LAW OF CONTRACT
ASSIGNMENT 01
Mistake (error) in contract refers to the situation where a contracting party acts while under an
incorrect impression that causes dissensus or disagreement between the parties. The essence of this
problem is whether X and company Y have reached actual consensus or dissensus. At the outset, it
must be determined whether agreement (consensus ad idem) as a contractual basis exists between
the parties. Consensus has three elements:
The parties must seriously intend to contract, the parties must be of one mind as to the material
aspects of the proposed agreement (the terms and the identity of the parties to it), The parties must
be conscious of the fact that their minds have met. 1
In the present case, company Y was mistaken about the identity of X and thought that the letter has
been sent to a different applicant that had all the right expertise and skills. This mistake is an error in
persona which is the mistake as to the identity of the party and is a material mistake due to the fact
that the identity is of vital importance to the mistaken party.
According to Steyn v LSA Motors, it was held that the indirect approach couldn’t be applied in
instances where there is no objective appearance of agreement, from our case there clearly was an
objective appearance of agreement. The declaration theory or wholly objective approach to
contractual liability grounds contractual liability purely on concurring, objective declarations of will.
The inner will or actual intention of a party is irrelevant. A prominent example of this generally
objective approach to contract is National and Overseas Distributors Corporation (Pty) Ltd v Potato
Board, where the respondent invited tenders for the erection of a steel shed. The appellant
submitted its tender, which the respondent’s manager accepted on its behalf by way of letter. The
appellant set about making arrangements for the erection of the shed. Thereafter, the appellant was
informed by the respondent that the letter of acceptance had inadvertently been addressed to the
appellant as a result of an administrative error and that the respondent had in fact accepted the
tender of another firm. The appellant refused to accept that such an error exonerated the
respondent and claimed that a contract had arisen between the parties, and that the respondent had
breached it by denying its existence. In an action for damages by the appellant, the respondent
disputed inter alia that a contract had arisen and that the manager had authority to enter into the
contract on its behalf. The court a quo decided in favour of the respondent. Another case similar to
these instances is kok v Osborne, where the seller of immovable property was able to successfully
avoid the contract of sale in the case where the seller was mistaken as to the identity of the buyer,
he relied on the defence of error in persona. 234
1
Dale Hutchison (trs), The Law Of Contract: in south africa 3rd ed (oxford university press 2017).
2
Steyn v LSA Motors LTD (207/1992)(1993).
3
National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958.
4
Kok v Osborne and another 1993
ASSIGNMENT 01
Mistake (error) in contract refers to the situation where a contracting party acts while under an
incorrect impression that causes dissensus or disagreement between the parties. The essence of this
problem is whether X and company Y have reached actual consensus or dissensus. At the outset, it
must be determined whether agreement (consensus ad idem) as a contractual basis exists between
the parties. Consensus has three elements:
The parties must seriously intend to contract, the parties must be of one mind as to the material
aspects of the proposed agreement (the terms and the identity of the parties to it), The parties must
be conscious of the fact that their minds have met. 1
In the present case, company Y was mistaken about the identity of X and thought that the letter has
been sent to a different applicant that had all the right expertise and skills. This mistake is an error in
persona which is the mistake as to the identity of the party and is a material mistake due to the fact
that the identity is of vital importance to the mistaken party.
According to Steyn v LSA Motors, it was held that the indirect approach couldn’t be applied in
instances where there is no objective appearance of agreement, from our case there clearly was an
objective appearance of agreement. The declaration theory or wholly objective approach to
contractual liability grounds contractual liability purely on concurring, objective declarations of will.
The inner will or actual intention of a party is irrelevant. A prominent example of this generally
objective approach to contract is National and Overseas Distributors Corporation (Pty) Ltd v Potato
Board, where the respondent invited tenders for the erection of a steel shed. The appellant
submitted its tender, which the respondent’s manager accepted on its behalf by way of letter. The
appellant set about making arrangements for the erection of the shed. Thereafter, the appellant was
informed by the respondent that the letter of acceptance had inadvertently been addressed to the
appellant as a result of an administrative error and that the respondent had in fact accepted the
tender of another firm. The appellant refused to accept that such an error exonerated the
respondent and claimed that a contract had arisen between the parties, and that the respondent had
breached it by denying its existence. In an action for damages by the appellant, the respondent
disputed inter alia that a contract had arisen and that the manager had authority to enter into the
contract on its behalf. The court a quo decided in favour of the respondent. Another case similar to
these instances is kok v Osborne, where the seller of immovable property was able to successfully
avoid the contract of sale in the case where the seller was mistaken as to the identity of the buyer,
he relied on the defence of error in persona. 234
1
Dale Hutchison (trs), The Law Of Contract: in south africa 3rd ed (oxford university press 2017).
2
Steyn v LSA Motors LTD (207/1992)(1993).
3
National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958.
4
Kok v Osborne and another 1993
