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Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide.
Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries.
Published in South Africa by
Oxford University Press Southern Africa (Pty) Limited
Vasco Boulevard, Goodwood, N1 City, Cape Town, South Africa, 7460
P O Box 12119, N1 City, Cape Town, South Africa, 7463
Copyright © Oxford University Press Southern Africa (Pty) Ltd 2017
The moral rights of the authors have been asserted.
First published in 2009
Third edition published in 2017
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any
form or by any means, without the prior permission in writing of Oxford University Press Southern Africa (Pty) Ltd,
or as expressly permitted by law, by licence, or under terms agreed with the appropriate reprographic rights
organisation, DALRO, The Dramatic, Artistic and Literary Rights Organisation at . Enquiries
concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University
Press Southern Africa (Pty) Ltd, at the above address.
You must not circulate this work in any other form and you must impose this same condition on any acquirer.
The Law of Contract in South Africa
Print ISBN: 978 0 19 041982 0
ePUB ISBN: 978 0 19 041 752 9
Typeset in Utopia Std Regular 9.5pt on 12pt
Acknowledgements
Publisher: Penny Lane
Development editor: Alison Paulin
Project manager: Lindsay-Jane Lücks
Copy-editor: Angela Voges
Proofreader: Language Mechanics
Indexer: Clifford Perusset
Typesetter: Barbara Hirsch
Cover designer: Judith Cross
Designer: Oswald Kurten
Printed and bound by: XYZ Printing Company
The authors and publisher gratefully acknowledge permission to reproduce copyright material in this book. Every
effort has been made to trace copyright holders, but if any copyright infringements have been made, the publisher
would be grateful for information that would enable any omissions or errors to be corrected in subsequent
impressions.
Links to third party websites are provided by Oxford in good faith and for information only.
Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work.
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,The Law of Contract in South Africa 3e Page 1 of 1
To my academic mentor and friend, Barry Dean, and to my wife, Jill
Dale Hutchison
To my wife, Colleen
Chris Pretorius
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Contents in brief
PART ONE NATURE AND BASIS OF CONTRACT
CHAPTER 1 THE NATURE AND BASIS OF CONTRACT
PART TWO FORMATION OF CONTRACT
CHAPTER 2 OFFER AND ACCEPTANCE
CHAPTER 3 MISTAKE/ABSENCE OF CONSENSUS
CHAPTER 4 IMPROPERLY OBTAINED CONSENSUS
PART THREE REQUIREMENTS OF A VALID CONTRACT
CHAPTER 5 CONTRACTUAL CAPACITY
CHAPTER 6 FORMALITIES
CHAPTER 7 LEGALITY
CHAPTER 8 POSSIBILITY AND CERTAINTY
PART FOUR CONTENTS AND OPERATION OF A CONTRACT
CHAPTER 9 PARTIES TO CONTRACTS
CHAPTER 10 OBLIGATIONS AND TERMS
CHAPTER 11 INTERPRETATION OF CONTRACTS
PART FIVE BREACH OF CONTRACT
CHAPTER 12 FORMS OF BREACH
CHAPTER 13 REMEDIES FOR BREACH
PART SIX TRANSFER AND TERMINATION OF RIGHTS AND OBLIGATIONS
CHAPTER 14 CESSION
CHAPTER 15 TERMINATION OF OBLIGATIONS
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PART SEVEN DRAFTING
CHAPTER 16 DRAFTING OF CONTRACTS
PART EIGHT THE CONSUMER PROTECTION ACT
CHAPTER 17 THE CONSUMER PROTECTION ACT 68 OF 2008
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Contents
PART ONE NATURE AND BASIS OF CONTRACT
CHAPTER 1 THE NATURE AND BASIS OF CONTRACT – DALE HUTCHISON
1.1 The notion of contract
1.1.1 Contract as an agreement intended to create enforceable obligations
1.1.2 Legally binding agreements that are not contracts
1.1.3 Legally binding agreements that are more than just contracts
1.1.4 Definition of contract
1.2 Requirements for a valid contract
1.3 The nature of contract
1.4 Contract and the law of obligations
1.4.1 The concept of obligation
1.4.2 Contract and delict
1.4.3 Contract and enrichment
1.5 Contract and the law of property
1.6 The development of the modern notion of contract
1.6.1 Roman law
1.6.2 Roman-Dutch law
1.6.3 Causa and consideration: a celebrated dispute
1.7 The basis of contract
1.7.1 Introduction
1.7.2 Actual subjective agreement (consensus)
1.7.3 Apparent or objective agreement
1.7.4 Theories of contract
1.7.5 Approach to contract: subjective or objective?
1.7.6 Dual basis of contract in modern law
1.7.7 Proving the existence of a contract
1.8 Cornerstones of contract
1.8.1 The goals of contract law
1.8.2 Competing values in the law of contract
1.8.3 Freedom and sanctity of contract
1.8.4 Good faith, equity and public policy in contract
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1.9 The Consumer Protection Act 68 of 2008
1.10 The impact of the Constitution
PART TWO FORMATION OF CONTRACT
CHAPTER 2 OFFER AND ACCEPTANCE – LUANDA HAWTHORNE AND DALE HUTCHISON
2.1 Introduction
2.2 The offer
2.2.1 Legal effect of an offer
2.2.2 Requirements for a valid offer
2.2.2.1 The offer must be firm
2.2.2.2 The offer must be complete
2.2.2.3 The offer must be clear and certain
2.2.2.4 The Consumer Protection Act 68 of 2008
2.2.3 Offers to the public
2.2.3.1 Advertisements
2.2.3.2 Promises of reward
2.2.3.3 Calls for tenders
2.2.3.4 Auctions
2.2.4 Termination of an offer
2.2.4.1 Rejection of the offer
2.2.4.2 Death of either party
2.2.4.3 Effluxion of the prescribed time, or of a reasonable time
2.2.4.4 Revocation of the offer
2.2.4.5 Loss of legal capacity to act
2.2.4.6 Acceptance of offer
2.3 The acceptance
2.3.1 Requirements for a valid acceptance
2.3.1.1 The acceptance must be unqualified
2.3.1.2 The acceptance must be by the person to whom the offer was
made
2.3.1.3 The acceptance must be a conscious response to the offer
2.3.1.4 The acceptance must be in the form prescribed by the offeror (if
any)
2.3.2 When and where acceptance takes effect
2.3.2.1 The information theory as the general rule in our law
2.3.2.2 Exceptions to the general rule
2.3.2.3 Where the offeror stipulates a different method of acceptance
2.3.2.4 Postal contracts: the expedition theory applies
2.3.2.5 The scope of the exception
2.3.2.6 Criticism of the expedition theory
2.3.2.7 Revocation or neutralisation of the posted acceptance
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2.3.2.8 Electronic contracts: the reception theory applies
2.4 Breaking off negotiations
2.5 Pacta de contrahendo
2.5.1 Options
2.5.1.1 Juristic nature of an option
2.5.1.2 Earlier views on the nature of an option
2.5.1.3 Unilateral declaration that the offer is irrevocable
2.5.1.4 Legal effect of an option
2.5.1.5 Duration of the option
2.5.1.6 Transferability of an option
2.5.1.7 Formalities: options to buy or sell land
2.5.1.8 Remedies for breach of an option
2.5.2 Preference contracts
2.5.2.1 Right of pre-emption
2.5.2.2 Right of pre-emption compared with an option
2.5.2.3 The obligations of the grantor
2.5.2.4 The trigger event in a pre-emption agreement
2.5.2.5 The offer must be a bona fide one
2.5.2.6 Duration of the offer
2.5.2.7 Remedies for breach
CHAPTER 3 MISTAKE/ABSENCE OF CONSENSUS – CHRIS PRETORIUS
3.1 Introduction
3.2 Classification of mistake
3.2.1 Unilateral, mutual and common mistake
3.2.2 Irrelevant and relevant mistake
3.2.3 Material and non-material mistake
3.2.3.1 Material mistake
3.2.3.2 Non-material mistake
3.2.4 Traditional classification of material and non-material mistake
3.2.5 Mistake of law and mistake of fact
3.3 Limitations of the will theory
3.4 Reliance-based correctives
3.5 The subjective approach as qualified by estoppel and quasi-mutual assent
3.5.1 The doctrine of estoppel
3.5.2 The doctrine of quasi-mutual assent or (direct) reliance theory
3.6 The objective approach as qualified by the iustus error doctrine
3.6.1 The declaration theory in case law
3.6.2 The iustus error doctrine
3.7 Reconciliation of the subjective and objective approaches
3.7.1 Sonap Petroleum (SA) (Pty) Ltd v Pappadogianis
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3.7.2 Direct or indirect reliance?
3.8 Common mistake
3.9 Rectification
CHAPTER 4 IMPROPERLY OBTAINED CONSENSUS – DALE HUTCHISON
4.1 Introduction
4.1.1 Restitutio in integrum
4.1.2 Delictual damages
4.1.3 A general ground for rescission?
4.2 Misrepresentation
4.2.1 Misrepresentation distinguished from other pre-contractual misstatements
4.2.1.1 Warranties or contractual terms
4.2.1.2 Opinions, statements as to the future and statements of law
4.2.1.3 Puffs (simplex commendatio)
4.2.1.4 Dicta et promissa
4.2.2 Misrepresentation and mistake
4.2.3 Remedies for misrepresentation
4.2.3.1 Rescission and restitution
4.2.3.2 Misrepresentation as a defence
4.2.3.3 Damages
4.2.4 Misrepresentation by silence: non-disclosure
4.3 Duress
4.3.1 The nature of coercion
4.3.2 The reasonableness of the fear
4.3.3 The object of the threat
4.3.4 The imminence of the harm
4.3.5 The unlawfulness of the threat
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Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide.
Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries.
Published in South Africa by
Oxford University Press Southern Africa (Pty) Limited
Vasco Boulevard, Goodwood, N1 City, Cape Town, South Africa, 7460
P O Box 12119, N1 City, Cape Town, South Africa, 7463
Copyright © Oxford University Press Southern Africa (Pty) Ltd 2017
The moral rights of the authors have been asserted.
First published in 2009
Third edition published in 2017
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any
form or by any means, without the prior permission in writing of Oxford University Press Southern Africa (Pty) Ltd,
or as expressly permitted by law, by licence, or under terms agreed with the appropriate reprographic rights
organisation, DALRO, The Dramatic, Artistic and Literary Rights Organisation at . Enquiries
concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University
Press Southern Africa (Pty) Ltd, at the above address.
You must not circulate this work in any other form and you must impose this same condition on any acquirer.
The Law of Contract in South Africa
Print ISBN: 978 0 19 041982 0
ePUB ISBN: 978 0 19 041 752 9
Typeset in Utopia Std Regular 9.5pt on 12pt
Acknowledgements
Publisher: Penny Lane
Development editor: Alison Paulin
Project manager: Lindsay-Jane Lücks
Copy-editor: Angela Voges
Proofreader: Language Mechanics
Indexer: Clifford Perusset
Typesetter: Barbara Hirsch
Cover designer: Judith Cross
Designer: Oswald Kurten
Printed and bound by: XYZ Printing Company
The authors and publisher gratefully acknowledge permission to reproduce copyright material in this book. Every
effort has been made to trace copyright holders, but if any copyright infringements have been made, the publisher
would be grateful for information that would enable any omissions or errors to be corrected in subsequent
impressions.
Links to third party websites are provided by Oxford in good faith and for information only.
Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work.
http://e.pub/2jgu008z7mqglxdupnek.vbk/OEBPS/Text/02_copyright-print-1533309682.xh... 03-Aug-18
,The Law of Contract in South Africa 3e Page 1 of 1
To my academic mentor and friend, Barry Dean, and to my wife, Jill
Dale Hutchison
To my wife, Colleen
Chris Pretorius
http://e.pub/2jgu008z7mqglxdupnek.vbk/OEBPS/Text/03_dedication-print-1533309654.x... 03-Aug-18
,The Law of Contract in South Africa 3e Page 1 of 2
Contents in brief
PART ONE NATURE AND BASIS OF CONTRACT
CHAPTER 1 THE NATURE AND BASIS OF CONTRACT
PART TWO FORMATION OF CONTRACT
CHAPTER 2 OFFER AND ACCEPTANCE
CHAPTER 3 MISTAKE/ABSENCE OF CONSENSUS
CHAPTER 4 IMPROPERLY OBTAINED CONSENSUS
PART THREE REQUIREMENTS OF A VALID CONTRACT
CHAPTER 5 CONTRACTUAL CAPACITY
CHAPTER 6 FORMALITIES
CHAPTER 7 LEGALITY
CHAPTER 8 POSSIBILITY AND CERTAINTY
PART FOUR CONTENTS AND OPERATION OF A CONTRACT
CHAPTER 9 PARTIES TO CONTRACTS
CHAPTER 10 OBLIGATIONS AND TERMS
CHAPTER 11 INTERPRETATION OF CONTRACTS
PART FIVE BREACH OF CONTRACT
CHAPTER 12 FORMS OF BREACH
CHAPTER 13 REMEDIES FOR BREACH
PART SIX TRANSFER AND TERMINATION OF RIGHTS AND OBLIGATIONS
CHAPTER 14 CESSION
CHAPTER 15 TERMINATION OF OBLIGATIONS
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PART SEVEN DRAFTING
CHAPTER 16 DRAFTING OF CONTRACTS
PART EIGHT THE CONSUMER PROTECTION ACT
CHAPTER 17 THE CONSUMER PROTECTION ACT 68 OF 2008
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Contents
PART ONE NATURE AND BASIS OF CONTRACT
CHAPTER 1 THE NATURE AND BASIS OF CONTRACT – DALE HUTCHISON
1.1 The notion of contract
1.1.1 Contract as an agreement intended to create enforceable obligations
1.1.2 Legally binding agreements that are not contracts
1.1.3 Legally binding agreements that are more than just contracts
1.1.4 Definition of contract
1.2 Requirements for a valid contract
1.3 The nature of contract
1.4 Contract and the law of obligations
1.4.1 The concept of obligation
1.4.2 Contract and delict
1.4.3 Contract and enrichment
1.5 Contract and the law of property
1.6 The development of the modern notion of contract
1.6.1 Roman law
1.6.2 Roman-Dutch law
1.6.3 Causa and consideration: a celebrated dispute
1.7 The basis of contract
1.7.1 Introduction
1.7.2 Actual subjective agreement (consensus)
1.7.3 Apparent or objective agreement
1.7.4 Theories of contract
1.7.5 Approach to contract: subjective or objective?
1.7.6 Dual basis of contract in modern law
1.7.7 Proving the existence of a contract
1.8 Cornerstones of contract
1.8.1 The goals of contract law
1.8.2 Competing values in the law of contract
1.8.3 Freedom and sanctity of contract
1.8.4 Good faith, equity and public policy in contract
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1.9 The Consumer Protection Act 68 of 2008
1.10 The impact of the Constitution
PART TWO FORMATION OF CONTRACT
CHAPTER 2 OFFER AND ACCEPTANCE – LUANDA HAWTHORNE AND DALE HUTCHISON
2.1 Introduction
2.2 The offer
2.2.1 Legal effect of an offer
2.2.2 Requirements for a valid offer
2.2.2.1 The offer must be firm
2.2.2.2 The offer must be complete
2.2.2.3 The offer must be clear and certain
2.2.2.4 The Consumer Protection Act 68 of 2008
2.2.3 Offers to the public
2.2.3.1 Advertisements
2.2.3.2 Promises of reward
2.2.3.3 Calls for tenders
2.2.3.4 Auctions
2.2.4 Termination of an offer
2.2.4.1 Rejection of the offer
2.2.4.2 Death of either party
2.2.4.3 Effluxion of the prescribed time, or of a reasonable time
2.2.4.4 Revocation of the offer
2.2.4.5 Loss of legal capacity to act
2.2.4.6 Acceptance of offer
2.3 The acceptance
2.3.1 Requirements for a valid acceptance
2.3.1.1 The acceptance must be unqualified
2.3.1.2 The acceptance must be by the person to whom the offer was
made
2.3.1.3 The acceptance must be a conscious response to the offer
2.3.1.4 The acceptance must be in the form prescribed by the offeror (if
any)
2.3.2 When and where acceptance takes effect
2.3.2.1 The information theory as the general rule in our law
2.3.2.2 Exceptions to the general rule
2.3.2.3 Where the offeror stipulates a different method of acceptance
2.3.2.4 Postal contracts: the expedition theory applies
2.3.2.5 The scope of the exception
2.3.2.6 Criticism of the expedition theory
2.3.2.7 Revocation or neutralisation of the posted acceptance
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2.3.2.8 Electronic contracts: the reception theory applies
2.4 Breaking off negotiations
2.5 Pacta de contrahendo
2.5.1 Options
2.5.1.1 Juristic nature of an option
2.5.1.2 Earlier views on the nature of an option
2.5.1.3 Unilateral declaration that the offer is irrevocable
2.5.1.4 Legal effect of an option
2.5.1.5 Duration of the option
2.5.1.6 Transferability of an option
2.5.1.7 Formalities: options to buy or sell land
2.5.1.8 Remedies for breach of an option
2.5.2 Preference contracts
2.5.2.1 Right of pre-emption
2.5.2.2 Right of pre-emption compared with an option
2.5.2.3 The obligations of the grantor
2.5.2.4 The trigger event in a pre-emption agreement
2.5.2.5 The offer must be a bona fide one
2.5.2.6 Duration of the offer
2.5.2.7 Remedies for breach
CHAPTER 3 MISTAKE/ABSENCE OF CONSENSUS – CHRIS PRETORIUS
3.1 Introduction
3.2 Classification of mistake
3.2.1 Unilateral, mutual and common mistake
3.2.2 Irrelevant and relevant mistake
3.2.3 Material and non-material mistake
3.2.3.1 Material mistake
3.2.3.2 Non-material mistake
3.2.4 Traditional classification of material and non-material mistake
3.2.5 Mistake of law and mistake of fact
3.3 Limitations of the will theory
3.4 Reliance-based correctives
3.5 The subjective approach as qualified by estoppel and quasi-mutual assent
3.5.1 The doctrine of estoppel
3.5.2 The doctrine of quasi-mutual assent or (direct) reliance theory
3.6 The objective approach as qualified by the iustus error doctrine
3.6.1 The declaration theory in case law
3.6.2 The iustus error doctrine
3.7 Reconciliation of the subjective and objective approaches
3.7.1 Sonap Petroleum (SA) (Pty) Ltd v Pappadogianis
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3.7.2 Direct or indirect reliance?
3.8 Common mistake
3.9 Rectification
CHAPTER 4 IMPROPERLY OBTAINED CONSENSUS – DALE HUTCHISON
4.1 Introduction
4.1.1 Restitutio in integrum
4.1.2 Delictual damages
4.1.3 A general ground for rescission?
4.2 Misrepresentation
4.2.1 Misrepresentation distinguished from other pre-contractual misstatements
4.2.1.1 Warranties or contractual terms
4.2.1.2 Opinions, statements as to the future and statements of law
4.2.1.3 Puffs (simplex commendatio)
4.2.1.4 Dicta et promissa
4.2.2 Misrepresentation and mistake
4.2.3 Remedies for misrepresentation
4.2.3.1 Rescission and restitution
4.2.3.2 Misrepresentation as a defence
4.2.3.3 Damages
4.2.4 Misrepresentation by silence: non-disclosure
4.3 Duress
4.3.1 The nature of coercion
4.3.2 The reasonableness of the fear
4.3.3 The object of the threat
4.3.4 The imminence of the harm
4.3.5 The unlawfulness of the threat
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