Law of Contract Questions
1
LAW OF CONTRACT QUESTION PACK
EXAM 1:
Question 1:
X, an organizer 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 being 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. Therefore X
changes 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,
because of this mistake.
1.1.1 Is Y’s mistake material? Substantiate your answer in one sentence. (1)
Answer and discussion:
Yes. The mistake relates to the terms of the contract (legal consequences)
(1)
The mistake is material. Y did not read the contract and did not know
that it contained a term that allowed X to change the dates. See study
guide 1 (50-53)
1.1.2 Will Y succeed in his attempt to have the contract set aside?
Substantiate your answer briefly. (3)
Answer and discussion:
Yes. In this problem we have a contract signed by both parties, and this
is an apparent contract. When answering this question you may thus use
either the direct reliance of the iustus error approach.
Direct reliance approach: Y, a party to the contract, misrepresents his
actual intention by signing the contract. (1) X was misled by Y’s
misrepresentation. (1) A reasonable man would have realized that Y,
certain dates having being mentioned during the negotiations would not
have expected a clause permitting X to unilaterally change these dates.
(1) X’s reliance is therefore not reasonable, and there is no contract.
OR
Iustus error approach: X made an innocent misrepresentation that there
was no term allowing X to unilaterally change the dates, and this
misrepresentation caused Y’s mistake. (1) This is an example of
misrepresentation by way of omission. There was a duty on X to direct
, Law of Contract Questions
2
Y’s attention to the fact that the contract contained a term that allowed
X to unilaterally change the dates. (1) This duty arose from the fact that
X knew that Y had not read the contract and the fact that the dates of
the exhibition where the only dates mentioned during negotiations (1). Y’s
mistake is therefore reasonable, and may rely on his mistake.
Question 2:
X, a government institution which was the owner of certain immovable property
in a township mistakenly accepted the tender submitted by Y to purchase a
certain erf in the township. X had in fact intended to accept the tender
submitted by T. Y did not know of X’s mistake. X later realized its mistake and
averred that it was not bound by the contract.
2.1 Was X’s mistake material? Substantiate your answer in one sentence. (1)
Answer and discussion:
Yes. The mistake is material because X does not wish to contract with Y,
but with T. (1)
2.2 Will X succeed in its attempt to escape liability under the contract?
Substantiate your answer briefly. (3)
Answer and discussion:
No. In this problem we have an apparent contract. When answering this
question you may use either the direct reliance of the iustus error
approach.
Direct reliance approach:
X misrepresented his actual intention to contract with T by accepting Y’s
tender (1)
Y was actually misled by X’s misrepresentation as to X’s intention to
contract with Y (1)
A reasonable man would also have been misled by this misrepresentation
of X (1)
Y’s reliance was therefore reasonable.
X, a party to the apparent contract, made a misrepresentation regarding
his own true intention. By accepting Y’s tender he made a
misrepresentation that he wished to contract with Y. Y was actually
misled by this misrepresentation and a reasonable man in Y’s position
would also have been misled, because there is no indication that
something was amiss and that X actually wished to contract with
someone else. Y’s reliance is therefore reasonable and X is bound by the
contract.
OR
Iustus error approach:
1
LAW OF CONTRACT QUESTION PACK
EXAM 1:
Question 1:
X, an organizer 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 being 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. Therefore X
changes 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,
because of this mistake.
1.1.1 Is Y’s mistake material? Substantiate your answer in one sentence. (1)
Answer and discussion:
Yes. The mistake relates to the terms of the contract (legal consequences)
(1)
The mistake is material. Y did not read the contract and did not know
that it contained a term that allowed X to change the dates. See study
guide 1 (50-53)
1.1.2 Will Y succeed in his attempt to have the contract set aside?
Substantiate your answer briefly. (3)
Answer and discussion:
Yes. In this problem we have a contract signed by both parties, and this
is an apparent contract. When answering this question you may thus use
either the direct reliance of the iustus error approach.
Direct reliance approach: Y, a party to the contract, misrepresents his
actual intention by signing the contract. (1) X was misled by Y’s
misrepresentation. (1) A reasonable man would have realized that Y,
certain dates having being mentioned during the negotiations would not
have expected a clause permitting X to unilaterally change these dates.
(1) X’s reliance is therefore not reasonable, and there is no contract.
OR
Iustus error approach: X made an innocent misrepresentation that there
was no term allowing X to unilaterally change the dates, and this
misrepresentation caused Y’s mistake. (1) This is an example of
misrepresentation by way of omission. There was a duty on X to direct
, Law of Contract Questions
2
Y’s attention to the fact that the contract contained a term that allowed
X to unilaterally change the dates. (1) This duty arose from the fact that
X knew that Y had not read the contract and the fact that the dates of
the exhibition where the only dates mentioned during negotiations (1). Y’s
mistake is therefore reasonable, and may rely on his mistake.
Question 2:
X, a government institution which was the owner of certain immovable property
in a township mistakenly accepted the tender submitted by Y to purchase a
certain erf in the township. X had in fact intended to accept the tender
submitted by T. Y did not know of X’s mistake. X later realized its mistake and
averred that it was not bound by the contract.
2.1 Was X’s mistake material? Substantiate your answer in one sentence. (1)
Answer and discussion:
Yes. The mistake is material because X does not wish to contract with Y,
but with T. (1)
2.2 Will X succeed in its attempt to escape liability under the contract?
Substantiate your answer briefly. (3)
Answer and discussion:
No. In this problem we have an apparent contract. When answering this
question you may use either the direct reliance of the iustus error
approach.
Direct reliance approach:
X misrepresented his actual intention to contract with T by accepting Y’s
tender (1)
Y was actually misled by X’s misrepresentation as to X’s intention to
contract with Y (1)
A reasonable man would also have been misled by this misrepresentation
of X (1)
Y’s reliance was therefore reasonable.
X, a party to the apparent contract, made a misrepresentation regarding
his own true intention. By accepting Y’s tender he made a
misrepresentation that he wished to contract with Y. Y was actually
misled by this misrepresentation and a reasonable man in Y’s position
would also have been misled, because there is no indication that
something was amiss and that X actually wished to contract with
someone else. Y’s reliance is therefore reasonable and X is bound by the
contract.
OR
Iustus error approach:
