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Law of Contract
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- University Of South Africa (Unisa)
Memorandum
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MEMORANDUM – EXERCISE QUESTION 02FIRST SEMESTER
This exercise question is a self-assessment exercise which does not
contribute towards your semester mark.
Question:
X, an organiser 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 been 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. Thereafter X changed 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. Will Y succeed in his attempt to have the contract set aside?
Substantiate your answer and refer to relevant case law. Apply the direct reliance
approach of the courts in answering this question. Do not apply the Consumer
Protection Act to this question.
(10)
Answer
Identifying the problem
The facts seemingly indicate that X and Y have not reached consensus based on the
will theory. If so, it is necessary to determine if Y may be held bound to a contract with
X, based on the reliance theory, or whether Y will escape liability. Only the direct
approach to the reliance theory will be considered.
Discussing the relevant law applicable to the problem, referring to the relevant
case law, AND applying the law to the facts of the problem
The direct reliance approach can only be applied after it has been determined that Y
acted under a material mistake. It must thus be determined whether agreement
(consensus ad idem) as a contractual basis exists between the parties, as required in
terms of the will theory.
The first step is to determine whether agreement (consensus ad idem) as a contractual
basis exists between the parties, as required in terms of the will theory. Consensus
has three elements (Hutchison and Pretorius (eds) The law of Contract in South Africa
(Oxford University Press Southern Africa 2017) 14): the parties must seriously intend
to contract, be of one mind as to the material aspects of the proposed agreement (the
terms and the identity of the parties to it), and be conscious of the fact that their minds
have met.
In the present case the parties were not in agreement as to the consequences they
wished to create: Y thought that the dates for the art exhibition (X’s performance) was
fixed, while X knew that the contract allowed X to unilaterally change the dates. This
is a mistake as to the obligations the parties wished to create which excludes
consensus between the parties (Hutchison and Pretorius Contract 86). No contract
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