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Contract Case Summaries Complete

Law of Contract (University of the Witwatersrand, Johannesburg)

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Case Legal Issue Legal Principle

1) George v Fairmead 1958 (2) - When will a party be “Caveat subscriptor” rule; a party will generally
SA 465 (A) bound to a contract? be bound to a written contract even if he didn’t
read it.
2) Boots Co Ltd v Somerset - Simulated contracts; is “Plus valet quad agitar quam quod simulate
West Municipality 1990 (3) SA there a real intention, concipitur”; a court must give effect to the real
216 (C) definitely ascertainable transaction and not what it purports to be. Courts
which differs from the may consider facts leading up to the contract and
simulated intention? look at any unusual provisions.
3) Church of the Province of - Is there animus “An offer, acceptance and consideration are not
Southern Africa, Diocese of contrahendi between the sufficient to create a contractual relationship
Cape town v CCMA and contracting parties? If not, giving rise to a legally enforceable obligation, it
others 2002 (3) SA 385 (LCC) agreement is not legally must be accompanied by an intention to contract”
binding or enforceable.
4) Maize Board v Jackson 2005 - Does a simulated contract “Parties may not call a contact by a name or give
(6) SA 592 (SCA) exist between parties? it a shape intended not to express, but to disguise
its true nature…in such a case a court will give
effect to the substance of the contract (real
contract) as opposed to its form (simulated
contract)” Simulated contract is not a real contract
as there’s no animus contrahendi.
5) Wessels v Swart NO 2002 - Was a valid oral “An offer and acceptance can take any form,
(1) SA 680 (T) agreement formed? unless there are prescribed formalities”. If the
plaintiff avers there is a contract, she must prove
its existence and terms. Offer and acceptance can
be express or tacit and need only adhere to
formalities if required by law or set up by the
parties.
6) Gelbuild Contractor CC v - Was the offer made with “Generally a tender or quote constitutes an offer,
Rare Woods South Africa animus contrahendi? but it is a question of fact. For a quote to
(Pty) Ltd 2002 (1) SA 886 (C) - Were the terms of the offer constitute a valid offer it must be made animo-
certain? contrahendi, i.e. with the express or implied
intention that G would be bound by R’s mere
acceptance thereof. The court will look to
objective (nature, words, surrounding
circumstances) and subjective factors to determine
animus contrahendi.
7) Pitout v North Cape - Animus contrahendi, offer “Case depends on facts. Courts will look to
Livestock Co-op Ltd 1977 (4) or tentative declaration of objective and subjective (surrounding
SA 842 (A) intent? circumstances, nature of offer and words used) to
- NB objective and conclude if undertaking was made with animus
subjective factors. contrahendi. Courts must be satisfied that the
- Outstanding matters to be parties intended the promise to constitute a
negotiated = no contract. concluded bargain on the precise terms, that no
additional terms were to be agreed upon.
8) Gelbuild Contractors CC v - Were the terms of the offer “Even if an offer is made with animus
Rare Woods SA (Pty) Ltd 2002 certain? contrahendi, its terms must also be certain”. For a
(1) SA 886 (C) sale the merx should be clearly described and the
price certain or capable of being made certain (via
formula). If the offer is not certain it’s void for
vagueness.
9) Crawley v R 1909 TS 1105 - Does an advertisement “An ad simply amounts to the announcement of an
constitute a valid offer intention to sell at the price advertised. Nothing
which can be accepted? obliges any tradesman to sell to any customer who
chooses to present himself”, therefore ad is an
invitation to the public to do business.
This extends to tenders, goods without prices and
notices.

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10) Carlill v Carbolic Smoke - Can an advertisement “Where an ad is worded in such a way that it
Ball Co [1893] 1 QB 256 (CA) constitute a valid offer? shows animus contrahendi and it has sufficient
detail to be complete and certain, it constitutes a
valid offer”
11) Dietrichsen v Dietrichsen - Time and place of “If a time period is not set, an offer lapses after a
1911 TPD 486 formation of contract. reasonable period”.
12) Bloom v The American - Does a valid contract exist “Acceptance must be a conscious response to the
Swiss Watch Co 1915 AD 100 where the offeree does not offer, the offeree must be aware of the offer
consciously respond to an otherwise there will be no animus contrahendi or
offer? privity of contract”.
13) Levin v Drieprok - Whether an offer made to “It is a cardinal principle of the law of contract
Properties (Pty) Ltd 1975 (2) W personally could be that a simple contractual offer made to a specific
SA 397 (A) accepted in his capacity as person could be accepted only by that person,
director of DP. therefore a purported acceptance by some other
person is ineffectual…the reason is that there is no
intention on the part of the offeror to contract with
such other person.
14) JRM Furniture Holdings v - Does an acceptance “The acceptance must be absolute, unconditional
Cowlin 1983 (4) SA 541 (W) followed by a proposal to and identical with the offer. If not, there is no
modify the contract make a contract. Court must determine whether additional
valid contract? demands form part of acceptance or are separable.
Separable = naturalia; proposal to modify
following a clear, sep acceptance.
15) A to Z Bazaars (Pty) Ltd v - Has the offeror prescribed If the offeror has prescribed a specific mode of
Minister of Agriculture 1975 any formalities of a valid acceptance, the acceptance must take this mode to
(3) SA 468 (A) acceptance? be valid.
16) McKenzie v Farmer’s Co- - How to determine whether “Courts will look to the intention of the offeror.
op Meat Industries Ltd 1922 a particular mode of They infer that the offeror has prescribed a
AD 16 acceptance is prescribed. particular mode of acceptance by the
circumstances of the case and the channel of
communication chosen by the offeror, etc.”
17) Union Spinning Mills (Pty) - Can silence or inaction of Generally, silence/inaction is not an indication of
Ltd v Paltex Dye House (Pty) the offeree be regarded as a consent. However, where it is the ordinary
Ltd 2002 (4) SA 408 (SCA) valid acceptance? practice for a merchant to send an ‘order
confirmation’ form to the customer which
includes the terms and conditions on which it does
business, the manufacturer can prescribe that
silence/non-rejection will constitute a valid
acceptance, in a long-standing business
relationship acceptance can be assumed from
silence/non-rejection.
18) Electronic - See p50. Failure to respond to an unsolicited
Communications and - Contract concluded when communication cannot amount to a valid
Transactions Act 25 of 2002 and where offeror receives acceptance.
acceptance, whether aware Receipt Theory for time and place of contract.
of it or not.
19) Dietrichsen v Dietrichsen - When is an acceptance The Information Theory is the starting point
1911 TPD 486 valid? unless there is a clear indication to the contrary.
- What theory for formation Thus acceptance must be communicated to the
of contract applies? offeror before a valid contract exists.
20) S v Henckert 1981 (3) SA - What formation theory “The information theory applies to contracts
445 (A); applies to telephone concluded telephonically”.
Tel Peda Investigation Bureau contracts?
(Pty) Ltd v Van Zyl (1965)
21) Driftwood Properties (Pty) - Does the information “The offeror may prescribe a different method of
Ltd v MckLean 1971 (3) SA theory apply when the acceptance, e.g. mere signature, and dispense with
591 (A) offeror has prescribed an the need to communicate the acceptance to the
alternative method of offeror. Here the contract is concluded when and
acceptance? where the offeree complies with the offeror’s

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instructions regarding method of acceptance.”

22) Cape Explosive Works Ltd - Which theory for the “Expedition theory applies for the purposes of
v SA Oil & Fat Industries Ltd formation of contracts commercial convenience and certainty. If the
1921 CPD 244 applies to postal contracts, offeror makes offer through post he implicitly
information or expedition? consents to acceptance through post so that the
- Exception: Unless contract is concluded when and where the
indication to the contrary. acceptance is posted/transmitted to offeror.”
23) Yates v Dalton 1938 EDL - Which theory of formation “The expedition theory applies to contracts
177 of contracts applies to concluded by telegram”
contracts concluded by
telegram?
NB! Expedition Theory will 1) Offer and acceptance 3) Postal services functioned normally at the time
only apply to postal contracts if: were made by mail [24) [26) Bal v Van Staden 1902 TS 128]
Smeiman v Volkers 1954 4) The offeror did not indicate a different intention
(4) SA 170 (C)] [27) A to Z Bazaars (Pty) Ltd v Minister of
2) The acceptance was Agriculture 1975 (3) SA 468 (A)].
correctly addressed [25)
Levben Products Pvt Ltd v
Alexander Films 1959 (3)
SA 208 (SR)]
28) CGEE Alsthom - What happens when an “Acceptance of part of an offer can result in a
Equipments et Enterprises offer is partially accepted? binding contract on that part, provided the parties
Electriques, SA Division v - See p44. had such an intention.”
GKN Sankey (Pty) Ltd 1987
(1) SA 81 (A)
29) Hirschowitz v Moolman - What is a pactum de “A pactum de contrahendo is simply an agreement
1985 (3) SA 739 (A) contrahendo? to make a contract in the future.”
30) Brandt v Spies 1960 (4) SA - In an option contract what “If the main offer is invalid for some reason (no
14 (E) happens when the main compliance with formalities) or illegal – the
offer is invalid or illegal? option contract will fail for lack of certainty.
31) Brandt v Spies 1960 (4) SA - Whether an option contract “A verbal agreement to keep open a written offer
14 (E) must also comply with the for the sale of land is a valid option contract”
formalities prescribed by
law for the valid formation
of the substantive contract.
32) Venter v Birchholtz 1972 - (As above) “A verbal agreement to keep a written offer for the
(1) SA 276 (A) sale of land open, signed by the offeror , is
completely valid and effective” (Obiter)
33) Hischowitz v Moolman - (As above) “Where formalities are required for the main
1985 (3) SA 739 (A) contract, the same formalities are required for the
ancillary contract (the pactum de contrahendo)”
(Obiter)
34) Sommer v Wilding 1984 (3) - Can the option holder “An option holder can claim damages for breach
SA 647 (A); claim damages for breach of of an option contract and can choose whether to
Boyd v Nel 1922 AD 414 the option contract? cancel or uphold the contract.”
35) Owsianick v African - Can a pre-emption contract “A right of pre-emption must be construed
Consolidated Theatres (Pty) impose a positive duty on constrictively…a pre-emption contract does not
Ltd 1967 (3) SA 310 (A) the grantor to do something? normally place a positive duty on the grantor to do
- I.e. to make or invite an something. It simply imposes a negative duty n the
offer from the grantee? grantor to refrain from frustrating the grantee’s
rights.”
36) Soteriou v Retco Poyntons - (As above) “There was a positive duty on R to give preference
(Pty) Ltd 1985 (2) SA 922 (A) to S. the content of that positive duty is embodied
in the form of preference agreed upon. I.e. the pre-
emption agreement sets out what the grantor must
do to give preference to the grantee.”
37) Associated South African - (As above) “Whether there is a positive obligation on the
Bakeries (Pty) Ltd v Oryx & grantor depends on the wording of the contract”
Vereinigte Bäckerein (Pty) Ltd If positive = specific performance. If negative =

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1982 (3) SA 893 (A) interdict.

38) Owsianick v African - Trigger events for rights of “It is advisable to describe the trigger event
Consolidated Theatres (Pty) pre-emption. clearly and with sufficient detail” and “If there’s
Ltd 1967 (3) SA 310 (A) any threat to the pre-emption agreement the
grantee can get an interdict to prevent the threat
from materializing.”
39) Soteriou v Retco Poyntons - Unreasonable offers for “The grantor cannot avoid his duty to make an
(Pty) Ltd 1985 (2) SA 922 (A) pre-emption contracts. offer by making an unreasonable offer, because he
must make a bona fidei offer. I.e. the parties must
act in good faith. If the offer is not made in good
faith, the grantor will be in breach of the pre-
emption contract.”
40) Associated South African - What happens when a “The grantee can buy the property from the
Bakeries (Pty) Ltd v Oryx & grantor has breached a pre- grantor on the same terms as the third party by his
Vereinigte Bäckerein (Pty) Ltd emption contract by selling unilateral choice. All he must do is inform the
1982 (3) SA 893 (A) the subject matter of the grantor of his decision and the grantor will have
right to a third party? no choice.
But, if ownership has already passed to third
party, grantee cannot recover it unless third party
knew of pre-emptive right (doctrine of notice).
41) Soteriou v Retco Poyntons - What is the difference “In an option agreement a firm, definitive,
(Pty) Ltd 1985 (2) SA 922 (A) between an option and a irrevocable offer is already in place. The exercise
pre-emptive contract? of the offer merely contemplates acceptance
(unilateral action) by the holder.” Pre-emption
agreement contemplates bilateral action for the
formation of the substantive contract.
42) NBS, Boland Bank v One - Is a contract void for Discretion to fix performance will only be valid if:
Berg River Drive CC; Deeb v uncertainty if it allows one 1) The discretion is to fix the other parties
ABSA Bank Ltd; Friedman v of the parties to determine performance AND,
Standard Bank of SA Ltd 1999 the performance of the other 2) The discretion is subject to arbitrio boni viri
4 SA 928 (SCA) party? (the judgement of a good person),
3) The discretion is NOT to fix a purchase price or
rental.
43) Southernport - Whether a contract to Whether agreement to negotiate in good faith is
Developments (Pty) Ltd v negotiate a second contract enforceable?
Transnet Ltd 2005 (2) SA 202 (bridging agreement) will be
(SCA) enforceable. I.e. is the first
agreement to negotiate a
valid contract?
44) Wilson v Smith 1956 (1) - Can a contract be valid “Generally such a contract would be void…
SA 393 (W) even if performance is however, if the parties foresaw the risk of
objectively impossible? impossibility and, despite this impossibility,
wanted to conclude a valid contract it may be
valid…usually the party who takes the risk of
being bound to give an impossible performance
will bargain for some sort of compensation from
the other party. Such contracts will be valid
despite the fact that one of the performances is
impossible if this is what the parties intended.”
45) Johnston v Leal 1980 (3) - What happens when “If the agreement in question is of the type
SA 927 (A) parties did not complete all contemplated by the statute, e.g. state of land, the
the clauses on a document contract in question is subject to the statutory
subject to statutory formalities. In this case, contract is of sale of land,
formalities? and according to the Act the whole contract must
- 46) Alienation of Land be reduced to writing.”
Act 68 of 1981
47) Impala Distributors v - Can a contract that is “A contract that is required by law to be in writing
Taunus Chemical required by law to be in may be cancelled orally (unless subject to a non-
Manufacturing Co (Pty) Ltd writing be cancelled and cancellation clause). However, any variation

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1975 (3) SA 273 (T) varied orally or does such (change by subsequent agreement by the parties)
cancellation and variation of such a contract, must as a general rule comply
need to also conform to the with the statutory formalities. E.g. if in writing,
statutory formalities? variation must be in writing too.”
48) Goldblatt v Fremantle - Doubt as to whether “The presumption is that writing is merely
1920 AD 123 writing is required for the required for a contract’s proof. Only when it is
validity of a contract or clear that the parties intended the writing to be a
merely its proof? formality will the contract be void if it doesn’t
comply with the formalities.”
49) SA Sentrale Ko-op - Can parties, in the resence “In terms of the Shifren principle the oral variation
Graanmaatskappy Bpk v of a written non-variation of a contract with a non-variation clause will be
Shifren 1964 (4) SA 760 (A) clause still change their ineffective. The contract will be enforced as
contract informally? I.e. though there had been no variation. The Shifren
Orally as opposed to in decision was unanimously reconfirmed in: 50)
writing? Brisley v Drotsky 2002 (4) SA 1 (SCA)”
- What is the nature and
effect of a non-variation
clause?
51) Golden Fried Chicken - How are non-variations “Non-variation clauses are interpreted
(Pty) Ltd v Sirad Fast Foods clauses to be interpreted. restrictively. I.e. they do not cover matters not
CC 2002 (1) SA 822 (SCA) specifically stated in the clause. therefore oral
cancellation, waivers and renewal of a contract
with a non-variation clause will be valid, unless
the clause specifically prescribes formalities for
these transactions.”
52) Impala Distributors v - What happens when there “A non-cancellation clause can be informally
Taunus Chemical is both a non-variation AND varied unless the contract also contains a non-
Manufactoring Company (Pty) a non-cancellation clause in variation clause. If there is ONLY a non-
Ltd 1975 (3) SA 273 (T) one contract? cancellation clause then oral agreement to cancel
the contract will denote a tacit agreement to scrap
the requirement of writing for cancellation (i.e. it
would be a variation of the contract.
The parties could thus have informally varied the
non-cancellation clause. The presence of a non-
variation clause, however, serves to entrench both
itself and the non-cancellation clause thus
preventing an oral cancellation of the contract.
The court therefore extended the Shifren principle
to non-cancellation clauses so that where parties
agree that any cancellation and/or variation of the
contract should be in writing, they cannot cancel
such a contract orally.”
NB: a non-cancellation clause applies to
cancellation by mutual agreement only , it does
not affect the right to cancel for material breach!
53) Miller v Dannecker 2001 - Does a pactum de non “No-waiver clauses will be interpreted strictly. A
(1) SA 928 (C) petendo (agreement not to pactum de non petendo does not amount to a
sue) amount to a waiver of waiver, therefore a non-waiver clause does not
rights? apply to it. Unlike a waiver, a pactum de non
petendo does not amount to permanently
abandoning a right but merely agreeing not to
enforce the right in court.”
54) Miller v Dannecker 2001 - How can you counter the (Obiter) “ Estoppel is a defence which may be
(1) SA 928 (C) harsh effects of the Shifren used to prevent the other party from relying on the
principle? non-variation clause.” I.e. being bound to the
incorrect impression you create.
55) Brisley v Drotsky 2002 (4) - Could estoppel be used as “Estoppel will not usually be successful in
SA 1 (SCA) a defence against a non- defeating a non-variation clause because of the
variation clause? strict requirements for estoppel.” – It is generally
not reasonable to believe that an oral variation will

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be binding if there is a non-variation clause in the

contract.
56) Brisley v Drotsky 2002 (4) - In the absence of fraud, “It has been agreed that where a person
SA 1 (SCA) can a party simply allege fraudulently seeks to rely on a non-variation
bad faith to escape a non- clause he will be prevented from doing so on the
variation clause? grounds of public policy. Fraud exists where one
party deliberately leads the other party to think
that he will not enforce the written contract.
Mere bad faith is insufficient to defeat a non-
variation clause; the party MUST prove FRAUD
or possibly unconsciousnability.”
(As above) - Should the Shifren It should be retained because: “there would be
principle be retained or adverse consequences for commercial enterprises
overruled? if the rule is changed; it would cause legal
uncertainty; it could be problematic to prove
subsequent variations because oral agreements are
not easily proven. There is in principle nothing
wrong with entrenching clauses in a contract, the
Shifren principle does not only favour the
economically stronger party, the non-variation
clause protects both parties.”
(As above) - Could the Shifren principle “Good faith is an ethical value which underlies the
be overridden by good faith, law of contract and informs its rules. However, it
i.e. could the non-variation is not in itself a substantive rule of law. The
clause be defeated if it principle of pacta sunt servanda also underlies the
would be in bad faith to law and the court held that pacta sunt servanda
enforce it? prevails here. Therefore non-variation clause had
to be enforced even if it entails some bad faith.”
Ex turpi causa non oritur actio - Enforcement of an illegal “This rule applies to claims for enforcement of an
(ex turpi causa rule) contract? illegal contract (e.g. when a party tries to claim the
promised performance from the debtor). The rule
states that an illegal contract can NEVER be
enforced.
In par delicto, potier est conditio - Other legal relief sought “The par delictum applies when other legal relief
defenditis (par delictum rule) from an illegal contract (e.g. is sought (i.e. a claim for return of performances
return of performance) when a party has already performed in terms of an
illegal contract). This rule provides that the
plaintiff will NOT be entitled to other relief. This
is subject to some exceptions.”
57) Metro Western Cape (Pty) - Did the legislature intend “On the basis of the mischief test and balance of
Ltd v Ross 1986 (3) SA 181 (A) contracts concluded by convenience test such contracts are invalid.”
unlicensed traders to be NB: court will look to the words of the statute
void? (peremptory), negative framing, mischief
prevented, balance of convenience and criminal
sanctions.
58) Henry v Branfield 1996 (1) - Despite contravening the Here they did not follow the approaches set out in
SA 244 (D) SA exchange control MWC v Ross (see 57).
regulations was the contract “In essence the contract was a sale of foreign
between H and B valid and currency by an unauthorized dealer – upholding
enforceable? the contract would allow the very mischief the
legislation sought to eradicate, and balance of
convenience = declaring the contract void.
Therefore the contract is invalid.”
59) Price Waterhouse Coopers - How does the advent of “Since [It’s] advent, public policy is rooted in the
v National Potato Co-operative the Constitution affect Constitution and the fundamental values it
Ltd 2004 (9) BCLR 930 (SCA) public policy? enshrines. The fundamental values enshrined in
the Constitution and the interests of the
community or the public are accordingly of the
utmost importance in respect of the concepts of

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public policy.”
60) Halsey v Jones 1962 (3) SA - Can a gambler sue (in “Allowing such an action would amount to
484 (A) contract or delict), in a court enforcing a gambling debt, which is not allowed in
of law, for the payment of a our law. A delictual claim would also be
gambling debt? dismissed since the duty of care on which it is
based would be derived from the contract between
the parties. Since the contract was unenforceable,
the delict based on the contract could also not be
enforced.”
61) Gibson v Van Der Walt - Can an obligation which “A debt which is closely related to a gambling
1952 (1) SA 262 (A) replaces/novates the debt will also be tainted with immorality and
gambling debt be enforced would also not be enforced. In order to decide
in a court of law? whether a debt is so closely related to a gambling
as to be unenforceable, one needs to determine
whether the new debt is merely a device for
enforcing the original gambling debt.”
62) Section 16 of the National - What kind of gambling 1) Licensed gambling activities: enforce a civil
Gambling Act 7 of 2004 activities are there? obligation. The debts are fully enforceable if valid
license.
2) Unlicensed but lawful gambling activities: no
license in terms of provincial legislation (comes
from CL). They enforce a natural obligation.
3) Unlicensed, unlawful gambling activities: Not
even a natural obligation is created. They are not
enforceable at all.
63) Contingency Fees Act 66 of - Champerty/ pactum de “This Act allows lawyers to conclude certain
1997 quota litis forms of champerty with clients (e.g. no-win, no-
fees arrangement, or if case is won, charge more
than usual fee. This is subject to max limitations).
64) Price Waterhouse Coopers - The validity of “Whether champertous contracts are allowed is an
v National Potato Co-operative champertous agreements issue of public policy, and the latter is determined
Ltd 2004 (9) SA BCLR 930 with people other than by the Constitution and the interests of the
(SCA) lawyers? community.
The rule against champerty is based on a fear of
its undermining the judicial system, but the
judicial system has evolved and has sufficient
safeguards against dishonest litigants.
The Constitutional right to access to courts and the
Constitutional principles underlying freedom of
contract means the agreement is not contrary to
public policy, and thus the agreements does not
bear relevance to the case at hand.”
65) Magna Alloys & Research - What are the current rules “In our law, the issue should be decided in
(SA) (Pty) Ltd v Ellis 1984 (4) regarding restraints of accordance with legality and public policy. A
SA 874 (A) trade? fundamental rule of our law is that it is in the
- Restraints of trade cannot public interest that contracts that were voluntarily
be used simply to concluded should be enforced; therefore a restraint
reduce/exclude competition of trade is valid in principle.
from an ex-employee, even However a restraint of trade will be invalid if it is
if employer spent time and against public policy. One of the factors is that
money training him. people should be able to take part in the
- Issues relate to the commercial world freely and pursue their careers.
enforceability of restraints Normally the rule that contracts should be
of trade rather than their enforced will be more NB than this freedom.
validity. However, if the restraint places an unreasonable
- Question = whether restriction on this freedom, the restraint will
enforcement is against probably be contrary to public policy.
public policy at the time that The unreasonableness of the restraint is just one of
enforcement is sought the factors to consider when deciding whether the
through a court order. restraint is contrary to public policy or not. The

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onus of proof is on the party who wishes to escape

the restraint.
The decision whether a specific restraint is
contrary to the public interest must have regard to
the circumstances at the time when a court is
asked to enforce the restraint. The court may
restrict the scope of a restraint of trade by severing
the portions which are contrary to public policy
and enforcing the rest of the restraint.
NB: ex turpi causa and par delictum rules will
apply to the illegal parts. NB consideration of time
duration and area of restriction.
66) CPT Ltd v Argus Holdings - Can a restraints of trade be “Yes, a restraint of trade may be enforceable at
1995 (4) SA 774 (A) enforceable at one time but one time, but when circumstances change the
then become contrary to restraint of trade may become contrary to public
public policy? policy and therefore unenforceable.”
67) Basson v Chilwan 1993 (3) - Factors to consider in “Reasonableness of restraints of trade is based on
SA 742 (A) deciding whether a restraint the broad interests of the community on one hand
of trade is contrary to public and interests of the contracting parties on the
policy? other. A restraint of trade is unreasonable if it
prevents one party, following termination of a
Factors (x6): The restraints contractual relationship, in participating freely in
must go no further than is the commercial and professional world without a
necessary to protect the protectable interests of the other party being
interests of the parties. served thereby.”
Factors to consider:
1) The nature of the restricted activity.
2) The geographical area in which the restraint of
trade operates.
3) The duration of the restraint.
4) Whether the restraint of trade protects a
legitimate interest, e.g. trade secrets, customer
base, or goodwill of a business (esp if paid for).
5) Bargaining power of the parties.
6) Any policy factor relevant to the particular
restraint of trade.
Court will attempt to balance these to determine
enforceability.
68) Sunshine Records (Pty) - Factors for court to “Court will only sever and enforce reasonable
Ltd v Frohling 1990 (4) SA 782 consider when determining parts if it doesn’t entail plastic surgery of entire
(A) unreasonableness and contract. Contract is unreasonable if other party
enforceability. has no bargaining power, unreasonable and
unenforceable if one party is too grasping and
greedy. Nature, extent and duration of obligations
and no real reciprocal obligations = unenforceable
restraint of trade.
69) Coetzee v Comitis 2001 (1) - Can a restraint of trade be “If a restraint of trade violates the values
SA 1254 (C) deemed unenforceable on underlying the Constitution – e.g. by abusing
basis of rights on the Bill of bargaining power, therefore violating equality,
Rights of the Constitution? dignity, etc. – the restraint of trade will be deemed
to be unreasonable and public policy will require
it to be unlawful, inconsistent with the provisions
of the Constitution, and therefore invalid.”
“Public policy must be found in the Constitution.”
70) Standard Bank of SA Ltd v - Is the prohibition of the “SCA = the rule is still valid as it was designed to
Oneanate Investments (Pty) interest in duplum rule still protect borrowers from exploitation by lenders.
Ltd 1998 (1) SA 811 (SCA) valid? The rule prevents outstanding (overdue) interest
from accumulating until the amount owed
becomes so large that the borrower will never be
able to repay it.”

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71) Standard Bank of SA Ltd v - Can capitalisation of the of “No. Capitalisation of interests would technically
Oneanate Investments (Pty) unpaid interests alter the mean that interests would never accumulate and
Ltd 1998 (1) SA 811 (SCA) application of the in duplum the in duplum rule can therefore find no
rule? application. However the SCA held that one
cannot circumvent the in duplum rule in this way;
The capitalised interests will still be regarded as
interest for purposes of the in duplum rule.
72) Santam Life Insurance Ltd - Does the in duplum rule “No, the in duplum rule has been limited to mean
v South Africa Breweries Ltd still apply in its original that the outstanding (overdue) interest cannot
2000 (2) SA 647 (W) wide sense? exceed the capital amount.” I.e. if X borrowed
R1000 from Y, X can pay more than R1000 in
interest on total, provided it is not in overdue
interest.
73) Zondi v MEC for - What is the effect of “Section 34 is an express Constitutional
Traditional and Local Section 34 (right of access recognition of the NBce of the fair resolution of
Government Affairs and to courts) of the social conflict by impartial and independent
Others 2005 (3) SA 589 (CC) Constitution? institutions…which requires that individuals
<2005 (4) BCLR 347 (CC)> should not be permitted to resort to self-help, but
also that the potentially divisive social conflicts
must be resolved by courts or by other
independent or impartial tribunals.”
74) Ex parte Minister of - What is the effect of “Such clauses are illegal and contrary to public
Justice: In re Nedbank Ltd v ‘Conclusive proof clauses’ policy in that they allow the creditor to be the sole
Abstein Distributors (Pty) Ltd in a contract? judge of the amount which the debtor owes and
& Donelly v Barclays National they exclude the jurisdiction of the courts.”
Bank Ltd 1995 (3) SA 1 (A)
75) Napier v Barkhuisen 2006 - Does a ‘time-bar’ clause in “A time-bar clause is not per se unconstitutional
(4) SA 1 (SCA) a contract, preventing a and contrary to public policy. it depends on
party from instituting a legal whether the parties right to claim was CREATED
claim unless he does so by the contract or whether it existed
within a specified time INDEPENDENTLY of the contract. If the right to
period, constitute common- claim was created by the contract, the party would
law invalidity? have no rights except what was provided for in the
contract, including the time-bar. The time-bar
would therefore be valid and enforceable, since it
does not limit any pre-existing right of access to
the courts.
76) Napier v Barkhuisen 2006 - What is the effect of a “If the party had a pre-existing right to legal
(4) SA 1 (SCA) ‘time-bar clause’ on a pre- recourse which existed independently of the
existing right to access to contract. The clause may infringe a parties right of
courts, independent of the access to the courts if the time period is
contract? unreasonably short.” – It would limit a parties pre-
existing, independent right to claim.
77) Bafana Finance Mapobane - What is the effect of a “Such a clause, which prevents a debtor from
v Makwakwa and Another clause which prevents a applying from an administration order in terms of
2006 (4) SA 581 (SCA) debtor from obtaining an s74(1) of the Magistrates’ Court Act 32 of 1944,
administration order? is against public policy and unenforceable. This is
because the clause restricts a debtors right to seek
redress in the courts and that it undermines the
very policy objectives which s74 seeks to achieve;
namely to protect a low-income debtor who is
unable to pay his debts and to ensure that all
creditors are treated equally.”
78) Chief Lesapo v North West - Are statutory provision, “The CC held that such a statutory provision
Agricultural Bank and which authorize parate authorizing parate eksekutie was contrary to
Another 2000 (1) SA 409 (CC) eksekutie/self-help by a public policy and invalid, because self-help by the
creditor, enforceable? creditor denies the debtor the protection afforded
by the judicial process and legal rules and
therefore violates the Constitutional right to a fair
hearing.

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This jurisprudence was later extended to a clause

in a general notorial bond authorizing the creditor
to take possession of a debtor’s moveable property
and to sell it to satisfy a debt.”
79) SA Bank of Athens Ltd v - What is the current law “Clauses allowing parate eksekutie aren’t
Van Zyl 2005 (5) SA 93 (SCA) relating to parate generally void, only in fact if they entitle the
eksekutie/self-help clauses? creditor to take the law into his own hands and to
(Overturned the above decision prevent the debtor from resorting to the courts are
of Chief Lesapo) illegal.
If the parate eksekutie clause is so wide that it can
only be exercised in an unconscionable manner,
the courts will find it illegal. But, if the clause can
be exercised in a legal or illegal manner, the
courts will not find the clause itself to be illegal.
However, the creditor may not resort to illegal
means of exercising the clause. I.e. the courts
draw a distinction between the validity of the
contractual clause and the creditor’s behaviour in
enforcing it.
80) Bock and others v - Which parate eksekutie “Invalid: 1) A clause allowing the creditor to seize
Duburoro Investments (Pty) clauses are contrary to the debtor’s assets against his will without a court
Ltd 2004 (2) SA 242 (SCA) public policy and order is unConstitutional whether for moveable or
unenforceable, and which immoveable property. A creditor could still get
are valid? possession if he applies for a court order. 2) A
clause allowing a creditor to keep a debtor’s assets
as payment of his debt.
Valid: 1) A clause allowing a creditor to sell
(realize) the debtor’s assets after he has lawfully
obtained possession of them (court order, debtor’s
consent). However, debtor can approach court if
such clause was exercised unconscionably (i.e.
creditor sells assets far below their value). 2) A
clause allowing the creditor to buy the debtor’s
assets, provided this is done at a fair price (not
simply the amount of the debt).
81) De Beer v Keyser 2002 (1) - Did the practice constitute “Practise is now forbidden by the: 82) National
SA 827 (SCA) parate eksekutie and was it Credit Act 34 of 2005.”
contrary to public policy?
83) Maseko v Maseko 1992 (3) - 2 contracts entered into, do “No simulated as appearance of contract is its
SA 190 (W) these contracts offend the reality. Contract is not enforceable as it is an
boni mores of society, and agreement to defraud creditors, it undermines the
are they consequently institute of marriage and tried to defraud the
invalid? courts.” Court also mentioned that specific
- Marriage for purposes of performance is not applicable as the contract is
surety evasion. illegal, therefore the ex turpi causa rule applies.
Court also mentioned par delictum rule, and the
potential for relaxing it. But in this case Mrs
maseko loses on grounds that public policy
influences illegality, and thus the contract is
illegal.
84) Edouard v Administrator - Does a contract based on “Argument by respondent = joy of children =
Natal 1989 (2) SA 368 (D) sterilization constitute unfair to try and transfer maintenance of children
something that is contrary to to state, therefore it is contrary to public policy.
public policy? I.e. does Court = claim for breach of contract in a contract
sterilizing a woman succeeds as a result of tacit contracting that
constitute something operation for sterilization should be done properly,
contrary to public policy? therefore the claim is not contrary to public
policy.”
85) Baart v Malan 1990 (2) SA - Is a court willing to set “The court held that a contract between husband
862 (E) aside an exploitative and wife, for the wife to pay over her gross salary

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contract on the basis that it and annual bonuses for a period of 20 years upon
offends public policy? divorce for maintenance, was clearly
unconscionable and contrary to public policy as it
deprived her from the benefits of her salary and
her work.
86) Sasfin (Pty) Ltd v Beukes - What role does unfairness “The court held that this contract was so
1989 (1) SA 1 (A) between the parties play in exploitative that it amounted almost to slavery.
re: to public policy? I.e. Beukes had to work but obtained no benefit from
how do we know whether his income, therefore the contract is contrary to
an unfair contract will be set public policy.” The case tells us that you don’t
aside on the basis of public need to stick to one of the established categories
policy? of common law illegality, so long as it is against
- Not all unfair contracts public policy.
will be illegal, only those Defense by Sasfin = severance – each phrase was
which offend against public drafted to be separable from each other, but court
policy. held that parties would not have contracted on
such a basis, and the defence failed. Court held
that the offending clauses in Sasfin are not always
contrary to public policy. The validity of the
clause depends on the facts of every case incl the
relationship between the parties and the
cumulative effect of all the clauses in the contract.

Rule = “No court should shrink from the duty of

declaring a contract contrary to public policy
when the occasion so demands. This power
should, however, be used sparingly and only in the
clearest of cases; test uncertainty as to the validity
of contracts result from an arbitrary and
indiscriminate use of the power. One must be
careful not to conclude that a contract is contrary
to public policy merely because its terms (or some
of them) offend one’s individual sense of
propriety and fairness.”
87) Eerste Nasionale Bank van - Can the principle of good “Majority of the court found that she was not
Suidelike Afrika Bpk v faith be used to strike down bound due to lack of contractual capacity. Oliver
Saayman NO 1997 (4) SA 302 unfair contracts? JA in minority judgement stated that principle of
(SCA) - Was Saayman bound to good faith required the balance to ensure that the
the contract of suretyship? old lady understood the effect of the session of her
shares before allowing her to sign the contract.
Since the bank had not acted in good faith,
enforcement of the contract was against public
policy despite contractual capacity.”
88) Brisley v Drotsky 2002 (4) - Is the enforcement of non- “Court held that good faith was not an
SA 1 SCA variation clauses contrary to independent, substantive rule of SA law which
good faith? could overrule existing rules of contract law. The
(overruled minority judgement court must therefore apply existing rules of
of Saayman based on good faith) contract law, even if this allowed a party to act in
bad faith or unfairly. Therefore the door closed on
using the principle of good faith to strike down
unfair contracts.”
89) Section 8(3)(a) of the - The Bill of Rights applies “A court, in order to give effect to a right in the
Constitution. to the common law too: Bill of Rights must apply, or if necessary
s8(1). duplicate, the common law to the extent that
legislation does not give effect to that right.”
90) Knox D’Arcy Ltd v Shaw - Have the courts found that “No. On the claim that the common law rule
1996 (2) SA 651 (W) contracts which directly relating to the validity of restraint agreements
restrict one of the infringed upon the right to freely engage in
fundamental rights economic activity, the court held that the common
enumerated in the Bill of law position does not unduly infringe on any

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Rights are against public Constitutional right, and the Constitution does not
policy/illegal? interfere as a matter of policy. In the private
affairs of parties, preventing them from entering
into contracts. Even if those contracts are contrary
to their interests. The Constitutional principle of
individual autonomy must be weighed against the
right to engage in economic activity, and the
current common law position provides sufficient
protection.
91) Garden Cities - Question as above. “No, it is not illegal. The case was decided on the
Incorporated Association Not - Is a clause restricting the basis that the electronic broadcast of the call to
for Gain v Northpine Islamic use of a sound amplification prayer is not part of the Islamic religion, therefore
Society 1999 (2) SA 268 (C) system for call to prayer a clause forbidding this does not infringe on the
serving to restrict freedom right to religion. Additionally, even if the need to
of religion, and is the call for prayer as loudly as possible was part of the
contract thus illegal? Islamic religion, N had relinquished this right by
signing the contract. Pacta sunt servanda meant
that the parties both had to perform their
contractual obligations.”
92) Brisley v Drotsky 2002 (4) - Has the advent of the “Five summarized effects of these two cases:
SA 1 (SCA) Constitution altered the 1) Good faith is NOT a legal rule but merely a
common law rules about factor to be weighed when courts determine public
legality which favour the policy.
and notion of pacta sunt 2) The principle of pacta sunt servanda and the
servanda and individual rationale of commercial certainty are very NB in
autonomy above other determining public policy for the legality of
93) Afrox Healthcare Bpk v considerations? contracts.
Strydom 2002 (6) SA 21 (SCA) (in re: unfair contracts). 3) The fundamental values of freedom and human
dignity favour the recognition of contractual
autonomy even if this results in unfair contracts.
4) The fundamental value of equality is not very
NB in the law of contract, alternatively it is
assumed that parties are equal in contracting
situations.
5) Courts are not very willing to give credit to
claims of unequal bargaining power; unless there
is startling unfairness, contracts will be enforced.”
94) Jajbhay v Cassim 1939 AD - Are there circumstances in “The par delictum rule will be relaxed in order to
537 which the par delictum rule do simple justice between man and man. There are
can be relaxed? four factors to consider in deciding whether or not
- (NB: Par delictum rule to relax the rule:
only applies where both 1) Whether relaxing the rule would be contrary to
parties knew that contract public policy.
was illegal) 2) Degree of moral turpitude, i.e. was one party
more blameworthy than the other?
3) Doing justice between the parties, esp whether
disallowing the plaintiff’s claim would lead to
unjust enrichment of defendant.
4) Whether relaxing the rule would lead to an
indirect enforcement of the contract.
~ In this case the par delictum rule was relaxed as
the DF was not unjustly enriched – was still
paying rent, thus there were no considerations of
fairness or public policy.
95) Henry v Branfield 1996 (1) - Should the par delictum H was not entitled to the money handed over to
SA 244 (D) rule be relaxed in this case? B’s agent. If the court gave such an order H would
receive the money in SA, in SA rands, which
would amount to an indirect enforcement of the
contract. I.e. doing what the parties sought to
achieve in the first place, and this is contrary to

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public policy.
96) Sasfin (Pty) v Beukes 1989 - Severance of the illegal “1) Do the illegal sections form part of the main
(1) SA 1 (A) portions of the contract purpose of the contract or are they merely
depends on the intentions of subsidiary?
the parties. How is this 2) Are the illegal sections of the contract
established? contained in separate sections and could they
easily be removed without rewriting the contract?
3) Are the illegal and legal parts of the contract
interlocking and interdependent?
4) Does the contract consist of separate promises,
some legal and some illegal?
5) Would the parties have concluded the contract
without the illegal parts?
97) Union Government v - In terms of the parol The integration rule states that when a contract has
Vianini Pipes 1941 AD 43 evidence rule, what does the been reduced to writing, the written document is
integration rule state? generally regarded as the ‘exclusive memorial’ of
the agreement between the parties, i.e. the court
will assume that the parties intended the document
to reflect all the express terms of the contract. The
court will NOT consider parol evidence which
differs from the written document…the document
may NOT be contradicted, altered, added to or
varied by parol evidence.” The basis of the rule is
that when parties reduce their whole agreement to
writing, then the document is the best evidence of
their consensus. Outside (parol) evidence is less
useful and therefore a waste of the court’s time.
The idea behind the rule is to reduce disputes
about which terms form part of the contract, thus
to save time. However, there are eight exceptions
to the parate eksekutie rule when it will NOT
apply:
1) The rule will only apply if the parties intended
the document to be the sole memorial of their
agreement. It does not apply if the parties only
intended the document to be a PARTIAL record
of their agreement. Extrinsic evidence may also
prove that the parties intended only to record their
contract partially.
2) The rule only applies to the express terms of the
contract. Parties are always free to bring evidence
that the contract contained implied/tacit terms.
3) The rule does not apply to evidence disputing
the validity of the contract; a party may always
bring evidence to show that the contract was
invalid/voidable.
4) The rule does not apply to evidence of
subsequent verbal variation/change of the contract
(subject to the Shifren rule about variation
clauses).
5) The rule does not apply to claims for
rectification of the document. If a party alleges
that the document incorrectly reflects the parties
intentions (e.g. by omitting a term, incorrect
recording, etc), the parate eksekutie rule will
apply.
6) Similarly a party may bring evidence that the
document represented a simulated transaction that
they did not intend to be bound to the terms of the
contract.

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7) It has been held that evidence may be brought

that the entire written contract was subject to a
suspensive condition which was not expressed in
writing in the contract.
8) Evidence may be brought of a collateral
(connected) oral agreement which induced the
written contract. The test seems to be that the oral
contract has to be a separate contract which must
not be inconsistent with the terms of the written
contract.
98) Sealed Africa (Pty) Ltd v - Does a resolutive “No. Evidence that the contract was subject to a
Kelly 2006 (3) SA 65 (W) condition constitute an resolutive condition is ‘by its very nature’
exception to the parate contradictory to the terms of the written
eksekutie rule? document, such evidence is therefore excluded by
the parate eksekutie rule.”
99) Bertelsmann v Per 1996 (2) - Is the practice of attorneys “The court could not find whether the practice had
SA 375 (T) paying advocates a trade become a trade usage, unless there was evidence
usage, i.e. is it an implied to show that it had become universal and
term of an attorney briefing uniformly observed. It is difficult to establish that
that the attorney will pay the a particular term has been incorporated into a
advocate directly? contract by trade usage because all of the
requirements must be met, i.e. the practice must be
reasonable, long-established, uniformly observed,
certain, universal and notorious (well-known).
100) West-end Diamonds Ltd v - Business Efficacy test: was “Yes, the contract was subject to such a tacit term
Johannesburg Stock Exchange the contact between W and as such a term was necessary to give the contract
1946 AD 910 JSE subject to a tacit term business efficacy. The JSE could not list an
that JSE would remove W insolvent company because business ppl would
from the listed companies assume that a listed company was solvent. From a
on the stock exchange if it commercial viewpoint, the tacit term was
was liquidated? therefore necessary.”
~ The Business Efficacy test asks whether the tacit
term is necessary to give business efficiency to the
contract, i.e. whether the contract would be
commercially viable without the tacit term in
question. If the contract would not be
commercially viable then the tacit term will be
incorporated into the contract.
101) Reigate v Union - What does the officious “This test asks what would have happened if such
Manufacturing Co [1918] 1 bystander test consist of? an officious bystander was present while the
KB 592 parties were negotiating the terms of the contract,
the officious bystander asked them whether they
wished to include the tacit term in their contract. If
the parties would have agreed upon the tacit term
[at the time] then it will be incorporated into the
contract.
102) Wilkins v Voges 1994 (3) - Factors set out to “Court made a distinction between tacit
SA 130 (A) determine whether a tacit unexpressed terms and tacit imputed terms.
term will be incorporated. Moreover, in applying the business efficacy test
- Court determined that tacit and officious bystander tests the court will
term argued for conflicted consider: the express terms of the contract; the
with express terms of the surrounding circumstances; any special
contract. knowledge by the parties. The courts will not
easily read a tacit term into the contract, it is not
enough that the tacit term is a reasonable one, or
convenient for one or both parties, but rather a
question of necessity. It is also not enough that the
reasonable parties would have agreed to the term,
but whether the particular parties would agree to
the term.

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103) In re Soper’s Estate 1935 - What did the term ‘wife’ “The court held that in the first stage of
(236) NW 247 mean in the partnership interpretation one looked only at the contract
contract entered into by itself. The words used in the contract were clear
Soper? and unambiguous: the money had to go to Ira’s
- Who was entitled to the wife, which clearly meant his legal wife. Since the
proceeds of Soper’s meaning was clear, evidence to the surrounding
insurance policy? circumstances was not permissible. Adeline was
Ira’s legal wife therefore she was entitled to the
money. (Evidence to the surrounding
circumstances may lead to unintended results,
contrary to the parties’ subjective intentions).
104) Pritchard Properties v - Did P have to give K “The court did not accept that P had to give K
Koulis 1986 (2) SA 1 (A) seven days written notice to seven days written notice because the court will
give remedy the breach in give words their ordinary grammatical meaning if
[1 stage approach] terms of the clause; breach sensible; in terms of linguistic treatment.
= failing to pay lease on Moreover, the court will consider the meaning of a
time. phrase in the context of the contract as a whole;
- The word ‘latter’ had been therefore ‘latter’ applied only to breaches after
deleted from the contract. their failure to pay rent. Therefore the seven days
notice was not required for a failure to pay the
lease.” Court will not look at surrounding
circumstances in first stage.
105) Botha v Venter 1999 (4) - When a court states that in “In this case the court held that background
SA 1277 (O) giving linguistic treatment evidence included evidence as to the nature and
to a contract it will look to purpose of the contract, and its genesis (the events
background evidence or the leading to the formation of the contract). The
factual matrix of the purpose of this contract was that V knew that B
contract. What does this had bought the engine to pump water from a
mean? I.e. what, in this borehole to three dams, which would take about
case, did the term ‘in 36 hours. The phrase ‘in working order’ therefore
working order’ mean? meant that the engine had to be capable of
working for that amount of time and not merely
that it should be in working order upon delivery.
V therefore breached the contract.”
106) Van Der Westhuizen v - Whether the phrase ‘no “Because the contract was ambiguous the court
Arnold 2002 (6) SA 453 (SCA) warrantee whatsoever has could look at the surrounding circumstances. This
been or is given to [the includes evidence of matters that the parties
[2 stage approach] buyer] by the seller or his probably had in mind when they contracted. In
(This judgement also suggested agent(s)’ excluded the this case, the parties had only been concerned
that the staged approach to (naturalia) implied warranty about the physical condition of the car. They had
interpolation should be against eviction from the never thought about the possibility that the buyer
reconsidered) contract for the sale of the might be evicted. They therefore could not have
car. intended to exclude the warranty against eviction
from the contract of sale. The clause therefore
only excluded the warranty against latent defects
(voetstoots).”
107) SA Breweries Ltd v - Instead of proving “R signed a document acknowledging that he
Ribeiro t/a Doc’s Liquor mistake, should a party owed money to SAB. Later he alleged that the
Merchants 2000 (1) SA 803 seeking to rectify a contract document was incorrect and that it was not him
(W) be required merely to give a personally who owed the money, but his company.
reasonable explanation as to The court refused to rectify the document since R
why he did not object to the could not give any reasonable explanation why he
incorrect term? signed the document if it was incorrect.”
108) Akasia Road Surfacing - Can a document be “E.g. A and B agreed that A would sell an
(Pty) Ltd v Shoredits Holdings rectified even if the contract unspecified portion of his farm to B, but the
Ltd en andere 2002 (3) SA 346 would be invalid as a result written contract incorrectly states that A would
(SCA) of the rectification? sell his hotel to B. The true agreement between A
and B (the sale of an unspecified portion of land)
is void for vagueness. But this does not mean that
the court should refuse to rectify the document. If

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the court refused rectification in such a case it

would result in the enforcement of an agreement
that neither of the parties intended. (the contract
for the sale of a hotel). For this reason the court
will rectify the document, even if it means the
contract between the parties will be invalid.”
Result of consensual approach to contractual
liability.
109) Weinerlein v Goch - Will a court rectify a “If the document appears prima facie valid the
Buildings Ltd 1925 AD 282 document subject to court will rectify it. I.e. if it appears valid without
statutory formalities? having regard to any evidence of the parties true
intentions. The court will not take into account
which terms the parties actually intended to
include in the contract. The court will simply look
at the document and ask whether it looks like a
valid contract or not. This will be the case if the
document appears to contain all the material terms
of the contract (essentialia and incidentalia) with
sufficient certainty.”
The document was valid as it contained a
description of the land that was being sold.
110) Magwaza v Heenan 1979 - (As above) “The contract can’t be rectified if it appears prima
(2) SA 1019 (A) facie invalid. For example, the document can’t be
rectified if an essential term has been left out or if
a term is not defined in the document with
sufficient certainty. E.g. If in the sale of land, the
land sold is not identified with sufficient certainty
<Akasia Road Surfacing (Pty) Ltd v Shoredits
Holdings Ltd en andere (2002) – see 108>
111) Wells v SA Alumenite Co - Can you use an exclusion “No, insofar as an exclusion clause purports to
1927 AD 69 clause to exclude liability exclude liability for fraud committed by a party,
for fraud? the clause will be invalid and unenforceable as its
against public policy.”
112) Government of the - Can you use an exclusion “No, it is against public policy to exclude liability
Republic of South Africa v clause to exclude liability for damages caused intentionally and for an
Fibre Spinners & Weavers for intentional misconduct intentional breach of contract.”
(Pty) Ltd 1978 (2) SA 794 (A) (dolus)?
113) FNB v Rosenblum 2001 - Can an employer exclude “The courts will ask whether the employer
(4) SA 189 (SCA) liability for the intentional benefited from such intentional misconduct or not.
wrongdoing of his If the employer benefited then he will remain
employees? liable despite the exclusion clause. If the employer
did not benefit he is not liable.
A clause that excludes vicarious liablility of an
employer for the theft or other willful misconduct
committed by his employees is not in itself
contrary to public policy – FNB here did not
benefit and therefore the exclusion clause was
valid.
114) Afrox Healthcare v - Can negligence or gross “It is not against public policy to exclude liability
Strydom 2002 (6) SA 21 (SCA) negligence be excluded by for negligence and even gross negligence provided
way of an exclusion clause? the clause is clear and unambiguous.”
115) Elgin Brown and Hamer - Can an exclusion clause “One can validly exclude liability for breach of
v Industrial Machinery exclude liability for breach contract, including fundamental breach of
Suppliers 1993 (3) SA 424 (A) of contract? contract. This is, however, a presumption that the
parties did not intend to exclude liability in such
circumstances. The wording of the exclusion
clause must therefore be clear and unambiguous.
The extent of the breach and the question of
whether it is fundamental to the contract are
matters relevant in determining whether there is a

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right of rescission (cancellation). But the fact of a

fundamental breach is irrelevant and alien to the
construction of an exemption clause and cannot
govern its compass.”
116) Section 90 of the National - Can statutes also regulate “The Act prohibits certain types of exclusions in
Credit Act 34 of 2005 clauses? the context of credit agreements, such clauses may
not exclude any of the consumer’s rights in terms
of the Act, or exclude or limit liability in terms of
implied warranties (e.g. against latent defects).
The Minister can prescribe that certain common
law rights may not be excluded in a credit
agreement.”
117) Johannesburg Country - Can a dependant’s action “The court said the exclusion clause was not
Club v Stott 2004 (5) SA 511 for loss of support be binding on Mrs Stott because loss of support is not
(SCA) instituted despite consenting covered by ‘personal injury’ or ‘harm’, and that
to an exclusion clause that the children weren’t members of the club and
excludes liability? were thus not included in the exclusion clause.
Their loss of support rights were independent and
autonomous – they cannot be signed away.
118) Cardboard Packing - What are the methods of “The courts may interpret the exclusion clause
Utilities v Edblo Transvaal Ltd interpreting exclusion restrictively by application of the eiusdem generic
1960 3 SA 178 (W) clauses? rule of construction.”
119) Galloon v Modern - Interpretation of exclusion “Court will give full effect to a clear and
Burglar Alarms (Pty) Ltd 1973 clauses; the contra unambiguous exclusion clause.
(3) SA 647 (C) proferentem rule. How will Application involves 2 steps:
the rule be applied for 1) The court will determine which grounds of
exclusion clauses? liability could possibly be covered by the
exclusion clauses.
1) If words are clear and 2) The court will then try to interpret the clause so
unambiguous by express that it only excludes liability for some of these
reference to negligence or grounds. In doing so it will make certain
fund breach – plaintiff assumptions.
cannot sue for this, If not - The courts will assume that the parties did not
clear and unambiguous: mean to exclude negligence and/or fundamental
2) Are words used wide breach in the clause.
enough to cover negligence. - If the clause is wide enough to exclude liability
I.e. no express reference but for negligence and/or fundamental breach AS
clear and unambiguous that WELL as liability on some other ground the court
words/exclusion clause IS will therefore interpret the clause so that it only
wide enough. If clear and covers liability for the other ground – however,
unambiguous – plaintiff the other ground of liability must be a realistic
cannot sue. If not clear and possibility. E.g. non-negligent breach, etc. if such
unambiguous: an alternate ground IS available, the exclusion
3) Exclusion clause clause will only cover this, therefore the plaintiff
interpreted contra CAN sue for negligence or fundamental breach!”
proferentem.
120) Durban’s Water - How the contra - Exclusion clause imposed by ticket case rules –
Wonderland (Pty) Ltd v Botha proferentem rule should be mistake.
1999 (1) SA 982 (SCA) applied. - Contract is not clear and unambiguous.
- DWW is not liable for negligent or accidental
damage – effective as long as it’s part of the
contract. Was it? Yes, by ticket case rules.
Reasonable steps were taken to notify them.
- If another course of action – interpreted contra
proferentum; negligence needs to be specifically
stated. DWW was excluded from liability.”
121) Ming-Chieh Shen v - Suspensive conditions: “There is a valid contract at the conclusion of the
Meyer 1992 (3) SA 496 (W) what is the status of the contract, but the operation of the
contract before fulfillment contract/obligation is postponed/suspended until
of the condition? the fulfillment of the condition.”

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122) Corandimas v Badat 1946 - Suspensive conditions in “Although there is some kind of contractual
AD 548 contracts of sale: is there a relationship between the parties before the
valid contract of sale up to condition is fulfilled, it is not a contract of sale
conclusion of the contract? yet.”
A sale subject to suspensive conditions is not a
sale until this condition is met.
123) Briscoe v Deans 1989 (1) - What happens when there “Question of interpretation of the contract. Merely
SA 10 (W) is confusion as to whether calling a term a condition does not make it a
something is a condition or condition instead of a normal term. The question
a term imposing an of whether it is in fact a condition depends on the
obligation? intention of the parties.”
If there is no fulfillment of a condition the contract
falls away.
124) Ming-Chieh Shen v - Can one party unilaterally “1) A condition which is exclusively for the
Meyer 1992 (3) SA 496 (W) waive a condition of a benefit of one party may be waived by that party,
contract if the condition will wherein the condition falls away and the
not be fulfilled? obligation becomes unconditional.
2) One can only waive such a condition before it
lapses. Once a condition lapses the contract falls
away and one would need a new contract.
3) The other party must be notified of the waiver
within the stipulated time for the fulfillment of the
condition, or within a reasonable time.”
125) Scott v Poupard 1971 (2) - What are the requirements “- One party must deliberately prevent fulfillment
SA 373 (A) for the doctrine of fictional of the condition
and fulfillment of a condition? - In breach of the duty on the party not to prevent
Koenig v Johnson & Co 1935 fulfillment and
AD 262 - The actions of such party must cause the non-
fulfillment of the condition.”
(Based on considerations of good faith and equity)
Simple Joint Common Joint Joint and Several Liability/Entitlement:
Liability/Entitlement: In re: Liability/Entitlement: In re: performance can be made/obtained individually or
divisible performance. Each indivisible performance. jointly.
debtor/creditor is liable/entitled Each debtor/creditor is Where the debt is not paid but the creditor releases
to a portion of the performance liable/entitled to one of the co-debtors personally, the others will
as a whole. Can be more than performance jointly, i.e. still be liable but their liability will be reduced
one obligation in re: divisible single obligation in re: proportionately.
performance. entire performance. [126) Dwyer v Goldseller (1906)]
therefore individual actions.
127) Total SA v Bekker NO - Privity of contract. A third party can intervene in a contract by
1992 (1) SA 617 (A) undertaking to pay the debt of a debtor for him.
128) Jansen v Pienaar (1881) 1 - Privity of contract If C deliberately induces A to breach the contract,
SC 276 B can claim damages in delict from C.
129) Louisa and Protector of - Stipulatio Alteri - Contract between A and B in terms of which B
Slaves v Van Berg 1830 (1) SA (stipulans, promittens, undertakes to confer a benefit on a third party (C).
Menz 471 beneficiary) C can therefore enforce the contract against B if C
accepts the benefit.
Requirements for Stipulatio 2) The parties must intend 3) The beneficiary must be identifiable but need
Alteri: to confer an enforceable not be in existence at the time of conclusion of the
1) Contract between stipulans right on the third party. contract.
and promittens must comply [Consolidated Frame Cotton [130) McCullogh v Fernwood Estate Ltd 1920
with all requirements for a valid Corporation Ltd v Sithole AD 204]
contract. (1985)]
Effects of the Stipulatio Alteri: 2) The beneficiary only 3) Once beneficiary accepts performance he can
1) The stipulans acquires acquires rights when he sue promittens for performance.
contractual rights against accepts benefits; therefore [133) McCullogh v Fernwood Estate Ltd 1920
promittens immediately (i.e. promittens and stipulans can AD 204]
specific performance or revoke the benefit before
interdict). this. 4) If benefit carries with it reciprocal duties

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[131) McCullogh v Fernwood [132) Crookes NO v beneficiary cannot accept benefit without
Estate Ltd 1920 AD 204] Watson 1956 (1) SA 277 accepting corresponding obligation.
(A)]
Agency: Creation of Agency by: Requirements for valid Agency:
A concludes a contract on behalf 1) Agreement. 1) Intention to bind Principal.
of principal with a third party so 2) Estoppel. 2) Authority of Agency (sp/gp)
that contractual rights and duties 3) Ratification. 3) Principal in existence.
are created between principal 4) Law.
and third party. Legal Effect of Agency:
NB 134) s35 of Companies 1) Valid agency.
Act 61 of 1973 allows a 2) Lack of authority – implied warranty
person to act as an agent to [135) Blower v Van Noorden 1909 TS 890]
a non-existent corporation 3) Doctrine of undisclosed Principal.
(exception to Principal in
existence rule)
136) Nel v Cloete 1972 (2) SA Requirements for an - State a specific date for performance.
150 AD interpellatio (when no due - Must be clear and unambiguous.
date is set for mora - Must give the debtor a reasonable time to
(Mora ex persona and not mora debitoris). perform (must not be immediate performance).
ex re) - “Reasonable time” dependant on circs of case.
137) Federal Tobacco Works v Old “time is of the essence” - These cases stated that if performance was
Barron & Co 1904 TS 483 doctrine. urgently required the creditor does not have to put
the debtor in mora (mora ex persona) nor is there a
and need for mora ex re. If time is of the essence then
this doctrine allows the creditor to cancel
Broderick Properties v Roodt immediately if performance is not timeous.
1962 (4) SA 447
Cases = WRONG.
138) Alfred McAlpine v TPA - How “time is of the - TOTE = should not be applied to the question of
1977 (4) SA 310 (T) essence” should be used. whether the party is in mora. That is determined
by mora ex re/persona. TOTE relates to the right
(Failure of timeous to cancel which arises when the other party
performance or non- already is in mora. NB: in cases of urgent
performance could situations you could argue for a tacit term for
constitute a ground for immediate performance, therefore a failure to
exceptio non adimpleti perform timeously = mora ex re.
contractus).
As above. - Right to cancel if TOTE? - TOTE rule indicates that where a debtor is in
mora and the need for performance is urgent, the
(in order to cancel, must creditor automatically obtains a right to cancel
show that the debtor is in without the need for a lex commisoria or note of
mora ex re/persona and that recission. BUT TOTE cannot place a debtor IN
the creditor has a right to mora.
cancel by lex comissoria,
notice of rescission or
TOTE.)
139) Ranch International - Mora creditoris (in - Debtor can claim specific performance from the
Pipelines v LMG Construction general) authority main creditor to make him comply (and an interdict to
1984 (3) SA 861 (W) case. prevent interference from the creditor).
- Consequences = purges, risk, sureties interest,
- If there’s no mora ex re we damages, cancellation, specific performance.
need to place the creditor in
mora ex persona by an
interpellatio – when the
debtor will deliver the
performance to creditor.
140) Martin Harris & Seuns - Mora Creditoris. - The debt must be due (unless debtor needs prior
OVS (Edms) Bpk v Qwa Qwa information from creditor to perform). The
Regeringsdiens 2000 (3) SA (NB: also mora ex creditor is not under a duty to accept performance
339 (SCA) re/persona  need to place before it is due.

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them if no date  - NB: Requirements: due, proper, fault, possible,

authority). failure to accept performance.
141) Highveld 7 Properties v - Requirements for 1) Conduct indicating a refusal to perform viewed
Bailes 1999 (4) SA 1307 (SCA) repudiation. objectively. Would the reasonable person view the
conduct of the party as repudiation?
and (Even if a party in good 2) No justification for refusal to perform.
faith disputes terms of a
contract, or believes he is
Culverwell v Brown 1990 (1) entitled to cancel or
SA 7 (A) withhold performance, they
could be found guilty of
repudiation due to
objectivity)
142) Unibank Savings & Loans - Can the innocent party be “There is no obligation to cancel on a repudiation.
(formerly Community Bank) v forced to cancel the contract Just because the other party has repudiated doesn’t
ABSA Bank 2000 (4) SA 191 if there was a repudiation? mean you are forced to cancel. However, if the
(W) innocent party wants specific performance the
(Req 2, “innocent parties” court has a discretion to grant specific
election  Culverwell v performance or not  if specific performance
Brown – see 141) would be considered a waste the courts have a
discretion not to enforce specific performance. If
not, they will still allow damages.”
143) Swartz v Wolmaranstad - Right to cancel for 1) If lex commissoria or
Town Council 1960 (2) SA 1 repudiation?
(T) 2) Repudiatory breach. I.e. the seriousness of the
(Every repudiation = breach, breach depends on the form of the breach it
but only cancelable if it anticipates, i.e. does it go to the root of the
goes to the core of the contract? It is a breach so serious that the innocent
contract. BUT even a small party cannot be satisfied with damages alone.
breach entitles you to
damages nonetheless).
144) Moodley v Moodley 1990 - Innocent Parties A) Repudiation may excuse the innocent party of
(1) SA 427 (D) contractual obligations formal acts preparatory to performance.
under repudiation. B) May entitle the innocent party to suspend his
own performance until guilty party has re-
(If election is to uphold). affirmed his willingness and ability to fulfill his
side of the bargain, provided the innocent party is
still willing to perform.
145) Culverwell v Brown 1990 - What if innocent party - Where the innocent party chooses to uphold the
(1) SA 7 (A) decides to uphold the contract and the guilty party again fails to
contract following perform, the innocent party can exercise this
repudiation (innocent parties further election of the further breach in advance
election), but guilty party by asking for specific performance and if party
does not perform? still fails to perform then cancellation. All is one
action to save expenses.
146) Datacolour International - Innocent parties decision - Writing, informally or by way of a third party,
v Intamarket 2001 (2) SA 284 to cancel must be conveyed provided the innocent party is sure that the notice
(SCA) to guilty party. will reach the guilty party.
147) Benjamin v Myers 1946 - Consequences of - A party cannot rely on his own breach to escape
CPD 655 prevention of performance. from a contract. I.e. if he rendered his own
performance impossible in the first place.
148) Grobbelaar v Bosch 1964 - Consequences of - Where there are reciprocal performances in a
3 SA 687 (E) prevention of performance particular contract, the impossibility of one set of
(NB) obligations does not extinguish the need to render
counter-performances, unless the contract is
(NB: absolute as opposed to validly cancelled.
relative impossibility) - Therefore if debtor prevents performance and the
creditor upholds, creditor must render his
performance and claim damages in lieu of the

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performance due by the debtor.

- If the creditor renders the debtors performance
impossible and the debtor upholds, the debtor can
claim counter-performance subject to a reduction
of the claim by the amount that the debtor saves
by not having to perform.
149) Reid v Spring Motor - Consequences of positive - Extinguishes creditor’s duty to cooperate with
Metal Works 1943 (TPD) 154 malperformance (NB). the debtor to enable the debtor to perform properly
or to fix his performance.
150) BK Tooling (Edms) Bpk v - Consequences of positive - Apart from cancellation, if the contract is upheld
Scope Precision Engineering malperformance. the creditor retains his own obligation to perform
(Edms) Bpk 1979 (1) SA 391 his part of the contract unless he can delay his
(A) performance as a result of exceptio non adempleti
contractus.
- Same for the debtor if the creditor does not
perform his side.
No case, just NB! - Consequences of positive - Right to reject defective performance (i.e.
malperformance. specific performance) if the positive
- But if specific malperformance is serious. If not serious then
performance, the creditor creditor must accept defective performance and
must tender his own claim damages.
performance as well!
151) Singh v McCarthy - Consequences of positive - Lex commissoria.
Motors 2000 (4) SA 975 (SCA) malperformance: right to - Where positive malperformance is very serious.
cancel if… Can creditor reasonably be expected tp retain
defective performance and be satisfied with the
damages? (Balance of competing interests).
152) Sweet v Ragerguhara - In positive - No. A notice of rescission is only applicable to
1978 (1) SA 131 (D) malperformance can the mora and not to other forms of breach.
innocent party obtain a right
to cancel by sending the
guilty party a notice of
rescission? As in mora?
153) Custom Credit - “Once And For All” rule. - A party with a single cause of action must claim
Corporation (Pty) Ltd v in one and the same action all remedies that she is
Shembe 1972 (3) SA 462 (A) (Also NB: 154) Signature entitled to. Therefore sue for all remedies you
Design Workshop v wish to claim.
Eskom Pension &
Provident Fund 2002 (2)
SA 488 (C). Rule not to be
too rigid and inflexible.)
Exceptio non adimpleti - Does not apply if the - If one of the parties to a contract has failed to
contractus contract is cancelled. perform, or indicated that he will not perform, but
- Is a defence which allows then sues the other party for performance, the
the innocent party in certain latter can use the exceptio to defend herself.
circs to withhold own
performance in order to
force guilty party to
perform.
Requirements for the exceptio to 1) One of the parties - Sequence of performances: can only use exceptio
apply (plaintiff) claims if the person using it has to perform at the same
performance from the other time or is the last to perform.
party (defendant).
2) The defendant’s - General rule = reciprocal performances take
performance is reciprocal to place simultaneously.
the plaintiff’s performance.
3) The plaintiff’s - BUT:
performance was due before 1) locatio conductio re (lease of thing),
or at the same time as the 2) locatio conductio operarum (contract of

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defendant’s performance. employment),

4) The plaintiff does not 3) locatio conductio operas (contract of mandate,
perform and does not tender e.g. building.)
(offer) his own In these cases the money must be paid last.
performance. Alternatively,
the plaintiff has performed
but performance is not
complete and proper.
155) Wynn’s Car Care - Reciprocity: the - Reciprocal obligations could then arise from one
Products v First National obligations are intended by contract or from different contracts as long as the
Industrial Bank 1991 (2) SA the parties to be in exchange intention is that they be undertaken in exchange
754 (A) for one another. for one another. The mere fact that the agreements
are for commercial and practical reasons linked to
one another does not necessarily mean that the
obligations are reciprocal.
156) Clarke v Nourse Mines - Reciprocity for exceptio - Not all the obligations of one party in any one
1910 TPD 512 again. contract are reciprocal to all the obligations of the
other party. This depends on the intentions of the
parties.
157) Valasek v Consolidated - Divisibility in re: exceptio - Where performance is divisible the principle of
Frame Cotton Corp Ltd 1983 non adimpleti contractus reciprocity is applied separately to each different
(1) SA 694 (N) section of performance. E.g. in this case the
principle of reciprocity applied separately in re: of
each month that V worked (contract divisible into
months).
Exceptio and Defective or - Where defective - But when defective performance has been
Partial performance performance is rejected and accepted can the guilty party claim reciprocal
specific performance is performance or can the innocent party still use
claimed, innocent party may exceptio on the basis that performance =
withhold her own defective?
performance on the basis of
the exceptio until such time
as the other party makes or
tenders proper performance.
- Performance must be
indivisible.
158) BK Tooling v Scope - Defective or partial - A parties right to reject partial/defective
Precision Engineering 1979 (1) performance; if accepted by performance = subject to de minimis rule. I.e.
SA 391 (A) innocent party, can he still whether performance is only defective in a minor
also claim exceptio? detail, he may not reject it.
- The party who accepted the defective
performance is entitled to withhold her own
performance and may resist claims for
performance by using the exceptio, until such time
as the other party has performed both fully and
properly.
As above - Discretion by court to - The party who claims for reduced counter-
order a reduced counter- performance must prove:
performance in light of the 1) That the other party has used the defective
BK Tooling rule set out performance to his advantage.
above? 2) Special circumstances which make it equitable
- Therefore the innocent or fair to use discretion.
party may have to pay at 3) The amount of the diminished counter-
least a part of the contract performance, e.g. cost of reduction = bringing
price, but less than the defective performance up to proper standard.
agreed price.
159) Thompson v Scholtz 1999 - Not all performances can - Where it isn’t possible to fix the defective
(1) SA 232 (SCA) subsequently be fixed. Here performance, the exact value of the reduced
the court will reduce the counter-performance cannot be calculated.
plaintiff’s claim by an Nevertheless the court should attempt to award an

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amount that is fair, taking amount that is “fair in all the circs” using “a fairly
into account all the circs of robust approach” to the calculation of the
the case. approach.
- Cases of - Specific performance cannot be granted in such
160) Benson v SA Mutual Life insolvency/impossibility cases.
Assurance Society 1986 (1) SA
776 (A) (NB: Specific performance - Specific performance = primary remedy in SA!
you need to tender your own
performance as well)
161) Haynes v - Old cases of specific 1) Damages would compensate the plaintiff.
Kingwilliamstown performance influenced by 2) It would be difficult for the court to enforce its
Municipality 1951 (2) SA 371 English law to the extent order.
(A) that the court could exercise 3) The thing can readily be bought anywhere.
its discretion and refuse to 4) When specific performance entails the
grant specific performance rendering of services of a personal nature.
when specific circs were 5) When specific performance would operate
met. unreasonably harshly on the defendant or is
- There is no real discretion unreasonable.
here, only rules. 6) Where specific performance would produce
- If there’s no specific injustice or would be inequitable.
performance, there is still a
damages claim.
162) Benson v SA Mutual Life - Better to view - This discretion is to be exercised judicially.
Assurance Society 1986 (1) SA considerations outlined in Specific performance will be refused if
776 (A) Haynes as factors and not inequitable.
rules. This case realigned - Where shares can be obtained from JSE without
law with the Roman Dutch difficulty.
position of specific - Where damages = sufficient remedy.
performance as a primary - If goods can be bought elsewhere – no specific
remedy, unless the court performance, but if unique – specific performance.
exercises its discretion. - Where ambiguity exists in the contract – no
specific performance.
- If against public policy – no specific
performance, and if impossible – no specific
performance.
- Plaintiff’s degree of control over circs = relevant
for specific performance.
163) National Union of Textile - Specific performance in re: - All employees should be able to claim specific
Workers v Stag Packings 1982 employment contracts; performance from an employer subject to the
(4) SA 151 (T) highly personal nature. courts discretion. All relevant factors and practical
circs must be considered:
(Specific performance by 1) The inadvisability of compelling 1 person to
employees: NB!) employ someone who he does not trust in a
position which imports a close relationship.
2) The fact that the court can, by its order, compel
a servant to perform his work faithfully and
diligently.
164) Santos Professional - Specific performance in re: - Consider the Constitutional rights to freedom of
Football Club v Igesund 2002 forcing employee to stay movement, profession and dignity. Also:
(5) SA 697 (C) (factors): - Highly personal nature of service rendered – the
a) Disapproval of forced court cannot force someone to work with
(SP by employer: NB!) labour. enthusiasm and commitment.
b) Damages enough to - How do you restore the working relationship
compensate employer? between parties?
c) Reluctance to interfere - Therefore no specific performance went on
with employees right to appeal.
exercise his skills or
profession.
165) Santos Professional - Specific performance in re: Coach caused unpleasantness. Court has discretion
Football Club v Igesund 2002 employment contract. and would refuse specific performance only if it

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(5) SA 73 (C) will operate unreasonably harshly on employee or

if inequitable. Courts should be slow in striking
(Appeal) down contracts or refusing to enforce them. Court
a quo did not enforce specific performance as a
primary remedy therefore erred. Igesund not in
inferior bargaining position, therefore upheld
specific performance as Santos was willing to take
on the risk of an unmotivated worker – i.e. return
of the coach.
166) Unibank Savings & Loans - Should the court refuse to - The plaintiff has a right to specific
Ltd v ABSA Bank Ltd 2000 (4) grant specific performance performance therefore he need not cancel, but
SA 191 (W) if the performance by the the court has a discretion whether to order
guilty party would be specific performance or not. If the specific
wasteful? performance would generate a waste courts
- If yes only damages have a discretion not to enforce it and the
claim subject to mitigation plaintiff will only have a damages claim.
(NB). - In this case the specific performance was
allowed.
167) Isep Structural - Monetary equivalent - If you claim a sum of money instead of actual
Engineering v Inland (surrogate) of specific performance then you have to satisfy all the
Exploration Co 1981 (4) SA 1 performance? If yes, then normal requirements for damages.
(A) the plaintiff’s claim will - IEC could not prove loss therefore his claim for
only be specific damages was unsuccessful.
performance in another
form. Therefore he’s not
subject to the rules relating
to claims for damages. E.g.
mitigation, etc.
- IE claimed R15000 from
ISE for ramp removal.
Cancellation - Cancellation is aimed at Requirements for cancellation:
the termination of a validly 1) Right to cancel.
concluded contract. - If a party attempts to cancel without sufficient
Therefore it is an extra- justification the cancellation is ineffective, the
ordinary remedy. contract stands and the “canceling” party is guilty
- Performances still of repudiation.
outstanding need not be - Must prove material breach through recognised
performed in future, and any categories of breach, e.g. mora and lex
performances already made commissoria.
must be restored subject to 2) Ability to restore performances
the doctrine of accrued - Subject to the doctrine of accrued rights.
rights. - Cancellation involves restoring performances
PS: cancellation does not received. Therefore the party seeking to cancel
completely wipe out the must be able to restore performances received by
contract as the guilty party the other party.
still has to compensate by - What if unable to restore performances?(see152)
contractual damages. 3) Exercise of right to cancel
- See Feinstein v Niggli (1981) below.
168) Feinstein v Niggli 1981 (2) - Inability to restore “The innocent party will be able to cancel if the
SA 684 (A) performances? inability to restore is not due to the fault of the
- If due to innocent’s fault innocent party and he is not enriched by the
 no cancellation. performance made.”
- E.g. 1) Deterioration of asset due to inherent
defect.
2) Perishables.
3) When object perished was used for the purpose
and in the manner for which it was intended.
4) The contractant used defective performance to
produce a new product.
Restoration only partly possible? - NB: the guilty party must - If through no fault of the innocent, the rules are

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also restore performances set out as above.

subject to the doctrine of - If due to his fault but restitution still substantially
accrued rights. If not possible  then he can cancel but must substitute
possible  losses due to the shortfall with money.
inability as damages by If the cancellation is without restoration  he
innocent. must still return what remains or its substitute.
169) Stewart Wrightson (Pty) - Exercise of right to cancel. - Cancellation is a unilateral juristic act and
Ltd v Thorpe 1977 (2) SA 943 - Extra-judicially and does therefore does not require agreement by the guilty
(A) not require confirmation by party.
a court of law.
Requirements for exercise of - No formalities for 1) He must express his intention to cancel the
right to cancel cancellation, therefore contract by words or conduct that manifests a
express, by conduct or clear election to cancel and,
summons, even dispersal
with requirement to notify. 2) He must communicate his election to cancel to
- Provided there is an the guilty party.
unambiguous election to
cancel.
170) Steward Wrightson (Pty) - Requirement of - Actual knowledge of the innocent parties
Ltd v Thorpe 1977 (2) SA 943 communication. election to cancel need not be proved if it can be
(A) (Guilty party cannot rely on shown that the innocent party took reasonable
lack of knowledge if the steps to notify the other party of his election to
lack was due to his own cancel.
fault)
171) Datacolour International - Requirement of - If the communication of the election to cancel
v Intamarket 2001 (2) SA 284 communication. was via a third party, the issue is not whether the
(SCA) (Do not have to state innocent party conveyed the notice but whether
grounds for cancellation) the notice reached the guilty party.
(If a notice of cancellation is
given before the right arises
 valid only if it was
intended to operate once the
right arises)
Loss of the right to cancel? The party will lose the right to cancel if he elects
to uphold the contract, or by conduct that clearly
indicates that he wishes to abide by the contract.
But if there is another reasonable explanation for
his conduct then he will not lose his right to
cancel.
172) Mahabeer v Sharma 1985 - Loss of the right to cancel? - A mere delay to exercise the right to cancel does
(3) SA 729 (A) not automatically mean that the right is lost. But if
the delay causes the other party to reasonably
believe that the innocent party elected to uphold
the contract  he will lose the right to cancel by
the doctrine of estoppel.
Effect of cancellation? - Cancellation extinguishes all future, unfulfilled
obligations and creates an obligation to restore any
performances already made (subject to the
doctrine of accrued rights).
173) Crest Enterprises v - Doctrine of accrued rights: “Rights that have become due and enforceable
Ryklof Beleggings 1972 (2) SA cancellation operates only before cancellation and are independent of any
863 (A) partially if the performance executory part of the contract are not extinguished
in terms of the contract is by cancellation.” Therefore if the doctrine of
DIVISIBLE, especially in accrued rights is applied – normal consequences
re: continuous obligations, of cancellation do not operate in re: of rights
e.g. rental contracts. which have already “accrued”.
Consequences of doctrine of 1) Accrued performances, which have already
accrued rights been received, do NOT have to be restored.
2) A party can still claim SP in re: to an obligation

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that has accrued even if the rest of the contract had

been cancelled.
Requirement 1: - If the contract is not divisible, the doctrine of
- The contract must be accrued rights does not apply. E.g. the milk of a
divisible into separate parts. cow is not a divisible sale, but a one year contract
for lease of a flat can be subdivided into 12
smaller parts, each consisting of an obligation to
pay rental and give occupation per month.
174) Nash v Golden Dumps Req 2: - The due date for the particular performances
1985 (3) SA 1 (A) - The right to the accrued must have arrived before the cancellation, and
performance must have there must be no unfulfilled conditions in re: that
(Right to shares not yet due and become due and enforceable performance.
enforceable; therefore depended before the cancellation - TEST = would you have been able to claim SP
on whether share option was also on the date of cancellation? If yes  performance
cancelled) is due and enforceable. If any reason that you
would not have been able to claim SP, e.g.
condition not yet fulfilled  not due and
enforceable.
Req 3: - I.e. All obligations that are reciprocal to the
- The accrued performance accrued performance must have been fully
must be independent from performed before the cancellation.
any outstanding
(unperformed) obligations at (look at page 243 in book)
the time of the cancellation.
175) Nash v Golden Dumps - What if there are two - If there are in fact two agreements between the
1985 (3) SA 1 (A) agreements between the parties, cancellation of one agreement does not
parties embodied in one necessarily mean that the other agreement has
document? I.e. two related been cancelled. Therefore it’s not necessary to use
but separate agreements. the doctrine of accrued rights to enforce the
uncancelled agreement.
- If documents are juristically separate, there are
independent rights and duties, and therefore it’s
divisible.
176) Custom Credit - Cancellation relationship The DOUBLE BARRELLED remedy: enables
Corporation (Pty) Ltd v to specific performance. We plaintiff to claim specific performance and in the
Shembe 1972 (3) SA 462 (A) cannot ask for both, as they same action to ask a court that in the event of the
are inconsistent remedies. defendant’s non-compliance with this specific
Nor specific performance performance order within the stipulated time, the
nor cancellation in the contract be cancelled and damages be granted.
alternative. This is done to save time and expenses.
Requirements for damages (x5) 1) Breach of contract by the other party.
2) Patrimonial loss.
3) Factual causation, i.e. causal connection
between the breach and the loss.
4) The loss is not too remote (legal causation –
general v special damages).
5) Mitigation of loss 9must be disproved by
defendant).
177) i) Edouard v Req 2: i) The loss must affect your patrimony, i.e. you
Administrator, Natal 1990 (3) - Patrimonial loss. must suffer financial loss – you cannot claim for
SA 581 (A) (If no proof of this – no non-patrimonial loss.
damages). ii) You must claim for present and prospective
ii) Custom Credit Corp. v future losses – once and for all rule.
Shembe 1972 (3) SA 462 (A) iii) The party must bring the best evidence that he
can to prove the quantum of his loss – but not
iii) Isep Structural engineering mathematical precision.
v Inland Exploration 1981 (4)
SA 1 (A)
Req 3: I.e. would this loss have occurred but for the

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- Factual causation – breach? If the damage would not have occurred

conditio sine qua non test. but for the breach  breach = factual cause of the
loss.
178) Thoroughbred Breeder’s Req 3: - Liability in contract is based on causation and
Association v Price - Will the innocent parties not on the parties’ relative degrees of fault –
Waterhouse 2001 (4) SA 551 claim fail or be reduced if therefore this is irrelevant.
(SCA) he partially caused his own - But NB: innocent party must mitigate his losses
losses due to his own or no damages will be awarded.
contributory negligence?
Req 4: - Legal causation entails that the harm must be
- Normative, limiting reasonably foreseeable at the time of entering into
enquiry. It may sometimes the contract – i.e. at the conclusion of the contract.
be unfair to hold a party
liable for ALL the
consequences of his breach.
Req 4: - The sort of harm that you would expect to flow
- General damages (intrinsic from the contract breach, i.e. the natural and
losses). probable consequences of breach. Harm is
reasonably foreseeable and therefore not too
remote. General damages can usually always be
claimed.
Req 4: - Although the loss was factually caused by the
- Special damages (extrinsic breach, it is unusual because of some special
damages) circumstances or interest of the innocent party.
- But if plaintiff can show in The guilty would not ordinarily, in the case of
his facts that loss was events, expect such a loss in breach. General
reasonably foreseeable, then damages usually not foreseeable, therefore too
losses can be claimed. remote and not recoverable.
Plaintiff must prove why,
despite all the unusual
nature, special damages
were foreseeable by the
defendant.
Req 4: “Foreseeability at the time that the contract is
Contemplation principle for concluded is sufficient for special damages.
special damages. Foreseeability = subject matter of contract, terms
of the contract and parties knowledge of the
special circumstances.”
Req 4: “Foreseeability is insufficient for a claim for
Convention principle for special damages. There needs to be some sort of
special damages. agreement (“convention”) between the parties that
the defendant would be liable for such losses, e.g.
even if it is a tacit term.”
179) Lavery & Co Ltd v - Convention principle. “This harm was so much in the minds of the
Jungheinrich 1931 AD 156 parties as to virtually be a term of the contract.”
180) Shatz Investments v - This was special damages “Court favoured the contemplation principle but
Kalovyrnas 1976 (2) SA 545 but in the circumstances it felt obliged to follow Lavery, and held that the
(A) was not too remote. convention principle is entrenched in our law.”
Goodwill loss = tacit term of the contract.
181) Thoroughbred Breeder’s - Did not resolve this issue. - It was stated obiter that a more flexible test
Association v Price towards legal causation should be adopted without
Waterhouse 2001 (4) SA 551 loss as a factor for consideration.
(SCA)
- What if the plaintiff takes steps Req 5: - The plaintiff is only required to take those steps
in mitigation but they are - Duty to mitigate losses. that a reasonable person in her position would
unsuccessful and/or increases the - Rebuttable presumption have taken. What is reasonable depends on the
loss suffered? If it was that plaintiff did mitigate. circumstances at the time and the fact that the
reasonable to have taken these - Plaintiff must take other party caused the loss by breaching the
steps, then he can recover the reasonable steps to keep contract.

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loss. losses at a minimum.

Applies from date of breach
and onus on defendant to
prove no mitigation.
182) Signature Design - Mitigation - All expenses incurred in taking steps in
Workshop v Eskom Pension & mitigation, as long as reasonable, are recoverable
Provident Fund 2002 (2) SA from the defendant.
488 (C)
183) Isep Structural - Subjective or objective - Subjective = What financial losses did this
Engineering v Inland approach to damages? particular creditor suffer because of the breach?
Exploration Co 1981 (4) SA 1 Take into account the creditor’s personal
(A) circumstances.
- Objective = what would be the objective value of
(subjective here) the performance to the ordinary person?
- Detrimental and beneficial - Breach can have both detrimental and beneficial
consequences of breach. consequences, therefore both should, in principle,
be taken into account to determine the net effect
on the creditor’s financial position. However,
sometimes fairness, justice and equity does not
allow beneficial consequences to be taken into
account.
Methods for calculation of - Positive interesse: - The innocent party should be placed in the
damages Compare hypothetical financial position he would have occupied had
position party would have there been no breach of contract (i.e. had the
been in if contract had been contract been properly performed). Positive
properly performed with interesse damages therefore looks forward towards
actual position now fulfillment position of the contract.
occupied due to breach.
- Negative interesse: - The innocent party should be placed into the
Compare hypothetical financial position that he would have occupied had
position of innocent party if there been no wrongdoing (e.g. delict) that
no wrongdoing (i.e. if he did induced him to contract. If no wrongdoing 
not enter into the contract) innocent party would not have entered into the
with the actual position now contract. Therefore place the innocent party into
occupied because of position as if there had been no contract. Negative
entering into contract by interesse therefore looks backwards towards the
wrongdoing. status quo ante.
Differential Approach Upheld: Cancelled:
- Comparing the innocent parties - Performances actually - Restoration of performances already received,
actual financial position (all given and received (under therefore no calculation of actual position.
actual losses and gains) with his actual position) as well as However, you must include the performances that
hypothetical financial position if performances that should each party should have given and received, i.e.
contract was properly performed have been given and you must work out the hypothetical position.
(the losses and gains he would received (hypothetical
have had if there had been no position).
breach) - HD + AP = D, or minus,
- HD – AP = D (Hypothetical look at what the AP and HP
damages – actual performance = are.
damages)
Concrete Method i) Losses relating to ii) Consequential losses (damnum emergens):
(Never claim wasted expenses) performance - Further expenses and losses caused by the
Losses in relation to - Upheld: HP – AP = D breach, which expenses would not have been
performance + consequential (NB: delete duplicates) incurred by the innocent party if the contract had
losses + Lost profits = Total - Cancelled: performance been properly performed.
losses – Beneficial consequences should have received – iv)Beneficial Consequences:
(=Damages). performance should have - Saved expenses: expenses that innocent party
been given. would have incurred if contract was properly
iii) Lost profits (lucrum performed.
cessans): - Income gained: income that innocent party
- Income, fruits and profits received but would not have received if contract

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that the innocent party was properly performed.

would have received if there
was no breach.

Measure of damages i) Money debts. - Mora interest on the capital amount for the
duration of the delay.
ii) Breach by contractor - How do you calculate - Damages consist of the amount that must be paid
damages if the contractor to someone else to perform or complete the work,
does not do the work at all less any part of the contract price that has not yet
or renders an incomplete or been paid.
defective performance? - E.g. if not paid  R24000-R20000=R4000. If
R5000 deposit  R24000 – (R20000-R5000) =
R9000.
ii) Breach by contractor - What if cost of repair is - Here the damages should be the difference in
very high and therefore not market value between the promised performance
reasonable? and the performance actually received.
184) Schmidt Plant Hire v - Breach by contractor. - However, if reasonable in the circumstances to
Pedrelli 1990 (1) SA 398 (D) allow costs of the repair of the performance,
courts may allow it, even if it exceeds the value of
the performance?
185) Rens v Coltman 1996 (1) - When should the cost of - It should be assessed when it would be
SA 452 (A) repair be assessed? reasonable to discover the defects and carry out
the repairs, i.e. when it would have been
reasonable for the plaintiff to have begun repairs.
Measure of damages iii) Delivery of defective Value of goods in the condition they should have
goods? been in (minus) value of goods in their defective
position.
iv) The market Value rule Uphold: Cancel:
(value of marketable - Market value of - Market value of performance that should have
performance = reasonable performance that should been received (minus) value of her own
market value) have been given (minus) performance.
market value of
performance actually given.
186) Novick v Benjamin 1972 - Time for determining - But in an anticipatory breach the court held that
(2) SA 842 (A) market value. damages are to be assessed at the date of
(Usually at the time of performance subject to the mitigation rule.
breach/performance) Therefore if the breach occurred before the date,
the innocent party must take reasonable measures
to mitigate losses (take reasonable steps to
mitigate if market value is dropping rapidly).
187) Culverwell v Brown 1990 - What if the date for - General rule if date of performance is not
(1) SA 7 (A) performance is not stipulated in the contract is that it is then the date
stipulated in the contract? for cancellation.
When do you calculate
damages then?
188) Solomon NO & others v - How does the sale of a - Lessors argued that subsequent sale of a property
Spur Cool Corporation (Pty) property affect the = irrelevant as damages were to be calculated at
Ltd 2002 (5) SA 214 (C) calculation of the lessor’s date of cancellation. Court rejected this, said that
loss? C v B was not a rigid rule. When damages have an
element of prospective loss it will be appropriate
to take account of relevant events between the
date of cancellation and the trial such as
subsequent sale of property.
189) Conventional Penalties - Clause does not equal Definition: A clause in the contract which
Act 15 of 1962 penalty clauses: provides that on breach of contract one party will
1) Roukoop clauses. make a performance to another (pay a sum of
(Protection against unfair 2) Restitution/cancellation money, deliver something, perform something,
penalty clauses) 3) Acceleration clauses. etc.). this performance must be intended by the
parties either as a penalty or as liquidated

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damages, i.e. to act in terrorem or as a pre-

estimate of loss.
Mistake 1) Determine whether a 2) If mistake has affected subjective TPA we must
An incorrect belief or mistake has affected the then determine what the effect of such a mistake is
understanding relating to the existence of subjective on the validity of the contract.
contract. consensus. If there is still
subjective consensus
2 aims: between the parties (Terms,
Parties, Animus
contrahendi) then contract is
valid in principle.
Causal Mistake - Casual mistake: party - Material mistake: it is material if it is causal and
- Essential (material) mistake. would not have contracted also leads to a dissensus of parties as to TPA.
- Mistake in motive. at all or would’ve contracted Void ab initio in principle unless policy dictates
on different terms if he had that it should be upheld despit lack of TPA.
not made mistake.
- Non-causal mistake: party - Mistake in Motive: only affects a parties reason
would’ve entered into the for contracting. Despite mistake still subjective
contract on the EXACT consensus on TPA, therefore valid in law of
SAME terms, even if he had mistake. NB: but remedies in misrepresentation.
not made the mistake
(irrelevant in our law –
contract valid).
190) Khan v Naidoo 1989 (3) - Non-causal mistakes. - A non-causal mistake in NOT regarded as an
SA 724 (N) essential/material mistake, even if it leads to a lack
of consensus.
No Person Now Can Quiz Roman system of 1) Error in negotio: mistake as to the nature or
Someone: classification. terms of a contract; essential mistake.
2) Error in persona: mistake as to identity of
(If more than one physical contractual party; essential mistake.
thing, and parties not in 3) Error in nomine: mistake as to name of party;
agreement as to which thing non-essential mistake.
must be delivered to them – 4) Error in corpore: mistake as to which thing is
error in corpore, and NOT the object of performance; essential mistake.
in substantia or qualitate) 5) Error in qualitate: mistake as to qualities of the
object of performance; non-essential mistake
(mistake in motive).
6) Error in substantia: mistake as to what material
the object of performance is made of; non-
essential mistake (mistake in motive)
191) Van Reenan Steel (Pty) - Fundamental Test for - Are contractants agreed upon T, P, A?
Ltd v Smith NO 2002 (4) 264 Essential Mistake
(SCA)
i) Common mistake: both parties ii) Unilateral mistake: only - Party who is trying to escape contract is usually
made same mistake, and mistake one of the parties makes a the mistaken party.
is causal for both of them. causal mistake. One parties - Court will first look at the objective meaning of
subjective intention differs the declared term and then the court will look at
(courts use same approach to from objective declaration. each parties subjective intention to see if it differs
unilateral and mutual mistakes) iii) Mutual mistake: both from the objective declaration.
parties make causal - The party who’s subjective intention differs from
mistakes but they make the objective declaration is mistaken.
different mistakes. Different
subjective mistakes will
differ from objective
declaration.
192) Van Reenan Steel v Smith - Common mistake v non- - If both parties are mistaken but the mistake is
NO 2002 (4) 264 (SCA) causal mistake. only causal for one of them, then this is a case of
(non-causal mistakes are unilateral mistake and NOT common mistake.
ignored).

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Common mistake in motive - Even though mistake is - However, if one parties mistake was caused by a
common it is still a mistake misrepresentation by the other party, the innocent
in motive and therefore the party may be entitled to set aside the contract on
contract is valid in principle. the basis of such misrepresentation (restitutio in
integrum) and also claim delictual damages.
- If one party gave a warranty, i.e. he guaranteed
that the belief was correct then the innocent party
will have remedies in breach of contract.
- If contract was subject to a condition/assumption
that the validity of the contract depended on the
truth of the shared belief, the contract will be
invalid due to the failure of the
condition/assumption.
193) Dickinson Motors v - The condition or - Contract subject to tacit term that car belonged to
Oberholzer 1952 (1) SA 443 assumption can be either an D. Contract depended on the truth of the
(A) express term or a tacit term. assumption  assumption was untrue, therefore
If tacit, it must satisfy all the the contract failed.
requirements for a tacit term
(BE and OB).
- The mere fact that both
parties made the same
mistake and it’s causal for
them both doesn’t
necessarily mean there was
such a tacit condition.
- Depends on facts of each
case.
194) Wilson Bayly Holmes As above. - Contract binding, no tacit term making the
(Pty) Ltd v Maeyane 1995 (4) contract dependant on the truth of the common
SA 340 (T) assumption.
Common essential mistake: - Where the parties shared subjective intentions on
TPA DIFFER from the objective meaning of their
declaration. Since there is subjective consensus
between the parties the contract is valid. The court
will give effect to the parties true subjective
intentions and not the objective meaning of the
declaration. I.e. contract will be RECTIFIED.
Mutual mistake - Mutual mistake in motive. - Both parties make different mistakes as to their
reasons for contracting. In terms of rules of
(p303) mistake, the contract is valid. However, one or
both of the parties may have remedies in
misrepresentation, warranty or
condition/assumptions.
195) Raffles v Wichelhaus - Essential Mistake in 1) Both parties subjective intentions differ from
1864 2 H & C 906; 159 ER 375 motive their declared agreement but they make different
mistakes, e.g. each thinks “voetstoots” means
something different.
2) Contract is ambiguous and the parties have
different subjective intentions.
NB: Unread documents either: - If bound by caveat - 181) Bhikhagee v Southern Aviation (1949):
- Caveat subscriptor, or subscriptor because you by signing the document without knowing what
- Ticket case. didn’t read but signed, the the contents were, he took the risk of being bound
(This is often the cause of document can then only by all the terms contained in the document.
unilateral mistakes) escape being bound by
application of Justus Error,
i.e. WHOLE TEST,
especially Q3i-iv (If Justus
 not bound; need to prove
mistake as to words of
contrat for caveat

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subscriptor)
- 180) George v Fairmead
(1958)
196) Burger v CSAR 1903 TS - Caveat subscriptor: - It is a sound principle of law that when a man,
571 (at 578) (Starting point = where a when he signs a contract, is taken to be bound by
party signs a document the ordinary meaning of the words which appear
without reading it he will OVER his signature.
generally be bound to it).
197) CSAR v Mclaren 1903 TS - If one cannot prove that a - Three Question Test:
727 party read the document, a 1) Did the party know that the document
Three Question Test is (ticket/notice) contained writing?
applied by the ticket case 2) Did the party know that the writing set out
rules to determine whether a contractual terms?
party who failed to read 3) Did the other party take reasonable steps to
these terms (mistake) will bring the terms to the mistaken party’s attention?
be bound by them.
(Use this test and NOT
Justus Error!)
198) Kings Car Hire v - Relationship between the - If answer to 1) AND 2) = Yes  party bound.
Wakeling 1970 (4) 640 (N) three ticket case rules. - If answer to either 1) OR 2) = No  go to 3).
- If answer to 3) = Yes  party bound.
- If answer to 3) = No  party not bound to ticket.
199) Kings Car Hire v - What do reasonable steps “Reasonable does not mean everything reasonably
Wakeling 1970 (4) 640 (N) mean? possible; rather it means steps that are reasonably
sufficient.”
200) CSAR v Mclaren 1903 TS - Reasonable steps… “If the document is NOT obviously contractual in
727 nature, more steps need to be taken to bring it to
the other party’s attention.”
NB: Mistake can be used as a NB: Distinction between Definition: The supplier places before the
REMEDY to escape exclusion TERM of contract  i.e. customer a document which is not intended to be
clauses excluding liability (e.g. Gallon case, and signed and which contains or relates to the terms
delict). VALIDITY of contract  on which the supplier is prepared to do business.
i.e. McLaren case.
201) Durban’s Water - Did the defendant do what Yes  Therefore this is authority for reasonable
Wonderland v Botha 1999 1 was reasonably sufficient to reliance.
SA 982 (A) notify the other party?
202) Cape Group Construction - What if the exclusion - FW did not take reasonably sufficient steps to
t/a Forbes Waterproofing v clause is referred to but the make UK aware. Where terms are incorporated
Govt of United Kingdom 2003 page containing these into a contract but not faxed through the rules of
(5) SA 180 (SCA) additional terms is not faxed integration and interpretation will apply.
through?
(Not bound to exclusion
clause)
203) Extel Industrial (Pty) Ltd - Consensus obtained in an - Contract voidable at instance of CM.
v Crown Mills (Pty) Ltd 1999 improper manner - A party alleging improperly obtained consensus
(2) SA 719 (A) (misrepresentation, duress, must prove one of the recognised grounds,
undue influence) although courts may develop additional grounds.
- Bribery of Agent.
204) BOE Bank v Van Zyl - General grounds of - General grounds of improperly obtained
1999 (3) SA 813 (C) improperly obtained consensus is NOT recognised yet.
consensus?
VOID  relates to validity (no Void contracts: Voidable:
contract lever) Contract is invalid (void ab Only potentially void. You have a choice whether
BREACH  cancellation and initio) because one of the or not to declare the contract void.
damages of a valid contract. requirements for validity of If upheld  the contract is entirely valid and can
MISREPRESENTATION  contract has NOT been met. be enforced just like any other contract.
voidable (rescission and The contract never existed, If set aside  restitutio in integrum (“rescission
restitution and delictual therefore does not create with restitution”). You return to your previous
damages) any legal rights and duties situation, therefore undoing the consequences of

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and can NEVER be the contract and placing the parties into a position
enforced. as if there had never been a contract (negative
- Mistake affects validity as interesse)
it relates to consensus! - In addition, if a contract is voidable, the
Mistake  lack of wrongful act will usually also allow for a delictual
consensus, therefore void. claim of damages, provided all the elements are
met (see Novick below).
- Delictual damages are aimed at undoing the
consequences of the wrongful act, therefore
damages are calculated according to negative
interesse (financial position as if the wrongful act
had not occurred).
Restitutio in integrum - Effects of restitutio in 1) Obligations created by the contract become
integrum. invalid  the parties no longer have legally
enforceable rights and duties in terms of the
contract.
2) Any performances already received in terms of
the contract must be restored (restitutio in
integrum ≠ cancellation!) Restitutio in integrum
operates retrospectively to COMPLETELY
unmake the consequences of the contract.
Cancellation is still subject to the doctrine of
accrued rights.
Misrepresentation Precontractual: - Pre-contractual statement false =
- A statement or conduct misrepresentation  restitutio in integrum and
which creates a false delictual damages.
impression in the mind of a - Warranty = term, therefore breach of contract 
contractual party and which damages, specific performance or cancellation.
influences his decision to - Condition/assumption = if not true contract will
contract. lapse, but not breach nor misrepresentation.

i) Fraudulent misrepresentation: the person

making the misrepresentation knew that statement
was false and that it would influence the other
party to contract.
ii) Negligent misrepresentation: person making the
misrepresentation did not know it was false but
ought to, as a reasonable person, to have realised it
was false.
iii) Innocent misrepresentation: person making the
statement did not know it was false and a
reasonable person would not have realised it was
false either.
205) Novick v Comair - Elements/requirements of 1) Fake representation (of present or past).
Holdings 1979 (2) SA 116 (W) a misrepresentation. 2) Of fact.
3) Which was intended to induce a contract.
4) Which actually induced the contract (causation,
but inducement need not be the sole cause of
contractant’s contracting)
5) Materiality.
Req 1: False representation. - Must be conduct which created a false
impression on the other party’s mind. It is usually
positive conduct, i.e. active misrepresentation.
BUT: can also be negative conduct, i.e. failure to
remove a false impression if there was a legal duty
to do so  misrepresentation by
nondisclosure/silence.
206) Feinstein v Niggli 1981 (2) Req 2: Of fact. - Statement of opinion generally entails at least
SA 684 (A) - Before it was said that one implied statement of fact, namely that the
opinions or predictions did person expressing opinion genuinely

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not give rise to a holds/believes that opinion. If the person did not
misrepresentation. honestly believe his opinion or the implied
- But question is whether a statement as to the existing state of affairs was
person expressing his false  misrepresentation.
opinion has honestly, - Case: current level of turnover = factual,
impliedly expressed his therefore if it was not true then it was in implied
present state of mind. In misrep of the current state of affairs.
speaker acted dishonestly in - Implied representation = business is currently
re: this implied doing well. Express representation = business will
representation of present do well in future. BUT: express representation that
state of mind  company will do well in future is based on an
misrepresentation of implied representation that the business is
opinion. currently doing well.
- If you make an opinion - x2 representations: express opinion and implied
which differs from your state of affairs.
present state of mind then - Misrepresentation wanted to hold liable for =
you’re making a implied misrepresentation and not opinion as to
misrepresentation of your FUTURE success (cannot be future). NB: look at
factual state of mind. NB: the statement; if express opinion or reference to
difference between implied future, then what is it based on at present? If
and express express reference of future is based on an implied
misrepresentations. representation of present state of affairs or present
- An express representation opinion then it can be a misrepresentation.
of some future occurrence
will usually be based on an
implied representation of
the current state of affairs or
state of mind to which
misrep is possible.
207) Phame v Paizes 1973 (3) (Answer to question, - Puffing is usually not a misrepresentation as long
SA 397 (A) (at B-C) materiality to purpose, if as you don’t start detailing and particularizing.
gullible would not be
(form of statement and fooled)
surrounding circumstances).
Req 3: Intended to induce. Req 4: Actual inducement. Req 4: Forms of causal misrepresentation:
- Not the same as saying that he - Caused the party to
must have been aware that the contract on the terms that he 1) Fundamental misrepresentation (dolus dans)
statement was untrue, rather that did. - But for the misrepresentation, the party would
he must have realised that his Requirements: not have contracted at all.
statement would have an effect 1) The innocent party
on the other party’s decision to actually believed the 2) Incidental misrepresentation (dolus incidens):
contract. misrepresentation. - But for the misrepresentation, the party still
2) The innocent party would have contracted but on different terms.
contracted on the terms that
he did because of the
misrepresentation.
208) Bird v Murphy 1963 (2) - Non-causal - If misrepresentation is not causal (i.e. neither
PH A42 (D) misrepresentation? fundamental nor incidental) it is legally irrelevant.
Party would have contracted on the same terms
despite the misrepresentation – therefore no
remedies.
Req 5: Materiality - Luke and Murray: - The misrepresentation must be material in the
materiality will be satisfied sense that a reasonable person would also have
if either: been induced to contract. If a reasonable person
i) The statement is of a would not have been misled by the
nature that it would misrepresentation, or it would not have influenced
influence a reasonable him to contract,  misrepresentation will not give
person to contract, or rise to remedies.
ii) The statement was
intended to induce

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representee to contract.
209) Lourens v Genis 1962 (1) Req 5: What about - He caused his own loss by his own
SA 431 (T) fundamental “unreasonable stupidity”, therefore no damages
misrepresentation? awarded as a reasonable person would not have
been fooled.
210) Orville Investments v Req 5: What about - Innocent party can sue even if the reasonable
Sandfontein Motors 2000 (2) fundamental person would not have been misled by the
SA 886 (T) misrepresentation? misrepresentation, as long as the innocent party
herself was misled.
(not confirmed by SCA,
therefore uncertain)
Misrepresentation by omission - Legal duty NB! i) Contracts uberrimae fide (of the utmost good
- Misrepresentation by faith) impose a duty to disclose any relevant
omission only if in re: legal information to the other party, e.g. insurance
convictions of the contract, partnership contracts, agency contracts.
community.
211) Dibley v Furter 1951 (4) - Misrepresentation by ii) Seller of goods has a duty to disclose any latent
SA 73 (C) omission. defects in the merx of which he is aware. A latent
defect is an abnormal quality which renders the
merx useless or less useful for the purpose for
which it was bought or is ordinarily used. This
only applies to contract of sale and its usefulness
must be diminished or destroyed for all people and
not just for the party in question.
212) Marais v Edlman 1934 - Misrepresentation by iii) Where a positive statement is made which is
CPD 212 omission. only a half-truth, i.e. the statement is true on its
own, but creates a false impression because other
relevant facts are not disclosed.
213) Mayes v Noordhof 1992 - Misrepresentation by iv) When a positive statement is made but
(4) SA 233 (C) omission. subsequently circumstances change so that the
statement is no longer true.
214) Brink v Humphries & - Misrepresentation by v) Duty to disclose unexpected terms in contracts.
Jewell (2005) <p308 Omission.

215) Kempton Hire v Snyman - Misrepresentation by vi) When a matter falls within the “exclusive
Omission. knowledge” of one of the parties and honest men
would recognise a duty to disclose in accordance
with the legal convictions of the community.
216) Dibley v Furter 1951 (4) - Misrepresentation by vi) A matter falls within the exclusive knowledge
SA 73 (C) omission. if, practically speaking, the other party could only
get the info from him.
217) Waller v Pienaar 2004 (6) - Misrepresentation by vi) The question is whether in a “practical
SA 303 (C) omission. business sense” he was the only source of
information for the other party. Even if the other
party could, theoretically, get the information
from another source, the court will take into
account what could reasonably and practically be
expected from the innocent party in these
circumstances.
218) ABSA Bank Ltd v Fouche - Misrepresentation by vi) It is not enough that the matter falls within the
2003 (1) SA 176 (SCA) omission. exclusive knowledge of one of the parties. A duty
to disclose will only arise if honest men would
recognise a duty to disclose in accordance with the
legal convictions of the community.
Aedilition remedies - Only available in contracts 2 forms:
<p330> of sale if seller made a
“dictum et promissum” 1) Actio redhibitoria: buyer may rescind (set
(misrepresentation about the aside) contract of sale and performances must be
qualities of the merx). released.

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2) Actio quanti minoris: the buyer may claim that

the purchase price be reduced to the true value of
the merx.

NB: If you use mistake, you cannot claim a

reduction in purchase price, as it’s valid, therefore
use misrepresentation for a reduction in purchase
price.
Requirements for restitutio in - Fault and loss is NOT a 1) Misrepresentation: needs to satisfy all 5
integrum requirement for restitutio in requirements for misrepresentation.
integrum. 2) By the party to the contract or his agent: is
misrepresentation is by a third party you cannot
claim restitutio in integrum but perhaps can claim
delictual damages.
3) Misrepresentation must be fundamental: not
merely incidental.
Loss of right to rescind - If: 1) Election: if election to uphold then loss of right
to rescind. Election can be express or by conduct,
but if there’s another reasonable reason for
conduct  don’t lose right to rescind. Mere delay
≠ loss of right unless there’s a reasonable belief by
the other party (therefore estoppel).
2) Incapacity to return performances: all
performances received in terms of the contract
must be returned. Court will generally not grant
RII if innocent party is unable or unwilling to
return performances received.

But can claim restitutio in integrum if inability is

not her fault:
- Deterioration of asset due to an inherent defect.
- Perishables.
- When object perished when used in manner and
purpose for which it was intended.
- where object perished due to circumstances
beyond control of innocent.

- If enriched by performance: compensate other

party to extent of enrichment.
- If due to her own fault: give other party
monetary value of the performance as
compensation.
219) Dibley v Furter 1951 (4) SA 73 (C)
Requirements for delictual - Can be claimed from a 1) Wrongful conduct (i.e. misrepresentation).
damages third party. 2) Fault: either intentional or negligent; cannot be
innocent.
For causation (4): 3) Loss: must have suffered patrimonial loss.
220) Bayer SA v Frost 4) Causation: innocent party’s loss must have been
1991 (4) SA 559 (A) – caused by the misrepresentation.
negative interesse damages. a) Fundamental misrepresentation (dolus dans)
b) Incidental misrepresentation (dolus incidens)
Both these misrepresentations will suffice.

Measure of damages Fundamental 1) Innocent party rescinds (sets aside contract).

misrepresentation. - Before damages are calculated, all performances
(Negative interesse: AP already received must be returned. Therefore
compared to HP if there had (Would not have contracted damages = losses not made good by restitution.
been no breach) at all but for - If fundamental misrepresentation, and innocent
misrepresentation) party sets aside the contract  damages =
consequential losses and wasted expenses.

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2) Innocent party uphold contract despite

fundamental breach.
- Parties will retain performances received.
- If fundamental misrepresentation, and party
chooses to uphold the contract  damages =
wasted expenses and consequential losses and the
difference in value of performances actually given
and received (AG-AR)
- However, if market value of performance that
was actually received cannot be determined 
courts may use the cost of repairing the defective
performance instead. Therefore WE + CL +
CORP = Damages.
221) Ranger v Wykerd 1977 (2) SA 976 (A)
Measure of damages Incidental - The court will compare his financial position in
misrepresentation. terms of the actual contract to his financial
position in terms of the hypothetical contract.
(Innocent party would still - Therefore if incidental misrepresentation 
have contracted but on damages = difference between actual performance
different terms) and performance in terms of the fictional contract
(FPOAC-FPOHC) and consequential loss (but not
wasted expenses).
222) Karabus Motors Ltd v - Third party - No restitutio in integrum as he’s not a party to
Van Eck 1962 (1) SA 451 (C) misrepresentation s. contract.
(Mistake in motive) - No mistake remedies as not essential mistake,
still TPA.
- Therefore delictual damages, as long as you can
prove fault.

223) Broodryk v Smuts NO - Requirements for duress 1) Actual violence or a reasonable fear.
1942 TPD 47 (x5) 2) Caused by threats of considerable evil (harm)
towards innocent or his family.
3) The harm must be imminent or inevitable.
4) The use of the threat is contra bonos mores (i.e.
wrongful).
5) The threat caused damage (causation).
224) Patel v Grobbelaar 1974 - Requirements for undue 1) The wrongdoer has influence over the innocent
(1) SA 532 (A) influence (x5) party.
2) Which reduces the resistance of the innocent
party.
3) An unconscionable use of the influence.
4) Which induced the innocent party to contract
(causation).
5) To his detriment (prejudice).

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