ASSIGNMENT 1 SEMESTER 1 2026
UNIQUE NO. 270727
DUE DATE: 31 MARCH 2026
, Law of Contract - PVL3702
ASSIGNMENT 01
The legal problem in this matter concerns the effect of a mistake (error) on the validity of
a contract. Specifically, the issue is whether the parties contracted under a material
mistake regarding the nature or quality of the merx (the ring), and whether such mistake
renders the contract void.
A contract is only valid if there is true consensus (meeting of the minds) between the
parties. However, South African law applies the reliance theory to determine whether
consensus exists. In terms of this approach, even if one party is mistaken, the contract
will remain valid if the other party reasonably relied on the mistaken party’s
representation of agreement.
In this case, both Jabu and Raymond believed that the ring was a genuine diamond ring
at the time of concluding the contract. The mistake therefore relates to the essential
characteristics (quality and substance) of the merx. This constitutes a material mistake
(error in substantia), which occurs when parties are mistaken about the nature or
essential qualities of the thing sold.
The principles applicable to mistake are discussed in Van Reenen Steel (Pty) Ltd v
Smith NO, where the Supreme Court of Appeal confirmed that a unilateral mistake will
only render a contract void if it is reasonable (iustus error) and the other party caused or
ought reasonably to have been aware of the mistake. If the mistake is not reasonable,
the contract remains valid.
In City of Cape Town (CMC Administration) v Bourbon-Leftley NO, the court
reaffirmed that the reliance theory protects a party who reasonably relies on the other
party’s apparent agreement. Where both parties share the same fundamental mistake
regarding an essential aspect of the contract, there may be no true consensus.