IIE Learn Module Outline LACO6311

Law of Contract (LACO6311)

MODULE OUTLINE 2023
(First Edition: 2018)

This guide enjoys copyright under the Berne Convention. In terms of the Copyright Act, no 98
of 1978, no part of this document may be reproduced or transmitted in any form or by any
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Company registration number: 1987/004754/07.

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IIE Learn Module Outline LACO6311

Table of Contents
Introduction .................................................................................................................................................................... 3
Using this Module Outline ............................................................................................................................................. 4
This Module on Learn .................................................................................................................................................... 5
Icons Used on Learn ....................................................................................................................................................... 6
Module Resources ......................................................................................................................................................... 7
Module Purpose ........................................................................................................................................................... 12
Module Outcomes ....................................................................................................................................................... 12
Assessments ................................................................................................................................................................. 13
Module Pacer ............................................................................................................................................................... 17
Glossary of Key Terms for this Module ....................................................................................................................... 36

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IIE Learn Module Outline LACO6311

Introduction
Welcome to the Law of Contract. This is an exciting and ever-evolving field of law. It is
consistently the most relevant aspect of law as it finds its applicability in almost all aspects of
our daily lives.

Like all aspects of South African law, the common law of contract is undergoing a process of
transformation in response to demand created by the Constitution. Thus the new yardstick for
measuring notions such as the freedom to contract are the requirement of fairness, public
policy and ubuntu. R1 Contract law requires a sound understanding of common law principles,
case law and various legislative rules which would need to be applied in a variety of practical
cases.

We use aspects of Law of Contract almost every day of our lives. We use it in our studies, in
our interaction with taxi drivers, shopkeepers, bank tellers, and even with our parents.
Contracts differ greatly in form, substance and content, and there are different types of
contracts for different industries in the workplace. Although this module is devoted to
introducing you to the theoretical concepts that underpin contracts in South Africa, there will
be a move to real world application. The goal is to not only transfer knowledge to you but to
also build your confidence in interacting with these agreements.

Of all the modules you will study during the pursuit of your degree, those related to contracts
will be the ones applied most often in your life. We enter into contracts on a daily basis, very
often without thinking consciously about it. This module should not be viewed as something
daunting or foreign, but as necessary skills to manage day to day agreements by design, rather
than by accident.

While the law of contract focusses on agreements entered into daily, we need to prepare you
for the conflicts that will invariably arise. This includes developing the skills needed to avoid
uncertainty and conflict through proper drafting as well as remedies available where
agreements lead to disagreement. A law student must be able to understand the concept of
a contract as well as the surrounding facts in a given scenario in order to bring a legal solution
to the problem at hand. This is sometimes difficult to do if practical experience is missing.
However, this year, with an in depth look at both theory as well as practical case studies, you
will find that the Law of Contract will prove to be both exciting and relevant in the workplace.
This is an ideal opportunity to learn from the mistakes of others and to plan for success.
Embrace the opportunity!

1
Hutchison, D (ed.) The Law of Contract in South Africa 3rd edition (2017) pp.37 and 44

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IIE Learn Module Outline LACO6311

Using this Module Outline

This module outline has been developed to support your learning. Please note that the content
of this module is on Learn as well as in the prescribed material. You will not succeed in this
module if you focus on this document alone.

• This document does not reflect all the content on Learn, the links to different resources,
nor the specific instructions for the group and individual activities.
• Your lecturer will decide when activities are available/open for submission and when
these submissions or contributions are due. Ensure that you take note of
announcements made during lectures and/or posted within Learn in this regard.

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IIE Learn Module Outline LACO6311

This Module on Learn

Learn is an online space, designed to support and maximise your learning in an active manner.
Its main purpose is to guide and pace you through the module. In addition to the information
provided in this document, you will find the following when you access Learn:

• A list of prescribed material;

• A variety of additional online resources (articles, videos, audio, interactive graphics,
etc.) in each learning unit that will further help to explain theoretical concepts;
• Critical questions to guide you through the module’s objectives;
• Collaborative and individual activities (all of which are gradable) with time-on-task
estimates to assist you in managing your time around these.

Kindly note:

• Unless you are completing this as a distance module, Learn does not replace your
contact time with your lecturers and/or tutors.
• This module is a Learn module, and as such, you are required to engage extensively
with the content on the Learn platform. Effective use of this tool will provide you
with opportunities to discuss, debate, and consolidate your understanding of the
content presented in this module.
• You are expected to work through the learning units on Learn in your own time –
especially before class. Any contact sessions will therefore be used to raise and
address any questions or interesting points with your lecturer, and not to cover
every aspect of this module.
• Your lecturer will communicate submission dates for specific activities in class and/or
on Learn.

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IIE Learn Module Outline LACO6311

Icons Used on Learn

The following icons are used in all your modules on Learn:
Icon Description

A list of what you should be able to do after working through the learning
unit.

Specific references to sections in the prescribed work.

Questions to help you recognise or think about theoretical concepts to be

covered.

Sections where you get to grapple with the content/theory. This is mainly
presented in the form of questions which focus your attention and are
aimed at helping you to understand the content better and to achieve the
learning objectives. Ensure that you can answer all these questions in detail.
In these sections, you will also be presented with online resources to work
through (in addition to the prescribed work) that will help you to understand
the work better and to achieve the learning objectives.

Opportunities to make connections between different chunks of theory in

the module or across modules.

Real life or world of work information or examples of application of theory

for self-exploration.

REMEMBER:
You need to log onto Learn to:
• Access the learning material and online resources such as articles, interactive
graphics, explanations, video clips, etc. which will assist you in mastering the content;
• View instructions and submit or post your contributions to individual or group
activities which are managed and tracked on Learn; and
• Submit assessment documents.

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IIE Learn Module Outline LACO6311

Module Resources
Prescribed Textbook:
Material (PM) Hutchison, D (ed.) The Law of Contract in South Africa 4th edition (2022)
for this Module Oxford University Press: Cape Town.
ISBN 9780190746940

Prescribed Journal articles:

• Hutchison, D ‘Non-variation clauses in contract. Any escape from
the Shifren straitjacket?’ (2001) 118 SALJ 720
• Kroeze, IJ ‘Doing things with values ii: The case of Ubuntu (2002)
13 Stell LR 252
• Sharrock, R ‘The general principles of the law of contract’ 2009
Annual Survey of South African Law 510
• Sutherland, P ‘Ensuring contractual fairness in consumer
contracts after Barkhuizen v Napier 2007 (5) SA 323 (CC) Part 1’
2008 Stell LR 390 and Part 2 (2009) 20 Stell LR 50
• Tladi, DD “Breathing constitutional values into the law of
contract: Freedom of contract and the Constitution” (2002) De
Jure 306
• Moseneke, D “Transformative Constitutionalism: its implications
for the Law of Contract” (2009) Stellenbosch Law Review 3.
• Van der Walt J, “Progressive indirect horizontal application of the
Bill of Rights: Towards a co-operative relation between common
law and constitutional jurisprudence”(2001) 17 SAJHR

Prescribed Case Law:

• ABSA Bank Ltd v Fouche 2003 (1) SA 176 (SCA)

• Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA)
• Allen v Sixteen Sterling Investments (Pty) Ltd 1974 (4) SA 164 (D)
• Associated SA Bakeries (Pty) Ltd v Oryx & Vereinigte Backereien
(Pty) Ltd 1982 (3)SA 893 (A)
• Barkhuizen v Napier 2007 (5) SA 323 (CC)
• Beadica 231 CC and Others v Trustees for The Time Being of
Oregon Trust and Others 2020 (5) SA 247 (CC)
• BK Tooling (Pty)Ltd v Scope Precision Engineering (Pty)Ltd 1979
(1) SA 391 (A)
• Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun
Transport (Edms) Bpk 2014 (2) SA 494 (SCA)
• Brink v Humphries & Jewell (Pty) Ltd 2005 (2) SA 419 (SCA)

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IIE Learn Module Outline LACO6311

• Brisley v Drotsky 2002 (4) SA 1 (SCA)

• Crawley v Rex 1909 TS 1105
• Everfresh Market Virginia (Pty)Lts v Shoprite Checkers (Pty) Ltd
2012 (1) SA 256 (CC)
• GF V SH 2011 (3) SA 25 (GNP)
• Hirschowitz v Moolman 1985 (3) SA 739 (A)
• Jajbhay v Cassim 1939 AD 537.
• Magna Alloys & Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 (A)
• Maphango v Aungus Lifestyle Properties 2011 (5) 19 SCA
• Naidoo v Birchwood Hotel 2012 (6) SA 170 (GSJ)
• Nyandeni Local Municipality v Hlazo 2010 (4) SA 261 (ECM)
• Phame (Pty) Ltd v Paizes 1973 (3) SA 397 (A)
• Pillay v Shaik 2009 (4) SA 74 (SCA)
• Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 486
(SCA)
• SA Sentrale Ko-operatiewe Graanmaatskappy v Shifren 1964 (4)
SA 760 (A)
• Sasfin (Pty)Ltd v Beukes 1989 (1) SA 1 (A)
• Scoin Trading (Pty) Ltd v Bernstein NO 2011 (2) SA 118 (SCA)
• Steyn v LSA Motors Limited 1994 (1) SA 49 (A)
• Sonap Petroleum SA (Pty) Ltd v Pappadogianis 1992 (3) SA 234
(A)
• Mokone v Tassos Properties CC and Another [2017] ZACC 25
Additional Additional/extra cases and/or journal articles applicable to this module:
material, 1. A to Z Bazaars (Pty) Ltd v Minister of Agriculture 1975 (3) SA 468
Recommended (A)
Readings, 2. Basson v Chilwan 1993 (3) SA 742 (A)
Digital, and Web 3. Bayer South Africa (Pty) Ltd v Frost 1991 (4) SA 559 (A)
Resources 4. Bloom v American Swiss Watch Co 1915 AD 100
5. Cape Explosives Works Ltd v SA Oil and Fat Industries Ltd 1921 CPD
244
6. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 (CA)
7. Dickinson Motors (Pty) Ltd v Oberholzer 1952 (1) SA 443 (A)
8. Durban’s Water Wonderland (Pty) Ltd v Botha 1999 (1) SA 982
(SCA)
9. Extel Industries (Pty) Ltd v Crown Mills (Pty) Ltd 1999 (2) SA 719
(SCA)
10. Goldblatt v Fremantle 1920 AD 123
11. Haynes v Kingwilliamstown Municipality 1951 (2) SA 371 (A)

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IIE Learn Module Outline LACO6311

12. Impala Distributors v Tanus Chemical Manufacturing Co (Pty) Ltd

1975 (3) SA 273 (T)
13. Khan v Naidoo 1989 (3) SA 724 (N)
14. Klokow v Sullivan 2006 (1) SA 259 (SCA)
15. Maseko v Maseko 1992 (3) SA 190 (W)
16. Phame (Pty) Ltd v Paizes 1963 (3) SA 397 (A)
17. SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren 1964 (4) SA 760
(A)
18. Santos Professional Football Club v Igesund 2003 (5) SA 73 (C)
19. Sonap Petroleum SA (Pty) Ltd v Pappadogianis 1992 (3) SA 234 (A)
20. Southernport Developments (Pty) Ltd v Transnet Ltd 2005 (2) SA
202 (SCA)
21. Steyn v LSA Motors Ltd 1994 (1) SA 49 (A)
22. Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3)
SA 138 (SCA)

Recommended Additional Reading:

Christie, RH, Bradfield, GB. Christies’ The law of contract in South Africa
6th edition (2011) Lexis Nexis: Durban
Essential web • Jutastat legal-resource database accessible through your campus
resources library: https://juta.co.za/home.[Accessed 24 January 2023].

The Southern African Legal Information Institute (SAFFLI) publishes legal

information for free public access which comprises mainly of case law
and legislation from South Africa: http://www.saflii.org. (Please note –
the SAFFLII cases are published in an unedited format.)
Useful law web • https://www.ccma.org.za/ [Accessed 24 January 2023.
resources • https://www.concourt.org.za/ [Accessed 24 January 2023.
• https://www.concourt.org.za/ [Accessed 24 January 2023.
• http://www.thedtic.gov.za/ [Accessed 24 January 2023.
• http://www.faisombud.co.za/ [Accessed 24 January 2023.
• http://www.dha.gov.za/ [Accessed 24 January 2023.
• https://www.justice.gov.za/fmadv/f_main.htm [Accessed 24
January 2023.
• https://www.supremecourtofappeal.org.za/index.php/judgement
s [Accessed 24 January 2023.
• http://www.labour.co.za/ [Accessed 24 January 2023.
• http://www.law24.comproperties/ [Accessed 24 January 2023.
• http://www.lssa.org.za/ [Accessed 24 January 2023.
• http://www.obssa.co.za/ [Accessed 24 January 2023.

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IIE Learn Module Outline LACO6311

• http://www.ombud.co.za/ [Accessed 24 January 2023.

• http://www.osti.co.za/ [Accessed 24 January 2023.
• http://www.parliament.gov.za/live/index.php [Accessed 24
January 2023.
• http://www.polity.org.za/ [Accessed 24 January 2023.
• http://www.sahrc.org.za/home/ [Accessed 24 January 2023.
• https://www.fic.gov.za/ [Accessed 24 January 2023.
Module You will find an overview of this module on Learn under the Module
Overview Information link in the Course Menu.
Assessments Find more information on this module’s assessments in this document
and on the Student Portal.

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IIE Learn Module Outline LACO6311

PLEASE NOTE:

It is YOUR responsibility to obtain the prescribed cases, journal articles and other additional
readings for this module. These will NOT be made available to you by your lecturer or your
campus librarian. These additional prescribed readings form part of the learning content in this
module. If you do not obtain and study said readings, you will not succeed in this module.

The ability to find legal sources (such as legislation, case law and journal articles) as well as
other information pertinent to any law module, is a specific skill which is not only required of
candidate attorneys, by the Law of Society of South Africa (LSSA) but it is also a skill that you
would need if you chose to enrol for an LLB at any South African university. The ability to
conduct research in an e-environment (including but not limited to by making use of Jutastat
and SAFLII) will also stand you in good stead in any position that you may hold in, for example,
the corporate world.

Furthermore, the ability to read, interpret and apply inter alia legislation and case law to legal
scenarios is another skill which you need to master in all law modules. (This skillset is again a
requirement of the LSSA. In addition, any other further study in law will require that you are
familiar with and able to utilise the FIRAC method.) As such, no summaries of, for example,
case law, will be provided to you.

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IIE Learn Module Outline LACO6311

Module Purpose
This module aims to equip students with the knowledge, insight and competencies to solve
problems commonly encountered in the South African law of contract.
Module Outcomes
MO1 Demonstrate an understanding of the legal principles underlying a contract and
the ability to distinguish between a valid, void, voidable and unenforceable
contract.
MO2 Analyse the requirements for a valid contract, and examine the principles relating
to sound law of contract practices in order to display an understanding of the
different legal principles that may operate in the law of contract.
MO3 Demonstrate an understanding of the various aspects of contract law such as valid
formation, mistake, undue influence, breach, remedies, termination and legality
of terms.
MO4 Juxtapose common law, current legislation and case law to produce sound legal
opinion on the validity of practical contract case studies that can be found in
everyday scenarios.

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IIE Learn Module Outline LACO6311

Assessments
Integrated Curriculum Engagement (ICE)
Minimum number of ICE activities to complete 4
Weighting towards the final module mark 10%

Formatives Assignment Test

Weighting 25% 30%
Duration Approximately 10 hours 1 hour
Write/Submit after LU 2 LU 4
Learning Units covered LU 1 & 2 LU 3 & 4
Additional research
Resources required Prescribed Learning Material
required

Summative Examination
Weighting 35%
Duration 2 hours
Total marks 120
Open/Closed book Closed book
Resources required Prescribed Learning Materials
Learning Units covered All

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Assessment Preparation Guidelines

Format of the Assessment Preparation Hints
Assignment
The assignment will assess • Read through the prescribed chapters and content for
your ability to: Learning Units 1 and 2.
• To identify issues in • Remember to analyse all elements required and
Learning Units 1 and ensure that your assignment is proofread and polished
2 for style, language and syntax as marks will be
• Identify the proper allocated to this aspect
authority • Ensure that you don’t just provide information, but
• Apply the content of answer the question by applying the material to the
this module to a question and drawing a conclusion.
given problem • Please make sure that all answers are referenced
statement. correctly.
• Draft an answer using
proper terminology,
paraphrasing
effectively and
applying the material
to the question
• This assignment will
include longer essay
type questions
• Additional marks will
be given for further
independent
research conducted
where the necessity
for this is indicated in
the question.

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IIE Learn Module Outline
Test
The test for this module will
assess your understanding
of Learning Unit 3 and 4 of
this module and will include
a series of short and
medium-length questions,
as well as one longer
question. You will be
expected to apply, as well
as recall information as per
your objectives for these
learning units.
© The Independent Institute of Education (Pty) Ltd 2023
LACO6311
• Ensure that you work through all the relevant activities,
exercises and revision questions on Learn and in your
textbook.
• Brainstorm possible questions based on the learning
outcomes and objectives provided. Then complete
these as practise-tests.
• During both your preparation for the test and during
the test itself, pay attention to the instruction words
(like list, apply, describe etc.) and to the mark
allocations of each question to ensure that you are able
to provide the correct depth and detail in your answers.
• Make sure that you have mastered the objectives in
Learning Units 3 and 4.
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IIE Learn Module Outline
Examination
The examination will assess •
all learning units in this
module and will include
both theory and
application-type questions.
You will be expected to
respond to short, theory-
based questions, essay and
problem-based questions.
Questions will not just be
limited to the textbook, but •
also the additional reading.
© The Independent Institute of Education (Pty) Ltd 2023
LACO6311
Ensure that you work through all the activities,
exercises and revision questions on Learn and in your
textbook. You must have completed close readings of
your prescribed material to ensure that you have
prepared adequately for your examination for this
module.
• Pay close attention to the instruction words (like list,
apply, describe, analyse etc.) and to the mark
allocations of each question to ensure that you provide
the correct depth and detail in your answers.
• Ensure that you answer the question by applying your
knowledge to the question.
Plan your answers to ensure that you draft them in a
logical manner, making your meaning clear.
• Please read your answers again to ensure that you have
written everything accurately and have not confused
any terminology.
• Make sure that you are comfortable in responding to
all the objectives for all learning units.
• Brainstorm possible questions based on the learning
outcomes and objectives provided.
• Remember to properly reference your answers using
the new referencing guide.
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IIE Learn Module Outline LACO6311

Module Pacer
Code Programme Contact Sessions Credits
LACO6311 BLAW411 (on phase-out) 48 contract 15
Learning Unit 1 The Nature and Basis of Contract

Overview:

The South African law of contract finds its origins in Roman-Dutch law principles of contract
and forms part of the private law of obligations. All agreements cannot be considered to be
contracts and there are specific requirements that need to be fulfilled for an agreement to
be classified as a contract.

In our legal system various theories have been used to try and determine the true basis of
contract in South Africa. It is important for us to understand which of these theories to apply
and ow to determine whether a contract has been entered into. Only once we know a valid
contract has been created will we know how that agreement should be enforced at law.

Even though the Constitution has been accepted as the uppermost authority in South Africa,
we still need to determine if it applies both vertically and horizontally, meaning does it apply
directly between private parties. The answer to this question will determine the impact of
the Constitution on the law of contract.

In the past the common law concepts of freedom and sanctity of contract were almost
unassailable but depending on the answer above these concepts might be limited in future.
This is due to the tug of war between these concepts and the requirements of good faith in
the law of contract. Even if we accept that the Constitution will not directly influence
contracts between private parties, the idea of freedom of contract is today under
considerable pressure and concepts such as good faith, public policy and the African notion
of ubuntu are increasingly used by the courts to ensure that contract law is practiced
consistently with the Constitution.”

In this learning unit, we look at how our law of contract has developed and can be applied to
real-life scenarios within the structure created by relevant legislation and the values
underpinning the law of contract.

Please work through Theme 1 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please also ensure that you complete all the activities on Learn.

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The challenge you may experience in this learning unit relates the new concepts and terms
applicable to the law of contract as well as the impact of the Constitution on common law
cornerstones of contract, so ensure that you are familiar with the way the terms are used in
this module by referring to the definitions included in the prescribed readings and the
discussions of transformative constitutionalism included in the articles for this unit.

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IIE Learn Module Outline LACO6311

Learning Unit 1: Theme breakdown

Sessions for Theme 1: The notion and nature of a Prescribed Material (PM)
LACO6311: contract
1-4 LO1: Differentiate between the notion of PM1: Chapter 1
a contract and other legally binding
agreements; PM2: Prescribed Journal
Related LO2: Explain the requirements and the Articles:
Outcomes: key characteristics of a valid • Tladi, DD “Breathing
MO001 contract; constitutional values
MO002 LO3: Compare the Law of Contract to into the law of
MO004 other branches of the Law of contract: Freedom of
Obligations; contract and the
LO4: Set out the historical development Constitution” (2002)
of the modern contract; De Jure 306
LO5: Discuss the impact of the • Moseneke, D
Constitution on the South African “Transformative
Law of Contract (with reference to Constitutionalism: its
the prescribed articles); implications for the
LO6: Explain the basis and dual basis of a Law of Contract”
contract in modern law; (2009) Stellenbosch
LO7: Explain the cornerstones of contract Law Review Volume 20
which include, freedom of contract, pp3 -13.
sanctity of contract, good faith and • Van der Walt J,
privity of contract. “Progressive indirect
LO8: Discuss the interplay between the horizontal application
competing values; of the Bill of Rights:
LO9: Discuss the interaction between the Towards a co-
Common Law of contract, the operative relation
Consumer Protection Act 68 of between common law
2008 and the Constitution in and constitutional
analysing the validity of a jurisprudence” (2001
contractual term. 17 SAJHR
• Sutherland, P ‘Ensuring
contractual fairness in
consumer contracts
after Barkhuizen v
Napier 2007 (5) SA 323
(CC) Part 1’ 2008 Stell
LR 390 and Part 2
(2009) 20 Stell LR 50

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IIE Learn Module Outline LACO6311

• Van der Walt J,

“Progressive indirect
horizontal application
of the Bill of Rights:
Towards a co-
operative relation
between common law
and constitutional
jurisprudence” (2001
17 SAJHR
• Kroeze, IJ ‘Doing things
with values ii: The case
of Ubuntu (2002) 13
Stell LR 252

PM3: Prescribed Case Law:

• Barkhuizen v Napier
2007 (5) SA 323 (CC)
• Beadica 231 CC and
Others v Trustees for
The Time Being of
Oregon Trust and
Others 2020 (5) SA 247
(CC)
• Ltd v Shoprite Checkers
(Pty) Ltd 2012 (1) SA
256 (CC)
• Sasfin (Pty)Ltd v
Beukes 1989 (1) SA 1
(Everfresh Market
Virginia (Pty) A)
• Steyn v LSA Motors
Limited 1994 (1) SA 49
(A)

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IIE Learn Module Outline LACO6311

Learning Unit 2 Formation of Contract

Overview:

In Learning Unit 1 we learned that contracts are agreements with the intention to create
legally binding rights and obligations, but the question remains, how do contracts begin? A
contract usually begins with an offer, which is accepted. This offer and acceptance need to
meet specific requirements that have been developed for the creation of a valid contract.
Apart from these rules, there are more theories that govern when and where an offer is
accepted as well as the requirements of Consumer Protection Act, when it applies.

In this learning unit, we will examine the requirements for valid offer and acceptance. We
will look at the rules relating to offers made to the public. We will also consider the different
types of pacta de contrahendo and how these agreements function.

Consensus, or agreement, is an essential part of contracts under our legal system and in
absence thereof a contract may be declared void. This will also be true in cases where
consensus was improperly obtained, the parties to the contract are mistaken about their
agreement, or where the acceptance was obtained because of misrepresentation, duress or
undue influence.

Please work through Themes 1, 2 and 3 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.

The challenge you may experience in this learning unit relates to differentiating between the
factors that may result in no consensus being achieved, improperly obtained consensus and
the consequences for the contract. Ensure that you are familiar with theories for
determining if consensus was achieved and the instances were consensus would be
improperly obtained by referring to the discussions included in the prescribed readings for
this learning unit.

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Learning Unit 2: Theme breakdown

Sessions: Theme 1: Offer and Acceptance Prescribed Material (PM)
5 - 13
Related LO1: Discuss the legal effect of an offer; PM1: Chapter 2
Outcomes: LO2: Apply the requirements for the valid
MO001 formation and termination of an PM3: Prescribed Case Law
MO002 offer to a practical scenario; • Associated SA Bakeries
MO003 LO3: Explain the legal position with (Pty) Ltd v Oryx &
MO004 regard to offers to the public, in the Vereinigte Backereien
form of advertisements, tenders, (Pty) Ltd 1982 (3)SA
etc.; 893 (A)
LO4: Apply the requirements for valid • Crawley v Rex 1909 TS
acceptance to when and where 1105
acceptance takes effect in a • Hirschowitz v
practical contract scenario using Moolman 1985 (3) SA
the theories of acceptance; 739 (A)
LO5: Explain the different types of pacta • Pillay v Shaik 2009 (4)
de contrahendo and the legal SA 74 (SCA)
position of the parties involved in • Mokone v Tassos
such agreements. Properties CC and
Another [2017] ZACC
25

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IIE Learn Module Outline LACO6311

Theme 2: Mistake/absence of consensus PM1: Chapter 3

LO6: Discuss the effect of a mistake on
the validity of a contract;
LO7: Differentiate between material and PM3: Prescribed Case Law
non-material mistake and the
• Allen v Sixteen Sterling
contractual consequences of both;
Investments (Pty) Ltd
LO8: Differentiate between the
1974 (4) SA 164 (D)
subjective and the objective
• Brink v Humphries &
approach to mistake and their
Jewell (Pty) Ltd 2005
respective limitations and how the
(2) SA 419 (SCA)
two approaches have been
• Sonap Petroleum SA
reconciled in terms of the reliance
(Pty) Ltd v
theory in terms of a practical case
Pappadogianis 1992
scenario;
(3) SA 234 (A)
LO9: Explain the contractual impact of a
common mistake;
LO10: Identify the way in which parties
may be able to apply for
rectification in some cases of
mistake.
Theme 3: Improperly obtained consensus
LO11: Apply the elements of PM1: Chapter 4
misrepresentation of the different
types of misrepresentations that PM3: Prescribed Case Law
can take place to a set of facts; • ABSA Bank Ltd v Fouche
LO12: Discuss the remedies available for 2003 (1) SA 176 (SCA)
improperly obtained consensus and •Phame (Pty) Ltd v Paizes
how voidable contracts operate; 1973 (3) SA 397 (A)
LO13: Explain an omission as a
misrepresentation and the
relationship between
misrepresentation and mistake;
LO14: Explain the basis on which
damages may be claimed for
misrepresentation;
LO15: Discuss the nature, elements and
remedies for: duress; undue
influence; and bribery;
LO16: Explain the impact of the CPA on
the elements of duress and undue
influence.

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IIE Learn Module Outline LACO6311

Learning Unit 3 Requirements of a Valid Contract

Overview:

There are five requirements for a contract to be considered valid: consensus, capacity,
formalities, legality and possibility and certainty. If one of these requirements are not
satisfied, the contract would be void. We have already discussed consensus and tis Learning
Unit focusses on the other four requirements.

All persons, natural and juristic, have legal capacity, which means that they are bearers of
rights and duties, but this does not apply to contractual capacity, which refers to the
competence to conclude a contract (juristic act) and be responsible for the rights and
obligations flowing from it.

Normally, there are no formalities required for the formation of a valid contract, with the
two notable exceptions being where statute prescribes formalities and where the parties
have imposed certain formalities themselves.

Depending on the illegality involved, the law regards these contracts as either void and
unenforceable or as valid but unenforceable. An enquiry into legality always involves the
balancing of competing contractual values and the many values and interests impacting
public policy. The constitution is not applied horizontally in the Law of Contract, but rather
through public policy.

Another important general rule is that the courts will never force a party to do something
that is impossible, therefore such agreements would be void.

Please work through Themes 1-4 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete all the activities on Learn.

The challenge you may experience in this learning unit relates to understanding the
remaining requirements for a valid contract, so ensure that you are able to identify them in
a set of facts and understand the impact of the requirement being absent. Make sure you
have studied the terms that are used in this module by referring to the discussions included
in the prescribed readings for this unit.

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Learning Unit 3: Theme Breakdown

Sessions: Theme 1: Contractual capacity Prescribed Material (PM)
14-22
LO1: Differentiate between contractual PM: Chapter 5
capacity and legal capacity;
LO2: Apply the different categories of
capacity for natural persons noting
the effect on the contract in each
instance;
LO3: Explain juristic persons’ contractual
capacity;
LO4: Explain the consequences for a
contract if either party does not
have contractual capacity.
Related Theme 2: Formalities PM: Chapter 6
Outcomes:
MO001 LO5: Distinguish between the two broad Prescribed Case Law:
MO002 categories of formalities;
MO003 LO6: Differentiate between the three • GF V SH 2011 (3) SA 25
MO004 types of formalities required by (GNP)
statute and provide examples of • Brisley v Drotsky 2002
each; (4) SA 1 (SCA)
LO7: Discuss what happens to a contract
• Maphango v Aengus
which is non-compliant with
Lifestyle Properties 2011
statutory formalities;
(5) 19 SCA
LO8: Explain why parties impose their
• Nyandeni Local
own formalities onto a contract;
Municipality v Hlazo
LO9: Apply the principles of case law to
2010 (4) SA 261 (ECM)
the most commonly found self-
• SA Sentrale Ko-
imposed formalities;
operatiewe
LO10: Explain the exceptions to the
Graanmaatskappy v
developments surrounding non-
Shifren
variation clauses, non-cancellation
• Hutchison, D ‘Non-
and non-waiver clauses.
variation clauses in
contract. Any escape
from the Shifren
straitjacket?’ (2001) 118
SALJ 720

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IIE Learn Module Outline LACO6311

Theme 3: Legality PM: Chapter 7

LO11: Differentiate between statutory
illegality and common law
illegality, and when they will be
applicable;
LO12: Apply the public policy
requirements and the cases that
have developed the common law
as it relates to illegality;
LO13: Explain the effect of an illegal
contract;
LO14: Apply the competing interests that
courts have to weigh in order to
decide legality;
LO15: Apply the principles of statutory
illegality to a practical case
scenario;
LO16: Explain illegal contracts that are
valid but unenforceable, such as
restraints of trade and the policy
requirements applicable.
Theme 4: Possibility and certainty
Prescribed Case Law:
• Barkhuizen v Napier
2007 (5) SA 323 (CC)
• Jajbhay v Cassim 1939
AD 537
• Magna Alloys &
Research (SA) (Pty) Ltd
v Ellis 1984 (4) SA 874
(A)
• Reddy v Siemens
Telecommunications
(Pty) Ltd 2007 (2) SA
486 (SCA)
PM: Chapter 8

LO17: Apply the three different types of

impossibility that may be applicable
to a contract, noting the
consequences of each type of
impossibility;
LO18: Identify the exceptions that apply
to impossibility;
LO19: Discuss the general requirement of
certainty;
LO20: Explain how certainty finds
practical application in types of
contracts;
LO21: Explain the consequences of failing
to comply with the certainty
requirement.

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IIE Learn Module Outline LACO6311

Learning Unit 4 Contents and Operation of a Contract

Overview:

Once a valid contract has been concluded it becomes important to interpret wat was agreed
to achieve the purpose of the contract and determine if the parties have performed on their
obligations. The process of interpretation can be as simple as referring to a clause in a
contract, but sometimes the intention of the parties cannot clearly be determined from the
agreement and then the courts will need to probe background circumstances and oral
evidence of the parties to determine the purpose of the agreement.

Who is liable to perform under a contract is an important question which will be answered
by the wording of the agreement and can take the form of simple, common and joint and
several liabilities. Despite the concept of privity of contract, it is also possible for third parties
to be included in the contract and there are rules that govern these instances.

In this learning unit, we will examine the subject matter of a contract. We will look at the
liabilities, obligations and terms of a contract, as well as the rules governing the
interpretation of contracts.

Please work through Themes 1, 2 and 3 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.

The challenge you may experience in this learning unit relates to grasping the different terms
and conditions that may be included in a contract as well as the rules relating to
interpretation.

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Learning Unit 4: Theme breakdown

Sessions for Theme 1: Parties to contracts Prescribed Material (PM)
LACO6311:
23 – 33

Related LO1: Distinguish between the different This unit looks at the
Outcomes: types of liability of parties in a methods of giving concrete
MO1 contract; namely, simple joint, meaning and application to
MO2 common joint and joint and several the terms contained in
MO4 liability; agreements as well as their
LO2: Discuss the stipulation alteri and its influence.
legal consequences and effect;
LO3: Apply the law of agency and the
various legal consequences and PM: Chapter 9
effects;
LO4: Apply the principles of the doctrine
of the undisclosed principal as well
as the legal effect of the doctrine on
the agent.
Related Theme 2: Obligations and terms PM: Chapter 10
Outcomes:
MO001 LO5: Apply the rules of interpretation to Prescribed case law:
MO002 determine whether terms are • Afrox Healthcare Bpk v
expressed, implied or tacit; Strydom 2002 (6) SA 21
LO6: Explain the application of the (SCA)
rectification doctrine;
LO7: Differentiate between time clauses
and conditions generally;
LO8: Differentiate between resolutive
and suspensive time clauses and
conditions specifically;
LO9: Explain the effect of suppositions,
modal clauses and exemption
clauses interpreted in terms of
Common Law.

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IIE Learn Module Outline LACO6311

Theme 3: Interpretation of Contracts PM: Chapter 11

LO10: Apply the primary, secondary and Prescribed case law:

the tertiary rules of interpretation
• Bothma-Batho
and the various steps applicable to
Transport (Edms) Bpk v S
each of the rules;
Bothma & Seun
LO11: Apply the courts’ approach to the
Transport (Edms) Bpk
interpretation of disclaimers,
2014 (2) SA 494 (SCA)
indemnities and exemption
clauses.

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IIE Learn Module Outline LACO6311

Learning Unit 5 Breach of Contract and Remedies for Breach of Contract

Overview:

When a party fails to honour her/his obligations under the contract, they are said to be in
breach. It is important to determine which type of breach is present in each situation as
different remedies will apply in each case.

To be able to apply the correct remedy, we need to know which of the four forms of breach,
recognised under South African law is present, these are: mora/late performance, positive
malperformance, repudiation and prevention of performance.

In this learning unit, we will examine the forms of breach of contract recognised by South
African law and the requirements of each form, as well as the remedies applying to each.

Please work through Themes 1 and 2 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.

The challenge you may experience in this learning unit relates to differentiating between the
various forms of breach of contract and applying the correct remedies in each situation.

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IIE Learn Module Outline LACO6311

Learning Unit 5: Theme breakdown

Sessions for Theme 1: Breach of Contract Prescribed Material (PM)
LACO6311:
34 - 42
Related LO1: Distinguish between the different This unit looks at instances
Outcomes: types of breach of contract; where parties do not
MO1 LO2: Explain the parties that can commit honour their agreements
MO2 and the remedies available
the different types of breach and
MO3 in such cases.
MO4 the requirements for each form of
breach; PM: Chapter 12
LO3: Apply the rules of breach of
contract to each type of breach Prescribed Case Law:
noting the consequences for the • Sasfin (Pty)Ltd v Beukes
innocent party and the breaching 1989 (1) SA 1 (A)
party;
LO4: Distinguish if fault is a requirement
for the different types of breach
and why;
LO5: Apply the consequences of breach
of contract to given scenarios.
Related Theme 2: Remedies for Breach PM: Chapter 13
Outcomes: LO6: Apply the different remedies
MO001 available to the innocent party Prescribed Case Law:
MO002 commenting on the effectiveness • BK Tooling (Pty)Ltd v
of each of the remedies and their Scope Precision
implications for both the breaching Engineering (Pty)Ltd
party and the innocent party; 1979 (1) SA 391 (A)
LO7: Explain that damages and interest
are cumulative remedies;
LO8: Discuss penalty clauses as a remedy
for breach of contract;
LO9: Apply the exceptio non adimpleti
contractus to a set of facts.

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IIE Learn Module Outline LACO6311

Learning Unit 6 Transfer and Termination of Rights and Obligations

Overview:

The personal rights and duties that are created under a contractual agreement can be
transferred by to a third party. There are various requirements for the cession, delegation
and assignment of these rights and obligations and ensuing consequences that result.
Special emphasis will be placed on the various types of cession that are possible.

The obligations that exist under a contractual agreement can be terminated in various ways,
these are by performance, agreement or by the operation of the law. We will be looking
into the requirements and consequences for each.

In this learning unit, we will examine the cession of rights and duties to a third party and the
termination of obligations under a contractual agreement.

Please work through Theme 1 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.

The challenge you may experience in this learning unit relates to understanding the cession
construction, the effect of the transfer of rights and identifying the correct method of
termination of rights.

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IIE Learn Module Outline LACO6311

Learning Unit 6: Theme breakdown

Sessions for Theme 1: Cession and termination of Prescribed Material (PM)
LACO6311: rights
43 - 46
Related LO1: Apply the requirements for a valid This unit looks at the
Outcomes: cession of rights noting the transferability of rights and
MO001 consequences of the transfer of obligations created by
contracts and the effect
MO002 rights;
thereof on the parties.
MO003 LO3: Distinguish between ordinary
MO004 cession and cession in securitatem PM: Chapter 14 and 15
debiti;
LO4: Discuss the various ways in which
obligations can be extinguished and
how each form takes place;
LO5: Differentiate between the different
types of extinction of obligations.

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IIE Learn Module Outline LACO6311

Learning Unit 7 The Consumer Protection Act 68 of 2008 (CPA)

Overview:

The preamble to the Consumer Protection Act (CPA) refers directly to the socio-economic
conditions in South Africa under apartheid and has the purpose of alleviating the poverty of
previously disadvantaged individuals and limiting the unequal power relations present in
most consumer agreements.

The CPA does not replace the common-law rules of contract and as such, consumers may
choose to enter into contracts under the CPA or the common-law, but it does give consumers
much more protection than they previously had. There are certain rights that the consumer
cannot waive when contracting under the CPA; however, this is not true, should they under
the common-law.

In this learning unit, we will examine the purpose of the Consumer Protection Act, as well as
when it is applicable and how the courts enforce those rules for the protection of consumers.

Please work through Theme 1 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.

The challenge you may experience in this learning unit relates to understanding the extent
of the application of the Consumer Protection Act to the law of contract.

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IIE Learn Module Outline LACO6311

Learning Unit 7: Theme Breakdown

Sessions for Theme 1: Consumer Protection Act 68 of Prescribed Material (PM)
LACO6311: 2008 (CPA)
47 - 48
Related LO1: Discuss the preamble, applicability This unit looks at the
Outcomes: and purpose of the CPA influence of the CPA on the
MO001 LO2: Outline the nine fundamental rights law of contract as well as its
MO002 found in Chapter 2 of the CPA; influence on the common
MO003 LO3: Apply CPA to a set of facts and law.
provide legal advice.
PM: Chapter 17

Prescribed Case Law:

• Naidoo v Birchwood
Hotel 2012 (6) SA 170
(GSJ)

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IIE Learn Module Outline LACO6311

Glossary of Key Terms for this Module

Term Definition My Notes
Ab initio void Void from the start/beginning.
Ad idem Of the same mind; a meeting of the
minds.
Animus Serious intention to contract
contrahendi
Bona fides Good faith
Consensus Agreement
Contract An agreement entered into between two
or more persons with the intention of
creating a legal obligation and one which
the law recognises as being a binding
agreement between the parties.
CPA Consumer Protection Act 38 of 2008
Creditor A person in a contractual relationship who
has a right that s/he may enforce.
Debtor A person in a contractual relationship who
has a duty to perform.
Ius in personam Personal right
Ius in rem Real right
Juristic act An act which has legal consequences
Mala fides Bad faith
Material breach Breach that is so significant given the
specific circumstances between the
parties that it entitles the non-breaching
party to terminate the agreement.
Material Mistake Also called essential mistake. A mistake or
error that excludes actual agreement
(consensus ad idem) between the parties.
Material term Term that goes to the root of the
contract.
NCA National Credit Act 34 of 2005
Non-variation Term in a written contract that prevents a
clause variation of the written terms and
condition unless certain formalities are
complied with (usually in writing and
signed).

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IIE Learn Module Outline LACO6311

Term Definition My Notes

Obligation A legal bond or legal tie between two or
more persons.
Pacta de Contracts aimed at the conclusion of
contrahendo other contracts.
Pacta sunt Agreements must be honoured.
servanda
Shifren principle The principle established in the Shifren
case that a non-variation clause is binding
on the parties.
Supposition Assumption that a certain state of affairs
exist.
Unenforceable A contract is unenforceable when the
contract creates legal obligations which
are recognised but a court will not
enforce this agreement for a variety of
reasons. For example, as a general rule a
contract with a minor is unenforceable.
Valid Contract that complies with all legal
requirements and of full legal force and
effect.
Vis maior “Acts of god” or “unforeseen acts of man”
or external circumstances that affect a
contract and are beyond the control of
the contracting parties making
performance unavoidable and impossible
in the circumstances.
Voetstoots (sell) as is
Void Of no legal effect (i.e. when a contract is
void there is no contract).
Voidable Valid but liable to be set aside.
Waiver The deliberate abandonment of a right
with full knowledge of its existence.

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