PVL3702 Law of Contract
2021 Semester 1 Assignment 1
X is one of ten people interviewed for a job which requires specialist skills and
expertise, at company Y. All ten candidates were very keen to be employed at company
Y, and at their job interviews for this position, they all signed a document titled “Offer of
Employment”, which included the terms of employment proposed. Subsequently, X
received a “Letter of Acceptance” signed by the relevant authorized representative of
company Y, informing her (X) that she is the successful candidate, and congratulating
her on her appointment. X was also informed in this acceptance letter, that all the terms
included in the “Offer of Employment” document which X signed, will apply to her
employment with company Y. Based on this letter of acceptance, X then resigned from
her employment in Durban, in order to take up her new position at company Y, in
Johannesburg. She also then sold her house in Durban and made arrangements to
have her furniture moved to her new home in Johannesburg. However, to her surprise,
X thereafter received an apology letter from company Y, stating that the letter of
acceptance was sent to her by mistake, and that it was intended to be sent to another
person who was interviewed by the selection committee, as that person had the
necessary skills and expertise required for the position. Company Y is of the view that
because it made an administrative error and mistakenly sent the acceptance letter to X,
a legally binding contract was not concluded between the parties.
Advise X fully, whether an enforceable contract was concluded between her (X)
and company Y. Apply the direct approach of the courts and refer to relevant
case law in your answer. Do not apply the Consumer Protection Act 68 of 2008 to
this question.
Answer
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,The facts seemingly indicate that X and Y have not reached consensus based on the
will theory. If so, it is necessary to determine if Y may be held bound to a contract with
X, based on the reliance theory, or whether Y will escape liability. Only the direct
approach to the reliance theory will be considered.
Discussing the relevant law applicable to the problem, referring to the relevant
case law, AND applying the law to the facts of the problem
The indirect approach is the iustus error-approach. A party who acted under a mistake
and wishes to escape liability (Y in our case) must prove that his / her mistake is
material and reasonable. At the outset it must be determined whether agreement
(consensus ad idem) as a contractual basis exists between the parties, as required in
terms of the will theory. Consensus has three elements
(Hutchison and Pretorius (eds) The law of Contract in South Africa Oxford University
Press Southern Africa 2012 14 85): the parties must seriously intend to contract, be of
one mind as to the material aspects of the proposed agreement (the terms and the
identity of the parties to it), and be conscious of the fact that their minds have met.
In the present case, the parties were not in agreement as to whom Y intended to send
the letter of acceptance Y intended to send the letter to another person who was
interviewed by the selection committee, as that person had the necessary skills and
expertise required for the position whilst X thought that the letter was addressed to her..
This is a mistake in persona and thus 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:
N.B Discuss cases on error in persona (3-5 cases in detail)
Advice
Y is not bound by the agreement with X because of the lack of actual and apparent
consensus.
Assignment 2
Question 1
Which statement is INCORRECT?
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,1 A delict constitutes a civil wrong, and in appropriate circumstances, gives rise to
a duty to pay damages.
2 In general, a delictual obligation is imposed by law, whereas a contractual
obligation is voluntarily assumed by the parties.
3 The law of contract, delict, and unjustified enrichment, do not all relate to the law
of obligations.
4 In the absence of a valid contract, an unjustified enrichment claim may arise
when there is a transfer of wealth from one person’s estate to another person’s estate,
without a good legal ground or cause for this shift.
5 Sometimes, concurrent contractual and delictual liability can arise, such that the
plaintiff may sue the defendant, on either basis. (1)
Discussion
Sources of obligations are derived from the following
1) Contract
2) Delict
3) From other causes
- Undue enrichment
- Family relationships
- Negottiorum gestion
- Exercise of administrative authority
Question 2
X makes an offer to sell her watch to Y for R2500. X and Y agree on 15 May that X’s
offer will be open for acceptance until 31 May. On 20 May, X informs Y that she (X)
intends to sell this watch to Z on 30 May. On 21 May, Y informs X that he (Y) accepts
the offer, but X refuses to sell the watch to Y. Which statement is CORRECT?
1 An option contract was concluded between X and Y on 15 May.
2 An option contract was not concluded between X and Y.
3 From these set of facts, the only legally binding agreement concluded between X and
Y occurred on 21 May.
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, 4 After X informed Y on 20 May that she (X) intends to sell the watch to Z, the option
contract concluded on 15 May became null and void, but it was subsequently revived
on 21 May when Y accepted X’s offer.
5 An option contract was concluded on 21 May when Y accepted the offer, and a further
contract was concluded for the sale of the watch on this day. (1)
Discussion
For a pre-emption contract or an option contract to exist there must firstly be an
agreement between Y and Z in this regard. There is no such agreement between Y
and Z. The stipulation that the offer lapses on 31 May is not an offer to keep the
offer to sell open until 31 May. Therefore, no option contract exists. No
preemption contract exists, as there is no agreement between Y and Z giving the
latter a preferential right to purchase the watch
Question 3
X has a watch that Y likes. On 5 August, X sends a written offer by post to Y, to
purchase Y’s watch for R10000. One of the terms in the offer is that the offer will lapse
on 20 August. The offer also stipulates that X must be aware of the acceptance, for any
legal obligations to arise. Y writes the letter of acceptance on 9 August in response to
X’s offer, and Y posts this written acceptance on 10 August. X’s son collects the post
from the Post Office on 17 August, and amongst the sealed letters of post collected, is
Y’s acceptance. X’s son is not responsible and only hands all the sealed post to X, on
20 August. On 21 August, X opens the post and reads the acceptance. Which theory
under South African law forms as the primary basis to apply when considering if a
contract was concluded between the parties?
1 An objective application of the reliance theory.
2 A subjective application of the reliance theory.
3 A subjective application of the will theory.
4 An objective application of the will theory.
5 A subjective application of the declaration theory. (1)
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2021 Semester 1 Assignment 1
X is one of ten people interviewed for a job which requires specialist skills and
expertise, at company Y. All ten candidates were very keen to be employed at company
Y, and at their job interviews for this position, they all signed a document titled “Offer of
Employment”, which included the terms of employment proposed. Subsequently, X
received a “Letter of Acceptance” signed by the relevant authorized representative of
company Y, informing her (X) that she is the successful candidate, and congratulating
her on her appointment. X was also informed in this acceptance letter, that all the terms
included in the “Offer of Employment” document which X signed, will apply to her
employment with company Y. Based on this letter of acceptance, X then resigned from
her employment in Durban, in order to take up her new position at company Y, in
Johannesburg. She also then sold her house in Durban and made arrangements to
have her furniture moved to her new home in Johannesburg. However, to her surprise,
X thereafter received an apology letter from company Y, stating that the letter of
acceptance was sent to her by mistake, and that it was intended to be sent to another
person who was interviewed by the selection committee, as that person had the
necessary skills and expertise required for the position. Company Y is of the view that
because it made an administrative error and mistakenly sent the acceptance letter to X,
a legally binding contract was not concluded between the parties.
Advise X fully, whether an enforceable contract was concluded between her (X)
and company Y. Apply the direct approach of the courts and refer to relevant
case law in your answer. Do not apply the Consumer Protection Act 68 of 2008 to
this question.
Answer
1|Page
,The facts seemingly indicate that X and Y have not reached consensus based on the
will theory. If so, it is necessary to determine if Y may be held bound to a contract with
X, based on the reliance theory, or whether Y will escape liability. Only the direct
approach to the reliance theory will be considered.
Discussing the relevant law applicable to the problem, referring to the relevant
case law, AND applying the law to the facts of the problem
The indirect approach is the iustus error-approach. A party who acted under a mistake
and wishes to escape liability (Y in our case) must prove that his / her mistake is
material and reasonable. At the outset it must be determined whether agreement
(consensus ad idem) as a contractual basis exists between the parties, as required in
terms of the will theory. Consensus has three elements
(Hutchison and Pretorius (eds) The law of Contract in South Africa Oxford University
Press Southern Africa 2012 14 85): the parties must seriously intend to contract, be of
one mind as to the material aspects of the proposed agreement (the terms and the
identity of the parties to it), and be conscious of the fact that their minds have met.
In the present case, the parties were not in agreement as to whom Y intended to send
the letter of acceptance Y intended to send the letter to another person who was
interviewed by the selection committee, as that person had the necessary skills and
expertise required for the position whilst X thought that the letter was addressed to her..
This is a mistake in persona and thus 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:
N.B Discuss cases on error in persona (3-5 cases in detail)
Advice
Y is not bound by the agreement with X because of the lack of actual and apparent
consensus.
Assignment 2
Question 1
Which statement is INCORRECT?
2|Page
,1 A delict constitutes a civil wrong, and in appropriate circumstances, gives rise to
a duty to pay damages.
2 In general, a delictual obligation is imposed by law, whereas a contractual
obligation is voluntarily assumed by the parties.
3 The law of contract, delict, and unjustified enrichment, do not all relate to the law
of obligations.
4 In the absence of a valid contract, an unjustified enrichment claim may arise
when there is a transfer of wealth from one person’s estate to another person’s estate,
without a good legal ground or cause for this shift.
5 Sometimes, concurrent contractual and delictual liability can arise, such that the
plaintiff may sue the defendant, on either basis. (1)
Discussion
Sources of obligations are derived from the following
1) Contract
2) Delict
3) From other causes
- Undue enrichment
- Family relationships
- Negottiorum gestion
- Exercise of administrative authority
Question 2
X makes an offer to sell her watch to Y for R2500. X and Y agree on 15 May that X’s
offer will be open for acceptance until 31 May. On 20 May, X informs Y that she (X)
intends to sell this watch to Z on 30 May. On 21 May, Y informs X that he (Y) accepts
the offer, but X refuses to sell the watch to Y. Which statement is CORRECT?
1 An option contract was concluded between X and Y on 15 May.
2 An option contract was not concluded between X and Y.
3 From these set of facts, the only legally binding agreement concluded between X and
Y occurred on 21 May.
3|Page
, 4 After X informed Y on 20 May that she (X) intends to sell the watch to Z, the option
contract concluded on 15 May became null and void, but it was subsequently revived
on 21 May when Y accepted X’s offer.
5 An option contract was concluded on 21 May when Y accepted the offer, and a further
contract was concluded for the sale of the watch on this day. (1)
Discussion
For a pre-emption contract or an option contract to exist there must firstly be an
agreement between Y and Z in this regard. There is no such agreement between Y
and Z. The stipulation that the offer lapses on 31 May is not an offer to keep the
offer to sell open until 31 May. Therefore, no option contract exists. No
preemption contract exists, as there is no agreement between Y and Z giving the
latter a preferential right to purchase the watch
Question 3
X has a watch that Y likes. On 5 August, X sends a written offer by post to Y, to
purchase Y’s watch for R10000. One of the terms in the offer is that the offer will lapse
on 20 August. The offer also stipulates that X must be aware of the acceptance, for any
legal obligations to arise. Y writes the letter of acceptance on 9 August in response to
X’s offer, and Y posts this written acceptance on 10 August. X’s son collects the post
from the Post Office on 17 August, and amongst the sealed letters of post collected, is
Y’s acceptance. X’s son is not responsible and only hands all the sealed post to X, on
20 August. On 21 August, X opens the post and reads the acceptance. Which theory
under South African law forms as the primary basis to apply when considering if a
contract was concluded between the parties?
1 An objective application of the reliance theory.
2 A subjective application of the reliance theory.
3 A subjective application of the will theory.
4 An objective application of the will theory.
5 A subjective application of the declaration theory. (1)
4|Page
