LAW OF
CONTRACT
NOTES
2024.
,1. Jack wants to sell his Yamaha speedboat. He approaches Jill, who sells
speedboats for a living, and asks her if she is interested in buying his
Yamaha speedboat. Jill signs a written offer and submits it to Jack for
the Yamaha speedboat for R200 000, in a document titled “Contract of
Sale.” The offer sets out all the relevant terms, and includes the
following clause:
“This offer is irrevocable and expires at noon on 5 March 2024, and
upon signature by the seller will indicate his acceptance, as well as the
conclusion of a valid contract of sale.”
On 4 March 2024 Jack signs the contract of sale document and he
inserts the date of his signature therein, but he forgets to immediately
inform Jill that he has done so. Only on 8 March 2024, Jack informs Jill
of his acceptance. Jill indicates to Jack that her offer lapsed on 5 March
2024, and that Jack did not inform her of his acceptance timeously. Jill
further informs Jack that she no longer wants to purchase the Yamaha
speedboat. Jack approaches you for legal advice. Do a detailed analysis
and application of the offer and acceptance requirements and advise
Jack if there is a legally binding contract between him and Jill. You must
also advise Jack about his concern that he only informed Jill after 5
March 2024, that he accepted Jill’s offer. Discuss fully. Do not apply the
Consumer Protection Act 68 of 2008 to this question.
[20]
2. Z hands over a written offer to sell his Rolex watch to X for R250 000.
The offer is made to X only, and it sets out all the relevant terms for a
contract of sale. Z signed the written offer as the seller. X and Y are best
friends and they both sign the same document as buyers, as they want
to purchase the watch jointly. X then hands the signed document to Z,
who reads it. The next day Z finds a new purchaser (D) who immediately
pays him R300 000 cash for the same watch. Z accepts this cash
amount and hands the watch to D. When X and Y learn that Z sold the
watch to D, they approach you for legal advice. Do a detailed analysis
and application of the offer and acceptance requirements and advise X
and Y if they concluded a legally binding contract with Z. Discuss fully
and refer to case law in your answer. Do not apply the Consumer
, Protection Act 68 of 2008. Your answer must not exceed two typed
pages or three written pages. [20]
3. X, who is deeply troubled and in a highly emotional state, informs his
minister (of religion) that he has bought a number of shares at a fraction
of their true value and that, although there was nothing legally wrong
with the transaction, he feels that he has acted in a way which was
morally wrong. The minister advises X to donate the shares to the
church to rid him of the feelings of guilt, and X there and then signs a
contract in terms of which he donates all the shares to the church. A
month later X seeks to have the contract SET ASIDE. Will he succeed?
Discuss fully. Do not apply the ConsumerProtection Act of 2008 to this
question. (15)
• Undue influence
The facts of this problem indicate that X asked his minister for
advice and the minister influenced him to donate the shares to the
church. This may be undue influence. South African courts have
been influenced by English law in recognising undue influence.
Undue influence has been expressly recognised as part of our law
since a case in 1948 and this position has been confirmed by two
later Appellate Division cases.
In English law, the existence of a special relationship between the
parties gives rise to a rebuttable presumption of undue influence. It
seems fairly clear that this is not the case in our law. The party
who alleges undue influence has the onus to prove that it
occurred. The existence of a confidential relationship between the
parties is a relevant factor in discharging that onus.
There are two forms of such a close relationship: a fiduciary
relationship (eg as between a doctor and patient or attorney and
client), or a relationship of respect and reverence (eg as in the
case of parent and child, guardian and ward or religious leader
and disciple). In such relationships the one party is entitled or
obliged to advise and assist the other, and then misuses his or her
superior position to influence and undermine the will of the latter.
In our problem a relationship of respect existed between X and the
minister.
, Undue influence is a form of improper pressure brought to bear
upon a person in order to induce him or her to enter into a
contract. According to AD cases a party who seeks to set aside a
contract on the ground of undue influence must establish:
1. that the other party obtained an influence over him or her;
2. that this influence weakened his or her powers of resistance
and rendered his or her will compliant; and
3. that the other party used this influence in an unscrupulous
manner to persuade him or her to agree to a transaction
• that was prejudicial to him or her, and
• which he or she would not have concluded with normal freedom
of will.
It is not clear why prejudice should be proved since the basis of
the action is vitiated consent. Mere inducement to contract should
suffice.
Therefore: The minister clearly had influence over X
2 This influence definitely weakened X’s power of resistance and
made his will compliant.
3 The minister could have advised X to pay the seller of the shares
the market value of the shares but instead saw the opportunity of
enriching the church. The minister thus unscrupulously influenced
X to donate the shares to the church.
4 This donation was clearly to the prejudice to of X: he stands to
lose his shares. The fact that X wants to set the contract aside
indicates that X would not have donated the shares with his
normal freedom of will.
Where the undue influence is brought to bear by an outsider, the
party influenced may set aside the contract only if the other
contracting party was aware, at the time of the transaction, that the
influence had been exercised. The minister either acted as agent
of the church or he was an outsider.
CONTRACT
NOTES
2024.
,1. Jack wants to sell his Yamaha speedboat. He approaches Jill, who sells
speedboats for a living, and asks her if she is interested in buying his
Yamaha speedboat. Jill signs a written offer and submits it to Jack for
the Yamaha speedboat for R200 000, in a document titled “Contract of
Sale.” The offer sets out all the relevant terms, and includes the
following clause:
“This offer is irrevocable and expires at noon on 5 March 2024, and
upon signature by the seller will indicate his acceptance, as well as the
conclusion of a valid contract of sale.”
On 4 March 2024 Jack signs the contract of sale document and he
inserts the date of his signature therein, but he forgets to immediately
inform Jill that he has done so. Only on 8 March 2024, Jack informs Jill
of his acceptance. Jill indicates to Jack that her offer lapsed on 5 March
2024, and that Jack did not inform her of his acceptance timeously. Jill
further informs Jack that she no longer wants to purchase the Yamaha
speedboat. Jack approaches you for legal advice. Do a detailed analysis
and application of the offer and acceptance requirements and advise
Jack if there is a legally binding contract between him and Jill. You must
also advise Jack about his concern that he only informed Jill after 5
March 2024, that he accepted Jill’s offer. Discuss fully. Do not apply the
Consumer Protection Act 68 of 2008 to this question.
[20]
2. Z hands over a written offer to sell his Rolex watch to X for R250 000.
The offer is made to X only, and it sets out all the relevant terms for a
contract of sale. Z signed the written offer as the seller. X and Y are best
friends and they both sign the same document as buyers, as they want
to purchase the watch jointly. X then hands the signed document to Z,
who reads it. The next day Z finds a new purchaser (D) who immediately
pays him R300 000 cash for the same watch. Z accepts this cash
amount and hands the watch to D. When X and Y learn that Z sold the
watch to D, they approach you for legal advice. Do a detailed analysis
and application of the offer and acceptance requirements and advise X
and Y if they concluded a legally binding contract with Z. Discuss fully
and refer to case law in your answer. Do not apply the Consumer
, Protection Act 68 of 2008. Your answer must not exceed two typed
pages or three written pages. [20]
3. X, who is deeply troubled and in a highly emotional state, informs his
minister (of religion) that he has bought a number of shares at a fraction
of their true value and that, although there was nothing legally wrong
with the transaction, he feels that he has acted in a way which was
morally wrong. The minister advises X to donate the shares to the
church to rid him of the feelings of guilt, and X there and then signs a
contract in terms of which he donates all the shares to the church. A
month later X seeks to have the contract SET ASIDE. Will he succeed?
Discuss fully. Do not apply the ConsumerProtection Act of 2008 to this
question. (15)
• Undue influence
The facts of this problem indicate that X asked his minister for
advice and the minister influenced him to donate the shares to the
church. This may be undue influence. South African courts have
been influenced by English law in recognising undue influence.
Undue influence has been expressly recognised as part of our law
since a case in 1948 and this position has been confirmed by two
later Appellate Division cases.
In English law, the existence of a special relationship between the
parties gives rise to a rebuttable presumption of undue influence. It
seems fairly clear that this is not the case in our law. The party
who alleges undue influence has the onus to prove that it
occurred. The existence of a confidential relationship between the
parties is a relevant factor in discharging that onus.
There are two forms of such a close relationship: a fiduciary
relationship (eg as between a doctor and patient or attorney and
client), or a relationship of respect and reverence (eg as in the
case of parent and child, guardian and ward or religious leader
and disciple). In such relationships the one party is entitled or
obliged to advise and assist the other, and then misuses his or her
superior position to influence and undermine the will of the latter.
In our problem a relationship of respect existed between X and the
minister.
, Undue influence is a form of improper pressure brought to bear
upon a person in order to induce him or her to enter into a
contract. According to AD cases a party who seeks to set aside a
contract on the ground of undue influence must establish:
1. that the other party obtained an influence over him or her;
2. that this influence weakened his or her powers of resistance
and rendered his or her will compliant; and
3. that the other party used this influence in an unscrupulous
manner to persuade him or her to agree to a transaction
• that was prejudicial to him or her, and
• which he or she would not have concluded with normal freedom
of will.
It is not clear why prejudice should be proved since the basis of
the action is vitiated consent. Mere inducement to contract should
suffice.
Therefore: The minister clearly had influence over X
2 This influence definitely weakened X’s power of resistance and
made his will compliant.
3 The minister could have advised X to pay the seller of the shares
the market value of the shares but instead saw the opportunity of
enriching the church. The minister thus unscrupulously influenced
X to donate the shares to the church.
4 This donation was clearly to the prejudice to of X: he stands to
lose his shares. The fact that X wants to set the contract aside
indicates that X would not have donated the shares with his
normal freedom of will.
Where the undue influence is brought to bear by an outsider, the
party influenced may set aside the contract only if the other
contracting party was aware, at the time of the transaction, that the
influence had been exercised. The minister either acted as agent
of the church or he was an outsider.
