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Page 1 of 7Question 1
(a) INTRODUCTION
In this question I will apply each of the various theories which will assist the courts in determining
whether a valid contract has come into existence and its consequences.
THE WILL THEORY
The will theory holds that a contract legally binds parties because they agreed to do so. The parties'
agreement is evidence of their freedom of choice. This viewpoint focuses on the parties' arbitrary
intentions. Since such arbitrary agreement is taken to be consensus, this theory is also known as the
consensual theory.
DEFICIENCIES OF THE WILL THEORY
It disregards the requirement for legal clarity necessary in business interactions; it fails to preserve
the reasonable expectation(s) of a party who relies on the external appearance of consensus;
Mistake is a defence that could render a contract invalid; it is very subjective and ignores the
complexity of social behaviour and unequal power distribution.
THE DECLARATION THEORY
The declaration theory holds that because the parties explicitly declared their intent to enter into a
legally enforceable contract, they are now bound. For example, under earlier Roman Law, parties
were deemed to have entered into a contract if they utilised the precise equations necessary to do so.
This approach thus relies on the parties' statements in order to determine whether there is an
agreement between them.
DEFICIENCIES OF THE DECLARATION THEORY
The focus is on the behaviour of the parties; the true basis is to be sought in concurring declarations,
not in what the parties believe, and the behaviour is to be viewed objectively & not subjectively.
The inner intentions of the parties are unimportant.
THE RELIANCE THEORY
Without qualification, the will theory has some weaknesses. Because liability is based on subjective
agreement, only parties who shared the same intentions will be held accountable for a contract. One
party will be able to escape responsibility if they can prove that they did not mean what they said
when they agreed to be bound by the contract. This can be unfair to the other party since she is
unable to understand what the other contracting party is thinking and may have believed incorrectly
that the parties had reached a legally enforceable agreement after establishing a consensus. Thus,
the reliance theory aims to support such a valid viewpoint
DEFICIENCIES OF THE RELIANCE THEORY
The basis of a contract is to be found in reasonable reliance in the absence of consensus; the other
party can allege a substantial mistake as a defence where the reliance is unjustified; and it offers a
sort of objective approach to contractual liability.
In the case of Cliff v Electronic Media Network (Pty) Ltd, Judge Caroline Nicholls of the Gauteng
High Court found that M-Net's denial of the existence of a 2016 Idols contract with Gareth Cliff
, Page 2 of 7
was "disingenuous." Cliff's victory, however, may just be temporary, according to a BDlive article.
The ruling reinstates Cliff and M-Net's contract, but as Nicholls drew attention to, M-Net was still
free to end it with one week's notice and no explanation. She also refused Cliff's request for an order
to stop the beginning of the auditions, which began over the weekend. Nicholls emphasised that at
this point, the case had nothing to do with racism, hate speech, or free speech. "At this time, the
contractual relationship between the parties is at the heart of the issue," she stated. Cliff merely
needed to persuade the court that he had "a right prima facie, albeit open to some uncertainty,"
according to Nicholls. Even if there hadn't been an explicit agreement, Cliff would have been an
Idols judge, according to communications between them, Nicholls claimed. Cliff's image being on
M-Net's advertisements for 2016 was "very implausible," according to her, if the corporation
believed that no contractual deal had been signed. "Both parties' conduct was obvious and
unambiguous.” The Idols brand, on the other hand, wouldn't experience the same kind of harm. It is
indisputable that Cliff's value as an Idols judge has come from his propensity to shock and provoke,
a reputation that M-Net has either promoted or, more likely, overlooked up until this point.
APPLICATION
In this scenario, Andile applied for a vacancy and was shortlisted. He receives an email from the
company stating that his interview went well and that he has an excellent chance of being offered
the position. Upon receipt of this email, he quits his job, sells his house and pays for transportation
of his furniture to Gauteng.
In this particular scenario, the declaration theory applies because what is declared is of utmost
importance and what is actually intended is irrelevant. Thus, what the parties have said or did
determines if there is an agreement between the parties. Andile received an email stating that his
interview went well and that he stands a good chance to be appointed for the position and according
to the Cliff case, a tacit agreement came into existence.
CONCLUSION
In concluding the above, the declaration theory applies.
(b) INTRODUCTION
In this question I am going to discuss if the South African law of contract uses an objective,
subjective, or a hybrid approach to decide whether a contract has been concluded, in the absence of
consensus.
South Africa, despite having major English law influences and Roman-Dutch law roots, the law has
alternated between an objective approach and a subjective approach.
DIFFERENCE BETWEEN SUBJECTIVE AND OBJECTIVE
When parties have a sincere intention to enter into a contract, are in agreement on all or the majority
of the material terms, and are aware that their minds have actually come together, this is referred to
as a subjective agreement, which assumes an actual meeting of the minds. Contrarily, the term
"objective" alludes to the possibility of some divergence or existence in which the true intention,
express or perceived intention resulting in the message sent or meant to be conveyed not being the
same as the message that was actually received.
THEORIES UNDER SOUTH AFRICAN LAW OF CONTRACT
The declaration, will, and reliance theory is an attempt to explain the principles of contract law.
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