Unit 3. The Concept of Consensus Ad Idem As A Basis of A Contract

3.
THE CONCEPT OF CONSENSUS AD IDEM

AS A BASIS OF A CONTRACT
Lecture 2
3. Consensus ad idem
After you finished this unit, you should be able to:
• explain the concept of consensus as a requirement of a valid

contract.
• Describe the requirements that must be complied with before

consensus can be said to be complete.
• Apply relevant case law.

2. Consensus ad idem
WHAT IS CONSENSUS?
Consensus is defined as the meeting of the parties’ minds on all
material aspects of their contract. In other words, consensus is the
mutual agreement of the parties that underlies a contract. This is
often referred to as consensus ad idem.
• Hutchison asserts that “the parties’ intent in their minds
must match (or at least appear to match) on all material
aspects of their agreement”.
• Thus the parties need to be in agreement in terms of the

rights and obligations they wish to create. If the parties are
unaware of the rights and obligations they created or wish
to create, proper performance of obligations and
enforcement of rights cannot be guaranteed.
• Consensus is one of the six legal requirements for a valid,
binding, and enforceable contract. The other four are
contractual capacity; legality; certainty and possibility of
performance; and formalities.
• If any of this requirements is not met, there can be no valid,
binding, and enforceable contract between the parties, thus
contractual liability does not arise between them.
• This six legal requirements are referred to as the essentialia,

and are implied into a contract by the operation of law.
• In addition to the parties’ minds meeting on all naturalia,
they must also be ad idem on all essentialia and
incidentialia, before a valid, binding, and enforceable
contract is concluded between them.
• It is common course that without a valid, binding, and

enforceable contract, there can be no contractual liability
between the parties.
• Subjective consensus refers to the actual
intellectual matching or meeting of the parties'
minds; objective or quasi-objective consensus refers
to the appearance of matching or meeting of the
parties' minds.
According to Hutchison, the parties’ reach subjective
consensus, when:
they seriously intend to contract;
are of one mind (ad idem) as to the material aspects of

the contract – namely, the terms of the proposed
agreement, and the identity of the parties to it; and
are conscious of the fact that their minds have met.
• In other words, subjective consensus is about the
psychological state of the parties’ minds, thus an enquiry
into whether the parties reached consensus ad idem
generally involves a determination of whether a valid offer,
which was duly accepted, was made; and whether by
making and accepting the offer the parties were animus
contrahendi, thus intended to create a vinculum iuris.
Note: Animus contrahendo – means ‘an intention to
contract’ – refers to the intention to be bound by the
legal obligations of a contract.
Vinculum iuris – means ‘a bond of the law’ – refers to

the legal tie that binds one person to another, creating
an obligation or legal bond.
• Consensus could also be defined as the agreement of
contracting parties on all material aspects of the contract
they are entering into, which agreement gives rise to
contractual liability between the parties for the fulfilment of
their respectively agreed obligations. Contracting parties
must, therefore, have consensus at the time at which a
contract is concluded.
• The parties’ consensus, both subjective and objective, is ascertained by
having regard to external facts, as Wessels states:
“Although the minds of the parties must come together, courts of law can
only judge from external facts whether this has or has not occurred. In
practice, therefore, it is the manifestation of their wills and not the
unexpressed will which is of importance.”
- South African Railways & Harbours v National Bank of South Africa Ltd
1924 AD 704 at 715
INTENTION TO BE CONTRACTUALLY BOUND
• All parties to the contract must have the serious intention to

be contractually bound.
• Hence the parties must have the intention of creating rights

and obligations which will be legally binding upon them.
• An undertaking seriously and deliberately made with the

intention that a lawful obligation should be established, is
sufficient to satisfy the requirement of serious intention.
• A serious intention to conclude a contract is fundamental to
the conclusion of a contract. A contract of a social nature, a
joke, a promise made without serious intention or where
the parties agree that their agreement will have no legal
consequences, can therefore not constitute a contract.
THERE MUST BE A COMMON INTENTION
• Both parties must have the same intention regarding the
rights and obligations of the contract.
• For example, if A gives money to B by way of deposit for a

house he is buying and B accepts the money thinking that
it's a loan such an agreement is not valid as the parties lacks
common intention.
• Another example would be, where Mark is selling his car
and John pays a certain amount of money to Mark, in terms
of which he wishes to buy Mark's house in Academia. In this
case Mark is selling a car and John is ''buying'' a house. The
parties lacks common intention and therefore consensus
cannot be reach in this case.
COMMUNICATING THE INTENTION
• All contracting parties must be aware of their true
agreement.
• If each party is only aware of his or her intention without

making such intention known to the other party then no
consensus is reached and hence no agreement.
• The primary reason in communicating one's intention to
another is for both parties to know what are their rights and
obligations.
• A party cannot enforce a right, if he or she is not aware of

his or her rights.
• A party may fail in his or her performance of the obligations

if he or she is unaware of his or her obligations that have
been created.
• The most common way to make your intention known to
the other party is through offer and acceptance.
• Once the parties have a serious intention and have the

common intention and this intention is communication to
each other, we can say that the first requirement of
consensus have been reached.
WRONGFULLY OBTAINED CONSENSUS
• In cases where consensus was achieved through
misrepresentation, duress, or undue influence, the resulting
contract will be considered valid and binding.
• Once the decision is made and communicated to the other

party, it becomes final and cannot be reversed without the
consent of the other parties.
• However, it can be voided at the discretion of the innocent
party who has the legitimate power to avoid the contractual
obligations. Regardless of whether the grounds for relief are
misrepresentation, duress, or undue influence, the Innocent
party is presented with a choice to either rescind the
contract or uphold it.
Case law:
Bloom v American Swiss Watch and Co 1915 AD 100
Muvangua v Hiangoro [2020] NAHCMD 292 (16 July 2020)
Tjirare N.O v Mgohagolema (I 1852/2013) [2017] NAHCMD 17

Dama v Old Mutual Life Assurance Limited (CA 03/2016)
[2017] NAHCNLD 117 (04 December 2017)
Seagull’s Cry v Council of the Municipality of Swakopmund

2009 (2) NR 769 at 780 D
Read additionally cases mentioned/discused in Hutchison’s

book.
Sources:
Bradfield, GB Christie’s Law of Contract 7th ed (2016) South
Africa: LexisNexis
Hutchison, D et al The Law of Contract in South Africa 3rd ed

(2017) South Africa: Oxford
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3.

THE CONCEPT OF CONSENSUS AD IDEM

After you finished this unit, you should be able to:

• explain the concept of consensus as a requirement of a valid

• Describe the requirements that must be complied with before

• Apply relevant case law.

• Thus the parties need to be in agreement in terms of the

• This six legal requirements are referred to as the essentialia,

• It is common course that without a valid, binding, and

they seriously intend to contract;

are of one mind (ad idem) as to the material aspects of

Vinculum iuris – means ‘a bond of the law’ – refers to

• All parties to the contract must have the serious intention to

• Hence the parties must have the intention of creating rights

• An undertaking seriously and deliberately made with the

• For example, if A gives money to B by way of deposit for a

• If each party is only aware of his or her intention without

• A party cannot enforce a right, if he or she is not aware of

• A party may fail in his or her performance of the obligations

• Once the parties have a serious intention and have the

• Once the decision is made and communicated to the other

Muvangua v Hiangoro [2020] NAHCMD 292 (16 July 2020)

Tjirare N.O v Mgohagolema (I 1852/2013) [2017] NAHCMD 17

Seagull’s Cry v Council of the Municipality of Swakopmund

Read additionally cases mentioned/discused in Hutchison’s

Hutchison, D et al The Law of Contract in South Africa 3rd ed

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