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PVL3702/201/1/2011

DEPARTMENT OF PRIVATE LAW


LAW OF CONTRACT (PVL3702)
TUTORIAL LETTER 201/1/2011
TO ALL STUDENTS IN THE LAW OF CONTRACT (PVL3702)

CONTENTS
1

MEMORANDA OF ASSIGNMENTS

AMENDMENT OF THE STUDY MATERIAL

COMMENTARY ON EXAMINATION

2
Dear Student
1

MEMORANDA OF ASSIGNMENTS

This tutorial letter contains the memoranda of the answers to the assignments.
1.1 Assignment 01
Question
Albert takes his motor vehicle to Dodgy Motors for a service. On his arrival, he is asked to sign a
job card by the owner. Albert enquires why he is required to sign the job card and the owner
explains to him that by signing he is authorising them to conduct the service on his car which will
cost R1 000. He signs the job card without reading it. While servicing the car, the service manager
finds faults on the car (unrelated to the service) and he proceeds to do these additional repairs for a
further R2 000. Albert refuses to pay for the additional repairs and argues that he did not authorise
such repairs. The owner of Dodgy Motors argues that Albert is obliged to pay for the work done as
the job card contains a contractual clause authorising Dodgy Motors to do any repairs on the
motor vehicle which they deem necessary without asking the clients authorisation and requiring the
client to pay for such repairs. Advise Albert on whether he is liable on the contract to pay Dodgy
Motors R2 000 for the additional repairs. Substantiate your answer and refer to relevant case law.
Apply the direct approach of the courts in answering this question.
(10)
Answer
The essence of this problem is the question whether Albert and the owner of Dodgy Motors has
reached actual consensus or ostensible consensus. Albert will not be contractually bound to pay for
the additional repairs If this requirement for a valid contract is absent.
The first step is to determine whether agreement (consensus ad idem) exists between the parties,
as required in terms of the will theory. Agreement has three elements (Van Aswegen et al Law of
Contract: only study guide for PVL301-W (1996) 13):
agreement between the parties as to the consequences they wish to create;
agreement as to the intention of the parties to create legal consequences; and
an awareness regarding their unanimity.
In the present case the parties were not in agreement as to the consequences they wished to
create: Albert thought that he was authorising Dodgy Motors to only service his car, while the owner
of Dodgy Motors knew that the contract also allowed Dodgy Motors to conduct repairs on the car
which they deem necessary and which should be paid by Albert without any further authorisation
from Albert. This was a mistake as to the obligations the parties wished to create and was a
material mistake which excludes consensus between the parties. This means that no contract could
arise on the basis of the will theory. This type of mistake can be illustrated with a number of cases.

PVL3702/201

In George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A) the appellant signed a hotel register without
reading it. The hotel register contained a term excluding the respondent from liability for certain
acts. The appellant was unaware of this term and his mistake related to a term which he believed
would not be in the contract and as such was material because it related to an aspect of
performance.
In Allen v Sixteen Stirling Investments (Pty) Ltd 1974 (4) SA 164 (D) the plaintiff believed that he
was purchasing the erf shown to him by the seller's agent, while the written contract that he signed
indicated the another erf which was a completely different property. His mistake related to
performance and was material.
The appellant signed a contract without reading it in Du Toit v Atkinson's Motors Bpk 1985 (2) SA
889 (A). The contract contained a term excluding the respondent from liability for misrepresentation
Once again the mistake related to an aspect of performance.
In Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis
1992 (3) SA 234 (A) the parties concluded a 20-year notarial lease contract. A later addendum to
the contract drafted by the appellant's attorney incorrectly indicated that the period of the lease was
15 years. Again the appellant signed the addendum without reading it. The appellant erred with
regard the period of the lease which was an aspect of the performance.
However, the matter does not end here, because a party may be held contractually liable on the
basis of a supplementary ground for liability, namely the reliance theory. In this regard you were
asked to apply the direct reliance approach of the courts. Contractual liability is then based on the
reasonable reliance that consensus has been reached which the one contractant (contract denier)
creates in the mind of the other contractant (contract enforcer).
According to the Sonap case the direct reliance approach entails a threefold enquiry:
Was there a misrepresentation regarding one partys intention? In our problem Albert wanted his
car to be serviced only. Dodgy Motors wanted the power to also unilaterally conduct repairs to
the car, which it deemed necessary. By signing the contract Albert made a misrepresentation
that his intention is the same as that expressed in the contract. This happened in the Sonap
case as well.
Who made the misrepresentation? In the problem it was made by a party to the contract, Albert.
Was the other party actually misled by the misrepresentation and, if so, would a reasonable man
also have been misled? Dodgy Motors in our problem could have been actually misled, but a
reasonable man would have taken steps to point out to Albert that the contract allows Dodgy
Motors to unilaterally conduct repairs on the car, because Albert enquired about the purpose of
the job card and the owner of Dodgy Motors misled him to believe that by signing the card he
is merely authorising the service to be done. In Sonap the court found that the contract enforcer
knew that the contract denier was acting under a mistake with regard to the reduction of the
term of the lease and consequently was not misled by the contents of the addendum. The
addendum was thus void.

4
In our problem Albert did not create a reasonable reliance that he wished to be bound to the
contract he signed. We can conclude that Albert is not contractually liable to pay R2 000 for the
repairs. [This does not exclude the possibility that Albert may be liable for unjustifiable enrichment]
Total: [10]
1.2 Assignment 02
Question 1
Where a contract is concluded by email, which theory applies?
1
2
3
4
5

The declaration theory.


The expedition theory.
The reliance theory.
The reception theory.
The information theory.

(1)

Answer
4.
Discussion
See section 22(2) of the Electronic Communications and Transactions Act 25 of 2002 (paragraph
10.2 van Tutorial Letter 101).
Question 2
S sends a written offer by post to P, in which S offers to sell his radio to P for R3 000. In the written
offer, S stipulates that the acceptance must be communicated to him by 1 June. On 20 May, P
posts a written acceptance to S, to purchase the radio for R3 000. On 22 May, S phones P and
cancels his offer to sell his radio. Ps written acceptance reaches S on 25 May. Which answer
reflects the CORRECT legal position?
1
2
3
4
5

A contract is concluded between S and P, because the expedition theory applies.


A contract is not concluded between S and P, because the information theory applies.
A contract is concluded between S and P, because the information theory applies.
A contract is not concluded between S and P, because the expedition theory applies.
A contract is concluded between S and P, because the reception theory applies.
(1)

Answer
2.

PVL3702/201

Discussion
Even though the written offer by S was sent by post, S specified that the acceptance must be
communicated to him by 1 June. Therefore the expedition theory does not apply because the
offeror (S) has expressly indicated that the information theory should apply. Before the acceptance
of the offer could reach S, P revoked the acceptance. See Study Guide 28-33.
Question 3
A offers B her car for R20 000 cash. B answers: I will buy your car for R19 000 cash. By this
answer,
1
2
3
4
5

B accepts As offer.
B accepts As offer unequivocally.
B accepts and rejects As offer.
B rejects As offer and makes her (A) a counter-offer.
B complies with the requirement that the acceptance must not be ambiguous.

(1)

Answer
4.
Discussion
An acceptance must be an unconditional and unequivocal acceptance of the whole offer. Any
conditions or reservations attached to it, (like in the context of this question), constitutes a counteroffer, which the original offeror (A) may accept or reject (Study Guide 27).
Question 4
Where a culpable misrepresentation exists, the action which arises is based on
1
2
3
4
5

delictual liability.
unjustified enrichment.
estoppel.
statutory liability.
contractual liability.

(1)

Answer
1.
Discussion
A culpable misrepresentation (which entails either a fraudulent or negligent misrepresentation) is a
form of delict (distinct from contract and breach of contract), even if it is committed in a contractual
setting (Study Guide 76).

6
Question 5
Sibongile is desperate to sell her house because of a termite infestation. Consequently she
knowingly conceals all signs of damage when a potential purchaser, Thandi, comes to inspect the
house and furthermore tells Thandi that there is nothing wrong with the house. Thandi purchases
the house, which she would never have done if she knew of the termite infestation. What cause of
action will Thandi be able to rely on in the circumstances?
(a)
(b)
(c)
(d)

Dictum et promissum.
Innocent misrepresentation.
Culpable misrepresentation.
Material mistake.

1
2
3
4
5

(a), (b) and (c).


(a) and (c).
(b) and (c).
Only (c).
Only (d).

(1)

Answer
1.
Discussion
The wrongful precontractual false statement by Sibongile that there is nothing wrong with the
house, knowing full well that the house has a termite infestation, constitutes a culpable
misrepresentation (either fraudulent or negligent) (Study Guide 76-81). See also Ranger v Wykerd
and Another 1977 (2) SA 976 (A) (Case Book 106).
This same statement by Sibongile is also a dictum et promisum as it satisfies the elements
contained in the definition of this dictum, which is a material statement made by the seller to the
buyer during the negotiations, bearing on the quality of the res vendita and going beyond mere
praise and commendation (Study Guide 88-89). See also Phame (Pty) Ltd v Paizes 1973 (3) SA
397 (A) (Case Book 125).
Sibongiles statement is also an innocent misrepresentation (Study Guide 86-87).
Thandis mistake that the house does not have a termite infestation relates to a characteristic of the
thing which is not a material mistake (Study Guide 55 -56 76).
Question 6
Assume the same facts as in question (5). What remedy or remedies are available to Thandi when
she discovers the termite infestation and damage to the house?
1
2
3
4
5

Thandi may only rescind the contract.


Thandi may only uphold the contract and claim damages.
Thandi may rescind the contract and claim damages.
Thandi may uphold the contract and claim damages.
Both 3 and 4.

(1)

PVL3702/201

Answer
5.
Discussion
As we have seen in the discussion of question 5 Sibongiles statement amounts to innocent
misrepresentation, a dictum et promissum and a culpable misrepresentation. The only remedy for
innocent misrepresentation is rescission of the contract (Study Guide 87). The remedies for a
dictum et promissum are the actio redhibitoria (cancellation) and the actio quanti minoris (reduction
of price). The remedies for culpable misrepresentation are firstly, rescission of the contract or
upholding the contract, and secondly, whether Thandi rescinds or upholds the contract, she may
also claim damages to compensate her for her actual loss (Study Guide 88). Note that the position
is not so clear if Thandi could have cancelled the contract, in the scenario where she still would
have entered into the contract had she known about the culpable misrepresentation (Study Guide
82). But his is not the position here.
The only options reflecting the above remedies are 3 and 4. Thus 5 is the correct option.
Question 7
In which case did the seller not reveal to the purchaser that the swimming pool was not structurally
sound because it leaked?
1
2
3
4
5

Trotman and Another v Edwick 1951 (1) SA 443 (A).


De Jager v Grunder 1964 (1) SA 446 (A).
Ranger v Wykerd and Another 1977 (2) SA 976 (A).
Bayer South Africa (Pty) Ltd v Frost 1991 (4) SA 559 (A).
Phame (Pty) Ltd v Paizes 1973 (3) SA 397 (A).

(1)

Answer
3.
Discussion
Read the prescribed cases mentioned again.
Question 8
The aggrieved party may be successful in instituting
1
2
3
4
5

a delictual claim against the other contracting party, for the return of his performance in
terms of an illegal contract, if the in pari delicto rule is relaxed.
an unjustified enrichment claim against the other contracting party, for the return of his
performance in terms of an illegal contract, if the par delictum rule is relaxed.
a contractual claim against the other contracting party, for the return of his performance in
terms of an illegal contract, if the in pari delicto rule is relaxed.
a specific performance claim against the other contracting party, for the return of his
performance in terms of an illegal contract, if the in pari delicto rule is relaxed.
(3) and (4).
(1)

8
Answer
2.
Discussion
All these options refer to aggrieved party claiming the return of his performance in terms of an
illegal contract. An illegal contract is void and thus this claim of restitution of whatever has been
performed is based on unjustified enrichment. It is not a delictual claim (option 1), a contractual
claim (option 3) or a specific performance claim (option 4). Option 2 is correct as the enrichment
action can be instituted where the par delictum rule has been relaxed (Study Guide 132-134).
Question 9
The consequences of an illegally concluded contract were discussed in
1
2
3
4
5

Jajbhay v Cassim 1939 AD 537.


Brandt v Spies 1960 (4) SA 14 (E).
Neethling v Klopper 1967 (4) SA 459 (A).
Goldblatt v Fremantle 1920 AD 123.
Nel v Cloete 1972 (2) SA 150 (A).

(1)

Answer
1.
Discussion
Read the prescribed cases mentioned again.
Question 10
Where ambiguous words in a clause in a contract are interpreted in such a way that the least
possible burden is placed on the debtor, and the clause is interpreted against the party in whose
favour it was inserted, this is consistent with
1
2
3
4
5

the primary rules of interpretation.


the secondary rules of interpretation.
the tertiary rules of interpretation.
the parol evidence rule.
the pactum in favorem tertii.

(1)

Answer
3.
Discussion
See Study Guide 158.
Total: [10]

9
2

PVL3702/201

AMENDMENT OF THE STUDY MATERIAL

2.1 Add a new paragraph on page 33 of the Study Guide:


2.3.5

Written contracts

In Withok Small Farms (Pty) Ltd v Amber Sunrise Properties 5 (Pty) Ltd 2009 (2) SA 504 (SCA) 509
the court held:
Where, however, the offer takes the form of a written contract signed by the offeror, the
inference will more readily arise in the absence of any indication to the contrary that the mode
of acceptance required is no more than the offeree's signature. This is particularly so where
provision is made in the written contract for the offeree to specify the date on which he or she
signs the contract.
2.2 Delete the last sentence in paragraph 3 on page 33 of the Study Guide and replace it
with the following:
Written agreements are often concluded at the place where the last necessary signature is affixed
3

COMMENTARY ON EXAMINATION

NB: Please ensure that your assignments have indeed been received by Unisa and that you
have examination admission.
At the end of the semester you will write one two-hour paper. The paper counts 100 marks. The
exam mark count 80% of the final mark and the assignments 20%. To pass you need to obtain at
least 50% in total (see par 9.1 of Tutorial Letter 101/3/2011).
The examination paper is comprised of two sections as follows:
(a) Section A: Multiple-choice questions which must be answered on a mark reading sheet and
counts 50%. The section comprises 25 questions of 2 marks each. There are 13 direct
questions on the study guide, and 12 problem questions.
(b) Section B: Fill-in questions comprising a mixture of direct and problem questions which
counts 50%. The fill-in questions consist of three direct questions, one of which is 10 marks, as
well as two 5 mark questions. There are also two problem type questions of 15 marks each.
The marks awarded for each question should be used as an indication of the time that you should
spend on that particular question and is not necessarily an indication of the number of facts you
should write down. For each mark awarded, you should not spend more than 1.2 minutes. For
example: a 10-mark question should take you 12 minutes.

10
The prescribed study material for examination purposes is as follows (par 6.2 of Tutorial letter
101/3/2011):
One study guide
Tutorial letters 101/3/2011 and 201/1/2011
Prescribed casebook
NB: You are welcome to contact a lecturer to discuss the content of the module or some or
other aspect pertaining thereto, but no further delimitation of the work will be discussed
with you. Therefore do not contact a lecturer for tips or to delimit the work further.

PROF TB FLOYD
ADV R ISMAIL
PROF L HAWTHORNE

UNISA

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