LAW OF CONTRACT - Q&A
written by
clarise
The study-notes marketplace
Buy and sell all your summaries, notes, theses, essays, papers, cases, manuals, researches, and
many more...
www.stuvia.co.za
Downloaded by: Goldenwing17 |
Distribution of this document is illegal
, Stuvia.com - The study-notes marketplace
Law of contract - PVL3702 S2/2014
Direct questions:
Discuss the impact of the Consumer Protection Act upon the law of contract with reference to its aims, objectives, scope, national regulatory institutions, and sanctions.
The CPA is bound to have a huge impact on the conduct of businesses in South Africa, and the law of contract. The primary purpose of the Act is to protect consumers from exploitation in
the marketplace, and to promote their social and economic welfare.
More specifically, it aims to:
- Establish a legal framework for the achievement and maintenance of a consumer market that is fair, accessible, efficient, and responsible, for the benefit of consumers generally;
- Promote fair business practices;
- Protect consumers from unconscionable, unjust, or unreasonable business practices.
The scope of the Act is very wide. It applies to:
- Most transactions concluded in the ordinary course of business between suppliers and consumers within South Africa, as well as;
- The promotion of goods and services that could lead to such transactions, and;
- The goods and services themselves once the transaction has been concluded.
A supplier is any person (including a juristic person, trust, and organ of State) who markets any goods or services.
A consumer includes not only the end-consumer of goods and services but also:
- Franchisees
- Relatively small businesses in the supply chain (asset value or annual turnover below the threshold determined by the Minister)
The Act does not apply to any transaction in terms of which goods and services are promoted or supplied:
- To the State
- To a juristic person with an asset value or annual turnover above the threshold
- Employment contracts
- Credit agreements and Transactions exempted by the Minister
Downloaded by: Goldenwing17 |
Distribution of this document is illegal
, Stuvia.com - The study-notes marketplace
These rights are protected and enforced not only through the courts, but the National Consumer Commission and the National Consumer Tribunal. Failure to comply with provisions of the
Act might attract various sanctions, commencing with compliance notices and leading possibly to the imposition of fines and criminal penalties. Contractual provisions in contravention of
the Act may be declared null and void to the extent of non-compliance.
List and very briefly discuss the requirements for a valid offer and acceptance.
OFFER:
- Must be firm. (That is to say, with the intention that its acceptance will call into being a binding contract.)
- Must be complete. (It must contain all the material terms of the proposed agreement.)
- Must be clear and certain. (It should be enough for the addressee to answer merely “yes” for a contract to come into being.)
- Must meet the requirements of the Consumer Protection Act.
ACCEPTANCE:
- Must be unqualified. (It must be a complete and unequivocal assent to every element of the offer.)
- Must be by the person to whom the offer was made – Bird v Summerville. (E.g. the offer to sell farm A cannot be accepted by A and B jointly.)
- Must be a conscious response to the offer – Bloom v American Swiss Watch Co. (A person cannot accept an offer if he was not aware of it.)
- Must be in the form prescribed by the offeror, if any.
State the ways an offer may be terminated.
- Rejection of the offer
- Acceptance of the offer
- Effluxion of the prescribed time, or of a reasonable time
- Death of either party
- Revocation of the offer
- Loss of legal capacity to act
Discuss and distinguish between an option and a right of pre-emption.
An option is a substantive offer, reinforced by an agreement in terms of which the offeror undertakes to keep his offer open to the offeree for a specified period.
Downloaded by: Goldenwing17 |
Distribution of this document is illegal
, Stuvia.com - The study-notes marketplace
A right of pre-emption is a type of right of preference. It is given by a prospective seller to a prospective purchaser, to give the purchaser preference if the prospective seller should decide to
sell.
There are significant differences between the two. In the case of an option to buy, the grantor has already made a firm offer to the grantee, and the power to conclude the sale lies
exclusively in the hands of the grantee.
With a pre-emption agreement, however, there is as yet no firm offer “on the table” – merely an undertaking to make an offer to the grantee if the trigger event occurs (usually, if the
grantee decides to sell the property). The grantor accordingly retains the power to decide whether or not to sell, and cannot be compelled to do so unless or until the trigger event has
occurred.
Remedies for breach:
Remedies for the breach of an option contract are governed by the general principles of the law of contract. An attempted revocation of the substantive offer does not prevent the exercise
of the option, and the option holder may enforce the contract specifically by means of an interdict against the grantor of the option. The option holder may also claim damages, if suffered,
to place him or her in the position that he or she would have been if the option had been exercised.
Remedies for the breach of a pre-emption contract by the grantor are a bit less certain. The Appellate Division in Owsianick held that a right of pre-emption entails a restriction on alienation
and that the holder was entitled to an interdict to prevent the grantor from alienating the thing to a third party. Furthermore, it held that the only other remedy available to the holder was
a claim for damages. In Associated SA Bakeries the court also doubted whether the holder could claim specific performance by means of an order directing the grantor to make him an offer,
but granted a different approach, which was set out as follows:
- If a seller concludes a contract of sale with a third party contrary to a pre-emptive right, the purchaser can step into the shoes of the third party by a unilateral declaration of intent. A
contract of sale will then be deemed to have been concluded between the seller and the holder of the pre-emptive right.
- Should delivery already have taken place, the holder of the right would not be able to pursue the merx in the hands of the third party with his or her personal right, unless the third
party was aware of the existence of the pre-emptive right.
Formalities:
Option contract
In Brandt v Spies, the defendant orally granted an option to the plaintiff to purchase his farm. Disregarding the option, he sold the farm to a third party. The plaintiff who exercised the
option in writing, then claimed damages for breach of contract, but an exception to his claim was upheld. The court stated that an undertaking to keep open an offer that is invalid can itself
Downloaded by: Goldenwing17 |
Distribution of this document is illegal
written by
clarise
The study-notes marketplace
Buy and sell all your summaries, notes, theses, essays, papers, cases, manuals, researches, and
many more...
www.stuvia.co.za
Downloaded by: Goldenwing17 |
Distribution of this document is illegal
, Stuvia.com - The study-notes marketplace
Law of contract - PVL3702 S2/2014
Direct questions:
Discuss the impact of the Consumer Protection Act upon the law of contract with reference to its aims, objectives, scope, national regulatory institutions, and sanctions.
The CPA is bound to have a huge impact on the conduct of businesses in South Africa, and the law of contract. The primary purpose of the Act is to protect consumers from exploitation in
the marketplace, and to promote their social and economic welfare.
More specifically, it aims to:
- Establish a legal framework for the achievement and maintenance of a consumer market that is fair, accessible, efficient, and responsible, for the benefit of consumers generally;
- Promote fair business practices;
- Protect consumers from unconscionable, unjust, or unreasonable business practices.
The scope of the Act is very wide. It applies to:
- Most transactions concluded in the ordinary course of business between suppliers and consumers within South Africa, as well as;
- The promotion of goods and services that could lead to such transactions, and;
- The goods and services themselves once the transaction has been concluded.
A supplier is any person (including a juristic person, trust, and organ of State) who markets any goods or services.
A consumer includes not only the end-consumer of goods and services but also:
- Franchisees
- Relatively small businesses in the supply chain (asset value or annual turnover below the threshold determined by the Minister)
The Act does not apply to any transaction in terms of which goods and services are promoted or supplied:
- To the State
- To a juristic person with an asset value or annual turnover above the threshold
- Employment contracts
- Credit agreements and Transactions exempted by the Minister
Downloaded by: Goldenwing17 |
Distribution of this document is illegal
, Stuvia.com - The study-notes marketplace
These rights are protected and enforced not only through the courts, but the National Consumer Commission and the National Consumer Tribunal. Failure to comply with provisions of the
Act might attract various sanctions, commencing with compliance notices and leading possibly to the imposition of fines and criminal penalties. Contractual provisions in contravention of
the Act may be declared null and void to the extent of non-compliance.
List and very briefly discuss the requirements for a valid offer and acceptance.
OFFER:
- Must be firm. (That is to say, with the intention that its acceptance will call into being a binding contract.)
- Must be complete. (It must contain all the material terms of the proposed agreement.)
- Must be clear and certain. (It should be enough for the addressee to answer merely “yes” for a contract to come into being.)
- Must meet the requirements of the Consumer Protection Act.
ACCEPTANCE:
- Must be unqualified. (It must be a complete and unequivocal assent to every element of the offer.)
- Must be by the person to whom the offer was made – Bird v Summerville. (E.g. the offer to sell farm A cannot be accepted by A and B jointly.)
- Must be a conscious response to the offer – Bloom v American Swiss Watch Co. (A person cannot accept an offer if he was not aware of it.)
- Must be in the form prescribed by the offeror, if any.
State the ways an offer may be terminated.
- Rejection of the offer
- Acceptance of the offer
- Effluxion of the prescribed time, or of a reasonable time
- Death of either party
- Revocation of the offer
- Loss of legal capacity to act
Discuss and distinguish between an option and a right of pre-emption.
An option is a substantive offer, reinforced by an agreement in terms of which the offeror undertakes to keep his offer open to the offeree for a specified period.
Downloaded by: Goldenwing17 |
Distribution of this document is illegal
, Stuvia.com - The study-notes marketplace
A right of pre-emption is a type of right of preference. It is given by a prospective seller to a prospective purchaser, to give the purchaser preference if the prospective seller should decide to
sell.
There are significant differences between the two. In the case of an option to buy, the grantor has already made a firm offer to the grantee, and the power to conclude the sale lies
exclusively in the hands of the grantee.
With a pre-emption agreement, however, there is as yet no firm offer “on the table” – merely an undertaking to make an offer to the grantee if the trigger event occurs (usually, if the
grantee decides to sell the property). The grantor accordingly retains the power to decide whether or not to sell, and cannot be compelled to do so unless or until the trigger event has
occurred.
Remedies for breach:
Remedies for the breach of an option contract are governed by the general principles of the law of contract. An attempted revocation of the substantive offer does not prevent the exercise
of the option, and the option holder may enforce the contract specifically by means of an interdict against the grantor of the option. The option holder may also claim damages, if suffered,
to place him or her in the position that he or she would have been if the option had been exercised.
Remedies for the breach of a pre-emption contract by the grantor are a bit less certain. The Appellate Division in Owsianick held that a right of pre-emption entails a restriction on alienation
and that the holder was entitled to an interdict to prevent the grantor from alienating the thing to a third party. Furthermore, it held that the only other remedy available to the holder was
a claim for damages. In Associated SA Bakeries the court also doubted whether the holder could claim specific performance by means of an order directing the grantor to make him an offer,
but granted a different approach, which was set out as follows:
- If a seller concludes a contract of sale with a third party contrary to a pre-emptive right, the purchaser can step into the shoes of the third party by a unilateral declaration of intent. A
contract of sale will then be deemed to have been concluded between the seller and the holder of the pre-emptive right.
- Should delivery already have taken place, the holder of the right would not be able to pursue the merx in the hands of the third party with his or her personal right, unless the third
party was aware of the existence of the pre-emptive right.
Formalities:
Option contract
In Brandt v Spies, the defendant orally granted an option to the plaintiff to purchase his farm. Disregarding the option, he sold the farm to a third party. The plaintiff who exercised the
option in writing, then claimed damages for breach of contract, but an exception to his claim was upheld. The court stated that an undertaking to keep open an offer that is invalid can itself
Downloaded by: Goldenwing17 |
Distribution of this document is illegal
