to be rectified)
- they should prove document is innaccurate
- they should provide true agreement and how document should k actually read

Term of an agreement can be express (explicitly said) or tacid (implicitly - eg in lease agreement, the fact that the building of room should be empty is implied)

Provide evidence - previous communication etc (cannot add information, only fix what is already in contract)

Question 15

What is misrepresentation?

Answer 15

Misrepresentation is a false statement of fact made by one party to the other party before or when contract entered into (and caused other party to enter into the contract)

Question 16

What are false statements that are not misrepresentation?

Answer 16

Opinions - express one’s own beliefs
Warranty - term of contract
Puff - supplier may not use exaggeration innuendo or ambiguity as to a material fact

Question 17

How can misrepresentation be made by the misrepresenting party (actions)?

Answer 17

1. Expressly - explicit statement
2. By conduct - physical conduct (gesturing, pointing, nodding etc)
3. By silence - only when there is a duty to speak (otherwise not bound by any law)

• duty to speak if prior conduct (eg grave yard covered up)
• duty to speak if change in circumstances (additions to property after initial viewing)

Question 18

What are the two main requirements for misrepresentation (2 main categories a misrepresentation can fit into)?

Answer 18

A) Casual or incidental

Causal
- renders contract voidable
- False statement of fact made by B, induces A to enter the contract
- A can either abide or rescind

Incidental
- does not render contract voidable
- regardless of misrepresentation you would have still entered into contract

B) fraudulent, negligent or innocent
Fraudulent
- false information given on purpose

Negligent
- reasonable seller would’ve checked all the information/facts before selling
- reasonable seller would not have believed information given to them

Innocent
- reasonable seller did check facts (expert opinion), but the information given was wrong

These are tested objectively (based on a reasonable standard) or subjective,y (circumstantial)

Question 19

What are the remedies available for the innocent party in misrepresentation?

Answer 19

Rescind and restitutio integrum (restitution)
- restore both parties to position they were in before entering the contract

Damages for consequential loss

Question 20

Under what circumstances can the innocent party rescind and claim restitution? What are the elements that need to be present

Answer 20

Requirements to rescind and claim restitution

1. Contract is voidable
   - (misrepresentation, causality, fraud or duress, materiality)
   - false statement must have been made express, by conduct or by silence if there was a duty to speak
2. Innocent party is able to restore other parties full peformance
   - can be partial restoration of a product and good difference in money
   - restoration is impossible because damaged or destroyed due to very fact related to misrepresentation

Prove the following elements:

1. Actually misrepresentation (false statement of fact that is not warranty, opinion or puff)
2. Causal (inducement)
3. Fraud or duress
4. Materiality

Right to rescind can be lost - has prescription period

Question 21

What are damages?

Answer 21

Damages fall under the law of delict:
- claiming for money loss (current and future losses incurred)
- loss must be able to be quantified in court
- delictual damages can supplement restitution, when we cannot claim for full restitution
- claim for expenses incurred in settling damages (legal fees, fees incurred in discovering misrepresentation)

Question 22

Requirements to claim for damages

Answer 22

Damages are only claimable for fraudulent misrepresentation

If conctract voidable (causal)

• choose to rescind and claim restitution + damages
• choose to ratify and claim for damages

If contract not voidable (incidental)

• claim for damages only

Question 23

What are the requirements for a misrepresentation to be considered “damages”?

Answer 23

1. Misrepresentation by definition
2. Person who misrepresented must have known information was false and intended on defrauding you
3. Misrepresentation must have induced you to act
4. Innocent party must have suffered damage - financial harm as a result to be able to claim under the law of delict

Motive and materiality not considered (only causality - inducement)

Question 24

What is duress and when does it render contract voidable?

Answer 24

Duress - threat of some considerable evil to the person, family or property of innocent party Contract voidable if (all requirements must be met): 1. Threat of an imminent or inevitable evil (current and unavoidable) 2. Threat is contra bonos mores (unlawful) 3. Threat made by other party to contract 4. Threat must have induced innocent party to contract 5. Clear objection of threat is to properly

Question 25

What are the remedies for duress?

Answer 25

Election : uphold or rescind and claim restitution

Question 26

What is undue influence and what are the requirements?

Answer 26

1. One person exercises influence over another 2. Influence weaknes the others powers of resistance and renders his will pliable 3. The person then uses their influence in an unscrupulous manned to persuade him to conclude contract which: a) is to his detriment b) would not have been entered into if he had been exercising normal free will