NAME: THABANG MOJAJE

STUDENT NUMBER: 53031650

MODULE: LAW OF CONTRACT

MODULE CODE: PVL3702

ASSIGNMENT NUMBER: 1

UNIQUE CODE: 618220

DUE DATE: 20 MARCH 2023

Introduction

Among other requirements of a valid contract consensus is needed in order for a

contract to hold water. According to Hutchison & Pretorius (2022) in order for the
requirement of a consensus to be met, the minds of both parties must or at least
appear to be in alignment on all aspects of their agreement. However, as is the case
with the scenario at hand one party might fail to express her intentions correctly and
create reasonable reliance in the mind of the other party, leading to the impression
that a consensus has been reached.

Legal question

Can a unilateral mistake diminish consensus in a contract?

The element of material mistake

Furthermore, Carol’s mistake was material because she inadvertently accepted the
offer of Jane whereas she intended to accept the offer of Portia. Material mistakes
relate to or exclude an element of consensus. Hutchison & Pretorius (2022) Highlights
that it is necessary to first consider whether if the parties are seriously intended to
contract and if their mind are in alignment with all the material aspects of the contract.
He goes further by stipulating that, if the contracting party lacks the conscious intention
to be legally bound by an agreement, there can be no consensus.

Reasonable belief and direct reliance theory

For example, in the case of Constantia Insurance Co Ltd v Compusource (Pty) Ltd
2005 (4) SA 345 (SCA), the court held that the ascription of contractual liability in the
absence of consensus in regards to reliance theory basically requires a reasonable
belief on the part of contract assertor induced by the contract denier that the latter has
to the contract in question (Hutchison & Pretorius 2022). The issue of reasonable belief
is rooted in the theory of direct reliance theory which is the basis for actual rather than
fictitious contract. As it was held in the case of Constantia, this school of thought states
that for a contractual liability to arise in the absence of consensus requires a
reasonable belief on the part of the contract assertor induced by the contract denier
that the latter had agreed to the contract in question. As a result, a unilateral mistake
was being committed which is a mistake in which is a situation whereby only one party
his mistaken. If one party mistakenly enters into a contract with under party creates a
dissensus and because of this a contract cannot exist (Hutchison & Pretorius 2022)

The concept of dissensus

As a general rule, primarily the law only concerns itself with the external manifestations
of a contract and not what the minds of the parties intended when the contract was
being drafted. However, in the case of an alleged dissensus, as a secondary measure
the law does have regard to other consideration concerning the contract. For instance,
it was held in KOK v Osborne AND Another 1993 2 All SA 549 SE that Osborne would
have never accepted the contract if he had known the true position of the contract. He
did not therefore accept the offer that was contained in the written contract and thought
that he she was acting on the strength of what he and Hobson-Jones had agreed upon
verbally. Therefore, the court stated that he was not bound by his apparent acceptance
of the contract because he has genuinely mistaken. The contract was nullified in spite
of the fact that his mistake was unilateral, provided the circumstances he acted
reasonably, and his mistake is justifiable.

Legal advice
Based on law and decided court cases, the contract that was mistakenly concluded
between Carol and Jane is not valid as a result it cannot be legally be enforced. And
can therefore be concluded that, if there is a lack of consensus between parties the
contract cannot stand even if the mistake is unilateral.
Reference

Constantia Insurance Co Ltd v Compusource (Pty) Ltd 2005 (4) SA 345 (SCA)

Hutchison & Pretorius (eds) The Law of Contract in South Africa 4th ed (2022) Oxford,
Cape Town.

KOK v Osborne AND Another 1993 2 All SA 549 SE