PVL3702 Assignment 1 Semester 2 Unique number: 647569
Student number: 55612792 Due date: 10 May 2021 Ashleigh Hala
The discussion below will look at the problem faced by X in terms of determining
whether a legally binding (enforceable) contract was concluded between her (X) and
the company (Y) or whether the administrative error (material mistake) made by Y
allows for denial of contractual liability on their part.
According to South African law there are two important factors to consider when
determining whether a contract has been concluded, namely consensus and
reasonable reliance1. If it is found that consensus has been reached, then the parties
will be bound to the contract. If no consensus has been reached, then it must be
determined whether either party misled the other into reasonable belief that
consensus existed between them2. If this is the case, then the contract will be upheld
based on reasonable reliance.
Sometimes, an error in contract can occur, which refers to “a situation where a
contracting party acts while under an incorrect impression that causes dissensus or
disagreement between the parties”3. Mistakes can be classified as either material or
non-material mistakes. Three criteria must be met in order to achieve consensus ad
idem, namely, there must be a serious intention to contract; the parties must be in
agreement regarding the material aspects of the contract; and they must be
conscious of the agreement4. If the parties disagree on even one of these criteria,
then there is a material mistake.
In cases of dissensus, the courts can apply the iustus error approach, which can be
seen as an indirect application of the reliance theory and works to ensure that a party
will not be held to a contract if that party mistakenly gave their consent and if their
mistake is material and reasonable. Once it has been shown that consent is present,
then the onus of proof falls on the party denying the contract to prove that their
mistake is reasonable and material and that they can therefore be absorbed from
liability on terms of the contract, as the contract will be void ab initio5.
Regarding the case of X, for a contract to exist between parties X and Y, there needs
to be consensus and reasonable reliance. As there is clear dissensus between these
two parties, the courts will need to determine whether one party misled the other into
believing that there was reasonable consensus between them. It could be argued
1
Hutchison, D. and Pretorius, C. 2017. The Law of Contract in South Africa. South Africa: Oxford University
Press (20).
2
Hutchison, 2017: 20.
3
Hutchison, 2017: 113.
4
Hutchison, 2017: 114.
5
Hutchison, 2017: 103.
Student number: 55612792 Due date: 10 May 2021 Ashleigh Hala
The discussion below will look at the problem faced by X in terms of determining
whether a legally binding (enforceable) contract was concluded between her (X) and
the company (Y) or whether the administrative error (material mistake) made by Y
allows for denial of contractual liability on their part.
According to South African law there are two important factors to consider when
determining whether a contract has been concluded, namely consensus and
reasonable reliance1. If it is found that consensus has been reached, then the parties
will be bound to the contract. If no consensus has been reached, then it must be
determined whether either party misled the other into reasonable belief that
consensus existed between them2. If this is the case, then the contract will be upheld
based on reasonable reliance.
Sometimes, an error in contract can occur, which refers to “a situation where a
contracting party acts while under an incorrect impression that causes dissensus or
disagreement between the parties”3. Mistakes can be classified as either material or
non-material mistakes. Three criteria must be met in order to achieve consensus ad
idem, namely, there must be a serious intention to contract; the parties must be in
agreement regarding the material aspects of the contract; and they must be
conscious of the agreement4. If the parties disagree on even one of these criteria,
then there is a material mistake.
In cases of dissensus, the courts can apply the iustus error approach, which can be
seen as an indirect application of the reliance theory and works to ensure that a party
will not be held to a contract if that party mistakenly gave their consent and if their
mistake is material and reasonable. Once it has been shown that consent is present,
then the onus of proof falls on the party denying the contract to prove that their
mistake is reasonable and material and that they can therefore be absorbed from
liability on terms of the contract, as the contract will be void ab initio5.
Regarding the case of X, for a contract to exist between parties X and Y, there needs
to be consensus and reasonable reliance. As there is clear dissensus between these
two parties, the courts will need to determine whether one party misled the other into
believing that there was reasonable consensus between them. It could be argued
1
Hutchison, D. and Pretorius, C. 2017. The Law of Contract in South Africa. South Africa: Oxford University
Press (20).
2
Hutchison, 2017: 20.
3
Hutchison, 2017: 113.
4
Hutchison, 2017: 114.
5
Hutchison, 2017: 103.
