Commercial Law for Accountants 1

Simthandile Mpinga Answer Sheet

Student number: 230550916

QUESTION 1
1.1 There are four factors that may affect consensus:
1. MISTAKE: A mistake is an emoneous belief that certain facts are true, whereas
they are not.
Mistakes are classified into: Material mistake
Non-material mistake
A material mistake may relate to the subject matter of the contract (error in
corpore).
A non-material mistake may occur where the error relates to characteristics or an
attribute of the subject matter (error in substantia).
2. MISREPRESENTATION: A misrepresentation is a false statement by one party
on the basis of which the other concludes a contract to his or her detriment.
Types of misrepresentation:
1. Intentional (fraudulent)
misrepresentation
2. Innocent misrepresentation
3. Negligent misrepresentation
4. Rectification / remedy for any
type of misrepresentation
3. DURESS: Duress is described as a threat or intimidation which engenders fear
in a person, causing him to conclude a contract because of this fear.
Remedy to duress: since duress renders the contract voidable, the threatened
party has a choice to enforce a set aside the contract as well as claim damages
when desired.
4. UNDUE INFLUENCE: Undue influence is a degree of influence to the extent
that the recipient of the influence is incapable of forming independent opinion.

1.2 Serious intention

Consensus or agreement
Lawfulness
Possibility of performance

1.3 The offer must be definite enough to determine a remedy in case of breach
The offer must appear to be seriously intented
 Must be communicated to the offeree
The offer must be in writing and signed by the seller or his estate agent
1.4 Judge
Magistrate
Justice of the peace
Commissioner
Atritrator

QUESTION 2
2.1.1 No contractual capacity
2.1.2 full contractual capacity
2.1.3 limited contractual capacity
2.1.4 limited contractual capacity
2.1.5 full contractual capacity

2.2 There are four theories:

>Declaration theory: According to this theory the date and place of the contract are
determined by the date when and place where the letter of acceptance was written by the
offeree.

>Reception theory: in terms of this theory the date and place of the contract are the date
when and place where of the letter of acceptance was received by the offeror.

>Expedition theory: in terms of this theory the date when and place where the letter of
acceptance was posted

>Communication theory: According to this theory the date when and place where the
offeror read the letter of acceptance.

2.3 BREACH OF CONTRACT: when one party fails to perform their obligations under the
contract the other party may terminate the contract.
MUTUAL AGREEMENT: Both parties may agree to terminate the contract by mutual
consent.
REPUDIATION: When one party indicates they will not fulfill their obligations under the
contract, the other party may terminate the contract.
FRUSTRATION OF PURPOSE: When an event occurs that makes it impossible to fulfill the
contract’s purpose the contract may be terminated.
IMPOSSIBILITY OF PERFORMANCE: When it becomes impossible for one party to
perform their obligations due to circumstances beyond their control may be terminated.

QUESTION 3
3.1 Public policy refers to the principle and values that guide the actions of the government
and the judiciary in a society. It encompasses the public interest and welfare and is often used
to interpret and apply laws in a way that promotes the common good. Also, can refer to the
notion that certain agreements or terms may be unenforceable if they contradict the values
and principals of the community.
3.2 >Government documents
>Academic regulations
>Media and news outlets
>International organizations
3.3.1 Purpose:
To uphold justice and fairness in society
To maintain social order and stability
To protect individual rights and freedom
Function:
To set rules and standards for behavior
To provide a framework for resolving conflicts
3.3.2 Law plays a crucial role in regulating and facilitating commercial activity, ensuring that
businesses operate fairly, efficiently and securely. Key aspects of this relationship includes:
legal framework, contract enforcement, business formation, regulation of business practice
and many more.
3.3.3 the doctrine of stare decisis is a fundamental principal which obligates courts to follow
precedents established in previous cases
3.3.4 A legal relationship refers to the rights, duties, and obligations that exist between
individuals, organization or entities under the law. It is a connection or bound between two or
more parties that is recognized and enforced by the legal system.
3.3.5 Legal liability refers to the responsibility or obligation of an individual or organization
to pay damages or compensation for harm or injury caused to another party. It arises when a
person or entity fails to meet legal obligations or duties.
Types of legal liability: Tort liability
Contractual liability
 Criminal liability
3.3.6 Legal personality refers to the capacity of an entity to have legal rights and duties and to
be recognized as a separate legal entity from its owners or members.

QUESTION 4
A contract is an agreement concluded between by or more persons with the serious intention
of creating legally enforceable obligations.
An obligation is the legal relationship that exists between parties to an agreement when the
parties acquire personal rights against each other that entitle them to performance and/or
oblige them to perform in terms of agreement.