PVL 3702 2023 Answers, Semester 2, Assignment 2

There are 10 questions for this assignment. Each answer below carries 2 marks and the
total for this assignment is 20 marks.

Question 1
On 1 August, Y offers to sell his couch to Z for 10 000. Y and Z further agree that Y’s offer
will be open for Z to accept until 31 August. Which statement is CORRECT?

1 Y and Z concluded an option contract.

2 Y and Z concluded a pre-emption contract.
3 Y and Z concluded neither an option contract nor a pre-emption contract.
4 Y and Z concluded an option contract and a pre-emption contract.
5 Y and Z concluded a contract subject to a resolutive condition.

Answer

Discussion
The statement in point 1 above is correct. Where an offer is made by a party (Y) and the
parties (Y and Z) reach an agreement that such an offer will be open for acceptance by
the other party (Z) for a specified period of time, in such an instance an option contract is
concluded between these parties (see Eiselen GTS et al Law of Contract study guide for
PVL 3702 (University of South Africa) 29). When this reasoning is applied to the facts in
the question, it follows that an option contract was concluded between the parties.
Therefore, point 1 is correct. This also means that the statement in point 3 is incorrect.

With a pre-emption contract, the prospective seller undertakes to give a prospective buyer
preference in the event of deciding to sell the property (Eiselen et al Study Guide 34).
Based on the facts, Y did not grant Z such a right of pre-emption in their agreement.
Therefore, the parties did not conclude a pre-emption contract. This means that point 2
is incorrect. And it also follows that point 4 is incorrect.

A resolutive condition is present where the parties agree that their contractual obligations
will operate fully, but that it will come to an end if an uncertain future event does or does
not happen (Dale Hutchison & Chris Pretorius (eds) The Law of Contract in South Africa
(Oxford 2022) 276-277). There is no resolutive condition in the agreement between Y and
Z, relating to any uncertain event which may bring an end to their agreement. It follows
that point 5 is incorrect.

Question 2
Which cause of action will render the contract void?

1 A fraudulent and negligent misrepresentation.

2 Duress.
3 Undue influence.
4 A reasonable and material mistake.
5 Commercial bribery.

Answer

Discussion

The correct answer is option 4 since a material and reasonable mistake excludes one of
the requirements for the existence of a contract, namely consent, which therefore renders
the contract void (Hutchison and Pretorius Contract 107-111; Study Guide 4). Options 1,
2, 3 and 5 are incorrect because misrepresentation, duress, undue influence or
commercial bribery only render a contract voidable (ie a contract is concluded but it may
be cancelled by the party who proves the requirements for the relevant cause of action).
In such cases, there is consensus, and as such, the contract is not void. However, the
consent has been obtained in an improper manner, rendering the contract voidable
(Hutchison and Pretorius Contract 124; Study Guide 4).
Question 3
Where a contract stipulates that each co-debtor is liable for the full amount of the debt,
and the creditor can accordingly claim the full amount of the debt, or any lesser amount,
from any one co-debtor or more than one co-debtor, this constitutes

1 simple joint liability.

2 stipulatio alteri.
3 liability in solidum.
4 collective joint liability.
5 a delict.

Answer

Discussion

Option 1 is incorrect because simple joint liability means that each of the debtors is liable
only for a proportionate share of the performance, and their shares are presumed to be
equal (Hutchinson and Pretorius Contract 246).

Option 2 is incorrect because stipulatio alteri is a contract for the benefit of a third party
which is not relevant to this question (Hutchinson and Pretorius Contract 253-254).

Option 3 is correct. Liability in solidum (also known as joint and several liability) applies
when each co-debtor is liable for the full debt amount, and the creditor can therefore claim
the full debt, or any lesser amount, from any of the co-debtors. Accordingly, option 3 is
the correct answer. (See Hutchinson and Pretorius Contract 247-248).

Option 4 is incorrect because with collective joint liability the co-debtors are liable to make
performance jointly as a collective, and the creditor may not demand performance, in
whole or in part, from any one of the debtors individually (Hutchinson and Pretorius
Contract 248).
Option 5 is incorrect. A delict is wrongful and blameworthy conduct that causes harm to
a person (Hutchison and Pretorius Contract 8-9). The scenario presented in the question
is a term in a contract, it and does not relate to a delict. Therefore option 5 is incorrect.

Question 4
X rents a house from Y for R10 000 per month, until such time as his employer transfers
him to commence working in the company’s Cape Town offices. The house is located in
Johannesburg. This lease is subject to a

1 suspensive condition.

2 resolutive condition.

3 suspensive time clause.

4 resolutive time clause.

5 modus.

Answer

Discussion

The rental contract will run until X’s employer transfers him (X) to commence working in
the company’s Cape Town offices, and only if this happens, the obligations will then come
to an end. This clause is thus a resolutive condition, as it is uncertain whether X’s
employer will transfer X in the future to work in Cape Town. This also means that it is not
a time clause because it is not certain that X will be transferred to work in the company’s
Cape Town offices. (See Hutchison and Pretorius Contract 276-278. Option 2 is therefore
correct and options 1, 3 and 4 are incorrect.
The clause is not a modus, because it does not place a duty on X or Y to do something
in the future. (See Hutchison and Pretorius Contract 278-279). Option 5 is therefore
incorrect.

Question 5
Jack is engaged to Jill. Jack has a very strong personality and eventually persuades Jill
to sell and transfer her (Jill’s) house that is worth R900 000 to him (Jack) at a purchase
price of a mere R50 000. After registration of the property in Jack’s name, he breaks off
the engagement. Which option below has the LEAST amount of relevance, in relation to
the cause of action that Jill is likely to rely on in her pursuit to have the transfer of the
house into Jack’s name set aside?

1 Proof that Jack applied improper pressure on Jill, which amounted to intimidation.
2 Proof that Jack used his superior position to undermine the will of Jill.
3 Proof that Jack and Jill were in a close relationship at the time of concluding their
sale agreement.
4 Proof that there was an erosion of Jill’s ability to exercise a free and independent
judgment at the time of contracting with Jack.
5 Proof that Jill was improperly induced to conclude the contract with Jack.

Answer

Discussion
Option 1 is correct. The appropriate cause of action for Jill to rely on should be based on
undue influence to have the contract set aside. Options 2, 3, 4 and 5 relates in some way
to undue influence (Hutchison & Pretorius Contract in South Africa 151-153). Option 1 is
correct because intimidation is usually associated with duress (Hutchison & Pretorius
Contract 147-151), and not with undue influence, therefore it would have the least amount
of relevance to the latter cause of action.
Question 6
X inserts ammunition into his gun and points it at Y, and orders him (Y) to sign a written
contractual document which X already signed as the purchaser. X explains that the
document is for the sale of Y’s car to him (X), at a price of R30 000. The market value of
the car is R250 000. Y, fearing for his life, signs the document as the seller. If Y proves
the requirements for the relevant cause of action that he (Y) is most likely to pursue, then
the contract between X and Y becomes

1 voidable at the instance of both X and Y.

2 neither void nor voidable, but it remains unenforceable.
3 voidable at the instance of Y.
4 automatically void and voidable.
5 void at the instance of X.

Answer

Discussion

Based on the facts presented, the appropriate cause of action for Y to pursue is duress.
If Y proves the requirements for duress, the contract will become voidable at the instance
of Y, which means that Y may then elect to cancel the contract. Therefore option 3 is
correct. (See Hutchison and Pretorius Contract 147-148). It follows, that options 1,2,4 and
5 are incorrect.

Question 7
X has a watch that Y likes. X offers to sell her watch to Y for R10 000. Y accepts this offer,
and X and Y further agree that they will reduce their oral contract to writing and that they
will both sign it (“the writing clause”). The parties failed to reduce their contract to writing
and sign it. The purpose of the parties’ stipulation to reduce their contract to writing and
have it signed was to have a written record of their agreement merely to facilitate proof of
the terms of the agreement. X insists that a binding contract was not concluded between
the parties because the writing clause was never executed by both parties. Y believes
that a binding contract was concluded. From this set of facts, the legal dispute which is
likely to arise between X and Y, relates to
1 non-variation clauses.
2 the application of statutory formalities.
3 stipulatio alteri.
4 the expedition theory.
5 whether a formality has been prescribed by the parties.

Answer

Discussion

The dispute does not relate to a non-variation clause, therefore option 1 is incorrect (see
Hutchison and Pretorius Contract 178-179, for the application of non-variation clauses).
The question does not relate to the application of a statute therefore a statutory formality
does not apply. Accordingly, option 2 is incorrect. Stipulatio alteri relates to a contract for
the benefit of a third party which is not applicable here (see Dale Hutchison and Chris
Pretorius Contract 253-257 for a discussion of stipulatio alteri). Therefore option 3 is
incorrect. The expedition theory relates to the conclusion of a contract by post which is
not an issue that is disputed between X and Y (see Hutchison and Pretorius Contract 61-
64, for a discussion of the expedition theory). It follows that option 4 is incorrect.

The issue disputed between the parties is whether a valid contract was formed between
the parties, despite the oral contract not being reduced to writing and signed by the
parties. The issue therefore centres around the intention of X and Y for stipulating a writing
clause and whether by doing so, the parties prescribed a formality for the creation of a
legally binding contract. (See Hutchison and Pretorius Contract 177-178. Therefore option
5 is correct.

Question 8
X has a watch that Y likes. X offers to sell her watch to Y for R10 000. Y accepts this offer,
and X and Y further agree that they will reduce their oral contract to writing and that they
will both sign it (“the writing clause”). The parties failed to reduce their contract to writing
and sign it. The purpose of the parties’ stipulation to reduce their contract to writing and
have it signed was to have a written record of their agreement merely to facilitate proof of
the terms of the agreement. X insists that a binding contract was not concluded between
the parties because the writing clause was never executed by both parties. Y believes
that a binding contract was concluded. Which statement is CORRECT?
1 Since there is no contrary evidence to suggest otherwise, the law presumes that the
oral agreement will not be binding until it is reduced to writing and signed by X and
Y.
2 The onus is on Y to prove that the parties (X and Y) intended the writing clause to
operate as a requirement for the validity of the contract.
3 Because the intended purpose for the writing clause was to facilitate proof of the
terms of the agreement, without compliance with this clause, the terms of the
agreement cannot be proved, therefore a binding agreement was not concluded
between X and Y.
4 A binding contract of sale was concluded between X and Y even though a written
agreement was not signed by X and Y.
5 Without a signed written agreement by X and Y, the oral agreement lacks certainty,
and it is therefore unenforceable.

Answer

Discussion

From the facts presented, the issue is whether X and Y intended to create a legal formality
for their oral contract to be valid, by stipulating the writing clause. A very important fact in
the question is that the purpose of the parties stipulation to reduce their contract to writing
and have it signed was to have a written record of their agreement merely to facilitate
proof of the terms of the agreement. With this intention, the agreement is legally binding
even if it is not reduced to writing and signed by the parties (see Hutchison and Pretorius
Contract 177-178). Therefore option 4 is correct. Accordingly, options 3 and 5 are also
incorrect.

Since there is no contrary evidence to suggest otherwise, the law presumes that the
parties intention to have the writing clause was merely to facilitate proof of the terms of
the contract, which means that the oral contract is legally binding. (See Hutchison and
Pretorius Contract 177). Therefore option 1 is incorrect.

In these circumstances, the party (X) who alleges that the contract is not legally binding
because the writing clause was intended by the parties to be a formal requirement to be
complied with for the contract to be valid, bears the onus of proving such an intention (see
Hutchison and Pretorius Contract 177). Because X bears such an onus and not Y, option
2 is incorrect.
Question 9
X submits a written offer to Y to purchase Y’s Rolex watch. X sends the written
offer by post to Y. Y reads the offer on 13 May and drafts an acceptance on 14
May. Y posts his written acceptance on 15 May to X. X receives the acceptance
on 17 May and reads it on 18 May. Which is the correct theory to apply to determine
when the contract between X and Y was concluded?

1 The information theory.

2 The reception theory.

3 The expedition theory.

4 The declaration theory.

5 The reliance theory.

Answer

Discussion

The information theory is the general rule in our law which states that the contract is
concluded when and where the offeror learns or is informed of the acceptance of his or
her offer. The offeror may determine expressly or tacitly otherwise in the offer. In postal
contracts the expedition theory applies, and the contract is concluded as soon as the
acceptance has been posted, provided that the requirements for the expedition theory to
apply, are proved. The law assumes (a fiction thus) from the making of an offer by post
that the offeror has authorised acceptance by post, and that he or she also has waived
the requirement of notification of acceptance. The expedition theory serves as a legally
recognised exception to the general rule (which is the information theory). (See the
Hutchison and Pretorius Contract 61 – 64).

For this question the expedition theory applies as the requirements for this theory to apply,
can be proved (see Hutchison and Pretorius Contract at page 63, for the requirements
for expedition theory to apply). In this regard, the offer was made by post. The postal
services seem to be operating normally as X receives Y’s acceptance not long after it was
posted to him. X as offeror does not appear to indicate tacitly or expressly that another
method of acceptance should apply, other than by post. And the contemplated transaction
between X and Y relates to a commercial sale. Therefore, all the requirements for the
expedition theory to apply can be established. It follows that the expedition theory applies
to the facts in this question. This means that option 3 is correct and all the other options
are incorrect.
Question 10

Which theory grounds contractual liability by adopting a subjective approach, based solely
on consensus?
1 The expedition theory.
2 The reliance theory.
3 The declaration theory.
4 The reception theory.
5 The will theory.

Answer

Discussion

From the options above, relating to the formation of a contract, the will theory is the only
one which entails a subjective approach based solely on consensus. Therefore option 5
is correct and all the other options are incorrect. (See Hutchison and Pretorius Contract
18-25, 62-64).

TOTAL ASSIGNMENT 02 [20]

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