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PVL3702/201/1/2011DEPARTMENT OF PRIVATE LAW
LAW OF CONTRACT (PVL3702)
TUTORIAL LETTER 201/1/2011
TO ALL STUDENTS IN THE LAW OF CONTRACT (PVL3702)
CONTENTS
1 MEMORANDA OF ASSIGNMENTS
2 AMENDMENT OF THE STUDY MATERIAL
3 COMMENTARY ON EXAMINATION
, 2
Dear Student
1 MEMORANDA OF ASSIGNMENTS
This tutorial letter contains the memoranda of the answers to the assignments.
1.1 Assignment 01
Question
Albert takes his motor vehicle to Dodgy Motors for a service. On his arrival, he is asked to sign a
“job card” by the owner. Albert enquires why he is required to sign the “job card” and the owner
explains to him that by signing he is authorising them to conduct the service on his car which will
cost R1 000. He signs the “job card” without reading it. While servicing the car, the service manager
finds faults on the car (unrelated to the service) and he proceeds to do these additional repairs for a
further R2 000. Albert refuses to pay for the additional repairs and argues that he did not authorise
such repairs. The owner of Dodgy Motors argues that Albert is obliged to pay for the work done as
the “job card” contains a contractual clause authorising Dodgy Motors to do any repairs on the
motor vehicle which they deem necessary without asking the client’s authorisation and requiring the
client to pay for such repairs. Advise Albert on whether he is liable on the contract to pay Dodgy
Motors R2 000 for the additional repairs. Substantiate your answer and refer to relevant case law.
Apply the direct approach of the courts in answering this question. (10)
Answer
The essence of this problem is the question whether Albert and the owner of Dodgy Motors has
reached actual consensus or ostensible consensus. Albert will not be contractually bound to pay for
the additional repairs If this requirement for a valid contract is absent.
The first step is to determine whether agreement (consensus ad idem) exists between the parties,
as required in terms of the will theory. Agreement has three elements (Van Aswegen et al Law of
Contract: only study guide for PVL301-W (1996) 13):
∗ agreement between the parties as to the consequences they wish to create;
∗ agreement as to the intention of the parties to create legal consequences; and
∗ an awareness regarding their unanimity.
In the present case the parties were not in agreement as to the consequences they wished to
create: Albert thought that he was authorising Dodgy Motors to only service his car, while the owner
of Dodgy Motors knew that the contract also allowed Dodgy Motors to conduct repairs on the car
which they deem necessary and which should be paid by Albert without any further authorisation
from Albert. This was a mistake as to the obligations the parties wished to create and was a
material mistake which excludes consensus between the parties. This means that no contract could
arise on the basis of the will theory. This type of mistake can be illustrated with a number of cases.
, 3 PVL3702/201
In George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A) the appellant signed a hotel register without
reading it. The hotel register contained a term excluding the respondent from liability for certain
acts. The appellant was unaware of this term and his mistake related to a term which he believed
would not be in the contract and as such was material because it related to an aspect of
performance.
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 another erf which was a completely different property. His mistake related to
performance and was material.
The appellant signed a contract without reading it in Du Toit v Atkinson's Motors Bpk 1985 (2) SA
889 (A). The contract contained a term excluding the respondent from liability for misrepresentation
Once again the mistake related to an aspect of performance.
In Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis
1992 (3) SA 234 (A) the parties concluded a 20-year notarial lease contract. A later addendum to
the contract drafted by the appellant's attorney incorrectly indicated that the period of the lease was
15 years. Again the appellant signed the addendum without reading it. 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 a party may be held contractually liable on the
basis of a supplementary ground for liability, namely the reliance theory. In this regard you were
asked to apply the direct reliance approach of the courts. Contractual liability is then based on the
reasonable reliance that consensus has been reached which the one contractant (contract denier)
creates in the mind of the other contractant (contract enforcer).
According to the Sonap case the direct reliance approach entails a threefold enquiry:
∗ Was there a misrepresentation regarding one party’s intention? In our problem Albert wanted his
car to be serviced only. Dodgy Motors wanted the power to also unilaterally conduct repairs to
the car, which it deemed necessary. By signing the contract Albert made a misrepresentation
that his intention is the same as that expressed in the contract. This happened in the Sonap
case as well.
∗ Who made the misrepresentation? In the problem it was made by a party to the contract, Albert.
∗ Was the other party actually misled by the misrepresentation and, if so, would a reasonable man
also have been misled? Dodgy Motors in our problem could have been actually misled, but a
reasonable man would have taken steps to point out to Albert that the contract allows Dodgy
Motors to unilaterally conduct repairs on the car, because Albert enquired about the purpose of
the “job card” and the owner of Dodgy Motors misled him to believe that by signing the card he
is merely authorising the service to be done. In Sonap the court found that the contract enforcer
knew that the contract denier was acting under a mistake with regard to the reduction of the
term of the lease and consequently was not misled by the contents of the addendum. The
addendum was thus void.
, 4
In our problem Albert did not create a reasonable reliance that he wished to be bound to the
contract he signed. We can conclude that Albert is not contractually liable to pay R2 000 for the
repairs. [This does not exclude the possibility that Albert may be liable for unjustifiable enrichment]
Total: [10]
1.2 Assignment 02
Question 1
Where a contract is concluded by email, which theory applies?
1 The declaration theory.
2 The expedition theory.
3 The reliance theory.
4 The reception theory.
5 The information theory. (1)
Answer
4.
Discussion
See section 22(2) of the Electronic Communications and Transactions Act 25 of 2002 (paragraph
10.2 van Tutorial Letter 101).
Question 2
S sends a written offer by post to P, in which S offers to sell his radio to P for R3 000. In the written
offer, S stipulates that the acceptance must be communicated to him by 1 June. On 20 May, P
posts a written acceptance to S, to purchase the radio for R3 000. On 22 May, S phones P and
cancels his offer to sell his radio. P’s written acceptance reaches S on 25 May. Which answer
reflects the CORRECT legal position?
1 A contract is concluded between S and P, because the expedition theory applies.
2 A contract is not concluded between S and P, because the information theory applies.
3 A contract is concluded between S and P, because the information theory applies.
4 A contract is not concluded between S and P, because the expedition theory applies.
5 A contract is concluded between S and P, because the reception theory applies. (1)
Answer
2.
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