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PVL3702
EXAM PACK
DISTINCTION QUALITY
UNISA EXAM
,PVL3702 October/November 2025 Exam
Question 1: Contract Formation – Timing Theories
When is a contract concluded under each of the four classical theories of
acceptance timing (information theory, expedition (mailbox) theory, reception
theory, and declaration theory)?
Rule
South African law follows the information theory as the general rule: a contract is formed
when the offeror actually learns of the offeree’s acceptance. Under this theory,
consensus is only reached once the offeror is informed of the offeree’s “yes.” In
contrast, the expedition (mailbox) theory holds that a contract is formed the moment the
offeree posts the acceptance, provided certain conditions are met, offer made by post,
postal system functioning, no contrary prescription, etc.. The reception theory provides
that a contract is concluded once the acceptance reaches (enters) the offeror’s control
or designated system for example, electronic messages are effective when they arrive
in the offeror’s inbox. The declaration theory a purely objective approach would treat a
contract as concluded when the offeree outwardly communicates acceptance, but South
African law does not generally apply this as the rule; it is chiefly an academic
alternative. In practice:
Information theory
Acceptance only takes effect when and where the offeror learns of it.
, Expedition mailbo theory: Acceptance takes effect upon posting the “postal rule”,
though only if the offer contemplated postal acceptance and no method requiring
receipt was prescribed.
Reception theory: Acceptance takes effect when it reaches the offeror (or his system)
now generally applied to instantaneous electronic communications (e-mail/SMS).
Declaration theory: Acceptance takes effect when the offeree makes a declaration of
intent to accept, but under SA law this is subsumed by the information theory except in
special circumstances.
Application
For example, in a postal contract the expedition theory creates an exception to the
general information rule: the contract is formed when the offeree posts the letter of
acceptance. In contrast, if acceptance is given face-to-face or by instant message, the
acceptance takes effect on receipt as under the information/reception approach. If an
offeror prescribes receipt e.g. I must get your acceptance by courier, that prescription
prevails. No single theory is absolutely universal, but in South Africa the information
theory is the default rule, subject to the postal rule and modern rules for electronic
acceptance.
A contract under SA law ordinarily becomes binding when the offeror learns of the
acceptance (information theory). However, if acceptance was made by post and the
circumstances fit the mailbox rule, the contract is formed on posting. If acceptance is by
instantaneous means (phone, e-mail), it is effective on receipt (reception theory). The
declaration theory (contract on outward declaration of acceptance) is largely academic
here.
, Question 2: Option versus Pre-emption Contracts
What are the definitions and distinguishing features of an option contract
(irrevocable offer) versus a pre-emption (right of first refusal) contract?
Rule
An option contract (pactum de contrahendo) involves a seller (offeror) promising to keep
an offer open to sell for a certain period. It has two parts: a firm substantive offer and an
agreement by the offeror not to revoke that offer. The result is an irrevocable offer – the
option holder has the power (but not the obligation) to accept the main offer within the
option period. During the option period the offeror cannot revoke the offer; if the grantee
exercises the option, the main contract automatically forms. An option may be
gratuitous or supported by consideration e.g. an upfront payment.
A pre-emption contract (right of first refusal) is a promise giving the holder the first
opportunity to buy property if and when the owner decides to sell. Crucially, in a pre-
emption no definite offer has yet been made, the grantor merely agrees to notify the
grantee of a bona fide sale offer to a third party. The grantee cannot force the sale; he
only gets the first chance to match any deal. The grantor remains free to decide whether
to sell, and only if he does must he give the grantee the first option on the terms of the
contemplated sale.
Key differences include
PVL3702
EXAM PACK
DISTINCTION QUALITY
UNISA EXAM
,PVL3702 October/November 2025 Exam
Question 1: Contract Formation – Timing Theories
When is a contract concluded under each of the four classical theories of
acceptance timing (information theory, expedition (mailbox) theory, reception
theory, and declaration theory)?
Rule
South African law follows the information theory as the general rule: a contract is formed
when the offeror actually learns of the offeree’s acceptance. Under this theory,
consensus is only reached once the offeror is informed of the offeree’s “yes.” In
contrast, the expedition (mailbox) theory holds that a contract is formed the moment the
offeree posts the acceptance, provided certain conditions are met, offer made by post,
postal system functioning, no contrary prescription, etc.. The reception theory provides
that a contract is concluded once the acceptance reaches (enters) the offeror’s control
or designated system for example, electronic messages are effective when they arrive
in the offeror’s inbox. The declaration theory a purely objective approach would treat a
contract as concluded when the offeree outwardly communicates acceptance, but South
African law does not generally apply this as the rule; it is chiefly an academic
alternative. In practice:
Information theory
Acceptance only takes effect when and where the offeror learns of it.
, Expedition mailbo theory: Acceptance takes effect upon posting the “postal rule”,
though only if the offer contemplated postal acceptance and no method requiring
receipt was prescribed.
Reception theory: Acceptance takes effect when it reaches the offeror (or his system)
now generally applied to instantaneous electronic communications (e-mail/SMS).
Declaration theory: Acceptance takes effect when the offeree makes a declaration of
intent to accept, but under SA law this is subsumed by the information theory except in
special circumstances.
Application
For example, in a postal contract the expedition theory creates an exception to the
general information rule: the contract is formed when the offeree posts the letter of
acceptance. In contrast, if acceptance is given face-to-face or by instant message, the
acceptance takes effect on receipt as under the information/reception approach. If an
offeror prescribes receipt e.g. I must get your acceptance by courier, that prescription
prevails. No single theory is absolutely universal, but in South Africa the information
theory is the default rule, subject to the postal rule and modern rules for electronic
acceptance.
A contract under SA law ordinarily becomes binding when the offeror learns of the
acceptance (information theory). However, if acceptance was made by post and the
circumstances fit the mailbox rule, the contract is formed on posting. If acceptance is by
instantaneous means (phone, e-mail), it is effective on receipt (reception theory). The
declaration theory (contract on outward declaration of acceptance) is largely academic
here.
, Question 2: Option versus Pre-emption Contracts
What are the definitions and distinguishing features of an option contract
(irrevocable offer) versus a pre-emption (right of first refusal) contract?
Rule
An option contract (pactum de contrahendo) involves a seller (offeror) promising to keep
an offer open to sell for a certain period. It has two parts: a firm substantive offer and an
agreement by the offeror not to revoke that offer. The result is an irrevocable offer – the
option holder has the power (but not the obligation) to accept the main offer within the
option period. During the option period the offeror cannot revoke the offer; if the grantee
exercises the option, the main contract automatically forms. An option may be
gratuitous or supported by consideration e.g. an upfront payment.
A pre-emption contract (right of first refusal) is a promise giving the holder the first
opportunity to buy property if and when the owner decides to sell. Crucially, in a pre-
emption no definite offer has yet been made, the grantor merely agrees to notify the
grantee of a bona fide sale offer to a third party. The grantee cannot force the sale; he
only gets the first chance to match any deal. The grantor remains free to decide whether
to sell, and only if he does must he give the grantee the first option on the terms of the
contemplated sale.
Key differences include
