PVL3702 EXAM PACK 2024

Contents PVL3702 – 201 – 2015...........................................................................................................................1 PVL3702 – 201 – 2018...........................................................................................................................5 PVL3702 – 201 – 2019.........................................................................................................................16 PVL3702 – Questions May 2013..........................................................................................................27 PVL3702_201_2009............................................................................................................................. 28 PVL3702_201_2010............................................................................................................................. 32 PVL3702_May 2013.............................................................................................................................35 PVL3702_Oct_2013............................................................................................................................. 46 PVL3702_May 2014.............................................................................................................................54 PVL3702_Oct_2014............................................................................................................................. 64 PVL3702_201_2016............................................................................................................................. 74 PVL3702_201_2017............................................................................................................................. 82 PVL3702_201_2018............................................................................................................................. 91 PVL3702_201_2012............................................................................................................................. 96 PVL3702_201_2013........................................................................................................................... 100 PVL3702_201_2014........................................................................................................................... 105 PVL3702_201_2011........................................................................................................................... 109 PVL3702_ Various MCQ.....................................................................................................................113 ASSIGNMENT 1 – 2009......................................................................................................................117 ASSIGNMENT 2 – 2009......................................................................................................................121 ASSIGNMENT – 2010 – SEMESTER 1..................................................................................................128 ASSIGNMENT – 2010 – SEMESTER 2..................................................................................................133 ASSIGNMENT – 2008 – SEMESTER 1..................................................................................................136 PVL3702_May_2016.......................................................................................................................... 141 PVL3702_201_2013........................................................................................................................... 147 PVL3702_201_2014........................................................................................................................... 150 PVL3702_Revision Pack.....................................................................................................................153 PVL3702_May_2015.......................................................................................................................... 204 PVL3702_Oct_2015........................................................................................................................... 237 PVL3702_Question from Study Unit..................................................................................................262 Study Unit 6 & 7_ OFFER AND ACCEPTANCE......................................................................................266 Case law.........................................................................................................................................266 1. CRAWLEY REX........................................................................................................................266 2. Carlill v. Carbolic Smoke Ball Co. [1893] Q.B. 256 (C.A.).........................................................266 3. Bloom v The American Swiss Watch Company......................................................................266 PROBLEM TYPES QUESTION: OFFER AND ACCEPTANCE.................................................................267 Question: ABSENCE OF CONSENSUS..............................................................................................269 Question: MISREPRESENTATION...................................................................................................271 Question: STUDY UNIT 13: DURESS...................................................................................................273 Question: Study Unit 14 UNDUE INFLUENCE.....................................................................................275 STUDY UNIT 15: COMMERCIAL BRIBERY............................................................................................276 Question: STUDY UNIT 17 and 18 : LEGALITY: ILLEGAL CONTRACTS THAT ARE VOID.........................276 STUDY UNIT 19: FORMALITIES...........................................................................................................277 Question STUDY UNIT 20: POSSIBILITY..............................................................................................278 STUDY UNIT 23: TERMS.....................................................................................................................279 3. Ticket cases....................................................................................................................................280 STUDY UNIT 24: INTERPRETATION.....................................................................................................281 STUDY UNIT 25-39: BREACH AND REMEDIES FOR BREACH................................................................281 SU 27: REPUDIATION.........................................................................................................................284 SU 28: PREVENTION OF PERFORMANCE............................................................................................284 SU 29: REMEDIES ON THE GROUND OF BREACH OF CONTRACT.......................................................285 SU 30: THE EXCEPTIO NON ADIMPLETI CONTRACTUS.......................................................................285 SU 31: RESCISSION (CANCEL).............................................................................................................285 SU 32: DAMAGES...............................................................................................................................285 SU 33: PENALTY CLAUSES...................................................................................................................304 SU 34: THE EXCEPTIO DOLI................................................................................................................305 SU 35: THE TRANSFER OF CLAIMS: CESSION......................................................................................305 SU 36, 37 & 38:..................................................................................................................................306 12 WAYS OF TERMINATING YOUR OBLIGATIONS:..........................................................................306 SU 36: THE TERMINATION OF OBLIGATIONS......................................................................................306 SU 37: THE TERMINATION OF OBLIGATIONS......................................................................................307 SU 38: THE TERMINATION OF OBLIGATIONS......................................................................................307 PVL3702_201_2019 – Second Semester............................................................................................311 ASSIGNMENT 02 – FIRST SEMESTER: UNIQUE NUMBER: ......................................................314 PVL3702_ Assignment ..........................................................................................................317 PVL3702_Oct 2016............................................................................................................................318 PVL3702_May 2017...........................................................................................................................330 PVL3702_Nov 2017............................................................................................................................340 PVL3702_May 2018...........................................................................................................................350 PROPERTY CASES:..............................................................................................................................359 REAL RIGHTS v CREDITORS RIGHTS................................................................................................359 OWNERSHIP AND LIMITATIONS ON OWNERSHIP...........................................................................359 Konstanz Property (Pty} Ltd:..........................................................................................................361 Info Plus:........................................................................................................................................361 Telkom SA Ltd v Xsinet (Pty) Ltd.....................................................................................................362 SERVITUDES: LIMITED REAL RIGHTS..............................................................................................362 Grant v Stonestreet....................................................................................................................362 Willoughby’s Consolidated........................................................................................................363 LIMITED REAL RIGHTS:...................................................................................................................363 REAL SECURITY...........................................................................................................................363 Mapenduka v Ashington............................................................................................................363 Qsry........................................................................................................................................... 364 CONSTITUTIONAL LAW IN RESPECT OF PROPERTY........................................................................364 FNB v COMMISSIONER, SARS:....................................................................................................364 PVL3702 – 201 – 2015 Question John, a racehorse owner, advertises for sale the horse Fire for R1.5 million. In the advertisement it is stated that Fire is an offspring of the legendary July winner, Lightning. Peter is a horse breeder who specifically wishes to introduce the bloodline of Lightning into his stud. He agrees orally with John to buy Fire for R1.5 million. Later, in order to meet the requirements of the horse breeders’ association, John has a written contract drawn up which Peter signs without reading. The contract makes no mention of Fire's ancestry, but does contain a clause exempting John from liability for any representations made during negotiations or in the contract. Peter's attention is not drawn to these facts. A month later Peter finds out that Fire is in fact not an offspring of Lightning, although at the time of the conclusion of the contract John genuinely and without any fault on his part believed that to be the case. Advise Peter on whether the contract of sale is valid. Substantiate your advice and refer to relevant case law. Apply the subjective approach of the courts in answering this question. Do not apply the Consumer Protection Act to this question. (10) Answer Identifying the problem The subjective approach of the courts involves the application of the will theory as qualified by estoppel or quasi-mutual assent (Hutchison and Pretorius (eds) The law of Contract in South Africa Oxford University Press Southern Africa ). A successful reliance on estoppel can only give rise to a ‘fictional’ (thus not valid) contract (Hutchison and Pretorius Contract 94) and will thus not be discussed. The facts seemingly indicate that John and Peter have not reached consensus based on the will theory. If that is the case, it is necessary to determine if Peter may be held bound to a contract with John, based on the reliance theory. Discussing the relevant law applicable to the problem AND applying the law to the facts of the problem The subjective approach implies that we first have to determine whether agreement between the parties exists as required in terms of the will theory or whether a party acted under a material mistake. Consensus has three elements (Hutchison and Pretorius Contract 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 innocent misrepresentation regarding Fire’s lineage is irrelevant because it caused a non-material mistake: a mistake regarding a characteristic (the lineage) of the thing sold, Fire (an error in substantia). The parties wanted to buy and sell the same horse, Fire. See Eiselen GTS et al Law of contract Only study guide for 3702 Unisa 2012 40: Hutchison and Pretorius Contract 88- 89. The parties were, however, not in agreement as to the consequences they wished to create: Peter did not know that there was a clause in the contract he signed exempting John from liability for any representations made during negotiations or in the contract, but John knew that the sale included an exemption clause. Peter made a mistake as to the obligations the parties wished to create which excludes consensus between the parties (Hutchison and Pretorius Contract 86). No contract can thus arise on the basis of the will theory. The facts of our problem are very similar to that in Du Toit v Atkinson's Motors Bpk 1985 (2) SA 889 (A) where the appellant signed an agreement without reading it which contained a term excluding the respondent’s liability for misrepresentation. The court held that the mistake regarding the exemption clause was material. This type of mistake also occurred in other cases. In Allen v Sixteen Stirling Investments (Pty) Ltd 1974 (4) SA 164 (D) the plaintiff believed that he was purchasing the erf shown to him by the seller's agent, while the written contract that he signed indicated the correct erf which was a completely different property. His mistake related to performance and was material. In Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (2) SA 234 (A) the appellant erred with regard the period of the lease which was an aspect of the performance. A valid contract could still arise in terms of the doctrine of quasi-mutual assent or direct reliance theory (Hutchison and Pretorius Contract ). The court stated the test in Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (2) SA 234 (A) 239-240 as follows: In my view, therefore, the decisive question in a case like the present is this: did the party whose actual intention did not conform to the common intention expressed, lead the other party, as a reasonable man, to believe that his declared intention represented his actual intention? … To answer this question, a three-fold enquiry is usually necessary, namely, firstly, was there a misrepresentation as to one party’s intention; secondly, who made that representation; and thirdly, was the other party misled thereby? … The last question postulates two possibilities: Was he actually misled and would a reasonable man have been misled? One of the parties to the contract, Peter, misrepresented his intention to be bound by the contract by signing the contract. Although it could be argued that John was actually misled by this misrepresentation of Peter, it is clear that a reasonable person in the position of John would not have been misled thereby. John knew in fact that there was no exemption clause in the oral contract while the written contract had such a clause. John should have realised that Peter could have thought that the written contract was also without such a clause and he thus had a legal duty to point out to Peter the presence of this clause in the written contract. There was either no actual or at least reasonable reliance on the part of John. The giving of appropriate advice The written contract of sale is invalid because of the lack of actual and apparent consensus. Total: [10] Question 1 Which concept is NOT a value that informs the law of contract? 1 Freedom of contract. 2 Good faith. 3 Privity of contract. 4 The requirement that a contract must not be against public policy. 5 Pacta sunt servanda. Question 2 Which statement is CORRECT regarding unlawful contracts? 1 All unlawful contracts are void. 2 Some contracts that have been criminalized by statute are not void. S - The Marketplace to Buy and Sell your Study Material 3 Some unlawful contracts are unenforceable in terms of the in pari delicto potior condicio possidentis rule. 4 All unlawful contracts are voidable. 5 All contracts that are prohibited by statute in order to protect the revenue of the state are void Question 3 X makes an offer to Y to purchase Y’s car. X sends the offer by e-mail to Y. Y reads the offer on 13 May and drafts a written acceptance on 14 May. Y posts his acceptance on 15 May to X. X receives the acceptance on 17 May in his post-box and reads it on 18 May. When was the contract concluded? 1 13 May. 2 14 May. 3 15 May. 4 17 May. 5 18 May. Question 4 In a contractual context, where the debtors are jointly liable only, and the co-creditors may only claim performance jointly, this is a case of 1 proportionate liability. 2 simple joint liability. 3 in solidum liability. 4 joint and several liability. 5 collective joint liability. Question 5 Which statement regarding the interpretation of contracts is INCORRECT? 1 The parol evidence rule has an integration and interpretation aspect. 2 The distinction between background and surrounding circumstances is imprecise. 3 The primary rule is to give effect to the intention of the party who drafted the contract. 4 Where a term is ambiguous it should be interpreted against the party who proposed it. 5 Where a term is ambiguous it should be given a meaning that makes it legally effective. Question 6 X and Y agree that should X sell her leather couch, she (X) will offer to sell it to Y first, before making an offer to sell the couch to any other person. X sells the couch to Z for R10 000 without first offering it to Y for sale. Delivery of the couch has not yet taken place. Which statement is CORRECT? 1 X and Y concluded an option contract. 2 The contract between X and Z is voidable, because it breaches the contract between X and Y. 3 Y has a personal right against X, but Z has a real right against X. 4 Both Y and Z only have personal rights against X. S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material 5 The personal right of Z enjoys preference above the personal right of Y, because it arises from a contract of sale. Question 7 Assume the same facts as in question (6). What remedy does Y have against X? 1 An interdict. 2 A claim for damages. 3 A claim for specific performance of the contract of sale after Y has stepped into Z’s shoes with a unilateral declaration of intent made to X. 4 All the above remedies. 5 None of the above remedies Question 8 Essentialia are: 1 All the terms of a contract apart from the naturalia. 2 Terms that identify a contract as belonging to a particular class of contracts. 3 Terms automatically imposed by law on the contracting parties unless contracting parties expressly exclude them. 4 All the terms of a contract apart from the incidentalia. 5 Material terms and conditions of a contract. Question 9 Y purchased from Z a specific painting for R150 000. At the time of contracting Y honestly believed it to be an original Da Vinci painting, but Z did not know of Y’s belief. The painting was later found to be a copy. Y argues that the contract is void whilst Z maintains that the contract is valid. Which answer reflects the CORRECT legal position? 1 The contract is valid, because Y’s mistake regarding the painting is only an error in motive. 2 The contract is void, because Y and Z acted under a common error regarding the painting. 3 The contract is void, because of Y’s unilateral mistake regarding the painting. 4 The contract is void, because Y’s mistake regarding the painting is an error in corpore. 5 The contract is void, because of Y’s supposition regarding the painting. Question 10 X, an organiser of art exhibitions, contracted with Y for an exhibition to be held on 24 to 27 July. These dates were the only dates mentioned during the negotiations. After having been pressurized by X, Y hurriedly signed the standard form contract without reading it. The contract contained a clause permitting X to change the dates of the exhibition unilaterally. Thereafter X changed the dates. X had no reason to believe that Y would have signed the contract if he had known of the term. Which statement(s) is / are INCORRECT? 1 Y can cancel the contract because of her material mistake with regard to the presence of a clause in the standard form contract allowing X to unilaterally change the dates of the exhibition. S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material 2 Y can prove that a contract with X exists without the clause in the standard form contract allowing X to unilaterally change the dates of the exhibition. 3 Y can use the iustus error approach to prove that a contract with X exists without the clause allowing X to unilaterally change the dates of the exhibition. 4 Option 1 and 3. 5 Option 1, 2 and 3. PVL3702 – 201 – 2018 Question Read the judgment in Steyn v LSA Motors Ltd 1994 (1) SA 49 (A). Identify the judgment of the Appellate Division case on which this judgement is based as well as the relevant section in the prescribed textbook. Read both. You can find judgments in conventional law libraries, online at the website of the Southern African Legal Information Institute (SAFLII) () or as an eresource on the Unisa Library site (choose Juta Law Online Publications and then South African Law Reports). Then use those authorities to answer the following question: John, a racehorse owner, advertises for sale the horse Fire for R1.5 million. In the advertisement it is stated that Fire is an offspring of the legendary July winner, Lightning. Peter is a horse breeder who specifically wishes to introduce the bloodline of Lightning into his stud. He agrees orally with John to buy Fire for R1.5 million. Later, in order to meet the requirements of the horse breeders’ association, John has a written contract drawn up which Peter signs in John’s presence without reading. The contract makes no mention of Fire's ancestry, but does contain a clause exempting John from liability for any representations made during negotiations or in the contract. Peter's attention is not drawn to the provisions of this clause. A month later Peter finds out that Fire is in fact not an offspring of Lightning, although at the time of the conclusion of the contract John genuinely and without any fault on his part believed that to be the case. Advise Peter on whether the contract of sale is valid. Substantiate your advice and refer to relevant case law. Do not apply the law with regard to misrepresentation or the Consumer Protection Act 68 of 2008 to this question. (10) Answer In order to identify the law, which you should apply to the problem, you were asked to: (1) read Steyn v LSA Motors Ltd 1994 (1) SA 49 (A) to determine the ratio decidendi of the case; (2) identify the Appellate Division case on which the ratio decidendi of Steyn was based; (3) identify the relevant section(s) in the textbook; and (4) not to discuss misrepresentation. (1) The ratio decidendi of the Steyn case The court held that Steyn could not accept the offer, because the offer was not directed at him. A reasonable person in Steyn’s position would have realised that the offer was open only to professional golfers and, accordingly, that he had no contractual claim to the car. This answers the third leg of the test in Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (2) SA 234 (A). (2) Identify the AD case on which the ratio decidendi in Steyn was based S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material The decision in Steyn case, was thus based on Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (2) SA 234 (A). The court stated the test as follows (239-240): “In my view, therefore, the decisive question in a case like the present is this: did the party whose actual intention did not conform to the common intention expressed, lead the other party, as a reasonable man, to believe that his declared intention represented his actual intention? … To answer this question, a three-fold enquiry is usually necessary, namely, firstly, was there a misrepresentation as to one party’s intention; secondly, who made that representation; and thirdly, was the other party misled thereby? …The last question postulates two possibilities: Was he actually misled and would a reasonable man have been misled?” (3) Identify the relevant section in the textbook If the “Table of cases” is consulted at the end of Hutchison and Pretorius (eds) The law of Contract in South Africa 3rd ed (2017) Oxford, Cape Town you will find the pages where Steyn and Sonap are discussed in the textbook. One of the pages on which Steyn is discussed is page 109. In footnote 214 the Steyn case is identified as an example of an instance where there is no objective appearance of agreement. Remember that, before the iustus error approach can apply, there must be a clear, objective agreement between the parties, such as when the parties have signed a contractual document. In Steyn, the court did not apply the iustus error approach, because no apparent or ostensible contract existed between the parties. Steyn had one interpretation of the offer (that it was open to all players) and the sponsor another (that it was only open to professional players). Consequently, there was no clear, apparent contract and the iustus error approach could not be applied. In Hutchison and Pretorius Contract 106-108 a discussion of the Sonap case is to be found. In this discussion the test quoted above in (2) is identified as the reliance theory. It is thus clear from the above that the subjective approach of the courts (will theory as qualified by the reliance theory) should be applied to the assignment problem. (4) Do not discuss misrepresentation This misrepresentation that you must not discuss cannot be the same as the misrepresentation in the first leg of the three-fold test of Sonap (there must be a misrepresentation of the intention of one of the parties), because we know we have to base our answer on Steyn and Sonap that both deal with error. So what does the instruction mean? In the given facts, Peter made an innocent misrepresentation with regard to Fire’s lineage. This is thus the misrepresentation we need not discuss in so far it does not cause a material mistake. Identifying the problem The subjective approach of the courts involves the application of the will theory as qualified by quasimutual assent (Hutchison and Pretorius Contract 93-100). The facts seemingly indicate that John and Peter have not reached consensus based on the will theory. If that is the case, it is necessary to determine if Peter may be held bound to a contract with John, based on the reliance theory. Discussing the relevant law applicable to the problem AND applying the law to the facts of the problem S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material The subjective approach implies that we first have to determine whether agreement between the parties exists as required in terms of the will theory or whether a party acted under a material mistake. Consensus has three elements (Hutchison and Pretorius Contract 87):  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 innocent misrepresentation regarding Fire’s lineage causes a mistake regarding a characteristic (the lineage) of the thing sold, Fire (an error in substantia). There are two views on whether such a mistake is material (Hutchison and Pretorius Contract 90-92). The one view is that the mistake is not material (Trollip v Jordaan 1961 1 SA 238 (A); The other view is that such a mistake is material (Spenmac (Pty) Ltd v Tatrim CC 2015 3 SA 46 (SCA). The latter view cannot be correct as the parties wanted to buy and sell the same horse, Fire. The parties were, however, not in agreement as to the consequences they wished to create: Peter did not know that there was a clause in the contract he signed exempting John from liability for any representations made during negotiations or in the contract, but John knew that the sale included an exemption clause. Peter made a mistake as to the obligations the parties wished to create which excludes consensus between the parties (Hutchison and Pretorius Contract 88). No contract can thus arise on the basis of the will theory. The facts of our problem are very similar to that in Du Toit v Atkinson's Motors Bpk 1985 2 SA 889 (A) where the appellant signed an agreement without reading it which contained a term excluding the respondent’s liability for misrepresentation. The court held that the mistake regarding the exemption clause was material. This type of mistake also occurred in other cases. In Allen v Sixteen Stirling Investments (Pty) Ltd 1974 (4) SA 164 (D) the plaintiff believed that he was purchasing the erf shown to him by the seller's agent, while the written contract that he signed indicated the correct erf which was a completely different property. His mistake related to performance and was material. In Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 2 SA 234 (A) the appellant erred with regard the period of the lease which was an aspect of the performance. A valid contract could still arise in terms of the doctrine of quasi-mutual assent or direct reliance theory (Hutchison and Pretorius Contract 98-100 and 106-108). The court stated the test in Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 2 SA 234 (A) 239-240 as follows: “In my view, therefore, the decisive question in a case like the present is this: did the party whose actual intention did not conform to the common intention expressed, lead the other party, as a reasonable man, to believe that his declared intention represented his actual intention? … To answer this question, a three-fold enquiry is usually necessary, namely, firstly, was there a misrepresentation as to one party’s intention; secondly, who made that representation; and thirdly, was the other party misled thereby? … The last question postulates two possibilities: Was he actually misled and would a reasonable man have been misled?” One of the parties to the contract, Peter, misrepresented his intention to be bound by the contract by signing the contract. Although it could be argued that John was actually misled by this misrepresentation of Peter, it is clear that a reasonable person in the position of John would not have been misled thereby. John knew in fact that there was no exemption clause in the oral contract while the written contract had such a clause. John should have realised that Peter could have thought that S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material the written contract was also without such a clause and he thus had a legal duty to point out to Peter the presence of this clause in the written contract. There was either no actual or at least reasonable reliance on the part of John. The giving of appropriate advice The written contract of sale is invalid because of the lack of actual and apparent consensus. Total: [10] Question 1 Which statement is INCORRECT? 1 Obligationary agreements create one or more obligations. 2 Absolving agreements discharge or extinguish obligations. 3 Real agreements transfer rights. 4 Transfer agreements transfer rights. 5 All binding agreements are contracts. Question 2 Which statement regarding the iustus error doctrine is CORRECT? 1 The iustus error doctrine qualifies the objective approach of our courts to error. 2 The iustus error doctrine is very similar to estoppel but does not require fault and prejudice as estoppel does. 3 The iustus error doctrine can be used to prove the existence of a contract on the basis of quasi mutual assent. 4 The iustus error doctrine amounts to a direct application of the reliance theory. 5 Option 1 and 4. Question 3 Which cause of action is/are delictual? 1 Mistake. 2 Culpable misrepresentation. 3 Innocent misrepresentation. 4 Dictum et promissum. 5 All of the above. Question 4 In which instance has consensus been obtained improperly? 1 A common error. 2 Rectification. 3 An error in substantia. 4 A threat that is not related to an imminent or inevitable evil. 5 An innocent misrepresentation. S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material Question 5 Which cause(s) of action may render the contract void? 1 A fraudulent and negligent misrepresentation. 2 Duress. 3 Undue influence. 4 A reasonable and material mistake. 5 Commercial bribery Question 6 X is employed as a bookkeeper in Y's business. X steals money from the business's bank account over a long period of time. Y gets forensic auditors in and they determine that X has stolen R50 000. Y confronts X and threatens to lay a charge of theft against X at the police station unless X signs an acknowledgement of debt for R50 000 and undertakes to pay back the money in monthly instalments of R500 each. X signs because he is afraid to go to jail. Which statement regarding the presence of the requirements for duress is INCORRECT? 1 X had a reasonable fear. 2 Ys threat weakened X’s power of resistance and rendered X's will compliant. 3 There was a threat of an imminent evil to X. 4 The threat against X was not contra bonos mores. 5 The pressure Y used against X caused X to suffer damage. Question 7 X sent an offer by email to Z on 1 February. Z downloaded the email to her computer on 6 February, but only read it on 7 February. Z sent an email to X on 8 February, in which she accepted the offer. Z’s email reached X’s service provider on 9 February and could have been downloaded by X on that date. X only downloaded Z’s email and read it on 11 February. When was the contract between X and Z concluded? 1 6 February. 2 7 February. 3 8 February. 4 9 February. 5 11 February. Question 8 X promises to give Y R10 000 if Y successfully passes her matric examination at the end of the year. This is an obligation subject to a: 1 suspensive time clause. 2 resolutive time clause. 3 suspensive condition. 4 resolutive condition. 5 modus. S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material Question 9 Y sells his car to Z for R20 000 on 15 January. Y undertakes to deliver the car to Z on 17 January. The undertaking to deliver the car on 17 January is a 1 suspensive time clause. 2 essentialium (singular for essentialia). 3 incidentalium (singular for incidentalia). 4 option 1 and 2. 5 option 1 and 3. Question 10 The courts use the hypothetical bystander test when determining the possible existence of 1 essentialia. 2 naturalia. 3 terms implied by law. 4 tacit terms. 5 express terms. Question 1 X, an organiser of art exhibitions, contracted with Y for an exhibition to be held on 24 to 27 July. These dates were the only dates mentioned during the negotiations. After having been pressurized by X, Y hurriedly signed the standard form contract without reading it. The contract contained a clause permitting X to change the dates of the exhibition unilaterally. Thereafter X changed the dates. X had no reason to believe that Y would have signed the contract if he had known of the term. Y averred that the contract was void. Will Y succeed in his attempt to have the contract set aside? Substantiate your answer and refer to relevant case law. Apply the direct reliance approach of the courts in answering this question. Do not apply the Consumer Protection Act to this question. (10) Answer Identifying the problem 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 direct reliance approach can only be applied after it has been determined that Y acted under a material mistake. It must thus be determined whether agreement (consensus ad idem) as a contractual basis exists between the parties, as required in terms of the will theory. The first step is to determine 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 S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material 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 the consequences they wished to create: Y thought that the dates for the art exhibition (X’s performance) was fixed, while X knew that the contract allowed X to unilaterally change the dates. This is a mistake as to the obligations the parties wished to create which excludes consensus between the parties (Hutchison and Pretorius Contract 86). No contract can arise on the basis of the will theory. This type of mistake can be illustrated with a number of cases. In Allen v Sixteen Stirling Investments (Pty) Ltd 1974 (4) SA 164 (D) the plaintiff believed that he was purchasing the erf shown to him by the seller's agent, while the written contract that he signed indicated a completely different property. His mistake related to performance and was material. See also Du Toit v Atkinson's Motors Bpk 1985 (2) SA 889 (A). The appellant signed an agreement containing a term excluding the respondent from liability for misrepresentation. Finally see Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (2) SA 234 (A) where the appellant erred with regard the period of the lease which was an aspect of the performance. The direct reliance approach can now be applied to the facts of the problem (Hutchison and Pretorius Contract -105). The court stated the test in Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (2) SA 234 (A) 239-240 as follows: In my view, therefore, the decisive question in a case like the present is this: did the party whose actual intention did not conform to the common intention expressed, lead the other party, as a reasonable man, to believe that his declared intention represented his actual intention? … To answer this question, a three-fold enquiry is usually necessary, namely, firstly, was there a misrepresentation as to one party’s intention; secondly, who made that representation; and thirdly, was the other party misled thereby? … The last question postulates two possibilities: Was he actually misled and would a reasonable man have been misled? A discussion of Ridon v Van der Spuy and Partners (Wes-Kaap) Inc 2002 (2) SA 121 (K) and Steyn v LSA Motors Ltd 1994 (1) SA 49 (A) will also be appropriate. By signing the contract, Y, a party to the contract, misrepresented his intention to be bound by the clause allowing X to unilaterally change the dates. X knew that the only dates mentioned during the negotiations were 24 to 27 July, that Y hastily signed the contract and that the contract had a clause allowing X to unilaterally change the dates. Although it could be argued that X was not actually misled by Y’s misrepresentation, it is clear that a reasonable person would not have been misled in any case. Indeed, X had no reason to believe that Y would have signed the contract had Y known of the term allowing X to change the dates of the exhibition unilaterally. In fact X had a legal duty to point out the presence of this clause in the agreement to Y. There was either no actual or at least reasonable reliance on the part of X. The giving of appropriate advice Y is not bound by the agreement with X because of the lack of actual and apparent consensus. Total: [10] Question 2 S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material X, an organiser of art exhibitions, contracted with Y for an exhibition to be held on 24 to 27 July. These dates were the only dates mentioned during the negotiations. After having been pressurized by X, Y hurriedly signed the standard form contract without reading it. The contract contained a clause permitting X to change the dates of the exhibition unilaterally. Thereafter X changed the dates. X had no reason to believe that Y would have signed the contract if he had known of the term. Y averred that the contract was void. Will Y succeed in his attempt to have the contract set aside? Substantiate your answer and refer to relevant case law. Apply the indirect reliance approach of the courts in answering this question. Do not apply the Consumer Protection Act to this question. (10) Answer Identifying the problem 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 indirect 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 ): 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 the consequences they wished to create: Y thought that the dates for the art exhibition (X’s performance) was fixed, while X knew that the contract allowed X to unilaterally change the dates. This is a mistake as to the obligations the parties wished to create which excludes consensus between the parties (Hutchison and Pretorius Contract 86). No contract can arise on the basis of the will theory. This type of mistake can be illustrated with a number of cases. In Allen v Sixteen Stirling Investments (Pty) Ltd 1974 (4) SA 164 (D) the mistake related to performance and was thus material. The plaintiff believed that he was purchasing the erf shown to him by the seller's agent, while the written contract that he signed indicated the correct erf which was a completely different property. His mistake related to performance and was material. See also in Du Toit v Atkinson's Motors Bpk 1985 (2) SA 889 (A), the appellant signed an agreement containing a term excluding the respondent from liability for misrepresentation. Finally see Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (2) SA 234 (A) where the appellant erred with regard the period of the lease which was an aspect of the performance. However, the matter does not end here, because Y still has to prove that his mistake is reasonable. A mistake will generally be reasonable (Hutchison and Pretorius Contract 100-103) in three instances of which only one is relevant, to this question. Where the mistake was induced or caused by the failure of the contract enforcer to remove an incorrect impression (ommissio). Here it will only be wrongful if the contract enforcer breached a legal duty to speak in the circumstances. Such a duty will usually exist (Hutchison and Pretorius S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material Contract 101-102) where the contract assertor knows or ought to know as a reasonable person that the other party is mistaken, or where the contract assertor, before the conclusion of the contract, created an impression which is in direct conflict with the agreement he or she seeks to enforce. Under these circumstances, the contract assertor must draw the contract denier’s attention to this discrepancy. (See the Du Toit case; Hutchison and Pretorius Contract 101-102). In this question, the only dates mentioned during negotiations (for the exhibition) were 24-27 July. Since X had no reason to believe that Y would have signed the contract had Y known of the term allowing X to change the dates of the exhibition unilaterally, he (X) had a legal duty to point out this clause to Y. X’s failure to do so, renders Y’s material mistake reasonable. The giving of appropriate advice Y is not bound by the agreement with X because of the lack of actual and apparent consensus. Total: [10] Question 3 X contracts with Y for the latter (Y) to build and fit a security gate for the entrance of her (X’s) home. Y builds the gate and fits it with an electric motor which is activated with a remote control. X is satisfied with the work and pays Y the contractual amount agreed upon. A week later the gate gets stuck while it is half way open as a result of defective materials used to build the gate. When X attempts to physically move the gate to close it fully, she suffers such severe damage to her left knee that she has to have a knee operation. Her medical costs are R20 000. The costs of repairing the gate amount to R15 000. X wants to claim both her medical costs, as well the cost of repairing the gate from Y. Advise X if she will be successful with her claim. (20) Answer Identifying the problem This question deals with one of the remedies for breach of contract by Y, as she used defective materials to build the gate. As a result of this breach, X now seeks to claim damages. The type of breach that has transpired is positive malperformance on the part of Y, and the damages claimable by X will be determined on the basis of whether such damages constitute general or special damages. Discussing the relevant law applicable to the problem, referring to the relevant case law, AND applying the law to the facts of the problem Is X entitled to compensated for both her medical costs (R20 000), as well the cost of repairing the gate (R15 000) from Y. In order to succeed with a claim for damages as a result of a breach of contract the innocent party must prove the following: (1) Breach of contract has occurred. (2) The innocent party) has suffered financial or patrimonial loss (3) There is a factual causal link between the breach and the loss (4) The loss is not too remote a consequence of the breach (legal causation) (1) Breach of contract has occurred S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material Positive malperformance takes place where a contracting party does not comply with the terms of the contract either by performing something in a manner which does not comply with the terms of the contract, or by doing something which he undertook not to do. In this question, it is either a tacit term or a term implied by law that the gate will not be built with defective materials. Therefore Y’s breach constitutes positive malperformance. (2) The innocent party must suffer patrimonial loss Breach of contract per se does not give rise to a claim for damages, unless patrimonial loss has actually been incurred. The plaintiff must prove actual pecuniary or patrimonial loss. Patrimonial loss is a loss suffered by the estate of the person concerned. To ascertain whether damage has been suffered as a result of breach of contract, one compares the present value of the creditor's estate with the value it would have had, had the breach of contract not occurred (the difference rule). In other words in the case of breach of contract one compares the present value of the innocent party's estate with the value it would have had, had the contract been carried out properly and on time. If the present value is less than it would have been, damage has been suffered. The debtor must place the creditor in the same patrimonial position as he would have been in had proper and timeous performance taken place. This is the measure or formula applied for damages and is referred to as positive interest. The innocent party has to receive his positive interest - in contrast with negative interest; that is the compensation payable if the injured party would have to be placed in the position in which he would have been, had the contract never been entered into. In this problem it is clear that damages have been suffered by X, in the form of R20 000 (for the medical costs) and R15 000 (for the cost of repairing the gate). (3) Causation Factual causation There must be a causal connection between the breach of contract and damage. The damage must be caused by the breach of contract. The question is whether the damage would have been incurred if the guilty party had properly fulfilled her part of the contract. A certain result is caused by a certain act if that result would not normally have ensued but for such act (conditio sine qua-non-test). The innocent party needs to prove, on a balance of probabilities, that the loss would not have been suffered but for the breach. If she fails to establish this causal link, that is the end of the enquiry and the damages claim must fail. Factual causality is present in this problem. If Y did not breach the contract, the gate would not have needed repair. Furthermore, if Y did not breach the contract the gate would have not have got stuck, X would not have tried to open the gate and X would not have been injured. Legal causality The question which arises after factual causation has been established is whether the innocent party may hold the other party liable for all the consequences of the breach. In the interests of fairness to the party that commits a breach of contract, a line must be drawn between damages caused by her breach and for which he is to be held liable, and damages which, although caused by the breach, are so remote from it that he should not be held liable for them. It is often very difficult to make this distinction. In regard to this issue, it is important to understand the distinction made by our courts between general and special damages (Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A)). (a) General damages S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material General damages are those which flow naturally and generally from the specific kind of breach that has been committed. They are the sort of damages that might be expected in the ordinary course of things to result from the breach. As such, they would have been foreseeable to a reasonable person entering into the contract as a probable consequence. The party that commits a breach of contract is held liable, without further ado, for general damages. An example of general damages is the cost of repairing or replacing defective goods. The repair costs (R15 000) of the gate are thus general damages. X is likely to be successful in this claim. It is not clear whether the medical costs are general damages or not. On the one hand it could be argued that a reasonable person entering into the contract would foresee that the use of defective materials could result in X sustaining injuries as a probable consequence, but the contrary could more convincingly be argued. The question then arises whether the medical costs could be claimed as special damages. (b) Special damages All damages that cannot be classified as general damages are special damages. Special damages are those which do not flow naturally and generally from the specific kind of breach of contract. The party that commits a breach of contract will be liable for special damages only in certain circumstances. The innocent party must prove: (i) the damages were actually foreseen or reasonable foreseeable at the time of entry into the contract (the contemplation principle); and (ii) the parties must have entered into the contract on the basis of their knowledge of the special circumstances, and thus can be taken to have agreed, expressly or tacitly, that there would be liability for damages arising from such special circumstances (the convention principle). It is unlikely that X will succeed with her claim for special damages. X and Y did not actually foresee that as a result of such a breach, X would physically injure herself (the contemplation principle). The parties clearly did not agree explicitly or presumably that such damages would be paid (in line with the convention principle). X’s claim for medical costs would thus be unsuccessful. The giving of appropriate advice X will succeed with her claim for the repair costs, but most probably not for her medical costs. TOTAL (20) PVL3702 – 201 – 2019 Question Read the judgments in Bloom v American Swiss Watch Co 1915 AD 100; Laws v Rutherford 1924 AD 261 and The Fern Gold Mining Company v Tobias () 3 SAR TS 134. Identify and read the relevant section(s) in the prescribed textbook. You can find judgments in conventional law libraries, online at the website of the Southern African Legal Information Institute (SAFLII) () or as an e-resource on the Unisa Library site (choose Juta Law Online Publications and then South African Law Reports). Then use those cases and the textbook to answer the following question: In a cash-in-transit heist, a gang of robbers attacks a van of XYZ Security in broad daylight on 10 January and robs R3.5 million in cash. The next day, XYZ Security, a well-known security company offers a reward of R100 000 on the TV news to anyone who gives information to the police leading to S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material the arrest of the robbers. H watches the news and notices that a reward is being offered. On 14 January, XYZ Security withdraws the reward, which is reported on the TV news. H does not watch the news and fails to hear about the revocation of the reward. On 15 January, H provides the police with information, which indeed leads to the arrest of the robbers that very night. On 17 January, XYZ Security hears that the information has been provided to the police. XYZ refuses to pay H the reward. Advise H fully. Substantiate your advice and refer to relevant case law. Answer In order to identify the law, which you should apply to the problem, you were asked to: (1) read Bloom v American Swiss Watch Co 1915 AD 100, Laws v Rutherford 1924 AD 261 and The Fern Gold Mining Company v Tobias () 3 SAR TS 134; and (2) identify the relevant section(s) in the prescribed textbook. (1) Read three cases In Bloom v American Swiss Watch Co 1915 AD 100 the American Swiss Watch Co offered a reward after a robbery at their shop for the giving of information to the police which lead to the arrest of the thieves and the recovery of the stolen goods. Bloom did so without knowing of the reward. He claimed the reward, but his claim was refused. On appeal, the court held that the reward was an offer open to the public. It could be accepted by providing information to the police. Bloom, however had no intention of accepting the offer because he did not know of its existence when he gave the information to the police. In Laws v Rutherford 1924 AD 261 R gave L an option to accept an offer within 3 months by written notice. L failed to notify R of his acceptance in the prescribed manner. The court found that no contract arose. In Fern Gold Mining Company v Tobias () 3 SAR TS 134 it was held that an offer can be revoked at any time before acceptance and that acceptance must come to the notice of the offeree. (2) Identify the relevant section in the textbook If the “Table of Cases” is consulted at the end of Hutchison and Pretorius (eds) The law of Contract in South Africa 3rd ed (Oxford Cape Town 2017) you will find the pages where Bloom, Laws and Tobias are discussed in the textbook. The first page on which Bloom appears in the text, is 54. The paragraph deals with rewards. It is mentioned that an advertised reward is an offer to the public. The offer is accepted by performing the required act and the reward must be certain. A discussion of the requirements of a valid offer and acceptance seems appropriate. The second page on which it is discussed in the text is 58 which deals with the requirement that the acceptance must be a conscious response to the offer. This is again an indication that the requirements for a valid acceptance is relevant. Laws appears in footnote 50 on page 58 as authority for the requirement that the acceptance must be in the form prescribed by the offer. S - The Marketplace to Buy and Sell your Study Material Downloaded by: LIBRARY | Distribution of this document is illegal Want to earn $103 per month? S - The Marketplace to Buy and Sell your Study Material Tobias appears in footnote 44 on page 56 as authority for the requirement that the revocation of an offer must come to the notice of the offeror. Revocation of the offer is thus also relevant. The relevant sections of the textbook are page 50– 54, 56 and 57-58 where the requirements of a valid offer, the revocation of an offer and the requirements for a valid acceptance of an offer are discussed. Identifying the problem First, we must determine whether the reward complies with the requirements for a valid offer. Then if it does, we must determine whether the offer has validly been revoked. Only if it has not been validly revoked, the question must be addressed whether the offer has been validly accepted. Discussing the relevant law applicable to the problem AND applying the law to the facts of the problem The offer of reward of XYZ Security complies with the requirements for a valid offer: 1 The offer was firm. An offer must be made with the intention that its acceptance will result in a binding contract (Hutchison and Pretorius (eds) The law of Contract in South Africa (Oxford Cape Town 2017) 50). In Bloom v American Swiss Watch Co 1915 AD 100 the American Swiss Watch Co offered a reward after a robbery at their shop for the giving of information to the police which would lead to the arrest of the thieves and the recovery of the stolen goods. Bloom did so without knowing of the reward. He claimed the reward, but his claim was refused. On appeal, the court held inter alia that the reward was an offer open to the public. The offer of XYZ Security was on the news and was not a tentative statement. 2 The offer was complete. An offer must include all material terms of the proposed agreement and there cannot be additional matters that still have to be discussed before the agreement can take effect (Hutchison and Pretorius Contract 50). The offer contained all the material terms: provide information to the police leading to the arrest of the robbers in return for the reward of R100 000. The offer will be accepted by providing the required information. 3 The offer was clear and certain. An offer is sufficiently clear and certain if the mere answer of ‘yes’ by the addressee brings a valid contract into existence (Hutchison and Pretorius Contract 50). If the offer is unclear and cannot capture what the offeror has in mind, no acceptance of the offer can create a binding contract. The offer by XYZ Security was so clear that H as a member of the public could form a clear idea what XYZ Security had in mind: a reward of R100 000 was offered to any member public for the giving of information to the police leading to arrest of the robbers. The giving of the required information will also constitute acceptance of the offer. Furthermore, an offer such as a promise of reward can be