PVL3702 DETAILED EXAM AND ASSIGNMENT MEMOS 2021

MEMORANDA OF ASSIGNMENTS This tutorial letter contains the memoranda of the answers to the assignments. 1.1 Assignment 01 Question Read the judgments in Cape Explosive Works Ltd v South African Oil and Fat Industries; Cape Explosive Works Ltd v Lever Brothers (South Africa) Ltd 1921 CPD 244, Bal v Van Staden 1902 TS 128 and A to Z Bazaars (Pty) Ltd v Minister of Agriculture 1975 (3) SA 468 (A). Use the cases to identify the relevant examinable section(s) in the prescribed textbook. Study the relevant section of the textbook. Use these cases and textbook to answer the following question: S, who lives in Upington, sends P, who lives in Cape Town, a letter by post in which she offers to sell him her (S’s) motorcycle, a collector’s piece, for R100 000. She states in her letter that her offer will expire on 1 February. P accepts S’s offer by letter which he posts on 8 January. The postal service is disrupted by a strike which starts on 6 January and only ends on 1 February. During this period no post is delivered. S receives the letter only on 7 February and only reads it on the next day. Did a valid contract of sale arise between S and P and, if so, where and when was the contract concluded? Advise P fully. Substantiate your advice and refer to relevant case law. Do not discuss option contracts. TOTAL [10] Answer Preliminary steps relating to basic research: In order to identify the law, which you should apply to the problem, you were asked to: (1) read three court judgments; and (2) identify the relevant section(s) in the prescribed textbook. (1) Read three cases In Cape Explosive Works Ltd v South African Oil and Fat Industries; Cape Explosive Works Ltd v Lever Brothers (South Africa) Ltd 1921 CPD 244, the expedition theory was introduced into South African law. In terms of this theory, if certain requirements are met, a contract is concluded where and when the letter of acceptance was posted by an offeree. In this case, two 2 4 offers were made from different companies, to the offeree. The offeree was based in the Cape where it received the offers. The offerors sent their offers by letter through post from Gauteng and Durban, where they were based respectively. In response to both offers, the offeree sent letters of acceptance which were posted at Somerset West in the Cape, and addressed to the offerors. These acceptance letters were then subsequently received and read in Gauteng and Durban respectively, by the respective offerors. The court had to address the issue of where and when the contracts were concluded. The offerors argued that each contract was concluded in the relevant province where and when the offerors received and read the offerees acceptance. The court disagreed and held that the contracts were concluded at Somerset West, where the letters of acceptance were posted. From the judgment in Bal v Van Staden 1902 TS 128, it seems that the expedition theory can only apply when the postal services are operating normally. It emerges from A to Z Bazaars (Pty) Ltd v Minister of Agriculture 1975 (3) SA 468 (A), that the expedition theory will not apply where the offeror has expressed a contrary intention, either expressly or tacitly. (2) Identify the relevant section(s) in the textbook If the “Table of Cases” is consulted at the end of Hutchison and Pretorius (eds) The Law of Contract in South Africa 3 rd ed (Oxford Cape Town 2017), you will find the pages where Cape Explosive, Bal and A to Z are discussed in the textbook. Only those relevant pages which are prescribed for you to study are referred to below. The relevant page on which Cape Explosive appears in the text, is on page 60. The page mainly deals with postal contracts relating to the expedition theory. Accordingly, it explains the framework of how a contract may be concluded by post, and thereafter there is a discussion of this case and the court’s ruling. In this case the expedition theory was successfully applied and the court held that the contract was concluded when and where the letter of acceptance was posted. This does not automatically mean that the expedition theory will apply to the facts in your question. Whether or not the expedition theory applies, will be based on the application of the law to the facts presented. Bal appears in footnote 61 on page 60 as authority for the requirement that the postal service should be operating normally for the expedition theory to apply. Therefore, where there is a disruption of such postal services, like in times of war, the expedition theory would probably not apply. A to Z appears in footnote 66 on page 61 as authority for the requirement that, for the expedition theory to apply, the offeror must not have indicated a contrary intention, expressly or tacitly. This theory will therefore not apply if the offeror prescribes a different mode of acceptance to be complied with by the offeree, for the contract to be concluded. Regarding the above cases, the relevant sections of the textbook are pages 60-61 where the application of the expedition theory relating to postal contracts is discussed. The requirements to be met for the expedition theory to apply, are also set out. The application of this theory impacts on determining whether a contract has been concluded, and if so, where and when the contract has been concluded (or put another way, where and when the acceptance took effect). Considering that where and when an acceptance takes effect is applicable to this discussion, means that pages 58-59 are also relevant to the facts in the question. 3 PVL3702/201/2/2020 5 Identifying the problem The question is whether P accepted S's offer in time and S and P thus reached consensus and concluded a valid contract of sale. To be more specific, the question relates to the legal rules pertaining to when and where the acceptance takes effect (Hutchison and Pretorius (eds) The Law of Contract in South Africa 3 rd ed (Oxford Cape Town )). Discussing the relevant law applicable to the problem AND applying the law to the facts of the problem In our problem S made an offer to sell her motorcycle in a letter sent to P, by post. In this letter she stated that her offer will expire on 1 February. An offer which has a time limit for acceptance lapses automatically if it is not accepted within the prescribed time period (Hutchison and Pretorius Contract 56). P accepted S's offer in a letter that he posted on 8 January, but S only received the letter and read it after the due date for acceptance. The issue is thus whether P timeously and validly accepted the offer on or before 1 February. The general rule is that a contract only comes into being when the offeror knows that his/her offer has been accepted (Hutchison and Pretorius Contract 59). The theory which explains this rule is the information theory. This general rule gives effect to one of the requirements of subjective consensus (Hutchison and Pretorius Contract 14) which is the primary basis of contractual liability in accordance with will theory (Hutchison and Pretorius Contract 20). If we apply the general rule, it is clear that the offer expired before acceptance, but first it has to be decided whether the general rule (information theory) applies, or whether a recognised exception to the general rule will apply. There are exceptions to the general rule (Hutchison and Pretorius Contract 58-61). One such exception is where the offeror stipulates a different method of acceptance. In this regard, the offeror may dispense with the need for acceptance being communicated to him/her or he/she can indicate in the offer that the contract will come into being at an earlier stage (Hutchison and Pretorius Contract 59-60). This may be expressly indicated in the offer itself, but this is not the case in our problem. It may also be implied from all the circumstances, the language of the offer itself and the nature of the contract. None of these implied instances are possibly applicable to the facts presented in the question. Another exception to the general rule pertains to the expedition theory. Where an offer is made through the post it is assumed (a legal fiction thus), if certain requirements are met that the offeror authorised acceptance by post, as well as indicated that the contract is concluded as soon as the acceptance is posted (Kergeulan Sealing and Whaling Co v Commissioner of Inland Revenue 1939 AD 487; Cape Explosive Works Ltd v South African Oil and Fat Industries; Cape Explosive Works Ltd v Lever Brothers (South Africa) Ltd 1921 CPD 244; Hutchison and Pretorius Contract 60-61). The expedition theory explains the rule pertaining to postal contracts (Hutchison and Pretorius Contract 59-61). There are four requirements which must be proved for the expedition theory to apply (see Hutchison and Pretorius Contract 61). Three of these requirements are met, in that S made the offer by post; S did not indicate a contrary intention expressly or tacitly, (A to Z Bazaars (Pty) Ltd v Minister of Agriculture 1975 (3) SA 468 (A)); and the transaction/contract was of a commercial nature (the anticipated sale of a motorcycle). 4 6 However, one of the requirements have not been met, as the facts in the question indicate that the postal services were not operating normally (see Hutchison and Pretorius Contract 61). One of the reasons for giving recognition to the application of the expedition theory is because of the general reliability of the post office, as it is presumed that a properly addressed letter will reach its destination (Hutchison and Pretorius Contract 60). However, when the postal services are disrupted, the expedition theory would probably not apply (Bal v Van Staden 1902 TS 128). In this question, the postal services were disrupted due to a strike, therefore the letter of acceptance addressed to S did not reach S timeously. When the letter of acceptance was posted by P on 8 January, the strike had already commenced and it clearly had a negative impact on the general reliability of the postal services, as the said letter did not reach its destination timeously. Accordingly, because one of the requirements, being that the postal services must be operating normally (Bal v Van Staden), cannot be met, the expedition theory does not apply to this question. Because an exception (relating to postal contracts in accordance with the expedition theory) does not apply, as a consequence, the general rule (in terms of the information theory) must out of necessity apply: S had to be informed that her offer was accepted before the time of termination of her offer on 1 February, and this did not transpire. Accordingly, by the time she read P’s letter on 8 February, her offer had already lapsed. Therefore, on 8 February, there was neither a valid offer nor a legally effective acceptance in place to form an enforceable contract between the parties. The giving of appropriate advice P’s acceptance was not legally effective, because S did not become aware of it timeously. Therefore, a valid contract of sale was not concluded between S and P. Total: [10] 5 PVL3702/201/2/2020 7 1.2 Assignment 02 Question 1 X advertises her car for sale in the newspaper for the amount of R40 000. Y reads the advertisement, phones X and accepts her advertisement to sell her car. Which statement most probably reflects the CORRECT legal position? 1 X and Y concluded a contract because an offer and acceptance exists. 2 X made an offer to the public at large. 3 Y is the offeree. 4 The advertisement is an invitation to do business. 5 Option 1, 2 and 3. (1) Answer 4. Discussion Option 4 is correct. The general rule in our law is that an advertisement constitutes merely an invitation to do business rather than an offer. See Hutchison & Pretorius (eds) The Law of Contract in South Africa 3rd ed (Oxford Cape Town 2017) 53; see also Eiselen GTS et al Law of Contract study guide for PVL 3702 (University of South Africa) 23. Applying this to the facts above, means that the advertisement is an invitation to do business, which allows Y (as offeror) to make an offer, and X (as offeree) can decide whether to accept the offer. X and Y did not conclude a contract, because even if there was an offer from Y, there is no evidence of X accepting an offer. Therefore option 1 is incorrect. X did not make an offer to the public, as it was merely an invitation to do business. Accordingly, option 2 is incorrect. X is the offeree, therefore, option 3 is incorrect. It follows that option 5 is also incorrect. Question 2 X and Y conclude a contract under circumstances wherein X threatened Y. This threat may be used to prove an element of 1 duress. 2 undue influence. 3 misrepresentation. 4 contract