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PVL3702-Contract-cases
Law of Contract (University of South Africa)
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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
Thus, no contract came into being between Bloom and ASW and therefore, no basis on which he could
claim the reward
Note
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PVL301-W 2
Parties who agree must be aware of their agreement
National and Overseas Distributors Corporation (Pty) Ltd v Potato Board
Facts of the Case
The Respondent [the potato Board] mistakenly accepted a tender of the Appellant for the erection of a
Steel shed
The respondent had expressed in a letter to the appellant that the appellant offer to erect the steel shed
had been accepted
This acceptance was a mistake as the Respondent had in fact intended to accept the tender of a third-
party.
Legal Question
Was the Mistake Material???
Finding and Rationale
The mistake was material
The court found that the appellant was led to reasonably believe that the respondent intended to contract
with it.
Even though the letter had incorrectly expressed the respondent's intention (so that there was
Dissensus) the court found that a contract existed because the appellant's belief that its offer had been
accepted was reasonable in the circumstances
It related to the persons between whom obligations were to be created [content of the obligation]
Note
This was not a case of mistaken as to identity as the Respondent [the Potato Board] did not mistake the
Appellant for the 3rd party.
George v Fairmead (Pty) Ltd 1958 (2) SA 465 (AD)
Facts of the Case
The Appellant argued that he had signed a hotel register whereas he had, In fact, signed a contract
containing a term excluding the Respondent from liability for certain acts
The Appellant was not aware of this term because he did not read the document before signing it.
Finding of the court
The court found that the Appellant’s mistake related to a term which he believed would not be in the
contract.
This mistake was material because it related to an aspect of performance.
F was led to believe that the other party (G) agreed to a material term in a contract because G had
signed the contract and F had believed that G had read the relevant term
The contract was therefore valid
Allen v Sixteen Sterling Investments (Pty) Ltd 1974 (4) SA 164 (D
Facts of the Case
The Plaintiff believed that he was purchasing the erf SHOWN to him by the seller's agent.
The written contract which he signed indicated the correct erf which was a completely different property
Finding of the court (analysing the mistake)
The mistake in this case related to performance and was thus, material
Du Toit v Atkinson’s Motors 11985 (2) SA 889 (AD)
Facts of the Case
A party (A) signed a contract without reading it since he believed that its terms coincided with the content
of the other party’s (B) advertisement.
However - the contract contained a further material term of which A was unaware (Vis - a term excluding
the Respondent from liability for misrepresentation.
Finding of the court
The court found [once again] that the mistake related to an aspect of performance and was thus
material.
The court found (as the term was material) the contract to be void.
The court found that B (in this case) had not been misled by A into believing that he (A) had agreed to
the term because B had not drawn A’s attention to that relevant material term.
The court found (as the term was material) the contract to be void.
Sonap Petroleum (SA) (Pty) Ltd [formerly known as Sonarep (SA) (pty) (Ltd) v
Pappadogianis
Facts of the Case
The contract denier entered into a contract of lease with the contract enforcer for a period of 20 years
Downloaded by Kayla Greenwood ()
PVL3702-Contract-cases
Law of Contract (University of South Africa)
StuDocu is not sponsored or endorsed by any college or university
Downloaded by Kayla Greenwood ()
, lOMoARcPSD|6503080
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
Thus, no contract came into being between Bloom and ASW and therefore, no basis on which he could
claim the reward
Note
Downloaded by Kayla Greenwood ()
, lOMoARcPSD|6503080
PVL301-W 2
Parties who agree must be aware of their agreement
National and Overseas Distributors Corporation (Pty) Ltd v Potato Board
Facts of the Case
The Respondent [the potato Board] mistakenly accepted a tender of the Appellant for the erection of a
Steel shed
The respondent had expressed in a letter to the appellant that the appellant offer to erect the steel shed
had been accepted
This acceptance was a mistake as the Respondent had in fact intended to accept the tender of a third-
party.
Legal Question
Was the Mistake Material???
Finding and Rationale
The mistake was material
The court found that the appellant was led to reasonably believe that the respondent intended to contract
with it.
Even though the letter had incorrectly expressed the respondent's intention (so that there was
Dissensus) the court found that a contract existed because the appellant's belief that its offer had been
accepted was reasonable in the circumstances
It related to the persons between whom obligations were to be created [content of the obligation]
Note
This was not a case of mistaken as to identity as the Respondent [the Potato Board] did not mistake the
Appellant for the 3rd party.
George v Fairmead (Pty) Ltd 1958 (2) SA 465 (AD)
Facts of the Case
The Appellant argued that he had signed a hotel register whereas he had, In fact, signed a contract
containing a term excluding the Respondent from liability for certain acts
The Appellant was not aware of this term because he did not read the document before signing it.
Finding of the court
The court found that the Appellant’s mistake related to a term which he believed would not be in the
contract.
This mistake was material because it related to an aspect of performance.
F was led to believe that the other party (G) agreed to a material term in a contract because G had
signed the contract and F had believed that G had read the relevant term
The contract was therefore valid
Allen v Sixteen Sterling Investments (Pty) Ltd 1974 (4) SA 164 (D
Facts of the Case
The Plaintiff believed that he was purchasing the erf SHOWN to him by the seller's agent.
The written contract which he signed indicated the correct erf which was a completely different property
Finding of the court (analysing the mistake)
The mistake in this case related to performance and was thus, material
Du Toit v Atkinson’s Motors 11985 (2) SA 889 (AD)
Facts of the Case
A party (A) signed a contract without reading it since he believed that its terms coincided with the content
of the other party’s (B) advertisement.
However - the contract contained a further material term of which A was unaware (Vis - a term excluding
the Respondent from liability for misrepresentation.
Finding of the court
The court found [once again] that the mistake related to an aspect of performance and was thus
material.
The court found (as the term was material) the contract to be void.
The court found that B (in this case) had not been misled by A into believing that he (A) had agreed to
the term because B had not drawn A’s attention to that relevant material term.
The court found (as the term was material) the contract to be void.
Sonap Petroleum (SA) (Pty) Ltd [formerly known as Sonarep (SA) (pty) (Ltd) v
Pappadogianis
Facts of the Case
The contract denier entered into a contract of lease with the contract enforcer for a period of 20 years
Downloaded by Kayla Greenwood ()
