PVL301-W 1
CONTRACT LAW CASE SUMMARIES
Saambou- Nasionale Bouvereniging v Friedman
Facts
• Respondent handed a cheque drawn in favour of Appellant to W to buy shares in the Appellant for the
respondent’s wife.
• Cheque fell into the hands of an unknown person who, pretending to be the respondent, handed it to
appellant as payment for shares which were issued to 3 persons who were complete strangers to
respondent
• The respondent stopped the payment of the cheque and was sued on it by the appellant
• Respondents defence was that the appellant gave no value or valuable consideration in respect of the
cheque and the respondent did not become a party to the cheque for any cause which could found an
action on contract or agreement
Legal Question
• Was there a valid agreement between the respondent and the appellant to the effect that appellant could
apply the cheque as payment for the shares issued to the 3 strangers?
Finding:
• No such agreement existed
Rationale
• Appellant contracted with the person who pretended to be the respondent and not with the respondent
• Respondent wasn’t in fact involved in the matter, therefore, no agreement between the respondent and
the appellant as to how the cheque was to be applied which meant that no valid primary agreement
came into existence to provide the iustu causa required for a valid and enforceable contract
Note:
• There could not have been a contract between the parties no matter which theory regarding the basis of
a contract is accepted
Vasco Dry Cleaners v Twycross
Facts
• Carides (VDC) sold business to Air Capricorn
• Ownership of machinery would only pass on payment of full purchase price
• AC later needed financial assistance to pay the balance of the purchase price and entered into an
arrangement with Twycross, in terms of which Twycross paid off Carides and AC sold and delivered the
machinery to Twycross
• Twycross then resold the machinery to AC but subject to the condition that ownership of the machinery
would only pass to AC once Twycross was paid
• Before paying Twycross, AC was again in financial troubles and sold VDC plus the machinery to Butcher
• When negotiating this sale AC guaranteed that it was the owner of the machinery
• Butcher ran the business as VDC, AC subsequently failed to pay Twycross who instituted rei vindication
against VDC to reclaim his machinery
Finding
• There had not been a true sale &resale of the machinery between Twycross and AC
• Twycross had lent the money to AC which lam was secured by a pledge if the machinery
• Ownership of the machinery had therefore not passed to Twycross who could not succeed with a rei
vindication
Note
• The contract of sale& resale between Twycross and AC was not their true intention. Their true intention
was to effect a pledge of the machinery
• To reach consensus it is essential that the parties actually intend to create an obligation
• Law looks at their true intention not their simulated intention
Bloom v The American Swiss Watch Company
Facts
• Bloom claimed a reward in terms of a notice published by ASW promising a reward to any one providing
information which lead to the arrest of the thieves and recovery of jewelry stolen
• Bloom gave the information BEFORE he became aware of the notice
Finding and Rationale
• He therefore, did not furnish the information in response to the notice and could not therefore, be said to
have accepted ASW’s offer to pay a reward
CONTRACT LAW CASE SUMMARIES
Saambou- Nasionale Bouvereniging v Friedman
Facts
• Respondent handed a cheque drawn in favour of Appellant to W to buy shares in the Appellant for the
respondent’s wife.
• Cheque fell into the hands of an unknown person who, pretending to be the respondent, handed it to
appellant as payment for shares which were issued to 3 persons who were complete strangers to
respondent
• The respondent stopped the payment of the cheque and was sued on it by the appellant
• Respondents defence was that the appellant gave no value or valuable consideration in respect of the
cheque and the respondent did not become a party to the cheque for any cause which could found an
action on contract or agreement
Legal Question
• Was there a valid agreement between the respondent and the appellant to the effect that appellant could
apply the cheque as payment for the shares issued to the 3 strangers?
Finding:
• No such agreement existed
Rationale
• Appellant contracted with the person who pretended to be the respondent and not with the respondent
• Respondent wasn’t in fact involved in the matter, therefore, no agreement between the respondent and
the appellant as to how the cheque was to be applied which meant that no valid primary agreement
came into existence to provide the iustu causa required for a valid and enforceable contract
Note:
• There could not have been a contract between the parties no matter which theory regarding the basis of
a contract is accepted
Vasco Dry Cleaners v Twycross
Facts
• Carides (VDC) sold business to Air Capricorn
• Ownership of machinery would only pass on payment of full purchase price
• AC later needed financial assistance to pay the balance of the purchase price and entered into an
arrangement with Twycross, in terms of which Twycross paid off Carides and AC sold and delivered the
machinery to Twycross
• Twycross then resold the machinery to AC but subject to the condition that ownership of the machinery
would only pass to AC once Twycross was paid
• Before paying Twycross, AC was again in financial troubles and sold VDC plus the machinery to Butcher
• When negotiating this sale AC guaranteed that it was the owner of the machinery
• Butcher ran the business as VDC, AC subsequently failed to pay Twycross who instituted rei vindication
against VDC to reclaim his machinery
Finding
• There had not been a true sale &resale of the machinery between Twycross and AC
• Twycross had lent the money to AC which lam was secured by a pledge if the machinery
• Ownership of the machinery had therefore not passed to Twycross who could not succeed with a rei
vindication
Note
• The contract of sale& resale between Twycross and AC was not their true intention. Their true intention
was to effect a pledge of the machinery
• To reach consensus it is essential that the parties actually intend to create an obligation
• Law looks at their true intention not their simulated intention
Bloom v The American Swiss Watch Company
Facts
• Bloom claimed a reward in terms of a notice published by ASW promising a reward to any one providing
information which lead to the arrest of the thieves and recovery of jewelry stolen
• Bloom gave the information BEFORE he became aware of the notice
Finding and Rationale
• He therefore, did not furnish the information in response to the notice and could not therefore, be said to
have accepted ASW’s offer to pay a reward
