Supplementary Take-Home Assessment Paper

Faculty Name: Commerce and Law

Module Name: Law of Contract Block 1
Module Code: LWCTA3-B11
Date: 18/05/2021 – 20/05/2021
Total Marks: 85
Duration: 48 Hours
Examiner: Blessing Mukwehwa
External Moderator: Michelle Schoeman
Copy Editor: Richard Dunningham
Section A: Multiple Choice Questions 50 Marks
Section B: Short and Long Questions 35 Marks

This examination contributes 50% towards the final mark.

Instructions to Student
1. Ensure that you are writing the correct examination.
2. Read each question carefully.
3. Answer all required questions in the answer book provided unless otherwise specified.
4. All rough work should be done in the back of the answer book and indicated as such.
5. This paper should not be removed from the assessment venue.
6. Refer to the instructions in the examination answer book.

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Eduvos (Pty) Ltd. (formerly Pearson Institute of Higher Education) is registered with the Department of Higher Education and Training as a private
higher education institution under the Higher Education Act, 101, of 1997. Registration Certificate number: 2001/HE07/008
Section A
Multiple Choice Questions 50 Marks
On the multiple-choice question answer section provided in your answer book, make a cross (X)
over your chosen answer option for each question. There is only one right answer. If more than
one option is listed, only the first option appearing in the answer book will be marked.

Question 1
1.1 Z walks into a shop, and puts R10 on the counter and points to a packet of sweets. X (the
owner of the shop) takes the money and hands over the sweets to Z. Which statement is
correct?
a. There is an oral offer, and acceptance by conduct.
b. There is both an offer, and acceptance by conduct.
c. There is an express offer, and an oral acceptance.
d. There is an offer by conduct, and an express oral acceptance.

1.2 The notion that contracts are based on what the parties have entered to be bound by has
given rise to which theory?
a. The expedition theory.
b. The declaration theory.
c. The will theory.
d. The reliance theory.

1.3 X and Y are law students and good friends. Since X wants to go away for the weekend, Y
agrees to attend the contract law lecture on Friday morning and to give a copy of his notes
to X. On Friday morning, Y oversleeps and misses the lecture. X intended the agreement to
be legally binding, but Y thought he was simply doing a favour for a friend. Which aspect of
consensus is affected from these facts:
a. The parties to the contract.
b. The term of the contract.
c. Possibility
d. Animus contrahendi.

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1.4 Which statement relating to the Bill of Rights in the Constitution of the Republic of South
Africa, 1996, is correct?
a. Vertical application relates to relationships between private persons, as in most
contractual situations.
b. 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.
c. Horizonal application relates to relationships between the state and the individual.
d. 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.

1.5 Which of the following does not lead to the termination of an offer?
a. Rectification of the offer.
b. Rejection of the offer.
c. Death of either the offeror or the offeree.
d. Effluxion of the prescribed time, or of a reasonable time.

1.6 A walked past B`s store and sees a nice belt marked with 50% off from its original price of
R300. A went in the store and got the belt from the shell and the price was also marked
down with the 50% off. When he got to the till-point, B told A that the price is R300 and that
the 50% off was finished. In terms of the Consumer Protection Act (CPA), which price
should A pay for the belt?
a. R300 as the special was finished, the CPA does not regulate specials which have
been finished.
b. R150 because the CPA does not allow a consumer to pay more than the displayed
amount.
c. R150 because B`s price was not clear and certain as required for validity of the
contract.
d. R300 since there was no animus contrahendi to sell the belt for R150.

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1.7 Ricky, an owner of an exclusive car dealership advertised a special limited-edition vintage
car for sale, and invited the public to make offers for the car. Carl and Michonne were
among many other people who submitted written offers for the car. Carl`s offer was for
R650 000, and Michonne’s offer was for R660 000. Although Ricky intended to accept
Michonne’s offer, he erroneously accepted Carl’s offer. Ricky’s mistake is
a. not material.
b. Error in corpore
c. material.
d. an error in motive.

1.8 Thanos points a loaded gun at Pete, and orders him to sign a written contract. Thanos
explains that the document is for the sale of Pete’s car to him (Thanos), at a price of R50
000 which is far below the market value of the car. Pete, fearing for his life, signs the
document. To establish a cause of action, which of the following is not necessary for Pete to
prove?
a. That Pete had a reasonable fear.
b. That the threat weakened Pete’s power of resistance and rendered his will compliant.
c. That there was a threat of an imminent evil.
d. That the threat was contra bonos mores.

1.9 X undertakes to donate R100 000 to Y on 5 December 2020. This donation is subject to a
a. suspensive condition.
b. resolutive condition.
c. suspensive time clause.
d. modal clause (modus).

1.10 In which instance has consensus been obtained improperly?

a. A negligent misrepresentation.
b. A common error.
c. Rectification.
d. An error in negotio.

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1.11 Simo illegally sells uncut diamonds to Chumani for R10 000. Both Simo and Chumani know
that the selling of uncut diamonds is prohibited by statute. Although Simo delivers the
diamonds to Chumani, Chumani fails to pay the purchase price. Which statement is
correct?
a. Simo will be able to claim the purchase price from Chumani.
b. The contract of sale is void because of illegality.
c. The contract of sale is voidable because of illegality.
d. Simo shall be able to claim return of the diamonds from Chumani with an enrichment
action, because the court as a rule will relax the par delictum rule.

1.12 A term implied ex lege into a contract

a. is imported into a contract by law and operates, unless the parties exclude it.
b. is imported into a contract by the parties and operates, unless the law operates to
exclude it.
c. is also known as a incidentilium (singular of incidentilia) if it is implied by the common
law.
d. A non-variation clause.

1.13 An absolving agreement is an agreement:

a. only creating obligations.
b. extinguishing or discharging obligations.
c. whereby a right is transferred.
d. an example of which is cession.

1.14 X and Y agree that should X sell her leather couch, she (X) will offer to sell it to Y first,
before making an offer to sell the couch to any other person. X sells the couch to Z for R10
000 without first offering it to Y for sale. Delivery of the couch has not yet taken place.
Which statement is correct?
a. X and Y concluded an option contract.
b. The contract between X and Z is voidable, because it breaches the contract between
X and Y.
c. Y has a personal right against X, but Z has a real right against X.
d. Both Y and Z only have personal rights against X.

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1.15 X makes an offer to Y to purchase Y’s car. X sends the offer by email to Y. Y reads the offer
on 13 May and drafts a written acceptance on 14 May. Y emailed his acceptance on 15
May to X. X receives the acceptance on 17 May in his email box and only reads it on 18
May. When was the contract concluded?
a. 13 May.
b. 15 May.
c. 17 May.
d. 18 May

1.16 S sends a written offer by post to P, in which S offers to sell his radio to P for R3 000. In the
written offer, S stipulates that the acceptance must be communicated to him by 1 June. On
20 May, P posts a written acceptance to S, to purchase the radio for R3 000. On 22 May, S
phones P and cancels his offer to sell his radio. P’s written acceptance reaches S on 25
May. Which answer reflects the correct legal position?
a. A contract is not concluded between S and P, because the information theory applies.
b. A contract is concluded between S and P, because the expedition theory applies.
c. A contract is concluded between S and P, because the information theory applies.
d. A contract is not concluded between S and P, because the expedition theory applies.

1.17 While doing window-shopping, X and his fiancée, Y, see a ring displayed in a shop window.
They immediately enter the jeweller’s shop and offer to buy the ring at the displayed price.
They find out to their dismay that the “diamond” is a synthetic diamond afterwards. Which
statement is correct:
a. The contract of sale is void due to material mistake on X and Y`s part.
b. The error is an error in corpore and contract is valid.
c. The parties to the contract did not want to buy and sell the same ring.
d. The error is an error in substantia and does not affect the validity of the contract.

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1.18 H lets a business premises to D for R5 000 per month. The written lease contains a clause
prohibiting D from sub-letting the premises without the written consent of H. A further clause
requires, that for any variation of the contract to be valid (including this clause), it has to be
in writing and signed by both parties. Subsequently H and D orally agreed that D can sub-
let the premises, for which D will pay an additional R2 000 per month. D then sublet the
premises to Y. After H discovered that D is now sub-letting the premises to Y, he (H)
cancels the lease agreement with D because D breached the contract by sub-letting the
premises. Which answer reflects the correct legal position?
a. H’s attempted cancellation has no effect on the validity of the contract.
b. Because H orally agreed that D can sub-let the premises, it is in fact H that has
breached the lease agreement by cancelling the contract.
c. H validly cancelled the contract.
d. The contractual relationship between the parties has become void for vagueness.

1.19 K and M agree orally that if K decides to sell her watch, she will offer to sell it to M first.
Which statement is incorrect?
a. An essential feature of this agreement is that K is under an obligation to sell the watch
within a reasonable time from the date that K concluded the agreement with M.
b. This agreement gives M the right to be granted the first opportunity to buy the watch,
if K decides to sell it.
c. This agreement which creates a right of first preference is a type of pactum de
contrahendo.
d. This agreement has been concluded with an offer and acceptance.

1.20 K and M agree orally that if K decides to sell her watch she will offer to sell it to M first.
Assume that K goes ahead and sells the watch to J without first offering it to M to purchase.
In terms of the agreement between K and M, what type of breach has K committed?
a. Mora debitoris.
b. Mora creditoris.
c. Prevention of performance.
d. Positive malperformance.

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1.21 X has been leasing a commercial property from Z for the past 3 years. The lease will come
to an end on 31 May. On 5 March, X phones Z and offers to renew the lease for a further 3
years, which offer Z accepts. During the phone call, the material terms of the renewal
agreement are agreed upon and X and Z further agree that the said material terms must be
reduced to writing and signed by both parties. Subsequently on 5 April, X is shocked to
receive a letter from Z, advising X that there will be no renewal of the lease and that X
should vacate the leased property on 31 May. X and Z never reduced their oral agreement
to writing. Which statement is correct?
a. Z bears the onus of proving that X and Z intended that their oral agreement will only
be binding if it is reduced to writing and signed by both parties.
b. A court adjudicating upon this dispute is likely to find that the oral agreement is not
enforceable because it was not reduced to writing as is prescribed in section 12 of the
Electronic Communications and Transactions Act 25 of 2002.
c. In the given set of facts, the law presumes that the contract between X and Z is not
clear and therefore it is not valid due to lack of certainty.
d. None of the statement is correct.

1.22 X contracts with Y for the latter to build and fit a security gate for the entrance of X’s home.
Y builds the gate and fits it with an electric motor, which is activated with a remote control. X
is satisfied with the work and pays Y the contractual amount agreed upon. A week later the
gate gets stuck while it is halfway open as a result of defective materials used to build the
gate. When X attempts to physically move the gate to close it fully, she suffers such severe
damage to her left knee that she has to have a knee operation. Her medical costs are R20
000. The costs of repairing the gate amount to R15 000. X wants to claim both her medical
costs as well as the costs of repairing the gate from Y. If X can prove that Y has committed
a breach of their agreement, what type of breach will X rely on?
a. mora debitoris.
b. mora creditoris.
c. prevention of performance.
d. positive malperformance.

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1.23 Based on the same facts above, advise X on the type of damages she sustained.
a. Both medical costs and costs of repairing the gate because these amount to general
damages.
b. Hospital costs are general damages and costs for repairing gate are special damages.
c. Hospital costs are special damages and costs for repairing the gate are general
damages.
d. Both medical cost and costs of repairing the gate because these amount to special
damages.

1.24 C, a builder, and O agree that C will build a house on O’s stand for R800 000, payable on
completion of the house. The house must be completed by 30 April, but on that date the
house is only 90% complete. It would cost R100 000 to complete the house. O refuses to
pay any amount to C because C failed to complete the house timeously. If C institutes legal
proceedings against O for payment, which defence is O likely to raise?
a. The exceptio doli.
b. The pactum de contrahendo.
c. The stipulatio alteri.
d. The exceptio non adimpleti contractus.

1.25 X sold certain premises to Y. The premises were registered in the name of X and her
daughters in undivided shares. X was unable to transfer the premises to Y because her
daughter refused to sell her portion. X raises the defense of impossibility. Will X succeed
with this defence?
a. The defence will succeed as it is objectively impossible for x to perform.
b. The contract is valid. The defence will not succeed as this is a case of subjective or
relative impossibility.
c. The contract is void because this is a supervening impossibility.
d. Contract is voidable on the instance of X` daughter. If she agrees to co-sign the
agreement with X, the contract will then become enforceable.

(25 × 2 Marks)

End of Section A

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Section B
Short and Long Questions 35 Marks

Question 2
Identify the following clauses and substantiate your answer. Where the clause is a condition or a
time clause, specifically indicate whether it is resolutive or suspensive.

2.1 A wants to buy B’s Ford Mustang GT500 but only if it is the 1969 Shelby GT500. B is not
sure of the model of the car and is not prepared to guarantee the fact. The parties enter into
a contract but added that the contract will be valid if it is a 1969 Shelby GT500 model.
2.2 Andrew agrees to pay Simon’s rent until he gets a job.
2.3 Y enters into a contract of sale with Z in which they agreed that Y will deliver the car that Z
purchased on 5 May 2021 before 16h00.
2.4 Blessing promises to buy his daughter Samantha an expensive LOL doll if she gets an
average of 70% on all her subjects in Grade 2.
2.5 Danny agrees to rent his house to Steve at R10 000 per month. The contract was valid for
12 months and expires on 31 December.
(5 × 2 Marks)
[Sub Total 10 Marks]

Question 3
Indicate the means by which an obligation is terminated from the activities below.

3.1 Abel applied and was granted a loan for R50 000 by AD Bank. The loan was payable for
twelve months. Six months in the debt and after Abel has already paid R25 000, he fell in a
temporary financial crisis which prompted him to reapply for another loan. AD Bank agree to
extend another loan of R75 000 to his already existing balance of R25 000, an old loan. He
signed a new loan agreement indicating the R100 00 which he now owes and the loan was
payable in 24 months as of date of signature (1 Mark)
3.2 Zane, a shopaholic, opened a clothing account with B & F fashions with a limit of R3 000 in
January 2017. Zane used all the credit in the account the day he opened the account. He
never paid a single cent towards the account. It is now May 2021 and he has not paid
anything nor has he received any legal documents demanding payment from B & F
Fashions. (1 Mark)

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3.3 Nemanja is owing an amount of R50 000 to Ibra. A few months later, Ibra crashed
Nemanja`s car and it will cost Nemanja R40 000 to fix his car. Nemanja decided to pay Ibra
R10 000 towards his debt to Ibra and used the R40 000 to fix his car. (1 Mark)
3.4 Isaacs got a loan of R10 000 from his girlfriend Lorraine. Isaacs and Lorraine subsequently
got married in community of property the following month before Isaacs could pay back the
money, he was owing her. (1 Mark)
3.5 Matty borrowed a law of contract textbook from Sipho since he had an exam the next day.
Unfortunately, Matty does not do well in the exam. Feeling sorry for him, Sipho told Matty
that he does not need to return the book back to him anymore and can keep it. (1 Mark)
[Sub Total 5 Marks]
Question 4
Mavis employs a builder, Bert, to build a house for her in Sandton. She signs a contract for R1 000 000
and they agree to have the house completed by 1 August. When the house is almost complete (only the
roof has to be affixed onto the house), Mavis is a victim of a huge fraud in her business that results in
serious financial difficulties. She contacts Bert and tells him that she will not be able to pay him as she
has run out of funds. She tells him that he must stop building and she will reconsider again once her
business recovers. She faxes him the written explanation and an instruction to stop building. Bert
ignores this fax and continues to complete the roof. On completion, a week later on 1 August, he
contacts her for payment in terms of the contract. Mavis told Bert that she cannot pay him as he
continued building despite her telling him of her financial crisis.
Source: Vos, E. PIHE 2016.

Bert approaches you for advice. He specifically needs clarity on the following issues:
• Type of breach of contract present
• The requirements of this breach (and apply it to the facts of this case)
• Bert’s contractual remedies
Your answer must make reference to relevant case law (20 Marks)

End of Section B

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