contract a class notes

7/26/2019 Contract a Class Notes

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- 8!rists of the middle ages were tased with creating a generalised theory of

contract!al obligation$

EX NUDO PACTO ORITUR ACTIO:

An action will arise o!t of serio!s agreement

PACTA SUNT SERVANDA:

+romise m!st be hono!red

IUSTA CAUSA:

There are reasonable social and economic gro!nds for recognising

that a binding legal obligation eists

o Iusta Causa theory in partic!lar $ 9the agreement was entered into serio!sly and

deliberately intending legal obligations4

The agreement is not illegal& immoral and impossible$Iusta Causa is recognised

o 3nfl!ence of :nglish Law $

- +ost 1;


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+ersons who are mentally ill

+ersons se#erely !nder the infl!ence of alcohol or dr!gs

o +erson4s with limited contract!al capacity$

Can only concl!de contract with the assistance or consent of another

person inors / between the ages of and 1;(

arried in comm!nity of property

3nsol#ent persons

+rodigals

o +ersons with f!ll contract!al capacity$

All nat!ral persons falling o!tside the abo#e mentioned categories ha#e

f!ll capacity to enter into contracts

3n certain respects& howe#er& specific stat!tory pro#isions may limit

capacity /e.g. if yo! are a criminal(

B( C)%:%U

o ?o!ndation of what a contract is

o The parties m!st beAd idem /The parties are on the same page @ of the same mind(

o The analytical tool that is !sed to determine whether consens!s has been reached

is to determine whether there has been an offer and acceptance

C) OFFERo An offer is a statement of intention on which the offeror sets o!t to the person to

whom the offer is made& what performance and what terms he is prepared to bind

himself to.

o The proposal is made with the intention that by its mere acceptance& witho!t more& a

contract sho!ld be formed.

:DU3::%T ?) A% )??:

a( Animus contrahendi /a 9firm4 offer(

b( 6efinite and complete

c( Certain

d( Comm!nicated to the offeree

o Animus contrahendi (a firm offer)

- A serio!s and deliberate intention to create a legal bond

- %)T$

+roposals in 0est /0oing(@anger

ocial arrangements /e.g. let4s meet for a drin at =(

6omestic arrangements


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o Definite and complete:

6oes not 5!alify as definite and complete$

3n#itations to negotiate

e5!ests for an offer

Efroiken v Simon 1E21 C+6 >=

6id a contract arise in terms of a firm offerF

A 8o 4b!rg broer sent a Cape Town broer a telegram to the effect that he had a seller of>


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*"as the offer animo contrahendi or was it merely a proposal made by the appellant d!ring

the negotiation process, page 850 para C

The following was concl!ded$ the onus was on the respondent to establish that the

!ndertaing constit!ted a concl!ded contract.

The terms of the !ndertaing were left #ery m!ch in the air. There were partic!lar matters thatwere most liely intended to be thrashed o!t before the interr!ption b!t were not and as a

res!lt were not finally concl!ded and red!ced to writing. age 85!"85# :

a) At the time of the negotiation process& the appellant was not f!lly aware of the tr!e facts

b) 3f the appellant was aware of the se5!estration and her son4s defiant attit!de it wo!ld be

improbable that she wo!ld !ndo!btedly offer to settle his debts

c) The terms of the !ndertaing were left #ery m!ch in the air. Th!s& for eample& there did

not appear to be C any !nanimity among respondentKs witnesses as to what the so-called

g!arantee meant and what wo!ld happen.

d) There is a similar !ncertainty as to precisely which cattle were intended as the s!b0ect

matter of the !ndertaing. Until he ga#e consent& it is diffic!lt to see how the appellant

co!ld ha#e gi#en an !n5!alified promise in terms of the !ndertaing

e) "hate#er the identity of the cattle to be sold in terms of the !ndertaing& they were at the

time !nder lease to 8ohn. Conse5!ently& his consent to the proposed sale wo!ld ha#e been

necessary. 3t sa#o!rs rather of an attempt to sal#age something from the wrec of the

negotiations than of a firm con#iction that a contract had been concl!ded

There was the con#ersation in the car while Botha and his companions were dri#ing away

from Belfast which had been reco!nted3t was held that in #iew of all the circ!mstances& the

8!dge was not con#inced in the respondents fa#o!r. There was an intention of concl!ding a

final contract b!t it t!rned o!r to be merely a proposal in the co!rse of the negotiations.

The appeal s!cceeds with costs and the order of he court a quoto be altered

Conditional arrangements

Holm Jordaan v Cit of !sh"ane #etropolitan #unicipalit *2


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The iss!e for determination are whether a contract between 78 and the City e#er came into

eistence& and if so& whether it was rep!diated.

3t was fo!nd& howe#er& that 78 being commissioned as architect for the remaining stages of

the pro0ect /after the resol!tions were comm!nicated and accepted( were conditional to the

abo#e mentioned essentials

The resol!tion was f!rthermore conditional on 78 entering into a 0oint #ent!re partnership

with a B:: entity which was ne#er identified.

%either of the conditions were met

3t was concl!ded that the City regarded terms /s!ch as f!nding and B:: entity( that had still

to be determined as cr!cial to the concl!sion of the contract and that no agreement had been

reached on the scope of the wor& the allocation of responsibilities etc. *para 22$ offer lacs

animus & and is not yet complete ,

A basic firm offer& and& if accepted& a binding contract& with f!rther terms to be settled later.

3t was held that no contract commissioning 78 as the architect for the b!ilding of the

m!nicipal head5!arters e#er materialiNed the appeal was dismissed with costs

o Certaint$

o Comm%nicated to t&e offeree

L:G3LAT3O: 3%?LU:%C: )% C)%TACT LA"$ C)%U: +)T:CT3)% ACT

=; )? 2


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s%pplier

3s the c!stomer a nat!ral personF 3s the pro#ider s!pplying the goods or

ser#ices in the ordinary co!rse of b!siness.

3f not& is the c!stomer a 0!ristic person with

an ann!al t!rno#er or asset #al!e of less than

2 millionF

3s the s!pply for consideration

/consideration$ anything of #al!e gi#en and

accepted in echange for goods or ser#ices(

's t&e t$pe of transaction coered b$ t&e C*

/if the amswer to any of the 5!estions below is 9yes4& then the answer to the abo#e 5!estion

will be 9no4 that is the C+A does not apply to the transaction or only applies to a limited

etent

7as the partic!lar ind!stry been eempted from the C+A or part of itF

3s the c!stomer the tateF

6oes the agreement 5!alify as a credit agreement !nder the %ational Credit ActF /"hen this

is the case& the agreement itself will not be s!b0ect to the C+A& b!t the goods or ser#ices that

are s!pplied in terms of the agreement are s!b0ect to the C+A. This means that those goods

and ser#ices m!st be of the 5!ality re5!ired by the C+A.(

3s the agreement an employment contractF

6oes the agreement gi#e effect to a collecti#e bargaining agreement within the meaning of s

2> of the Constit!tion and the Labo!r elations ActF

6oes the agreement gi#e effect to a collecti#e agreement as defined in 21> of the Labo!r

elations Act

6oes the ser#ice constit!te ad#ice or intermediary ser#ices in terms of the ?inancial Ad#isory

and 3ntermediary er#ices Act

3s the ser#ice reg!lated by the Long-term 3ns!rance Act or hort-term 3ns!rance Act

o The C+A introd!ces f!rther re5!irements in regard to offers$

- !st be in plain and !nderstandable lang!age /s22(

Any notice& doc!ment or #is!al representation will be regarded as

being in plain lang!age if it is reasonable to concl!de that an

ordinary cons!mer of the class of person for whom the notice&

doc!ment or #is!al representation is intended& with a#erage literacy

sills and #ery little eperience as a cons!mer of the partic!lar goods

or ser#ices& co!ld be epected to !nderstand the content and

significance witho!t !nd!e effort- !st disclose whether goods are grey-maret or reconditioned /s2J(


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A person who offers to s!pply any goods that ha#e been

reconditioned& reb!ilt or remade and bear the trademar of the

original prod!cer or s!pplier m!st indicate that the goods ha#e been

reconditioned& reb!ilt or remade.- +rohibition of 9negati#e option mareting4 /s>1(

A s!pplier may not promote goods and ser#ices on the basis that the

goods or ser#ices are to be s!pplied !nless the cons!mer declines the

offer

- eg!lation of direct mareting /s 11@1=(

)??: T) T7: +UBL3C

o To whom may an offer be made

- 3t may be made to /a( specified person' /b( a specified gro!p of people' /c( the

world at large

- The point of depart!re is that an offer is !s!ally addressed to a specific

indi#id!al & b!t that is not necessarily the case

- )ne can address an offer to the p!blic at large and then concl!de a contract

with specific members of the p!blic who respond to the offer

- Below are eamples of ways to address the p!blic at large& or a segment of the

p!blic

Carlil v Carbolic Smoke $all Compan *1;E>, 1 DB 2J=

The defendant /CB( man!fact!red and sold the Carbolic moe Ball. The company placed

ads in #ario!s newspapers offering a reward of 1 times per days as directed and contracted infl!enNa& colds or any other diseases.

After seeing the ad& the plaintiff p!rchased a ball and !sed it as directed. 7e contracted

infl!enNa and made a claim for a reward.

The defendant ref!sed to pay and the plaintiff s!ed for damages arising from breach of

contract.

The defendant arg!ed that the ad#ertisement was a mere in#itation to treat rather than an offer

The co!rt held that the plaintiff was entitled to the award as the ad#ert constit!ted an offer of

a !nilateral contract which she had accepted by performing the conditions stated in the offer.

The co!rt re0ected all the arg!ments p!t forward by the defendants for the following reasons$

a( The statement referring to the deposit of 1


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c( 3n !nilateral contracts there is not re5!irement that the offeree comm!nicates intention to

accept& since acceptance is thro!gh performance

d( The defendants wo!ld ha#e #al!e in people !sing the balls e#en if they had not been

p!rchased by them directly.

$loom v American S"iss %atch Co 1E1J A6 1


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Cra"le v 'e( 1EE AL8 1== /A6O:T33%G A%6 +3C: T3CP:T(

A shopeeper placed a placard o!tside his shop ad#ertising a partic!lar brand of tobacco for

sale.

The appellant entered the shop and bo!ght a po!nd of the tobacco. 7e ret!rned a while laterand wanted another po!nd.

The shopeeper ref!sed his re5!est& apparently belie#ing that he had been sent by a ri#al shop

owner intent on b!ying !p his stocs.

The appellant wo!ld not lea#e the shop when ased to do so & and was e#ent!ally escorted o!t

by the police. 7e was s!bse5!ently con#icted of a criminal offence for remaining !nlawf!lly

on premises after being re5!ested by the owner to lea#e.

3n his appeal against the con#iction& the appellant arg!ed that he had not been on the

premises !nlawf!lly& beca!se by accepting the owner4s offer to sell the tobacco& he had

created a contract between himself and the shopeeper and so was entitled to remain in the

shop !ntil the contract was carried o!t.

The appeal was dismissed on the gro!nds that the ad#ertisement was merely an in#itation to

do b!siness and that therefore no contract had come into being

o Tenders

- An in#itation to the p!blic to s!bmit a tender for wor to be done is not an offer

that is open to acceptance to the highest tenderer.

- At most& it is an in#itation to potential tenderers to mae offers that will be

considered after closing date for the partic!lar tender

o A!ction

- imple a!ctions$ 3n terms of sJ of the C+A& sale by a!ction is considered to be

complete when the hammer falls' !ntil this has taen place& a bid may be

retracted

- "ith reser#e$ means that a price is set and the offer cannot be lower than this

price. ale will go to highest bidder abo#e reser#e price

- "itho!t reser#e$ the article will be noced down to the highest bidder. 3n this

instance& the a!ctioneer is considered to be maing an offer to sell to the

highest bidder by calling for bids

T:3%AT3)%

o e0ection of the offer

- An offer falls away if it is re0ected by the offeree /epressly or impliedly(

- 3mpliedly$ if the offeree maes a co!nter offer


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- D!alified acceptance /for eample& where the offeree accepts s!b0ect to certain

conditions being met( will !s!ally be constr!ed as a co!nter-offer

o 6eath of either party

- ince an offer in itself creates no obligations& there is neither a debt that can passto the estate of the deceased offeror& nor any contract!al right that can pass to the

estate of the deceased offeree

- 7)":O: if the offeror has promised /constit!tes as a contract( not to

withdraw the offer& then the offer does not terminate !pon the death of a party

o +assing of time

- "here the offeror has prescribed a time limit for acceptance& the offer lapses

a!tomatically if it is not accepted within the prescribed period of time

- "here no time limit has been prescribed& the offer will lapse after a reasonable

period of time has passed /what constit!tes as a reasonable period of time is

dependent on the facts of the case(

o e#ocation of the offer

- Unless the offeror has promised not to re#oe the offer for a certain period& the

offer may be withdrawn at any time prior to its acceptance

- ince re#ocation is an epression of intention& it taes effect only when

comm!nicated to the mind of the offeree' th!s& if the offeree comm!nicates

acceptance of the offer to the offeror before learning of the re#ocation& a

contract is concl!ded


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D) *CCE+*,CE

6:?3%3T3)%$

o An acceptance is a statement of intention in which the offeree signifies his assent to

the proposal embodied in the offer

:DU3::%T$ /may only occ!r(

o By person to whom offer is made- "here an offer is addressed to !nspecified persons& s!ch as the general p!blic

or a class of the p!blic& it may be accepted by any member of the p!blic or

class.

- "here it is addressed to a specific person /or persons(& it may be accepted only

by that person or gro!p of persons

$ird v Summerville 1E=1 />( A 1E /A(

The appellant& who wished to sell his property& was informed by an estate agent that the first

respondent was interested in b!ying.

The appellant signed a written offer to sell& naming the first respondent as sole p!rchaser

7owe#er& the first and second respondents both signed as b!yers.

At the time of maing the offer& the appellant had been !naware of the eistence of the second

respondent

The co!rt fo!nd that altho!gh the appellant wo!ld not ha#e been pre0!diced by both parties

b!ying the property& the appellant was not bo!nd to a contract of sale to both the respondents

beca!se he ne#er intended that his offer be accepted by both of them

o 3n response to the offer

- A person cannot be said to accept an offer if he or she is !naware of it

$loom v American S"iss %atch Co 1E1J A6 1


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B f!rnished s!ch information& altho!gh he was !naware of the reward

"hen he s!bse5!ently became aware of the award& he claimed it from the company.

The co!rt held that he co!ld not reco#er the award& beca!se 9!ntil the plaintiff new of the

offer he co!ld not accept it& and !ntil he accepted it there co!ld be no contract& for a contract

re5!ires consens!s of two minds& and if the one did not now what the other was proposing&

the two minds ne#er came together4

o The acceptance m!st be !n5!alified

Command Protection Services )*auten+,)Pt, &td v South African Post -ffice &imited /21@12(

*2


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- The co!rt held that the term Ks!b0ect toK in the letter of acceptance was generally !nderstood in

the contract!al contet to introd!ce some or other condition *para 1E-21,.

- 3t f!rther held that the post officeKs comm!nication to ai did not constit!te an

!nconditional acceptance of the tender' b!t that it was intended by the post office and

accepted by ai as a co!nteroffer *para 2J,. The agreement ai relied on ne#er came into

eistence. The appeal was th!s dismissed with costs.

"7:% A%6 "7:: ACC:+TA%C: TAP: :??:CT

o 6eclaration theory

- states that the contract comes into being when and where the offeree epresses

acceptanceo :pedition theory

- states that the contract comes into being when and here the offeree posts his or

her letter of acceptance

o eception theory

- states that the contract comes into being when the letter of acceptance reaches

the address of the offeror

o 3nformation theory

- states that the agreement is concl!ded when and where the offeror learns or is

informed of the acceptance& in other words& when the offeror reads the letter ofacceptance

:lectronic Comm!nications and Transactions Act 2J of 2


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7e informed them that he had booed a holiday between the dates of 22 6ec and ; 8an as

well as the fact that he wo!ld ha#e to gi#e 2 months4 notice to his then c!rrent employer

which he wo!ld only be able to do after ret!rning from his holiday.

:Nem#elo4s 7 officer e-mailed the 0ob offer to 8afta on 1> 6ec and it re5!ired 8afta tobegin employment on 1 ?eb.

E) PACTA DE CONTRAHENDO

o Contracts abo!t contracting$

- Oery often in commercial practice& before an offer has been accepted& or e#en

made& the parties enter into ancillary agreement concerning the main agreement

that might follow.

- ?or eample& A& ha#ing made an offer to sell her property to B& might promise

not to re#oe the offer for a n!mber of days& so that B can thin the matter

o#er' or A& not yet wishing to sell her property might promise B that if she e#er


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changes her mind and decides to sell the property& she will mae an offer to B&

affording him the first opport!nity to b!y the property.

o A Law recognises two types$

- An option

- A preference contract /right of first ref!sal@right of pre-emption(

)+T3)%$

o An agreement to eep an offer open for a period of time

o %at!re of an option$

- The offer to enter into the main contract

- A separate s!bsidiary contract where the parties agree the main offer will

remain open on partic!lar terms /3t may e#en ha#e its own fee attached( .

o :ffect of option$- )fferor is contract!ally bo!nd to eep the offer open

- 3f he fails to do so $ breach of the option contract

- )ther party co!ld$ claim performance& claim damages or iss!e an interdict the

offeror

$oerne v Harris 1EE /1( A E> /A(

)ffer to renew lease on a hotel for a f!rther J years

enewal cla!se$ an offer within the original contract /1J April 1E2 1 April 1E( to

renew lease on same terms... An offer is made

)pen for acceptance !ntil = months before end of first lease /1J )ct 1E=(

)n J )ctober 1E= the lessee indicated his intention to renew the lease from 1J )ctober 1E=

CA$ there was no acceptance beca!se the dates did not match !p with the partic!lar

re5!irements set o!t in the s!bsidiary contract there was no correspondence with the dates

in the offer$ had to accept by 1J )ct 1E= b!t the new lease wo!ld only begin from 1 April

1E. *The acceptance was not clear and !ne5!i#ocal,

3G7T )? +:-:+T3)% *+:?::%C: C)%TACT,

o )ne party /preference grantor( agrees to gi#e preference to another person /the

grantee( sho!ld he or she decide to concl!de another agreement.

o ost commonly& a sale

o :ample problems$


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a( A to B$ 3? 3 decide to sell my 7arley / beca!se my wife does not

accept(& let !s agree that$ /a( 3 will mae the first offer to yo!' or /b( 3

will let yo! mae the first offer to me

o %o open offer /s!ch as in option$ power is in the hand of the acceptor(. 9A4 cannot be

forced to sell. A preferential right only eists if 9A4 decides to sell.

o Th!s& a right of pre-emption is conditional& and relies on a trigger e#ent$ i.e. the

decision to sell.

)T7: ?) )? AG:::%T T) AG::

Everfresh #arket 1ir+inia )Pt, &td v Shoprite Checkers )Pt, &td 2 ga#e :#erfresh an option to renew the lease on its epiry on the same

terms and conditions& s!b0ect to agreement being reached between the parties on the

rental. eeing that hoprite was opposed to the renewal of the lease on its epiry& :#erfresh

remained in occ!pation of the premises. 3t alleged that it had !nilaterally b!t #alidly

renewed the lease in terms of cla!se >. :#erfresh alternati#ely alleged that hoprite had

no right to e#ict it& beca!se cla!se > obliged hoprite to mae efforts in good faith to

reach an agreement on rental. !bse5!ently& hoprite so!ght and obtained an e#iction

order against :#erfresh in the Pwa-M!l! %atal 7igh Co!rt& +ietermaritNb!rg /7igh

Co!rt(. The 7igh Co!rt held that an option to renew a lease on terms to be agreed is

!nenforceable. The !preme Co!rt of Appeal /CA( agreed with the 7igh Co!rt and

dismissed :#erfresh4s application for lea#e to appeal.

Before the Constit!tional Co!rt :#erfresh arg!ed that the common law of contract m!st

be inf!sed with constit!tional #al!es& to pro#ide for greater recognition of the concept of

good faith. The 5!estion was whether this can be done in circ!mstances where this iss!e

was directly raised in neither the 7igh Co!rt nor the CA& b!t for the first time before the

Co!rt.

osenee 6C8 in a ma0ority 0!dgment acnowledged the importance of inf!sing

constit!tional #al!es into contract law. 7e howe#er concl!ded that it was not in the


18/35

interests of 0!stice to entertain the appeal and that :#erfresh had not ad#anced any

gro!nds why it wo!ld be in the interests of 0!stice for the Co!rt to decide the appeal as

the co!rt of first instance. 7e held that hoprite was not warned of the case it had to

meet and the relief so!ght against it& nor was the Co!rt afforded the benefit of the #iews

of the 7igh Co!rt and the CA which wo!ld help shape the common law and c!stomary

law in line with the normati#e grid of the Constit!tion.

Accordingly& the Constit!tional Co!rt dismissed the application for lea#e to appeal with

costs. The Co!rt ref!sed to set aside the order of e#iction and to remit the matter bac to

the 7igh Co!rt for re-hearing.

acoob 8 in a minority 0!dgment held that the inf!sion of the #al!es of the Bill of ights

into contract law is of considerable significance& that the 7igh Co!rt was obliged to

de#elop the common law in the light of the fact!al disp!te before it& and that it is

appropriate to refer the matter bac to the 7igh Co!rt to consider whether to de#elop the

common law.

F) */E,CE OF CO,E,123'+*4E

3TAP:

o "as the mistae legally significant or 0!stifiable at law

o o! ha#e to show a material mistae to 0!stify yo!r claim

- 3f someone is s!ccessf!l in pro#ing that there was a material mistae that is

legally significant or 0!stifiable in law& the effect will be dissens!s

o Classification of mistaes$

- As a res!lt of the infl!ence of :nglish Law& co!rts refer to > types of mistaes$

a( Unilateral

b( !t!al

c( Common

- Common mistae is a separate 0!ristic concept. "e will consider only !nilateral

and m!t!al mistae here.

- +ractically speaing /see p ;2-;>( there is not m!ch distinction between

!nilateral and m!t!al mistae.


19/35

o Theories of contract$

- Used to !nderstand the concept of mistae

- They define the philosophical eplanation of a contract

- 6o we adopt a *a, s!b0ecti#e approach /will theory( or and *b, ob0ecti#e

approach /declaration theory(F

- The "ill Theory$

:plains the fo!ndation of a contract BUT it is not always protocol

beca!se it is s!b0ecti#e

e5!ires act!al& s!b0ecti#e agreement between the parties for

contract!al liability to arise $ places reliance only on the indi#id!als

mind

%ot a perfect theory& beca!se a party can 0!st wal away from a

contract d!e to the fact that they did not share the sameness of mind

intention is a big factor in considering the s!b0ecti#e theory& b!t how

can one party read the mind of another partyF

- The declaration theory$

6ict!m of "essels 8A in SA 'ail"as 2 Harbours v National $ank of

SA HThe law does not concern itself with the woring of the minds of

parties to a contract& b!t with the eternal manifestation of their mindsI

tip!lates that the only important consideration is the eternal

manifestation of the parties4 wills. The tr!e basis of contract& then& is to

be fo!nd in the conc!rring declarations /acts( of the parties& not in what

they act!ally thin or intend.

The law sho!ld not consider the minds of the parties& we m!st rather

loo to the manifestation of their mind$ in other words their acts and

the tr!e state of affairs between the parties etc.

Also not a perfect theory d!e to the fact that there wo!ld be no way to

arg!e& for eample& conf!sion or being forced into a contract

- "hat we need is a compromise between these two polar theories

Saambou Nasionale $ouvereeni+in+ v 3riedman 1EE />( A E; /A(

?acts$

? drew a che5!e in fa#o!r of aambo!-%asionale Bo!#ereniging and ga#e it to " with

instr!ctions that " p!rchase shares from aambo!.

3t is not 5!ite clear what happened to the che5!e in the interim& b!t it was e#ent!ally handed to

aambo! by an !nnown person and !sed to p!rchase shares which were iss!ed to other

persons.


20/35

? stopped payment of the che5!e and aambo!& relying& inter alia& on the ob0ecti#e appearance

of an intention on the part of ? to bind himself in a contract with aambo!& s!ed ?. T

he action failed.

The co!rt stated that in #iew of the basic principle in o!r law of contract that there m!st be

consens!s& aambo!Ks reliance on the ob0ecti#e theory rested on #ery shay gro!nds.

8ansen 8A identified possible approaches$

a( 6octrine of :stoppel $ a doctrine that applies across pri#ate law 5!ite complicated and

8ansen 8A discards it as an alternati#e approach

b( 6octrine of Culpa in contrahendo $ German approach also re0ected by 8ansen 8A

c( The reliance theory& aa the doctrine of 5!asi-m!t!al

?oc!ses on the cond!ct of the contract assertor and his@her claim there is a

contract.

The legal iss!e will be to determine whether or not the law s!pports the claim

that there is consens!s

d( 6octrine ofIustus error

?oc!ses on the cond!ct of the contract denier and his@her claims that there is no

contract.

Can the law s!pport his@her claim that there is dissens!sF

esol!tion /Saambou (

8!dges chose the reliance theory

Altho!gh& a mistae is commonly called a Iustus error *9we fo!nd there was a

mistae4 we simply !se the term& do not apply the theory,

- eliance theory& in f!ndamental terms& states that$

%o s!b0ecti#e agreement$ contract is recognised if$

)ne party& by his o!tward acts& creates in the mind of the other party&

the belief@reliance that and an agreement has been reached' and

The party wanting to rely on the alleged agreement can show his

belief@reliance is reasonable

Hod+son $rothers v South African 'ail"as 1E2; C+6 2J

+laintiff$ 7odgson Brothers and the defendant$ o!th African ailways

The plaintiffs bro!ght the application before the Cape +ro#incial 6i#ision for the claim of Q>E&

as damages in respect of the breach of a contract of sale for a J-ton Parrier Lorry to the #al!e

of QJ


21/35

anager of ailways. Thereafter the parties comm!nicated by way of telegram to set !p a time

and meeting place for the re#iew and inspection of the Lorries.

)n ; 8!ne 1E2 the plaintiffs wrote to the defendants stating that they had disposed of the eo

Lorry b!t that they wo!ld be pleased sho!ld the defendant still wish to tae ownership of the J-

ton Lorry. This offer materialised on the E 8!ne& in which the plaintiffs re5!ested that the defendants

respond to their offer within one month stating whether or not they wished to tae o#er the J-ton

Lorry.

)n the 11 A!g!st 1E2 the General anager wrote that the go#ernment was prepared to pass an

order on the plaintiff for the J-ton Lorry and stated that the price payable m!st incl!de the spares

held for the lorry. The plaintiffs replied on the 1> A!g!st 1E2& in a letter comprising their

acceptance of the incl!sion of the spares.

)n the 1= A!g!st 1E2 the defendant telegraphed the plaintiffs stating that the price of the Lorry

had been omitted and that they were prepared to pay Q>


22/35

on his part& b!t were directed by the 0!dge that if r 7!ghes was !nder a mistae abo!t the

oats /thining they were old when they were green oats( and r mith had nown it& they

sho!ld find in r 7!ghesK fa#o!r. r mith appealed.

The Co!rt of the D!eenKs Bench fo!nd that the 0!ry had been misdirected and ordered a

retrial.

Leaning in r mithKs fa#o!r& they held that the 5!estion was not merely whether the parties

were at consensus ad idem& b!t what they had comm!nicated by their cond!ct and words to

one another.

r mith was held to be !nder no d!ty to inform r 7!ghes of his possible mistae abo!t

the ind of oats& reaffirming the old idea of caveat emptor /b!yer beware(. A !nilateral

mistae is therefore in principle no gro!nd for rescission of a contract

Blacb!rn 8 set o!t his classic statement of the ob0ecti#e interpretation of peopleKs cond!ct

when entering into a contract. e0ecting that one sho!ld merely loo to what people

s!b0ecti#ely intended& he said$

3f& whate#er a manKs real intention may be& he so cond!cts himself that a reasonable man wo!ld

belie#e that he was assenting to the terms proposed by the other party& and that other party !pon thatbelief enters into the contract with him& the man th!s cond!cting himself wo!ld be e5!ally bo!nd as if

he had intended to agree to the other partyKs terms.

o igned@written doc!ments

- Caveat subscriptorr!le$ when an agreement is red!ced to writing and signed by the

parties& they are bo!nd to its terms as signat!re signifies assent thereto. This places the

b!rden on the cons!mer to protect himself by !nderstanding the terms of the

agreement before signing it& as he will be bo!nd to their ordinary meaning.

- 3t is reasonable that the party belie#es yo! are bo!nd when yo! ha#e signed a

doc!ment

- )nly if yo! can show mistae& or that the alleged agreement #iolated the element of

legality& can yo! escape BUT this is #ery rare

Slip /not Investments v 4u !oit 2


23/35

the ad#anced amo!nt.

%ot only had the respondent had no direct contact with the appellant b!t he did not read the

agreement in f!ll& based on the fact that the doc!ments were !rgent and he didn4t ha#e time to

read thro!gh all 2 pages of the contract and also beca!se he felt reass!red by the ban

manager who acted as the commissioner of oaths on this doc!ment. The co!rt had to determine whether or not the respondent was contract!ally liable for the

repayment of the money ad#anced by the appellant to the tr!st& based on the fact that he had

no intention of being contract!ally liable to the terms of the agreement& despite his signatory

consent to it& which he deemed to be a mistae.

The co!rt fo!nd in fa#o!r of the appellant and th!s the appeal was !pheld with costs

The co!rt held that contract!al liability is not strictly applied only to those cases where there

is ad item consens!s b!t that it can eist by #irt!e of the doctrine of 5!asi-m!t!al assent&

according to the reliance theory /para E( *This theory states that while there is no meeting of

the minds& contract!al liability will ens!e.,

7is assent on the agreement was indication eno!gh to the appellant that he intended to becontract!ally liable and th!s the co!rt held as s!ch& s!pporting the claim that consens!s

eists.

$ur+er v Central SA' 1E T J1

B!rger deli#ered goods to the railways for carriage thro!gh an agent who signed a

consignment note stating that it was iss!ed s!b0ect to section of the Goods Traffic

eg!lations.

B!rger read the consignment note before the goods left b!t did not chec the reg!lations. The

goods were s!bse5!ently lost in transit and B!rger s!ed for their f!ll #al!e.

7e lost the case.

7is !se of an agent did not affect the Hso!nd principle that a man& when he signs a contract& is

taen to be bo!nd by the ordinary meaning and effect of the words which appear o#er his *or

his agent4s, signat!re.I

Tho!gh the reg!lations were not printed as part of the contract& this did not change the

principle' mere reference to the reg!lations was s!fficient sa#e for fra!d or misrepresentation.

+)O3%G A C)%TACTUAL 3TAP:

o 7ow does a party trying to disp!te a contract act!ally go abo!t pro#ing a mistae that

is legally recognisableF

A( 3dentify who the +AT3: are

+ R party claiming there 3 a contract

D R +arty claiming there is %) C)%TACT or A 3TAP:


24/35

B( The party alleging there is a contract /+( m!st demonstrate a prima facie

agreement

o 3n other words& is there e#idence of$

- A declaration of intention on +4s part' and- A corresponding declaration on D4s part

o The appeal to ob0ecti#ity$ can + show that D& by his o!tward acts& has created in the

mind of + theprima facie /or apparent( belief@reliance that an agreement has been

reachedF

C( 3f + is s!ccessf!l& the on!s passes to D to show that this belief is !nreasonable

/remember$ the reliance has to be reasonable for there to be a contract($

The en5!iry has two parts$

- /a( D will first ha#e to show& on the facts& that there is some form of

material conf!sion between the parties /fail!re of will or s!b0ecti#e

agreement fact!ally(. )!r law recognises > ways in which yo! can

demonstrate there is material conf!sion$

Conf!sion as to the nat!re of the contract or a ey term if the

contract

4obbs v 1erran

Appellant had been con#eyed at his re5!est a distances of >< for

medical fees.

espondent admitted owing the amo!nt& b!t co!nter-claimed for Q1J for the transport of

appellant in his car.

espondent alleged that he had con#eyed appellant at his epress #erbal re5!est. The

magistrate fo!nd that no agreement abo!t payment had been arri#ed at& b!t that appellant had

failed to pro#e his contention that he had been in#ited as a g!est& and that as there was an

implied contract to pay& respondentKs co!nter-claim m!st s!cceed.

Held& on appeal& that as appellant reasonably belie#ed he was to tra#el as a g!est e#en if

respondent tho!ght he was to pay& the parties were not ad idem& and no contract epress orimplied eisted& and that therefore the appeal m!st s!cceed. Semble$ That the onus of pro#ing

the agreement whether epress or implied relied !pon by him rested !pon respondent.

Slip /not

3 had no idea 3 was signing a s!pplementary contract in my personal capacity to stand s!rety

3 was !nder the impression that 3 was signing a contract for a loan between my tr!st and lip

Pnot in#estments


25/35

Hort Investments v Interior Acoustics

6!ration of the lease was being disp!ted on paper it was a 12 year lease /d!e to a typo(&

howe#er d!ring negotiations it was also agreed !pon 2 years.

A lessor had intended to let his property for two years& b!t owing to a careless typing error onhis part& the contract doc!ment stated that the lease was to end!re /at a fied rental( for 12

years.

The problem was that the lessee& an elderly and ineperienced b!sinessmen& had signed the

contract in the bona fidebelief that he was getting a 12 year lease

The Co!rt& adopting the iustus error approach& said that the mistaen party co!ld not rely on the

lac of tr!e consens!s to escape liability if the mistae was d!e to his own fa!lt& beca!se then

the other party co!ld rely on the doctrine of 5!asi-m!t!al assent to !phold the contract despite

the dissens!s

3nstead of foc!sing on the negligence of the lessor in maing the error& howe#er& the Co!rt

shifted the en5!iry to the reasonableness of the lessee4s cond!ct and& ha#ing decided that a

reasonable person in his position wo!ld ha#e detected the typing error& held that there was in the

circ!mstances no room for an application of the 5!asi-m!t!al assent doctrine

3n effect& therefore& the lessor4s error was iustusbeca!se the lessee4s reliance on the appearance

of consens!s was !nreasonable.

Sonap Petroleum )SA, v Pappado+ianis

3n this case& the parties entered into a 2< year lease agreement.

7owe#er& when the appellant4s attorney drafted an addend!m to the lease& he mistaenly

shortened the lease period to 1J years.

The respondent& as owner of the property& stood to gain from a shortened lease period and

signed he addend!m witho!t a m!rm!r& later claiming that he belie#ed that the appellant had

intended to shorten the lease period

The appellant had no s!ch intention and claimed inter alia that the addend!m was #oid in

light of the mistae

The co!rt a 5!o fo!nd in fa#o!r of the respondent.

)n the iss!e of mistae& it held that the appellant4s mistae had not been iustusbeca!se it was

d!e to its own fa!lt

)n appeal 7arms A8A categorised the appellant4s mistae as !nilateral on the basis that only

the appellant mistaenly belie#ed that its declared intention conformed to its act!al intention

7e then proceeded to re#iew the law pertaining to mistae in contract. 7e confirmed that& as a

general r!le& the law concerns itself with the eternal manifestations and not the worings of

the minds of the parties to a contract

7arms A8A fo!nd that the respondent was aware of the possibility of a mistae on the part of

the appellant& and had a d!ty to spea and en5!ire whether the latter act!ally did intend to

shorten the period of the lease.

The respondent failed to discharge this d!ty with the res!lt that there was no consent and the

addend!m was declared #oid to the etent that it p!rported to red!ce the lease from 2< years

to 1J years

The Sonap test /reliance test( th!s en5!ires whether& in instances of dissens!s& the contract

denier misled the contract enforcer into a reasonable belief that the contract denier had

act!ally assented to the contract!al term in 5!estion 3f the contract enforcer realised or sho!ld& as a reasonable person& ha#e realised that there was


26/35

a real possibility of a mistae on the part of the contract denier& the contract enforcer had the

d!ty to spea and en5!ire whether the contract denier4s epressed intention conformed to his

or her act!al intention

?ail!re to do so res!lts in an absence of reasonable belief in consens!s on the part of the

contract enforcer& and& con#ersely& indicates a reasonable mistae on the part of the contract

denier.

Conf!sion as to the thing that is the s!b0ect matter of the contract

#arit. v Pratle

aritN was cond!cting an a!ction sale and when he came to lot 12


27/35

+roblems with regard to the 5!ality of the thing that is the s!b0ect

matter of the contract

:rrant moti#e

- :#idence of material fact!al conf!sion might s!ggest a mistae

- BUT... o!r 9theories of contract!al formation4 tell !s this is not necessaril!the case.

- The contract can still be !pheld if& despite the s!b0ecti#e fact!al conf!sion&

there is reasonable reliance on the appearance of consens!s by the contract

assertor

- ) /b( $ D m!st also show !nreasonable reliance as a matter of law

- %B$ foc!s in on the contract assertor

o There will be !nreasonable reliance /no matter what the other party did( if$

- The party alleging a contract eists$

a( !b0ecti#ely new of the material conf!sion& b!t ept silent /Sonap(

b( )!ght reasonably to ha#e nown of the material conf!sion& b!t did not clarify the

position /Hort,

c( 3f the party alleging a contract$ act!ally ca!sed the conf!sion in the first place by

creating an impression& prior to contracting& which is contrary to the doc!ment which

he now relies /Allen(

Spindrifter v &ester 4onovan

The appellant in pindrifter /+ty( Ltd entered into a standard form contract which embodied

an application to stage an ehibition on 2-2 8!ly 1E;1.

The contract pro#ided that wo!ld-be ehibitors were bo!nd by the general conditions printed

on the re#erse side of the doc!ment.

Among those conditions was a cla!se entitling the respondent Kfor any reason whatsoe#erK to

#ary the dates on which the ehibition was to tae place& and binding the ehibitor in the

e#ent of a change of date to mae payment of the moneys d!e !nder the contract.

3n April 1E;1 the ehibitor was notified that the dates of the ehibition had been changed to

>< 8!ly-1 A!g!st 1E;1.

3t replied informing the respondent that the dates were !ns!itable and that it considered theagreement cancelled.

The co!rt a 5!o held that the ehibitor was liable for damages& b!t on appeal the principles

en!nciated in4u !oit5scase were applied and the decision re#ersed.

The agent of the respondent /the owner of the ehibition centre(& ha#ing negotiated with the

appellant on the basis that the ehibition wo!ld be held on certain dates& had failed to draw its

attention to the fact that the dates of the ehibition co!ld be altered with imp!nity and that the

appellant wo!ld be liable for payment.

The co!rt held that the real en5!iry was not whether the owner of the premises had nown

that the ehibitor was !naware of the general conditions.

"hat was important was whether the ehibitor had had reason to belie#e that the form he was

abo!t to sign contained a pro#ision maing him liable to pay e#en if the dates were changed&


28/35

and whether the owner had had reason to belie#e that the ehibitor wo!ld ha#e signed had he

nown that.

The ehibitor co!ld not be affected with constr!cti#e notice of the rele#ant pro#ision& and in

the circ!mstances his error was iustus.

d( The cla!se in the disp!te is a 9trap for the !nwary4& and o!ght reasonably to ha#e been

pointed o!t and clarified before the doc!ment was signed and settled

Constantia Insurance Co v Compusource

A company in#ol#ed in arbitration ins!red against losing the case and ha#ing to pay costs. 3t too o!t the policy&

attracted by the ins!rerKs sales slogan Kno win no payK.

3t tho!ght this meant it only had to pay the premi!m if it won the case. "hen it looed lie losing and the ins!rer

cancelled the policy b!t claimed the premi!m and s!ed for payment !nder a term of the policy which it said

entitled it to do so.

The company relied on the sales slogan and said it was !naware of the policy term which formed the basis of the

ins!rerKs case.

)n >< arch 2


29/35

o Case st!dy /eactly the same as Spindrifters case(

- 8ones$ alleging the mistae

- "hite$ alleging there is a contract

- "hite pro#es there is a contract& on!s falls on 8ones to pro#e there is a mistae.

- ?orm of fact!al conf!sion$ ey term of a contract is at iss!e. 6id he now

abo!t the cla!se that indicated that dates co!ld change at random and he wo!ld

still be bo!nd by the contract. 7e alleged that he was !naware of that term& and

there was no s!b0ecti#e agreement abo!t this term between the parties.

- Co!rt has to resol#e this by implementing the reliance theory.

- Co!ld be arg!ed that "hite s!b0ecti#ely new of the material conf!sion /the

cla!se( b!t ept silent. 3f that arg!ment fails& 8ones can fall bac on /2( and />(

by her cond!ct she created an impression that the dates of the fair were the

original ones mentioned which is important to him d!e to the fact that he is

going on a wor trip the following wee.

- ?!rthermore& the cla!se was fo!nd at the bac at =pts in light green /(

- Can be arg!ed there is a mistae

o ?inal comments$

- 3f D is able to show fact!al material conf!sion A%6 !nreasonable reliance$ yo!

ha#e& in a general sense& a mistae /iustus error( & or& in a partic!lar sense& an$

a( Error in ne+otiob( Error in corpore

c( Error in persona

/)nly !se this terminology as a concl!sion(

- 3f yo! cannot pro#e the re5!irements $

There will be no mistae /there will be reasonable reliance(& and the

contract will stand

Potato $oard6 Hod+son $rothers6 Slip /not /co!ldnKt show

!nreasonable reliance(

o :ffect of mistae

- Contract #oid ab initio

- in cases of error in ne+otio relating to one term only$ the offending cla!se can

be str!c o!t& lea#ing the rest of the contract in tact /e.g compusource (

- 3n others words contract /or cla!se( did not e#er eist

) 1nsigned contracts and tic6et cases

o The test is the same$ one of reasonable reliance


30/35

- Can the person asserting there is a contract show he@she is reasonably entitled

to rely on the appearance of consens!sF

o 6id the party who recei#ed the ticet /D( now there was writing@printing on the

ticet and in that sit!ation wo!ld it be reasonable to ass!me that writing@printing

co!ld referee to terms of a contract!al nat!re

- 3f yes& chances are it will be reasonable for the other party /+( to rely on the

appearance of consens!s

SA 'ail"as v #clarens /!n!s!al case beca!se in this case answer to 5!estion is no(

deposited a pacage at the cloaroom of the +retoria railway station and was gi#en a

ticet by the attendant.

+rinted in red in diagonally across the ticet were the words HThe department is not

responsible for any article eceeding the #al!e of J po!nds.

These words had been partly obsc!red by the attendant4s written description of the

article deposited

new that there was printing on the ticet& b!t not that it contained any conditions

limiting the departments liability.

The pacage was lost and s!ed for its #al!e

Under the common law& the railways defended the action the gro!nds that the articles

deposited were worth more than J po!nds and& by #irt!e of the term on the ticet& they

were not liable for more than this amo!nt.

The co!rt re0ected this defense& holding that the railways had not done what was

reasonably s!fficient to gi#e notice of the term and& hence& he was not bo!nd by it.

3n reaching this concl!sion& the co!rt had regard to the following considerations$

a( A cloacroom ticet is not a doc!ment which a person o!ght

reasonably to s!ppose will contain terms'

b( The attendant had written the description of the pacage on the ticet&

which s!ggested that whate#er was !nder the writing was !nimportantc( The ter& was& in any e#ent& not printed in a #ery distincti#e fashion

d( 4s attention had no specifically been drawn to the terms on the ticet

B!t& as the 9yes4 answer becomes increasingly !nliely& the on!s shifts more to a

reasonable person in the position of + to eplain the sit!ation& to tae steps to ens!re

there is no conf!sion created in Ds mind and not to trap the !nwary D

o +olicy shifts


31/35

7 7ea#ier on!s on bans& ins!rance companies etc. with regards to eplaining

terms of the contract

7 A minor 9watering down4 of the caveat subscriptor r!le

7 E of the Cons!mer +rotection Act

Standard $ank of SA v 4lamini

r 6lamini& a f!nctionally illiterate M!l! speaer& bo!ght a car from a second-hand car dealer.

The dealer acted as the banKs agent to facilitate the banKs financing of the p!rchase of the

#ehicle.

?o!r days later r 6lamini ret!rned the serio!sly defecti#e #ehicle and demanded a ref!nd of

his deposit.

The dealer did not ref!nd r 6lamini& and the banKs attorneys ended !p iss!ing s!mmons

against r 6lamini. The ban contended that& beca!se r 6lamini did not notify the ban of the termination in the

manner prescribed by a certain cla!se in the agreement& the termination was a #ol!ntary

s!rrender& in which case the ban co!ld sell the #ehicle and claim any shortfall d!e by him

!nder the agreement.

This cla!se pro#ided that r 6lamini co!ld& within fi#e b!siness days& terminate the

agreement on notice to the ban at a certain fa n!mber& and ret!rn or tender the ret!rn of the

#ehicle.

"hat the agreement had not recorded was that he was entitled to a ref!nd in terms s121/>(

)a,of the %ational Credit Act > of 2, *>E, at 22;C 7.( 3

Held& f!rther& that non-disclos!re of s 121/>()a,#iolated the right of cons!mers to ed!cation

and information in terms of s > of the %CA. The banKs selection of what parts of s 121 of the

%CA it recorded in the agreement& and what it ecl!ded& was deliberate and decepti#e. !ch

deception conflicted with the letter and spirit of the %CA. /+aragraphs *1, *2, at 22EA

6.(

AHeld& f!rther& that the ban co!ld not ha#e mis!nderstood r 6laminiKs reasons forret!rning the defecti#e #ehicle. The ban had gi#en the dealer no mandate to report #ehicles


32/35

that were ret!rned within fi#e days in terms of the termination cla!se. !ch a b!siness practice

made credit transactions !nd!ly onero!s and a trap for poor& illiterate and disad#antaged

people who int!iti#ely wo!ld ret!rn defecti#e goods to a s!pplier and as for a ref!nd. B The

ban co!ld not absol#e the dealer of its d!ty to act in good faith to notify the ban in the

ordinary co!rse of commercial practice that the #ehicle was towed bac and that it co!ld not

be dri#en. /+aragraphs *>, *J, at 22E6 7.(

Held& f!rther& that for lawyers and lay persons alie& the form of the banKs standard agreement

was an !nappetising& formidable read. ?or a labo!rer C lie r 6lamini who did not read&

write or !nderstand :nglish there might 0!st as well ha#e been no written agreement at all. r

6lamini was in a worse position than the p!rchaser who signed one page of an agreement& b!t

who was s!ed in terms of a cla!se appearing on the re#erse of that page which had not been

sent to him. 7is fail!re to comply with a p!rely proced!ral obligation had not been d!e to an

!nwillingness to comply& b!t 6 rather an !nawareness of s!ch an obligation. /+aragraphs *J>,

and *J, at 2>1G 7 and 2>27 2>>A.(

Held& f!rther& that the ban co!ld not hold r 6lamini bo!nd to the agreement by applying the

common-law principles of ca#eat s!bscriptor and m!t!al consent. 6!e to his illiteracy& the!npalatable form and get-!p of the agreement wo!ld ha#e been immaterial to r 6lamini& and

this was all : the more reason why the ban sho!ld ha#e ens!red that its agents eplained the

material terms to him. ince r 6lamini was ignorant of the prescribed notice re5!irements of

the agreement& there was no m!t!al consent as regards this term. /+aragraph *=, at 2>? 7.(

Held& f!rther& that the agreement had been sewed in fa#o!r of the ban by$ the selecti#e

disclos!re' the fail!re to inform r 6lamini of the contents of the agreement' and the breach

of his rights to information in an official lang!age that he !nderstood and to information in

plain and !nderstandable lang!age /ss => and = of the %CA(. 6istorting the balance created

in the %CA in this way was !nlawf!l& defeated the p!rpose of the %CA& and rendered the

entire agreement !nlawf!l. The entire agreement had to be set aside. /+aragraphs *==, *=, at2>JB :.(

C))% 3TAP:

o %o dissens!s& as disc!ssed before

o Both parties are in complete agreement as to what they were doing

o B!tS both are mistaen as to some #ital !nderlying ass!mption@ s!ppostition

!nderpinning their contract

4ickinson #otors v -berhol.er

The defendant !nder a hire-p!rchase agreement sold a +lymo!th car to the plaintiffKs son and

recei#ed an acnowledgment of debt from the son for the amo!nt owing.

The defendant later too 0!dgment against the son for the amo!nt owing' a warrant of

eec!tion was iss!ed and ser#ed on the son.

A nulla bonaret!rn was made and it was recorded that the son had stated that this car was on

his fatherKs& the plaintiffKs& farm.

This statement was false as far as the identity of the car was concerned in that the son had


33/35

meanwhile p!rchased another +lymo!th from the A otors and echanged it for a 7!dson car

belonging to his father.

The son then sold this car and the first +lymo!th to certain garages.

The messenger& still acting !nder the 0!dgment obtained by the defendant& attached the second

+lymo!th which was in plaintiffKs possession on his farm.

The plaintiff had allowed the messenger to tae the car away and was told that if he paid an

amo!nt of Q2J he co!ld ha#e the car bac.

:fforts by the plaintiff to obtain the ret!rn of his 7!dson car from his son ha#ing failed&

sometime later he wrote to the defendant asing whether the +lymo!th which had been

attached had been sold& and if not whether the offer to let him ha#e it for Q2J was still open

for acceptance by him.

The reply was that if he paid in cash the amo!nt o!tstanding on the car - approimately Q2E1

- he co!ld call and collect it& which he did& the hire-p!rchase agreement relating to the first

+lymo!th being cancelled on the signat!re of the plaintiff and a representati#e of the

defendant.

As the res!lt of a 0!dgment obtained by the A otors& a representati#e of this firm went withthe messenger and remo#ed the second +lymo!th from the possession of plaintiff.

+laintiff there!pon instit!ted action to reco#er the Q2E1 paid to defendant.

7e pleaded that he paid this amo!nt in error to the defendant& which amo!nt was not owing

by him to the defendant. 3n an amendment made to the plea after all the e#idence had been

led& it was admitted that the amo!nt had been paid b!t it was denied that s!ch had been paid

in error.

3t was a#erred that this amo!nt had been paid in payment of the amo!nt owed by the

plaintiffKs son. 3t f!rther admitted that the s!m was not owing by plaintiff and stated that when

the amo!nt was paid the plaintiff new this.

A trial Co!rt ha#ing entered 0!dgment in plaintiffKs fa#o!r& on an appeal&

Held& if the parties had regarded the transaction as a new sale& that the seller had to gi#e the

p!rchaser 5!iet possession and if the C p!rchaser was lawf!lly e#icted he was entitled to a

ref!nd of the p!rchase price.

Held& f!rther& if the transaction was regarded not as a fresh sale b!t as a release of the car by

payment of what was owing by the plaintiffKs son to the defendant& that the res!lt was the

same.

Held& f!rther& as the amo!nt had been paid !nder a common mistae in regard to a matter

which was #ital to the transaction and as if either 6 of them had been aware of the tr!e

position the transaction wo!ld not ha#e gone thro!gh& that the plaintiff was entitled to a

ref!nd of the amo!nt paid.

The decision in the Trans#aal +ro#incial 6i#ision in4ickinson #otors )Pt8, &td v

-berhol.er& confirmed.

:CT3?3CAT3)%

o efers specifically to written contracts

o 3f the written doc!ment fails to reflect the parties4 common intention acc!rately& the

parties can rectify the misrecordingo "ho can rectify the doc!ment$


34/35

- The parties themsel#es /acnowledges there is an error(

- By application to co!rt /if there is disp!te$ one party decides that there is no

error in written doc!ment( - often in limine to main iss!e /a form of

proceedings that is preliminary to the main iss!e where the co!rt has to deal

with it before the main iss!e so that they can mo#e onto the main iss!e(

o %B$ it is only the doc!ment that is rectified& not the contract

o e5!irements

- The applicant m!st be able to pro#e on a balance of probabilities that a

common intention was misrecorded

- 3mportant e#identiary b!rden in cases of disp!te

- 3t is easier where the doc!ment is merely e#idence of the Halready concl!ded

contractI /oral agreement settled o#er a meeting and then 0!st to be safe p!t it

in writing as e#idence(

Co!rt is more liely to consider arg!ments for rectification in s!ch

instances

o Cases where the contract cannot eist witho!t writing

- ome contracts can only eist once they are formaliNed in writing

- :.g. sales of land& s!retyships

3f the misrecording affects the essential formal legal re5!irements for

the #alid contract$ no rectification

3f the misrecording affects other ancillary terms$ rectification is

possible

#eer v #erchants !rust 1E2 A6 2

Terms of s!retyship H3 /eyer( do hereby bind myself as s!retyS ?or the payment of all

monies which may be owing by *abbe 2 #eer to their creditors *in my personal capacity,

S pro#ided that the total amo!nt reco#erable from me notwithstanding the amo!nt that may

be owing by *abbe 2 #eer shall not eceed 2J< po!nds.I

%at!re of s!retyship agreement$ he is not going to tae more than 2J< po!nds in liability $

limited s!retyship agreement

"hat was stated abo#e was not typed !p in the contract the secretary perpetrated ahomeoteleuton /the !se of word-endings that are similar or the same& either intentionally for

rhetorical effect or by mistae d!ring copying of tet(

H3 /eyer( do hereby bind myself as s!retyS ?or the payment of all monies which may be

owing by *abbe 2 #eer to their creditors *in my personal capacity,S pro#ided that the

total amo!nt reco#erable from me notwithstanding the amo!nt that may be owing by *abbe

2 #eer shall not eceed 2J< po!nds.I /the repetition of those words conf!sed the secetary

who was typing !p the contractI

The contract& as a res!lt& read as follows& H3 /eyer( do hereby bind myself as s!retyS ?or

the payment of all monies which may be owing by *abbe 2 #eer to their creditors *in my

personal capacity,S pro#ided that the total amo!nt that may be owing by *abbe 2#eershall not eceed 2J< po!nds


35/35

%at!re of the s!retyship$ if the debt is more than 2J< po!nd& eyer no longer stands s!rety

Ban initiated proceedings& claiming that this was not the common intention between the

parties and wo!ld lie to rectify the doc!ment

contract a class notes

Documents