Question 1

1.1 General essential elements of a vital contact are:

• Consensus between the party,
consensus means the meeting of the minds (agreement between both
parties), it requires all the parties to the contract to have serious obligations
(intention) of creating the same legally binding rights and obligations and also
that they (parties) make their intentions known to each other. Consensus
must have at least these 3 criteria namely;
1. Type of contract the parties wish to conclude
2. The object of the contract
3. The contract price.
Further the parties must both want their intentions to be legally bound, their
intentions must be common (unanimity-oneness), their intentions must be
communicated (made known), there must be clarity and certainty, identities of
both parties, and also the termination of an offer must also be disclosed
(expiration of time limit, counter offer by offeree etc)
• Capacity of a contract,
the parties must be legally capable of binding themselves to an agreement
and thus incurring writes and obligations. Factors such as age, marriage,
mental deficiency influence of alcohol and drugs prodigality and insolvency
must not affect either one of the parties concluding a valid contract. Be it that
it is age(living/giving the individuals no contractual capacity – minors below
7years of age , or limited contractual capacity- over 18 years old) or marriage
(be it married in community of property or married (not) out of community of
property), mental deficiency (the parties must be both mentally capable of
acting legally), influence of alcohol and drugs- parties must not be intoxicated,
if intoxicated then threes no contractual capacity), prodigality(both parties
must be financially sound- be capable of managing their own affairs- in this
case of prodigality then the will be no contractual capacity), insolvency( both
parties must not be insolvent)
• Physical possibility of performance
Performance in terms of the contract must objectively be possible
meaning that the parties concluding the contract must be in a physical
position to render the services (performance) to which they are have
committed themselves in conjunction (terms) to the contract. (unless
otherwise it is objectively impossible, the contract shall be void or subject
impossibility then contract shall be voidable or otherwise initial
supervening impossible- vis major(act of God) or casus fortutuis.
• Legal impossibility of performance
The contract must be permitted by law, the contract must be lawful. A
contract will be void if it is unlawfully due to it being prohibited by
law( selling of firearms or uncut diamonds without a license) or if it is in
conflict with the common law (contacts promoting sexual misconduct or
impairing the stability of a marriage) or wagering/betting contracts or
 agreements involving the administration of justice or agreements involving
crime and delicts or agreements affecting the safety of the states or
agreements restraining a persons’ right to participate freely in commerce
(agreements prohibiting competition and agreements protecting trade
secrets and commercial contracts)
• The formalities of the contract must be complied with
Means that there are no formalities on how a contract should be done, it
can be tacitly or in writing. Certain contracts must be by law in writing e.g.
sale, donation or exchange of land. Contracts of the alienation of land e.g.
contracts of suretyship and ante nuptial contracts must be signed, written
and registered in the deeds office before a contract is voidable. Such
contracts have/ are formalities required by law. Others are formalities
required by the contracting parties which say/state that the contract
will/must be in writing before it will be valid and of force.
• Certainty of material terms
Meaning that performance, purpose, rights and obligations of/to which the
parties are to joint (bind) themselves must be clear and certain. If the
parties do not know what their rights and obligations are, then the contract
is not valid (void).

A contract will only be voidable if each of the above elements have been
implemented (taken to consideration) by the parties involved in a contract.

1.2 A contract of lease differs from a contract of sale in two ways

“in terms of a contract of sale, the seller intends to part in every right he
has in respect of the merx, including the right to diminish and destroy the
thing (thus the intention is to transfer full ownership) in concluding a lease,
the parties intention is that the lesser will, at most transfer only the right to
use the thing and gather and use its fruits (not the right to diminish or use
up the substance of the merx).
So in a contract of sale the seller part ways to every right in respect to
merx including the right to diminish and destroy, but in contract of lease
the lessor will only give the right to use the thing but not destroy and
diminish the merx.
Another difference is that in the contract of sale, the sellers intentions are
that the buyer will have full use and enjoyment of the merx permanently
where else in a contract of lease the lessor merely intends to give the
lessee the temporary use and enjoyment of the property
A contract of lease is an agreement between the lessor and the lessee in
terms of which the lessor undertakes to make available a merx to the
lessee for the lessee temporary use of the merx in exchange the lessee
undertakes to pay a sum of money as rent for the use and enjoyment of
the merx.
A contract of sale is an agreement between the seller and the buyer in
terms of which the seller undertakes to deliver permanently the merx to
 the purchaser in exchange the purchaser (buyer) undertakes to pay a sum
of money for the merx.

This is a contract of lease.

1.3 The term arbitration entails ‘the process in which parties involved in a
dispute undertake (agree) to refer the dispute to the third party (arbitrator)
with the intention that this arbitrator will determine the dispute by making
an award that binds the parties. Arbitration and court proceedings are
fairly similar in a sense that the decision of the arbitrator is binding, like
that of a judge’s decision. Arbitration is less formal than court proceedings
and normally less expensive and quicker. However there is no appeal
arising from arbitration award and a dispute cannot be referred to
arbitration unless both parties agreed thereto.
 Question 4

• Actual delivery refers to the actual (physical) handling over of the merx by
the seller to purchaser e.g. the seller giving (already sold) bread to the
buyer/purchaser.
• Symbolic delivery refers to an item(another item) which gives control over
the merx, and is handed over to the purchaser e.g. handing over of keys
to motor a vehicle.
• Delivery with long hand refers to the merx is pointed out and made
available to the purchaser. This type of delivery is used when the is to
big/heavy to carry e.g. when a cow(s) have been bought and the
purchaser is to go get them from the farm-personally or when furniture is
bought and it is to big/heavy to be carried (couches/wall units etc)
• Delivery with short hand refers to the purchaser is already in possession
of the merx, but does not hold it as a owner, and then holds it (the merx)
as the owner e.g. when the purchaser had borrowed or leased the item
prior to sale and then purchases it(thus keeping the item he or she already
posessed.
• Constitutum possession refers the opposition of short hand delivery. The
seller retains possessions of the merx, but holds it on behalf of the
purchaser e.g. Colin purchases a car from a car dealer (BMW Motors)
which retains possession of the car in order to match Collins’ standard
taste of cream leather interior.
 Question2

Elements for a valid offer:

1. Animul contrahendi(which is intention)
A true offer is made when Tom(offeror) has the intention to be legally
bound by Anne’s’(offeree) acceptance. Without the intention the could be
no offer.
2Toms’ offer must be complete and have certain or ascertainable
contents(complete offer)
In other words all the material terms of the contract of sale i.e. price of
object to be sold and the time and place of delivery should be set out in
the offer so that a contract is formed by mere acceptance by Anne.
2. Toms offer must be addressed to Anne i.e. he’s offer should be brought to
the attention of Anne (the offeree)
3. Tom has to communicate the offer to Anne i.e. verbally or in writing in this
instance through writing(the letter)

According to this, Tom would probably draft a letter like this

 8732 Compton Boulevard
Hamptons
New Jersey Dakar
7178
02 May 2008

561Letsatsi Street
Orlando East
Soweto
1804

Dear Anne

A proposal for the sale of your red car.

I saw your car the other day and I fancied it, so I have decided to purchase your
car for R20 000 which could be payable into your account at a rate of R10
000per month for 2 months which could be debited from my account to your
account on the first day of each month.

I would kindly request a response from you with your account details to which I
can deposit the payable amount. I would request your reply in the same way
(through a letter).

Yours sincerely
Tom
All elements were fulfilled
(the intentions were met; Tom made it clear that he wanted to buy Annes’ red
car for R20 000)
(the offer must be complete and have certain or accescertainable content; to the
price was set (R20 000) but the place of delivery was not set.
(the offer must be addressed; the letter was sent to Anne)

2.2
Expiration of time limit
Where an offer is subject to a time limit, it will fall away if not accepted by the
offeree before the time limit expires. If the offeror did not attach a time limit to the
offer, the offer will fall away if it is not accepted wiyhin a reasonable time period.

Revocation of the offer

If the offer revokes or withdraws the offer before the offeree has accepted it, the
offer terminates. Effective once it has been communicated by the offeror to the
offeree.

Rejection by the offeree

If the offer that I rejected by the offeree is extinguished and cannot be revised.
Any conduct that indicates that the offeree is unwilling to constitute the offer.

Counter offer by the offeree

Where an offeree is not happy to accept all terms of an offer s/he may make a
counter offer. In this case the original offer is ‘rejected’ and the counter offer
becomes the new offer, which the other party may now accept. It is important to
distinguish a offer from a mere enquire to modify the terms. A mere enquiry or
request does not terminate the original offer.

Death of offeror/offeree
The death of offeree/offeror extinguishes the offer and no rights or duties can be
transferred to the deceased’s estate.
 Question 3

The issue in this relates to the time and place of conclusion of a contract i.e
contracts conclude via post. In South Africa law is the starting point to determine
whether or not the contract has been validly included is a concept known as the
information theory. This theory states; contract is concluded upon the offeree
getting knowledge of the offeree acceptance i.e. acceptance has been
communicated to the offeror. However through situations where the information
does not apply;
1. where the offeror stipulates a different method of acceptance.
2. postal contracts
3. electronic contracts

The expectation theory applies to postal contract, this theory will only apply if :
• both offer and acceptance where made by mail
the offeror makes an offer by mail, he assumes the risk of postal acceptance.

• Acceptance was correctly addressed

The expectation theory will apply where the offeree is responsible for the
letter being incorrectly addressed.

• Postal services functions normally at that time

Expeditions theory will not apply where the letter of acceptance is not
delivered by extra ordinary circumstances i.e. postal workers strike or war.

• The offeror did not indicate that there are different

intentions.
If the offeror clearly indicates that he does not wish the contract to be
concluded upon a mere postal of the acceptance

From the above it is clear that for a contract to be validly concluded via the
past all of the above have to be met most importantly the contract comes into
being as soon as the offoree has mailed the acceptance. & the above is met
(the offoree need not have knowledge of the acceptance as in the
information’s theory mentioned above).

REFERENCE

Student law guide to law of contract: Deeksha bhawa, elsje bonthuys, minette
nortjie, Juta & (co 2007 Cape Town).
The law of S.A, Butter worths (publisher 2007 , J Blackman)