+27 680 77 9615
280 Oak Avenue, Randburg, Johannesburg, ZA
, +27 680 77 9615
280 Oak Avenue, Randburg, Johannesburg, ZA
The direct reliance theory is a legal principle that refers to the idea that a third party
can enforce a contract that was made for its benefit. According to this theory, if a
contract is made for the benefit of a third party and the third party relies on the
performance of that contract, the third party can enforce the contract even if it was not
a party to the contract itself. This theory is often used in situations where it is difficult
or impossible for the third party to directly enter into a contract with one of the original
contracting parties. The direct reliance theory allows the third party to seek remedy for
breach of contract if one of the original parties fails to perform their obligations under
the contract.
Case study
Carol accidentally sent the letter of acceptance to Jane because it intended to contract
with another party. Thus, the question is whether this error was on the part of the
company. The error made by Carol is due to an error in persona. When a party intends
to accept the offer of one party but instead accepts the offer of another, the error is
usually material. In Kok v Osborne, a party was mistaken about the identity of the party
or parties with whom he was contracting, and the court determined that his mistake
was material.1
After establishing that there was a material mistake, the next step in the investigation
based on the iustus error doctrine is to determine whether the mistake made by Carol
1
KOK v Osborne AND Another 1993 2 All SA 549 (SE)
280 Oak Avenue, Randburg, Johannesburg, ZA
, +27 680 77 9615
280 Oak Avenue, Randburg, Johannesburg, ZA
The direct reliance theory is a legal principle that refers to the idea that a third party
can enforce a contract that was made for its benefit. According to this theory, if a
contract is made for the benefit of a third party and the third party relies on the
performance of that contract, the third party can enforce the contract even if it was not
a party to the contract itself. This theory is often used in situations where it is difficult
or impossible for the third party to directly enter into a contract with one of the original
contracting parties. The direct reliance theory allows the third party to seek remedy for
breach of contract if one of the original parties fails to perform their obligations under
the contract.
Case study
Carol accidentally sent the letter of acceptance to Jane because it intended to contract
with another party. Thus, the question is whether this error was on the part of the
company. The error made by Carol is due to an error in persona. When a party intends
to accept the offer of one party but instead accepts the offer of another, the error is
usually material. In Kok v Osborne, a party was mistaken about the identity of the party
or parties with whom he was contracting, and the court determined that his mistake
was material.1
After establishing that there was a material mistake, the next step in the investigation
based on the iustus error doctrine is to determine whether the mistake made by Carol
1
KOK v Osborne AND Another 1993 2 All SA 549 (SE)
