Housekeeping

• Test date: 23 April 2019

• Assignment date: 6 May 2019

 Contractual capacity – The Prodigal

Court has power to declare a prodigal and to appoint a curator to

administer the prodigal’s estate
• Reeder v Softline Ltd and Another 2001 (2) SA 844 (W)
Spouse squandering assets before finalisation of divorce proceedings and
negatively impacting on calculation of accrual - two possible remedies (at least):
apply for an interdict pendente lite or apply for the other spouse to be declared
a prodigal.
• Van den Berg v Van den Berg, 1939 W.L.D. 228
Court has the necessary power to appoint a curator bonis to a person found to
be incapable of managing his own affairs, from whatever cause arising
• Ex parte Comins, 1951 (2) SA 249 (W) at p. 252
Court has power at common law to appoint a curator ad litem when satisfied
that a person through physical debility, such as old age, deafness and the like, or
for reasons of mental debility, chronic intemperance, or prodigality is not
capable of managing own affairs
 THE ESSENTIAL ELEMENTS IN THE
FORMATION OF A CONTRACT:

2. CONSENSUS: THE OFFER

Hutchinson ch 2 pg 47 et seq; ch 8, pg 218 et seq

LECTURE 3
19 February
 1. Introduction

Progress 2. Requirements for a valid contract

2.1 Contractual Capacity
Map 2.2 Consensus – agreement
(a) Offer & Acceptance
(b) Absence of consensus
(c) Improperly obtained consensus

2.3 Legality – must be lawful

(a) General principles
(b) Impact of Constitution
(c) Specific topics

2.4 Possibility of performance at conclusion

2.5 Certainty - definite / determinable content
2.6 Formalities - if required (alienation of land)
3. Parties to contracts
→ a contract is concluded when parties reach
agreement on all material terms of the contract

• a bargaining process

• mutual declarations

• writing / oral / conduct

• offer
• counteroffer
• often counter counter offer
• acceptance

→ consensus
Terminology:
Offeror / Offeree

Definition of an Offer
• briefly, a unilateral proposal to contract
• addressed to third party / parties – known / unknown
• specifically :-
– a declaration of intention by the offeror to an offeree
stipulating :-
• the performance that the offeror will make if offer
accepted
• the terms on which the offer is made
 
The legal effect of an offer :-

• does not by itself result in binding

obligations
• BUT practical effect that,
• on the unilateral acceptance of the
offer by an offeree
• a contract is concluded
An offer may be :-
• withdrawn before acceptance
• remain open for acceptance during a specified
period
• conditional
• (e.g., I offer to sell my car to you on condition
that you donate your car to charity)
 The requirements for a valid offer

1. the offer must be animo contrahendi (firm)

2. the offer must be complete
3. the offer must be clear and certain in content
4. compliance with the Consumer Protection Act
1. The offer must be animo contrahendi
• acceptance → binding contract
• tentative offer ≠ a firm offer
- not always easy to determine
- depends on facts of case
Examples:
Efroiken v Simon 1921 CPD 367
Pitout v North Cape Livestock Co-op Ltd 1977 (4) SA 842 (A)
850C
Lambons (Edms) Bpk v BMW (Suid-Afrika) (Edms) Bpk 1997
(4) SA 141 (SCA)
Efroiken v Simon (principle only)
(very cryptic telegram – oats offered for sale)
offer must be firm not simply “to sound out”
• must be made with the intention that when
accepted it will bind the offeror
• if tentative –
• merely with intention to establish if
counterparty would enter into negotiations
→ not firm offer
Pitout v North Cape Livestock (facts lengthy, involved,
disputed - “raised sharp questions of credibility”)
Question that arose iro an undertaking given during the course
of uncompleted negotiations between the parties :-
• did it have contractual force?
• i.e., was it an offer made animo contrahendi?
OR
• was it a proposal made during negotiation with the intention
to move to a more precise and comprehensive agreement?
(Pitout)

→ a Court will conclude that a promise (such as the undertaking)

is effective as an independent and substantive contract if it is
satisfied on the probabilities that :-
• the parties intended the promise to constitute a concluded
bargain;
• no additional material terms were intended to be agreed upon
• the parties were content to stand by that bargain irrespective
of the course that further negotiations might take.
Lambons v BMW

• Lambons sought appointment as a BMW dealer

• Lambons and BMW reached agreement on the
commencement date of the contract
• no agreement was reached on material matter relating to a
dealership agreement, such as the sale of motor vehicles,
the supply of parts, servicing of vehicles, etc
• nevertheless BMW said to Lambons during a telephone call,
“Congratulations, you have been appointed a BMW dealer”
Lambons (continued)

The court held that :-

• BMW and Lambons negotiated and agreed on certain main features
of the contract
• BUT
– BMW had clearly contemplated that there were other material matter
which would have to be agreed upon before a binding contract would
came into force;
• THEREFORE,
– BMW did not intend to conclude a binding agreement by way of the
short telephone conversation
 2. The offer must be complete

• The offer must contain all material terms of the proposed

contract
• there may not be any matter still to be negotiated
• Lambons - BMW dealership
• EXCEPT
– where parties agree that matter remaining do not avoid
conclusion of contract
• if agreement on such matter later – incorporated in
contract
• If not, of no consequence to existence of agreement
 
Offers that do not qualify as valid offers because they are not
definite and complete
• invitations to negotiate
• requests for an offer
– Efroiken v Simon 1921 CPD 367
• offer lacked animus contrahendi
• offer must be firm - made with the intention that when
accepted it will bind the offeror]
• Incomplete / partial proposals
– Pitout v BMW
• conditional arrangements
– Holm Jordaan v City of Tshwane Metropolitan Municipality
[2014] ZASCA 105]
Holm Jordaan v Tshwane
• Tshwane held a competition for an architectural design of a

new municipal building

• The competition was open to architects practising in Pretoria

• The first prize for the competition was that the winner would

be appointed as architects for the construction of the new

building
• Holm, a firm of architects, entered the competition and won

• Holm was of the view that it was entitled an appointment

because they had a contract with Tshwane

Holm, continued
The SCA held, on the facts, that :-
• the contract alleged by Holm was neither definite nor
complete because various material terms had still to be
determined and agreed
• the parties could not have intended that such terms
would be negotiated in the future
• if such terms were eventually not agreed, there would in
any event be no contract to fall back on
→ in essence, therefore, the award of a contract was held
to be conditional upon the construction actually proceeding
 3. The offer must be certain in content
- it must not be vague

• the offer should be clear as to what the offeror has in

mind
• it must be possible to determine exactly what the offer
entails
• if the offer is not clear / contents not certain :-
– void for vagueness (there is no contract)
BUT:
vagueness should not be confused with ambiguity
• vague: uncertain / unclear / imprecise – no contract - void
• ambiguous: more than one meaning
→ If ambiguous, a court will attempt to interpret so as to
lead to validity – principle is :-
• dealings between people should be treated as effective
• law and courts are not destroyer of bargains
• Court will rule on one meaning – having regard to
extrinsic evidence
Commercial agreements exception :-
• business people are not (necessarily) legal experts
• such agreements are intended to have legal effect
• courts reluctant to strike down :-
• will in as far as possible interpret agreement so as to
uphold and enforce
bear in mind :-
contracts may include terms to achieve certainty :-
• reasonable price
• determination by third party – price /
performance
 The Consumer Protection Act, 68 of 2008
(applies promotion or supply of goods and services to consumers)

the offer
– must be in plain / understandable language
– must disclose if goods reconditioned / grey market goods
– may not be negative option marketing (“Readers Digest”
cases)
– must provide a cooling of period
– in case of catalogue marketing (no opportunity to inspect
telephone, web based, etc)
• Info: seller name / address / contact part / cancelation / etc