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Contract Tutorial 1Issue → what is the nature of the agreement between the parties and which of the two agreements
is enforceable
- in order to decide whether a contract exists, one must first look at whether there has been
an agreement to create legally binding obligations between the parties
- agreement is reached when both parties have the serious intention to create a legally
binding contract → look at the surrounding circumstances ie look at their conduct to with
regard to the agreement to determine whether their minds met
- both parties must have the same intentions as to the obligations created by an agreement
Agreement is reached through valid offer and acceptance
- a simulated contract is a disguised transaction intended to conceal the true nature of the
real agreement between the parties → to deceive others about the true nature of the
agreement
- according to Mackay v Fey there must be understanding that the contract/agreement is
concealed
- It has been accepted that parties are free to arrange their affairs so as to remain outside the
provisions of statute/deceive others and this doesn’t make the agreement objectionable
- Therefore the parties can conceal the true nature of their transactions
- According to Boots v Somerset West Municipality and MaizeBoard v Jackson courts
will give effect to the substance of the contract ie the real agreement → a court will never
enforce the simulated contract because there is no animus contrahendi with regard to the
simulated contract
You must therefore determine the true intentions of the parties from all the surrounding
circumstances
Apply principles to the facts and conclude which of the two contracts is enforceable.
© Copy Rights Reserved
,Tutorial 2
(not to be used as study material – meant to be a guide)
Issue → whether a valid and enforceable contract exists between the parties
- For a valid contract there must be a valid offer and acceptance
- A person is said to make an offer when he puts forward a proposal with the intention that by
its mere acceptance, a contract be formed
- The offer must therefore:
be made with animus contrahendi → implied/expressed intention to be bound
be complete and have certain/ascertainable content
be addressed to a and brought to the attention of he offeree
- The first point of enquiry is according to Gelbuild v RareWoods to ascertain whether an
offer was made animo contrahendi, in that upon its mere acceptance a contract is formed,
failing which there will be no offer.
- When determining the true intention of the parties, courts look at both subjective and
objective factors
- According to Gelbuild objective factors can be determined by looking at
The nature of the offer
Words used
Surrounding circumstances
Manner in which
(each case depends on the facts, so the nature of the offer, including the words used to express it, the relationship between the parties and the
circumstances surrounding the making of the offer must be looked at when deciding whether an offer was made with/out animus eg in examining
he facts, the words used by the offeror are…)
- The subjective factors give account of what was actually in the minds of the parties – account
of the events as provided by the respective parties.
- According to Gelbuild it is fundamental to the nature of the offer that the offer be certain and
definite so as to prevent it from being regarded as void for vagueness
- In Pitout v NC Livestock the court held the court held that a declaration of intention must set
out the essential and material terms of the envisaged contract ie price, thing and other
incidental terms - if there are outstanding terms still to be negotiated no agreement can exists
- According to Levin v Drieprok Properties an offer must be made to a particular person to
whom it is intended to bind
© Copy Rights Reserved
,- The choice of mass communication to place an offer before the public raises the question of
whether a contract can be made with the public in this manner?
- In Carlill v Carbolic SmokeBall the court held that an offer can be addressed to the public at
large as long as it meets the requirements for a valid offer
- However, in practice ‘offers’ contained in adverts fail to meet these requirements → there
mayn’t be animus contrahendi, the terms mayn’t be certain/ascertainable eg price negotiable,
and there may be a lack of control as to how many people can accept the offer and as a result
it can’t be addressed to the offeree
- Thus the general rule as per Crawley v R is that and advert is merely an invitation to the
public to do business and not an offer
Apply Principles to the given facts ie determine which of the parties made the offer as per the
discussions in class
Any conduct which indicates that the offeree is unwilling to contract on the terms offered to him
will constitute rejection of the offer ie a counter offer is made by the offeree, which constitutes an
implied rejection of the 1st offer → the offeree thus becomes the offeror in relation to the counter-
offer – establish whether a counter offer exists in the given facts
Once you have dealt with the requirements for a valid offer deal with acceptance.
- Acceptance occurs when the offeree agrees to an offer to create legally binding obligations
- The acceptance must be made:
With animus contrahendi
By the person to whom it is directed
In the manner prescribed by the offeror ( if there is a prescribed method of payment)
Made before offer terminates
In correspondence with the terms of the offer
- Thus the acceptance must be a complete and unequivocal assent to every part of the offer ie it
must be absolute, unconditional and identical to the offer
- Apply principles to the given facts
© Copy Rights Reserved
, - Once you have ascertained that there is valid offer and acceptance, a contract has been
created , and as a result legally enforceable obligations are created
- In determining the exact time and place of formation of a contract, there are four main
theories to be considered, namely the Information theory, Expedition theory, Declaration
theory and the Reception theory
- According to Dietrichsen v Dietrichsen in SA the information theory is the starting point for
the enquiry unless there is a clear indication to the contrary – according to this theory the
acceptance must be communicated to the offeror before a contract exists
- However, according to McKenzie v Farmers Co-operative courts will infer that the offeror
has prescribed a particular method of acceptance from the particular circumstances of the case
through the channel of communication chosen by the offeror
- In the Cape Explosive works the court held that if the offeror chooses to make an offer
through the post, he impliedly consents to acceptance through the post so that the contract is
concluded when and where the letter of acceptance is posted
- apply
© Copy Rights Reserved
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