LAW OF CONTRACT PVL 3702
EXAM MEMO 2015-2016
Discuss the impact of the Consumer Protection Act 68 of 2008 upon the law of contract
with reference to its aims, objectives, scope, national regulatory institutions, and sanctions.
[15]
The CPA is bound to have a huge impact on the conduct of businesses in South Africa, and the
law of contract.
The primary purpose of the Act is to protect consumers from exploitation in the marketplace, and
to promote their social and economic welfare. More specifically, it aims to:
• Establish a legal framework for the achievement and maintenance of a consumer market that is
fair, accessible, efficient, and responsible, for the benefit of consumers generally;
• Promote fair business practices;
• Protect consumers from unconscionable, unjust, or unreasonable business practices.
The scope of the Act is very wide. It applies to:
• Most transactions concluded in the ordinary course of business between suppliers and
consumers within South Africa, as well as;
• The promotion of goods and services that could lead to such transactions, and;
• The goods and services themselves once the transaction has been concluded.
A supplier is any person (including a juristic person, trust, and organ of State) who markets any
goods or services.
A consumer includes not only the end-consumer of goods and services but also:
• Franchisees
• Relatively small businesses in the supply chain (asset value or annual turnover below the
threshold determined by the Minister)
The Act does not apply to any transaction in terms of which goods and services are promoted or
supplied:
,• To the State
• To a juristic person with an asset value or annual turnover above the threshold.
• Employment contracts
• Credit agreements
• Transactions exempted by the Minister
These rights are protected and enforced not only through the courts, but the
National Consumer Commission and the National Consumer Tribunal. Failure to comply
with provisions of the Act might attract various sanctions, commencing with compliance
notices and leading possibly to the imposition of fines and criminal penalties. Contractual
provisions in contravention of the Act may be declared null and void to the extent of non-
compliance. List and very briefly discuss the requirements for a valid offer and acceptance.
[10]
OFFER:
• Must be firm.
(That is to say, with the intention that its acceptance will call into being a binding contract.)
• Must be complete.
(It must contain all the material terms of the proposed agreement.)
• Must be clear and certain.
(It should be enough for the addressee to answer merely “yes” for a contract to come into being.)
• Must meet the requirements of the Consumer Protection Act.
ACCEPTANCE:
• Must be unqualified.
(It must be a complete and unequivocal assent to every element of the offer.)
• Must be by the person to whom the offer was made – Bird v Summerville.
(E.g. the offer to sell farm A cannot be accepted by A and B jointly.)
• Must be a conscious response to the offer – Bloom v American Swiss
Watch Co.
, (A person cannot accept an offer if he was not aware of it.)
• Must be in the form prescribed by the offeror, if any.
State the ways an offer may be terminated.
1. Rejection of the offer
2. Acceptance of the offer
3. Effluxion of the prescribed time, or of a reasonable time
4. Death of either party
5. Revocation of the offer
6. Loss of legal capacity to act
Discuss and distinguish between an option and a right of preemption. [10]
An option is a substantive offer, reinforced by an agreement in terms of which the offeror
undertakes to keep his offer open to the offeree for a specified period.
A right of pre-emption is a type of right of preference. It is given by a prospective seller to a
prospective purchaser, to give the purchaser preference if the prospective seller should decide to
sell.
There are significant differences between the two:
In the case of an option to buy, the grantor has already made a firm offer to the grantee, and the
power to conclude the sale lies exclusively in the hands of the grantee.
With a pre-emption agreement, however, there is as yet no firm offer “on the table” – merely an
undertaking to make an offer to the grantee if the trigger event occurs (usually, if the grantee
decides to sell the property). The grantor accordingly retains the power to decide whether or not
to sell, and cannot be compelled to do so unless or until the trigger event has occurred.
Remedies for breach:
Remedies for the breach of an option contract are governed by the general principles of the law
of contract. An attempted revocation of the substantive offer does not prevent the exercise of the
option, and the option holder may enforce the contract specifically by means of an interdict
against the grantor of the option. The option holder may also claim damages, if suffered, to place
him or her in the position that he or she would have been if the option had been exercised.
EXAM MEMO 2015-2016
Discuss the impact of the Consumer Protection Act 68 of 2008 upon the law of contract
with reference to its aims, objectives, scope, national regulatory institutions, and sanctions.
[15]
The CPA is bound to have a huge impact on the conduct of businesses in South Africa, and the
law of contract.
The primary purpose of the Act is to protect consumers from exploitation in the marketplace, and
to promote their social and economic welfare. More specifically, it aims to:
• Establish a legal framework for the achievement and maintenance of a consumer market that is
fair, accessible, efficient, and responsible, for the benefit of consumers generally;
• Promote fair business practices;
• Protect consumers from unconscionable, unjust, or unreasonable business practices.
The scope of the Act is very wide. It applies to:
• Most transactions concluded in the ordinary course of business between suppliers and
consumers within South Africa, as well as;
• The promotion of goods and services that could lead to such transactions, and;
• The goods and services themselves once the transaction has been concluded.
A supplier is any person (including a juristic person, trust, and organ of State) who markets any
goods or services.
A consumer includes not only the end-consumer of goods and services but also:
• Franchisees
• Relatively small businesses in the supply chain (asset value or annual turnover below the
threshold determined by the Minister)
The Act does not apply to any transaction in terms of which goods and services are promoted or
supplied:
,• To the State
• To a juristic person with an asset value or annual turnover above the threshold.
• Employment contracts
• Credit agreements
• Transactions exempted by the Minister
These rights are protected and enforced not only through the courts, but the
National Consumer Commission and the National Consumer Tribunal. Failure to comply
with provisions of the Act might attract various sanctions, commencing with compliance
notices and leading possibly to the imposition of fines and criminal penalties. Contractual
provisions in contravention of the Act may be declared null and void to the extent of non-
compliance. List and very briefly discuss the requirements for a valid offer and acceptance.
[10]
OFFER:
• Must be firm.
(That is to say, with the intention that its acceptance will call into being a binding contract.)
• Must be complete.
(It must contain all the material terms of the proposed agreement.)
• Must be clear and certain.
(It should be enough for the addressee to answer merely “yes” for a contract to come into being.)
• Must meet the requirements of the Consumer Protection Act.
ACCEPTANCE:
• Must be unqualified.
(It must be a complete and unequivocal assent to every element of the offer.)
• Must be by the person to whom the offer was made – Bird v Summerville.
(E.g. the offer to sell farm A cannot be accepted by A and B jointly.)
• Must be a conscious response to the offer – Bloom v American Swiss
Watch Co.
, (A person cannot accept an offer if he was not aware of it.)
• Must be in the form prescribed by the offeror, if any.
State the ways an offer may be terminated.
1. Rejection of the offer
2. Acceptance of the offer
3. Effluxion of the prescribed time, or of a reasonable time
4. Death of either party
5. Revocation of the offer
6. Loss of legal capacity to act
Discuss and distinguish between an option and a right of preemption. [10]
An option is a substantive offer, reinforced by an agreement in terms of which the offeror
undertakes to keep his offer open to the offeree for a specified period.
A right of pre-emption is a type of right of preference. It is given by a prospective seller to a
prospective purchaser, to give the purchaser preference if the prospective seller should decide to
sell.
There are significant differences between the two:
In the case of an option to buy, the grantor has already made a firm offer to the grantee, and the
power to conclude the sale lies exclusively in the hands of the grantee.
With a pre-emption agreement, however, there is as yet no firm offer “on the table” – merely an
undertaking to make an offer to the grantee if the trigger event occurs (usually, if the grantee
decides to sell the property). The grantor accordingly retains the power to decide whether or not
to sell, and cannot be compelled to do so unless or until the trigger event has occurred.
Remedies for breach:
Remedies for the breach of an option contract are governed by the general principles of the law
of contract. An attempted revocation of the substantive offer does not prevent the exercise of the
option, and the option holder may enforce the contract specifically by means of an interdict
against the grantor of the option. The option holder may also claim damages, if suffered, to place
him or her in the position that he or she would have been if the option had been exercised.
