1. Introduction to the Law of Contract
Business / Commercial Law

2. The concept of “obligatio”
Obligatio = Obligation
Contracting parties acquire personal rights against each other
Duty to perform
Right to receive performance

3. The essentials of a valid contract
Consensus
Contractual capacity
Legal possibility of performance
Physical possibility of performance
Formalities

4. Freedom of Contract
Generally speaking, people are free to choose with whom and on what grounds they wish to contract with another

5. Contracting electronically
Electronic Communications & Transactions Act 25 of 2002

6. Consensus
Each party must have serious intention to be bound to the contract
Common intention
Must make intention known to the other party

7. Offer and Acceptance
An offer is a declaration made by the Offeror setting out their intention to be contractually bound & the rights & duties they wish to create
An acceptance is a declaration by the Offeree indicating their acceptance of the offer

8. Requirements for offer & acceptance
Made with intention that offeror will be bound by offeree’s acceptance
Offer must be complete
Offer & acceptance must be clear & certain
May be made expressly or tacitly
Offer may be accepted by person(s) to whom addressed
Offer & acceptance completed on communication

9. Falling away of the offer
If not accepted within stipulated time
If offeror revokes before acceptance
On rejection by offeree
On counteroffer by offeree

10. The option
Option giver makes an offer (substantive offer) & agrees to keep open for a period (the option)
If offeree accepts option the option contract comes into being allowing offeree to accept substantive offer within option period

11. Special circumstances
Invitations to make an offer (advert)
Statements of intent
Calling for tenders
Auctions

12. Time & place of contracting
When parties in each others presence
Information theory
Contract comes into being at the time acceptance communicated and at the place where parties are

13. Time & place of contracting
Where parties not in each others presence
By telephone – Information theory applies – contract comes into being at time & place when offeror becomes aware of offeree’s acceptance
By post – Expedition theory – contract comes into being at time & place when offeree posts letter of acceptance

14. Lack of consensus Mistake – contract void – provided:
Mistake relates to fact, legal rule or principle
The fact, rule or principle is material
The mistake is also reasonable

15. Lack of consensus Misrepresentation – contract voidable if:
Untrue statement regarding existing fact or condition
Made by one party to the other
Misrepresentation must be unlawful
Misrepresentation must have induced (caused) the contract
Can be intentional, negligently or innocent

16. Lack of consensus
Duress – unlawful threat of harm or injury causing other party to enter into contract
Voidable if:
Actual or reasonable fear of physical violence or damage
Imminent or inevitable
Unlawful
By one party against another
Causes party to contract

17. Lack of consensus
Undue Influence – improper or unfair conduct by a party to persuade other party to contract against their free will
Voidable if:
One party exercises influence over another
Influence used to weaken will / resistance
Influence used to persuade other party to contract against own free will & to their disadvantage