PVL3702 Law of Contract MCQ Assignments 2021/2022.

PVL3702 Law of Contract MCQ Assignments 2021/2022. 1. Z walks into a shop, puts R10 on the counter and points at a packet of sweets. X (the owner of the shop) takes the money and hands over the sweets to Z. Which statement is CORRECT? 1. There is an oral offer and acceptance by conduct. 2. There is an express offer and an oral acceptance. 3. There is both an offer and acceptance by conduct. 4. There is an offer by conduct and an express oral acceptance. 5. There is a firm oral offer and an unqualified acceptance. Answer: 3. There is both an offer and acceptance by conduct. Note: There is neither an oral offer, not an oral acceptance. No words were exchanged between the parties. The placing of the R10 on the counter and pointing at the sweets constitutes and offer by conduct. X taking the money amounts to an acceptance by conduct. 2. C, an owner of an exclusive bicycle shop, advertised a special limited edition bicycle for sale and invited the public to make offers for the bicycle. J and P were among other people who submitted written offers for the bicycle. J’s offer was for R150 000 and P’s offer was for R160 000. Although C intended to accept P’s offer, she erroneously accepted Jane’s offer. C’s mistake is: a. Not material. b. An error in persona. c. An error in motive. d. Material. 1. a. 2. b. 3. c. 4. b. and d. 5. a., b. and c. Answer: 4. b. and d.. Note: b. is correct because there if a mistake relating to the identity of the parties with whom C intended to contract with (an error in persona). C’s mistake was materially (d.) because she inadvertently accepted the offer of one party (J), whereas she intended to accept the offer of a completely different party (P). The facts in this problem are similar to the facts in National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958 (2) SA 473 (A), where the Appellate Division found that the mistake was material. c. is incorrect as the error did not relate to C’s reason for concluding the contract. 3. C, an owner of an exclusive bicycle shop, advertised a special limited edition bicycle for sale and invited the public to make offers for the bicycle. J and P were among other people who submitted written offers for the bicycle. J’s offer was for R150 000 and P’s offer was for R160 000. Although C intended to accept P’s offer, she erroneously accepted J’s offer. C’s mistake is material. Which statement(s) is/are CORRECT? a. C’s error was an iustus error. b. C’s error was not an iustus error. c. C misrepresented her intention to J by accepting J's offer. d. C by accepting J’s offer, led J to reasonably believe that they had reached consensus. 1. a. 2. b. 3. c. and d. 4. b. and c. 5. b., c. and d. Answer: 5. b., c. and d. Note: The requirements for both iustus error and the doctrine of quasi mutual assent are relevant when answering this question. A mistake is an iustus error if it is both material and reasonable. It has already been established that the error was material. The issue now is whether the mistake was also reasonable. In National and Overseas Distributors Corporation (PTY) Ltd v Potato Board 1958 (2) SA 473 (A), the court ruled under similar circumstances that the mistake by the contract denier was not reasonable. The mistake furthermore does not fall into one of the recognised categories of reasonable mistakes. Therefore option b. is correct. Options c. and d. relate top the requirements for the doctrine of quasi-mutual assent. This doctrine requires that the one party reasonably believes that the other party had agreed to enter into the contract and that this belief must have been caused by the letter party. C made a misrepresentation to J that she wanted to conclude a contract with J by accepting J’s offer and this led J to reasonable believe that consensus had been reached between the parties. Therefore both options c. and d. are correct. See application of the doctrine of quasi=-mutual assent to the facts of National and Overseas Distributors Corporation (PTY) Ltd v Potato Board 1958 (2) SA 473 (A). 4. C, an owner of an exclusive bicycle shop, advertised a special limited edition bicycle for sale and invited the public to make offers for the bicycle. J and P were among other people who submitted written offers for the bicycle. J’s offer was for R150 000 and P’s offer was for R160 000. Although C intended to accept P’s offer, she erroneously accepted J’s offer. Which case has similar facts? 1. National and Overseas Distributors Corporation (PTY) Ltd v Potato Board 1958 (2) SA 473 (A). 2. Brink v Humphries & Jewell (Pty) Ltd 2005 (2) SA 419 (SCA). 3. George v Fairmead Hotel (Pty) Ltd 1958 (2) SA 465 (A). 4. Du Toit v Atkinson’s Motor Bpk 1985 (2) SA 893 (A). 5. Alien v Sixteen Stirling Investments (Pty) Ltd 1974 (4) SA 164 (D). Answer: 1. National and Overseas Distributors Corporation (PTY) Ltd v Potato Board 1958 (2) SA 473 (A). 5. G points a loaded gun at P and orders him to sign a written contract. G explains that the document is for the sale of P’s car to him (G) at a price of R50 000 which is far below the market value of the car. P, fearing for his life, signs the document. To establish a cause of action, which of the following is NOT necessary for P to prove? 1. That P had reasonable fear. 2. That the threat weakened P’s power of resistance and rendered his will compliant. 3. That there was a threat of an imminent evil. 4. That the threat was contra bonos mores. 5. That the pressure G used caused damage. Answer: 2. That the threat weakened P’s power of resistance and rendered his will compliant. Note: The requirements for duress are relevant to this question, as it appears that P did not freely conclude the contract, but through fear for his life. 2 Options 1, 3, 4 and 5 are all requirements that must be present to prove a cause of action based on duress. Option 2 is not a requirement to prove duress, instead it has a similar wording to a requirement which is necessary to prove undue influence. 6. X has a watch that Y likes. X offers to sell her watch to Y for R1 000 and X and Y agree that X’s offer will be open to acceptance until 1 June. This is a case of: 1. a pre-emption formed unilaterally 2. an option formed bilaterally. 3. an option formed unilaterally. 4. neither an option, nor a pre-emption. 5. a pre-emption formed bilaterally. Answer: 2. an option formed bilaterally. 7. X has a watch that Y likes. X offers to sell her watch to Y for R1 000 and Y accepts this offer. X and Y agree that they will reduce their contract to writing and that they will both sign it (“the writing clause”). The parties reduced their contract to writing, but failed to sign it. Which statement(s) is/are CORRECT? 1. The law presumes that X and Y intended the writing clause to facilitate proof of the terms of their contract, because there is doubt about what the intended purpose of X and Y was with the inclusion of the writing clause in the contract. 2. There is no binding contract because the formalities created by X and Y were not complied with. 3. The writing clause also constitutes a non-variation clause. 4. A binding contract was concluded even though X and Y only partially complied with the writing clause. 5. Options 1 and 4. Answer: 5. Options 1 and 4. 8. S negligently informs P that there are 1 000 fruit trees on S’s farm, as a result of which P buys the farm for R8 000 000. P pays R8 000 000 and the farm is registered in P’s name. It is later found that there are only 800 fruit trees on the farm. P would not have bought the farm had she known the truth about the number of fruit trees, but decides nevertheless to uphold the contract. The value of the 200 missing fruit trees is R500 000. The market value of the farm is R7 800 000. The farm would have been worth R8 400 000 if it had 1 000 fruit trees on it. What amount will P be able to claim from S based on negligent misrepresentation? (Do not apply the Consumer Protection Act to this question) 1. R0. 2. R200 000. 3. R400 000. 4. R500 000. 5. R600 000. Answer: 2. R200 000. 9. S negligently informs P that there are 1 000 fruit trees on S’s farm, as a result of which P buys the farm for R8 000 000. P pays R8 000 000 and the farm is registered in P’s name. It is later found that there are only 800 fruit trees on the farm. P would not have bought the farm had she known the truth about the number of fruit trees, but decides nevertheless to uphold the contract. The value of the 200 missing fruit trees is R500 000. The market value of the farm is R7 800 000. The farm would have been worth R8 400 000 if it had 1 000 fruit trees on it. P’s claim against S is based on: 1. delict. 2. breach of contract. 3 3. unjustified enrichment. 4. monetary compensation. 5. all of the above. Answer: 1. delict. Note: Negligent misrepresentation is a delict. 10. Incidentalia are: 1. All the terms from the contract apart from the naturalia and essentialia. 2. Terms that identify a contract as belonging to a particular class of contract. 3. Terms automatically imposed by law on the contracting parties unless contracting parties expressly exclude them. 4. All the terms of a contract apart from the naturalia. 5. All the material terms and conditions of a contract. Answer: 1. All the terms from the contract apart from the naturalia and essentialia. 11. Which of the following is NOT a requirement for a valid contract? 1. Consensus. 2. Formalities. 3. Possibility. 4. Reciprocity. 5. Certainty. Answer: 4. Reciprocity. 12. Which statement is INCORRECT? 1. A contract is an unilateral, or even bilateral juristic act. 2. A contract entails promises or undertakings on one or both sides. 3. An undertaking in a contract that a certain state of affairs exists or has existed is known as a warranty. 4. The conclusion of a contract can be multilateral. 5. Freedom of contract means that the parties can agree to anything that is possible and lawful. Answer: 1. A contract is a unilateral, or even bilateral juristic act. 13. Which statement is INCORRECT? 1. An obligation is a legal bond between a debtor and a creditor. 2. With a contract of sale, the seller is the debtor in respect of the duty to deliver the thing sold, and the seller is the creditor in respect of the obligation relating to the duty to pay the price. 3. An obligation compromises a right and a corresponding duty the right of the creditor to demand a performance by the debtor and the duty of the debtor to make that performance. 4. A natural obligation is unenforceable in a court of law. 5. The right created by an obligation is a real right. Answer: 5. The right created by an obligation is a real right. 14. Which statement is INCORRECT? 1. A delict is a wrongful and blameworthy conduct that causes harm to a person and which obliges the wrongdoer to compensate the injured person. 4 2. Concurrent liability exists where the same conduct might constitute both a delict and a breach of contract, as when a surgeon who has contracted to perform an operation negligently leaves a cotton swab inside the patient’s body. 3. The essential difference between contractual and delictual obligations is that the latter are, as a general rule, voluntarily assumed by the parties themselves, whereas the former are imposed by law, irrespective of the will of the parties. 4. The courts have shown great reluctance to permit claims in delict for economic losses caused by a breach of contract. 5. Unjustified enrichment occurs when there is a shift of wealth from one person’s estate to another’s without a good legal ground or cause for this shift. Answer: 3. The essential difference between contractual and delictual obligations is that the latter are, as a general rule, voluntarily assumed by the parties themselves, whereas the former are imposed by law, irrespective of the will of the parties. 15. Which statement relating to the Bill of Rights in the Constitution of the Republic of South Africa, 1996, is CORRECT? 1. Vertical application relates to relationships between private persons, as in most contractual situations. 2. Horizonal application relates to relationships between the state and the individual. 3. In Barkhuizen v Napier 2007 (5) SA 323 (CC) the majority in the Constitutional Court ruled that a contractual term can be tested directly against a provision in the Bill of Rights. 4. In Barkhuizen v Napier 2007 (5) SA 323 (CC) the minority in the Constitutional Court preferred an indirect application of the Constitution to the contractual dispute before them. 5. In Barkhuizen v Napier 2007 (5) SA 323 (CC) Ngcobo J reasoned that the proper approach to constitutional challenges to contractual terms is to determine whether the term challenged is contrary to public policy, and what constitutes public policy must be discerned with reference to the fundamental values embodied in the Constitution. Answer: 5. In Barkhuizen v Napier 2007 (5) SA 323 (CC) Ngcobo J reasoned that the proper approach to constitutional challenges to contractual terms is to determine whether the term challenged is contrary to public policy, and what constitutes public policy must be discerned with reference to the fundamental values embodied in the Constitution. 16. C joined a religious sect. Recently this sect took advantage of C’s good nature and convinced him to donate his motor vehicle to the sect, which C did. C approaches you for legal advice explaining that he wants his motor vehicle returned to him. The issue emanating from these facts relates to: 1. duress. 2. undue influence. 3. commercial bribery. 4. puffs. 5. dicta et promissa. Answer: 2. undue influence. 17. C joined a religious sect. Recently this sect took advantage of C’s good nature and convinced him to donate his motor vehicle to the sect, which C did. C approaches you for legal advice explaining that he wants his motor vehicle returned to him. A court presiding over this case is likely to find that the religious sect: 1. threatened C and more particularly his property. 2. instilled reasonable fear in C. 3. coerced C to donate his motor vehicle to the sect. 5 4. obtained an influence over C and that this influence weakened his powers of resistance and rendered his will compliant. 5. conducted itself in such a distasteful manner that it amounts to supervening impossibility of performance. Answer: 4. obtained an influence over C and that this influence weakened his powers of resistance and rendered his will compliant. 18. C joined a religious sect. Recently this sect took advantage of C’s good nature and convinced him to donate his motor vehicle to the sect, which C did. C approaches you for legal advice explaining that he wants his motor vehicle returned to him. An order sought for the return of the motor vehicle by C amounts to an order for: 1. restitution. 2. specific performance. 3. compensation for general damages. 4. compensation for special damages. 5. rectification. Answer: 1. restitution.