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CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106)

CHINHOYI UNIVERSITY OF TECHNOLOGY BUSINESS SCIENCES AND MANAGEMENT BUSINESS LAW INTRODUCTION The following are summaries of cases that you may find useful in this module. However, the list is not exhaustive. Laws governing the business world are not static, they are dynamic hence changes and developments to such laws are reflected in current cases. The cases below however shows the standard and famous cases in our subject area. You are strongly advised to be familiar with them as this will make life easier for you in future as a practising manager and currently for your examination. Acknowledgement: In this task I made use of E.C. MacColl : Case briefs in Contract and Sale for Zimbabwean Students. Students are referred to this rich and fuller text. However, I remain fully responsible for content and for presentation and typographical accuracy. The following approach is proposed in studying cases: Summarise the facts of the case. Be sure you understand the court ruling and the principles raised in the judgement. Read related cases and establish similarities and differences illustrated in each case. In the examination/assignment: give a brief description of the case [if necessary] and then the decision that the court arrived at together with the underlying principles ratio decidendi . Sometimes even a simple citation of the case may suffice. A lot depends on the argument you wish to make.

Case Citation Using Humphrey V Cassell 1923 TP 280 The first party cited to a case is the plaintiff i.e. the one who brings the case to the courts (in our example HUMPHREY) and the last party to be cited is the defendant (in our example CASSEL). 1923 is the year in which the case was tried TP stands for Transvaal Province. This will vary from case to case. 280 the number of the case that year that the court tried. From a Zimbabwean point of view, all the cases that are tried at the High court and the Supreme Court are recorded in the Zimbabwe Law Report (ZLR), which is published annually for subsequent use by stakeholders in law. For example in AG v Paweni Trading Corp (Pvt) Ltd 1990 ZLR 24. This means o o o o o AG Attorney General is the plaintiff Paweni Trading Corp (Pvt) Ltd is the respondent/ defendant 1990 the year the case was tried ZLR the Zimbabwe Law Report 24 the case number.

It is very helpful to remember the names of the parties in question. The year is far less important.
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CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106)


CONTRACTS The offer must be clear and precise. It must not be equivocal or ambiguous. HUMPHREYS v CASSEL 1923 TP. Humphreys, a solicitor agreed not to demand any fees until such time as defendants mine was producing and he was on his feet again financially. When he was sued for fees, Cassell advanced this clause in defence. Held: the special agreement was too vague to enforce and... interpret. The agreement was set aside for uncertainty and Cassell was compelled to pay immediately. Where an offer is vague and imprecise any consequent agreement is void. BYRNE & Co. v LEON VAN TIENHOVEN, 1880 A letter was posted from Cardiff on 1 October offering to sell 1 000 boxes of tin-plates to a client in New York. The offer was accepted by telegram on 11 October. However a letter of withdrawal had been posted on 8 October. This did not arrive until 20th. The contract was upheld because revocation/withdrawal must be communicated to the offeree since a state of mind not notified cannot be regarded in dealings between man and man... an uncommunicated revocation is for all practical purposes and in point of law no revocation at all. Such revocation must actually have been received. EFROIKEN v SIMON 1921 CPD A Johannesburg broker sent a Cape Town broker a telegram to the effect that he had a seller of 3 000 bags of oats at 11 shillings a bag, adding the terms of delivery. The question before the Court was whether this telegram was an offer which could result in a valid contract if accepted. Gardiner J had this to say:There are certain offers, offers made to the whole world, acceptance of which before withdrawal constitutes a binding contract, but it is not every offer of this nature. One has to ascertain from the offer itself whether it is tentative, or whether it is meant to constitute upon acceptance a binding contract. This telegram starts: Have seller of 3 000 oats, and it goes on to give certain terms. To my mind it means this: I have a seller, can you find me a buyer and then we may do business? The telegram was not intended to be an offer. Statements of lowest price are not offers. CRAWLEY v REX 1909 A shopkeeper advertised tobacco at a special price. He had a placard outside his shop. One evening, Crawley (a customer) entered the shop and bought a pound of tobacco. He left the shop and within five minutes came back for some more tobacco. This time, the shopkeeper refused to sell him the tobacco. Crawley refused to leave the shop without the tobacco and the shopkeeper had to call a constable to remove him. Crawley was then charged with trespassing. His contention was that the shopkeeper had made an offer which he accepted. The Court had this to say in that case: In the present case it seems to me there is no contract. The mere fact that a tradesman advertises the price at which he sells goods does not appear to me to be an offer to any member of the public to enter the shop and purchase goods, nor do I think that a contract is constituted when any member of the public comes in and tenders the price mentioned in the advertisement. It would lead to most extraordinary results There is nothing as far as I know which obliges a tradesman to sell to any customer who chooses to present himself in his shop FINESTONE v HAMBURG 1907 Hamburg undertook to let a hotel to Finestone on certain conditions, stating that if these conditions were agreed to then the further general clauses can be discussed. The court ruled that the contract was void for uncertainty since the terms had not been finalised: if the
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CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106)


terms of an agreement are incomplete the offer inherent in those terms is indefinite and such agreement therefore void. However note: Blundell v Blom 1950: In a written agreement involving blank spaces, these do not automatically invalidate the agreement unless the circumstances clearly indicate incompleteness due to continued negotiations as opposed to mere acceptance of one partys right to fill the blanks unilaterally. KANTOR v KANTOR 1962 Through an ante-nuptial contract, a prospective husband promised to settle and renew furniture and domestic effects on his future wife at such times and in such quantities as may be expedient to him. Mrs Kantor sought performance of this promise but the husband argued that the agreement was void for uncertainty. The court held that the agreement was indeed unenforceable since the terms were unclear and left the donor free to act or not at all. The agreement gave Mr Kantor an unlimited option leaving the offer open at the whim of the offeror. BALFOR v BALFOUR. 1919 Mr. Balfour agreed to pay his wife monthly maintenance of 30 while he was on civil service duty in Ceylon. He failed to do so and his wife sued. The court rule in favour of Mr. Balfour: informal financial arrangement within the family are not enforceable at law. DAWIDOWITZ v VAN DRIMMELEN, 1913 Dawidowitz sued Van Drimmelen for payment for goods sold and delivered. Van Drimmelen refused and claimed to be protected by a special agreement to pay in monthly instalments according to his capacity to pay and according to circumstances. It was ruled that the contract was void for vagueness and because it left the amount payable entirely dependent on the will of one of the parties. Thus Van Drimmelen had to pay immediately. DE BRUYN V PEYPERS, 1955 De Bruyn leased 2 farms from Peypers for 6 years under an option allowing him to buy the farms for 8 000 pounds half down and the balance in instalments at an interest rate to be agreed upon. De Bruyn then tendered the full amount as cash and then claimed transfer. Peypers refused arguing that the terms on payment were vague and uncertain. The court upheld the contract because the vagueness was purely technical and no longer even relevant. Similarly vagueness will not void an agreement if the vagueness can be clarified and the facts established. [See Strand Meat Co. Pty v Smith, 1930 where a client was to pay to the best of my ability] FISHER v BELL 1961 QB A shopkeeper displayed a flick-knife for sale in his shop window. He was charged with offering the knife for sale since selling flickknives was an offence. The court held that the shopkeeper had committed no offence because the display on the window was not an offer, but merely an invitation to do business. PHARMACEUTICAL SOCIETY OF GREAT BRITAIN v BOOTS CASH CHEMIST 1953 QB There were certain drugs that could not be sold over the counter except with the supervision of a pharmacist. Boots put the drugs on self-service counters and customers came and selected the drugs they wanted, putting them in baskets. It was contended that Boots were contravening the law by selling specified drugs over the counter. It was held that the counter displays of the drugs were not offers but mere invitations to treat. Consequently, no offence was committed since the contract would only come into being, not when the drugs were taken from the shelves, but when the pharmacist agreed to sell them.
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HARVEY & ANOTHER v FACEY & OTHERS, 1893 The plaintiffs sent a telegram to the defendant regarding the price of a certain piece of land Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid The defendants replied:- Lowest price for Bumper Hall Pen 900. The defendants then telegraphed:- We agree to buy Bumper Hall Pen for 900 asked by you. The defendants however refused to sell. The plaintiffs said the defendants had made an offer to sell which they accepted. The Court said there was no offer, it was only a response to a specific enquiry. The mere statement of lowest price at which the vendor would sell contains no implied contract to sell at that price to the persons making the inquiry. Statements of lowest price even in response to a specific inquiry- are not offers. CARLLIL v CARBOLIC SMOKEBALL Co.1893 QB A company took out an advertisement undertaking to pay 100 to any person who still fell ill with flu after taking a new drug as directed. Mrs. Carllil took the drug and still fell ill and she thus claimed the reward. Further the company had deposited 1000 with a London bank as evidence of their sincerity. The Company said the advertisement was not an offer but a mere puff and that in any case notification had not been given. The Court said the general rule is that advertisements are not offers, but in this case, there was a definite offer to anybody who performed the conditions named in the advertisement. Notification in such cases is not required. Reward advertisements are therefore offers binding on the offeror if accepted as required. BLOOM v AMERICAN SWISS WATCH Co. 1915 AD On 19th March 1913, a robbery was perpetrated at the Cape Town premises of the defendant company and jewellery value at 5000 was forcibly removed. In the press the following day, there appeared a notice in these terms that a reward of 500 was offered to any person who could supply information leading to the arrest of the thieves and recovery of the jewellery. Bloom supplied the required information to the C.I.D. but at the time he did so, he was not aware of the reward. The Court said he/she could not be given the reward since he could not accept an offer of which he was unaware. Solomon, JA: Until the plaintiff knew of the offer, it seems clear that he could not accept it and, until he accepted it, there could be no contract, for a contract requires that there should be a consensus of two minds, and if the one did not know what the other was proposing, the two minds never came together A person acting as required by a reward advertisement will receive that reward only if he was aware of the reward when he so acted. RAMSGATE HOTEL v MONTEFOIRE (1866) On June 8, M offered to take shares in R Hotel Co. He heard nothing from them until 23 November when he received the letter of acceptance. M refused to take the shares. HELD: M was entitled to refuse as his offer had lapsed before November 23, so it would not be accepted LEE v AMERICAN SWISS WATCH Co. 1915 Lee gave information after Bloom. The court sought to establish whether Lee was eligible after Bloom was ruled ineligible. it is the person who gives information who is entitled to the reward offered. For disclosures are not information unless they contain something which is new. Where only one reward is available only the first person acting as required, provided he knew of the reward, will receive such reward. Anyone who is not the first will not receive the reward even if the party who was first did not receive it. This is so because after Bloom the police were in possession of the facts and the offer could not be regarded as still open for acceptance.
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CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106)

HYDE v WRENCH, 1840 The defendants offered to sell land to the plaintiff for 1000. The plaintiff said he would pay 950 only. The defendant rejected this. Plaintiff then agreed to pay 1000 after all. But by now the defendant no longer wished to sell. The court ruled that a counter-offer had been made which amounted to rejection of the original offer. BOERNE v HARRIS 1949 SA (AD) A lessee had an option to renew a lease for five years from 15 April 1947 provided such option was exercised by 15 October 1946. On 5 October 1946, lessee wrote that he intended to renew the lease for a further period of five years from 15 October 1946. It was held that there was no acceptance. There were contradictory dates and an acceptance of an offer must be unequivocal i.e. positive and unambiguous. An offeror is entitled to know in clear terms whether the offeree accepts his proposal An offeror is entitled to know in clear terms whether the offeree accepts his proposal. It is not enough that the words of a reply justify a probable inference of assent It must leave no room for doubt. HOUSEHOLD FIRE AND CARRIAGE ACCIDENT INSURANCE CO. V GRANT (1879) Grant wrote offering to buy 100 shares in the company enclosing a deposit. The company replied with a letter of allotment, thus accepting his offer, but the letter never arrived. Nevertheless, when the company later went into liquidation, the liquidator sued for money owed by Grant for payment of the shares. SHEPHERD v FARRELS ESTATE AGENCY, 1921. The agencys advertisement read: Business wanted. Our motto: no sale, no charge. All advertisements at our expense. Shepherd responded and signed a document which, contrary to the advert, gave the agency sole selling rights to receive commission even if the property was sold by another. Held: The contract Shepherd signed departed most seriously from the advertisement. Though adverts are not offers, if a contract arises from an advertisement, then its terms must be followed unless the other party is notified of such departure. BLEW v SNOXELL 1931 TPD Blew offered to buy a piece of land from a company, Richard Currie Ltd. However, the land in fact belonged to Snoxell who, upon becoming aware of the offer wrote to Richard Currie Ltd, accepting it, whereupon Blew was notified. In a law suit later, Blew argued that there was no contract between him and Snoxell and the Court agreed holding that, it is trite law that an offer made by one person to another cannot be accepted by a third party. In this case, the offer was made to Richard Currie Ltd and not to Snoxell. In short, if A offers to B, then C cannot accept and bind A unless A so wishes. EAST ASIATIC Co. v MIDLANDS MANUFACTURING 1954 SA The plaintiff argued that the defendant, by failing to timeously refuse to accept a counter offer, had in fact accepted it by silence. The court held that no contract existed since mere silence cannot be taken as acceptance unless there is some duty upon the defendant to speak. FELTHOUSE v BINDLEY, 1862 Felthouse had a nephew who owned a horse, which Felthouse wanted to buy. He wrote to the nephew to buy the horse saying, If I hear no more about him I will consider the horse to be mine. The nephew did not reply but decided to keep the horse for Felthouse. Bindley, an
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auctioneer, mistakenly sold the horse to a third party. Felthouse then sued Bindley for damages equivalent to the value of the horse. It was held that there was no contract since no acceptance had been made. In any event, the offeror could not impose conditions of refusal upon the offeree by forcing an offeree to act in a certain way. LEVBEN PRODUCTS v ALEXANDER FILMS 1959 SA (SR) A letter of acceptance was sent by registered post but it failed to arrive. It was contended by the appellant that the letter failed to arrive because it had been addressed incorrectly to LEVBEN PRODUCTS 54 SINOLA STREET, SALISBURY whereas the correct street name was SINOIA ST. The Court said that there was a contract because the incorrect spelling was not so serious as to affect the contract. The court ruled that an incorrect spelling of the address by an offoree must be fundamental before it affects such acceptance. The court was satisfied that the address was sufficient to direct the letter to its proper destination. Acceptance was therefore valid upon its posting. YATES v DALTON 1938 EDL Yates sent a telegraph to Dalton on 12 February. On 13 February at 9.40 am Dalton telegraphed his acceptance. However, a few minutes after 11.00 am, Dalton received a telegram from Yates cancelling the offer. It was held that there was a valid contract since an acceptance had been made before revocation. Acceptance by telegraph is governed by the same rules as acceptance by letter. [As in Cape Explosive Works]. CAPE EXPLOSIVE WORKS Ltd [CEW] v SOUTH AFRICAN OIL & FAT INDUSTRIES Ltd [SAOFI] (Also CEW v LEVER BROS [SA] Ltd, 1921) These 2 cases involved the same issue & were argued together having both occurred in 1916. SAOFI in Transvaal and Lever Bros in Natal made separate written offers to sell glycerine to CEW in the Cape. CEW accepted each offer by letter posted in The Cape. In the 2 cases the jurisdiction of the Cape court was disputed on the grounds that the contracts were finalised in the Transvaal and Natal respectively. The court ruled that the contracts were concluded in the Cape whose courts had jurisdiction; in particular where a written offer is made, the offer becomes a contract on the posting of the letter of acceptance. [Kotze, JP]. A written offer authorises a written acceptance; consequently such acceptance is valid and the contract is concluded at the time and place of posting. This is referred to as the Expedition Theory . CAVEAT SUBSCRIPTOR GEORGE v FAIRMEAD 1958 SA A guest at a hotel was given a register to sign. He signed the register without reading/familiarizing himself with a clause that exempted the hotel from claims arising out of theft. His clothes were stolen and the hotel refused to compensate him. He said he had made a mistake through ignorance based on justus error believing that he was signing a mere register not a contract. But the court said he was bound by his signature. When a man is asked to put his signature to a document he cannot fail to realise that he is called upon to signify by doing so, his assent to whatever words appear above his signature.. If he chose not to read what that additional something was, he was, with his open eyes, taking the risk of being bound by it. He cannot then be heard to say that his ignorance of what was in it was justus error. Thus unless induced by misrepresentation or fraud, one is bound under caveat subscriptor by his own signature - even if the material was neither read nor pointed out. WOODS v WALTERS, 1921 AD.

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The parties entered into an agreement for the lease of land, a furnished house and other buildings. Woods argued that he was not bound because the contract had not been reduced to writing as had been agreed. The court ruled that Woods was bound to lease the property to Walters because the parties were clearly ad idem and there was no evidence that they should not be bound until the written lease had been done/executed. Innes CJ: The broad rule is that writing is not essential [except in certain cases] to the validity of a contract.. But the mere mention of a written document during the negotiation will be assumed to have been made with the view of convenience of record and facility of proof. Thus when a signed written document is agreed to be a precondition of a contract such a contract is void without it. The courts assume that the written document is not a precondition to the validity of the contract. BURGER v CENTRAL SOUTH AFRICAN RAILWAYS [CSAR] 1903 TS Burger delivered goods to the railways for carriage through an agent who signed a consignment note stating that it was issued subject to section 47 of the Goods Traffic Regulations. Burger read the consignment note before the goods left but did not check the regulations. The goods were subsequently lost in transit and Burger sued for their full value. He lost the case. His use of an agent did not affect the sound principle that a man, when he signs a contract, is taken to be bound by the ordinary meaning and effect of the words which appear over his [or his agents] signature. Though the regulations were not printed as part of the contract, this did not change the principle; mere reference to the regulations was sufficient save for fraud or misrepresentation. BHIKAGEE v SOUTHERN AVIATION PVT LTD, 1949. Bhikagee sought to escape liability on grounds that he could not read English and that the terms had not been brought to his attention and had not been explained. The fact .. that the defendant did not read the condition on the ticket and did not know their contents is immaterial.. by his signature he elected to take the risk and he is bound. PARKER v THE SOUTH EASTERN RAILWAY CO., 1877 CPD. Parker deposited a parcel worth over 10 at the cloakroom and received a ticket with the words See back. A condition at the back stated that the railways would not be responsible for articles exceeding 10 in value. The parcel was lost and Parker sued. The court laid down guidelines on tickets being unsigned documents containing waivers of liability. Where contracting party does not know that the ticket includes writing, he is not bound by any conditions contained in that ticket. Where he knows the ticket contains writing which includes conditions, he is bound Where he knows that the ticket contains writing but not that it contains conditions, then two distinct situations arise: o For documents which by their accustomed use in regular commercial practice would be supposed to contain conditions, the customer is bound even if he is neither a man of business nor a lawyer e.g. with a bill of lading. For documents [e.g. cloakroom tickets] where one cannot reasonably be expected to suppose contain conditions even if they do, the customer is not bound.

CSAR v McLAREN, 1903 TS.


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McLaren deposited a parcel at the Pretoria station cloakroom and received a ticket which contained a statement [partly obscured by a clerks writing] wavering responsibility for any articles over 5 in value. McLaren was aware there was writing on the ticket but he did not realise it contained a condition and this was not pointed out to him and there was no notice. The parcel was lost and McLaren sued for its value. The court ruled for McLaren the ticket was a mere voucher and the railways had not drawn his attention to the condition. A left luggage receipt is not a ticket. DYER v MELROSE STEAM LAUNDRY, 1912 . Laundry lists stated that articles were washed subject to conditions on the back. These limited liability for articles lost. Dyer never read the conditions. His clothes were subsequently lost. At the hearing it emerged that Dyer had used the lists several times. The company was nevertheless found liable: Dyer was not bound. CSAR v MCLAREN 1903 TS Mclaren deposited his luggage at a railway station. He was given a ticket, which had a clause stating that the railways would not be liable for loss of articles exceeding five pounds in value. This clause was partially obscured by the clerk who wrote on the face of the ticket. When the package was stolen and the railways refused to make good the loss, Mclaren sued and the court held that the railways had not done what was sufficiently necessary to bring the attention of the customer to the conditions. In any event, the ticket was a mere voucher where one could not reasonably expect to find such a clause PARKER v SOUTH AFRICAN RAILWAY Co. 1877 Parker left a parcel at a railway cloakroom and was given a ticket with the words see back. At the back was an indemnity clause exempting the railways from liability for loss of packages deposited. Parkers parcel was lost and he sued. The Court said that where a condition is reasonably expected to be on a document, the customer will be bound. There are documents such as bills of lading and railway tickets, which invariably contain conditions. DYER v MELROSE STEAM LAUNDRY 1912 TPD Dyer took his clothes to the dry cleaners and they were lost. It was held that since there was no evidence to show that Dyer was aware of the conditions excluding liability, the drycleaners had not done what was reasonably necessary to bring the Dyers attention to those conditions. They were therefore liable. ROSEVEARE v AUCKLAND PARK SPORTING CLUB. 1907 Roseveare was mistaken for another and taken into custody and subsequently thrown out of the club race course. He sued for damages for wrongful arrest. The club claimed that on its printed programmes it reserved the right to refuse admission for anyone whose presence the did not desire without having to give any refund for money paid. They claimed that this right to eject and refuse admission was a term universally implied and understood in the case of entry tickets to races and that therefore it had become incorporated by custom. The court rejected this argument. While admission may be subject to good conduct/behaviour there was no right to to remove even a harmless and inoffensive spectator. The right claimed was not universal and notorious. The term was printed in small letters in an inconspicuous place at the end of the programme whose purchase in any event was optional. Roseveare did not know of the rule: it was not advertised and was not printed at the entrance. Racing programmes whose purchase in not compulsory are not tickets where one would expect terms/conditions. MISTAKE
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MARITZ v PRATLEY (1894) SC In this case it was held that there was dissensus not consensus. An auctioneer held a sale in a store. All articles were catalogued and the catalogue was printed and circulated. Pratley read the catalogue. One condition of the sale, stated in the catalogue was that purchasers were to acquaint themselves with the articles under offer. In addition this condition was read out at the beginning of the sale. Lot 1208 was a mantelpiece on which stood Lot 1209, a large mirror. The auctioneer called for bids for what he intended to be Lot 1208 [the mantelpiece/table] alone but Pratley bid thinking that the mirror [Lot 1209] was also included. Lot 1208 was knocked down to Pratley and the auctioneer proceeded to sell Lot 1209 to another person. The circumstances were such that at one moment a member of the audience asked what it was the auctioneer was selling. Pratley refused to pay both the price and the commission on the mantelpiece only. The court held that there was no sale due to bona fide mistake: Pratley did not agree to purchase the same thing that the seller/auctioneer was endovouring to sell. Both acted reasonably in the circumstances. At an auction, prospective buyers were asked to inspect the goods before buying them. There was a mirror on top of a marble table. Pratley bid for the table thinking that the mirror was part of the table. When he refused to pay for the goods separately, he was sued by the auctioneer. It was held that there was a mistake, consequently the parties minds did not meet and the contract was void. CONTRACTUAL CAPACITY Nash vs Inman DAMA v BERA 1910 TPD Bera, 21 years old, and a minor under South African law was employed as a domestic for 4/5 years. She controlled her own income and contributed for board and lodgings to her mother and stepfather with whom she lived. The stepfather disclaimed responsibility for her. Bera sued Dama for wages due. Dama raised the defence that Bera, being a minor did not have locus standi in judicio. The court held that Bera, in her circumstances, had been emancipated. WOOD v DAVIES, 1934. CPD. Wood's father used interest belonging to his minor son to buy a house for 1 750 on an instalment basis. It was late established that the house was worth only 1 550. a clause entitled the seller to cancel and retain arrear instalment if any instalment was not made. Wood lived on and off in the house as he was in boarding school some of the time. On attaining majority a substantial amount was still owing. He then sought to cancel the contract. The court ruled that assisted contracts which are substantially detrimental to a minor especially those extending beyond minority may be set aside by the court along with a grant for restitution upon application by the minor when he reaches majority. The court noted that: The price was excessive Wood did not really require the property It hampered him in his free administration of his income The terms were harsh.

SKEAD v COLONIAL BANKING & TRUST CO. LTD, 1924.


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A minor [8 days before his majority] signed a promissory note on an endowment policy valued 750 in his favour on the authority of his guardian. Skead, the minor, being short of money because of his spendthrift ways repudiated liability. Skead was bound: assisted contracts which are clearly beneficial to a minor at the time they are entered into are binding on the minor, even though they extend beyond his majority and prove to be subsequently disadvantageous. EDELSTEIN v EDELSTEIN, 1952. Miss Daniel, a minor, married Mr Adelstein with the consent of both her parents [then divorced]. She also entered into an ante-nuptial contract assisted only by her mother who had custody but not guardianship. This second contract, with her future husband, was therefore a contract by a minor without the assistance of her guardian. It also excluded community of property. When her husband died Mrs. Edelstein believed that as a consequence of the ante-nuptial contract she was entitled only to those benefits under Mr. Edelstein's will. She therefore accepted only those benefits and entitlements. Subsequently she was advised that the ante-nuptial contract was in fact not binding and that therefore her marriage had been in community of property.

Van den Heever, JA: In Roman-Dutch law, the judgement of a minor is considered immature throughout his minority and he is consequently not bound by his contracts
A contract entered into by a minor without the assistance of his guardian is not binding upon the minor. STUTTAFORD v OBERHOLZER 1921 CPD Oberholzer a minor bought a motorcycle on hire- purchase. When he became a major, he continued to ride the motorcycle but failed to pay instalments. When sued he pleaded minority at the time of the contract as defence. Oberholzer was bound due to ratification by deed as he continued to use the bike in full knowledge of his legal position. TONNE v FOGGIT 1938 TPD Foggit a minor child entered into a contract without the knowledge of his father or natural guardian to take lessons at a college for two weeks in March and for the whole of April -fees being payable in advance. He paid only for the March lessons and attended them but neither paid nor attended the April lessons. Held he was liable for only the two weeks that he had attended since he had no fraudulently misrepresented anything. The court focussed on the benefits actually enjoyed. A minor is liable to the extent enriched and so Foggit paid only for services received. DURESS BLACKBURN v MITCHELL (1897) SC A ship was in danger of sinking in bad weather. A tug came to the rescue and its captain demanded 2 000 from the captain of the ship in peril. When the latter said it was too much, the captain of the rescuing tug threatened to leave them to drown, whereupon the beleaguered captain agreed. The court said the contract was void for duress. The captain of the stricken ship had signed under protest. I will sign this bill, but you will never get paid. The sailors were however entitled to fair and reasonable recompense assessed at 1 000 instead of the original 2 000 demanded. In the case of duress of goods [as here] as opposed to duress of person, the court will require that in addition to the five points listed in Broodryk, there must have been a categoric protest at the time of the contract. BROODRYK v SMUTS NO 1942 TPD
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Broodryk a married man and with one child alleged he had enlisted for military service following threats by two government officials that he would be regarded as hostile and interned unless he did. He claimed rescission of the contract. The court listed 5 elements for duress: 1) Actual violence or reasonable fear. 2) Fear must arise from threat of considerable evil to the party or his family 3) Threat must be of imminent/inevitable evil

4) Threat or intimidation must be contra bonos mores


5) The pressure used must have caused damage. The court ruled in Broodryks favour because of duress by the governments agents. Broodryks fear was not vain or foolish; it was sufficient to overcome a mind of ordinary firmness. UNDUE INFLUENCE PRELLER v JORDAN 1956 SA Jordaan [an elderly farmer] donated and transferred 4 farms to Preller [his doctor and advisor] to be administered by Preller for the benefit of Jordaans wife and farm labourers. Preller subsequently transferred one farm to his son and 2 to his daughter. Jordaan sought to recover the farms arguing that he had been sick, spiritually weak, and mentally/physically exhausted and had fallen totally under the influence of his doctor. He argued that Preller had used his influence improperly otherwise he [Jordaan] would never have agreed to the transfer. Restitution was granted for one farm still retained by Preller but not for the other three which had been transferred to Prellers children. It was explained that a contract obtained by undue influence is not void and is thus valid ab initio. It is merely voidable and so transfer had passed irretrievably. PATEL v GROBBELAAR, 1974. Grobbelaar sought cancellation of a mortgage bond registered against his property in favour of Patel thinking he owed Patel a loan for R40 000. Grobbelaar had been persuaded by Patel to believe that Patel had supernatural powers. In fact Grobbelaar owed Patel no money. The court ruled in Grobbelaars favour and they listed essential requirements for undue influence as follows: [1] One party exercises influence over another. [2] That influence weakened his powers of resistance and made his will pliable. [3] The influence was exercised in an unscrupulous manner in order to obtain his consent. [4] The agreement is to his detriment [5] Under normal free will he would not have consented. Under undue influence one party achieves dominance over another and uses that dominance improperly to persuade the other into a prejudicial contract which he would not otherwise make. The resultant contract may be set aside. Company as a separate legal entity : On its formation a company acquires the capacity to have its own rights and duties apart from its members. This principle is exemplified in the English case below concerning a oneman company: SALOMON v SALOMON & CO. LTD, 1897.
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S sold his business to a company that he himself had floated on 20 000 shares of one pound each together with debentures valued 10 000 secured by a bond over the companys assets. The other shareholders were his wife and 5 children who held one share each. A year later the company was liquidated. It then had assets sufficient for the secured debentures only and nothing remained for the unsecured creditors who argued that Salomon and his company were in essence one and the same person and that as a person he should be liable for the companys debts. The House of Lords decided that, from its inception the company was separate from its members. Even though it may be that after incorporation the business is precisely the same as it was before and the same persons are mangers and the same hands receive the profits. DADOO LTD & OTHERS v KRUGERSDORP MUNICIPAL COUNCIL. 1920. it was held that a South African statute which prohibited Asiatics from owning immovable property in the Transvaal did not apply to companies controlled by Asiatics since a company is separate and distinct from its members. KELNER v BAXTER & OTHERS. 1866. Baxter, acting as an agent for a proposed company bought wine worth 900 from Kelner in January 1866. the wine was consumed. On 1 February the directors of the proposed company purported to ratify the agreement. However the company which was not incorporate until 20 February collapsed soon afterwards. Kelner sued Baxter for payment. The company again tried to ratify the agreement. It was held that Baxter was personally liable even though this was never intended and even in the face of attempted ratification. The company was considered a stranger to the agreement because one cannot contract as an agent for a no-existent 3rd party. McCULLOGH v FERNWOOD ESTATES, 1920. Aspey acting as a trustee for a proposed company contracted with McCullogh to buy land for the company for 10 000. The company, Fernwood Estates was duly formed and it adopted the contract. McCullogh sued the company for payment against transfer. Aspey had undertaken to adopt the contract if the company failed to ratify the agreement. [he was there acting personally and not as an agent] One may contract in an individual capacity [not as agent] for the benefit of a non-existent 3rd party who, on coming into existence may ratify the contract and assume liability. If the 3rd party does not ratify, the original party is bound. Note: Section 32 of the Companies Act on pre-incorporation contracts: a party may contract for a company in the process of formation as an agent without incurring liability even if the contract is not ratified provided: Contract is in writing The person must profess to act as agent/trustee of the unformed company The memorandum on registration must allow for the adoption of the contract in one of its objects. The contract [or a certified copy] must be lodged with the memorandum The company after incorporation must adopt the contract. MISPRESENTATION DONNER MOTORS v KUFINYA 1968 SA The parties agreed to sell each other a car. The seller agreed to rectify the defects on the car and the buyer then signed a contract. The contract however, had a voetstoots clause, which
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the buyer had not seen. The seller relied on this clause in refusing to effect repairs. The court said the contract could be set because of misrepresentation by the seller. DIBLEY v FURTER 1951, SA The buyer of a farm sued the seller alleging that the seller had failed to disclose that the farm has a graveyard. It was held, the buyer could not seek relief but could rely on fraudulent misrepresentation by the seller because even though the farm could still be used for the purpose for which it was bought (the graveyard had been ploughed over), the buyer would not have bought the farm had he known about the graveyard. Restitution was granted. A seller sold a farm some 4 acres [1.5 ha] on which there stood a dwelling house. A substantial portion of the farm had been used as a graveyard in which over 80 people had been buried in the four years before the sale. With no intention to deceive, the owner had removed all external indications of the graves to allow him to cultivate the land. The seller did not disclose the existence of these graves. The court held that the buyer was entitled to cancel the contract and claim damages. Non-disclosure of a material latent defect [in order to mislead a buyer and induce a sale] known to the seller is fraudulent misrepresentation. LION MATCH CO. LTD v WESELS, 1946. Wessels sued for payment for wood sold and delivered in terms of an illegal contract because Wessels did not have the necessary Government permit. Wessels failed in his action. He was seeking enforcement of an illegal contract even though he may have been ignorant [as he claimed] of the requirement for a permit. The ex turpi causa rule applied in this case because Wessels sought to enforce performance by the company; not recovery of property delivered. It makes no difference. If the plaintiff has himself made performance of his obligations, for performance does not validate the agreement. SPECIFIC PERFROMANCE HAYNES v KINGWILLIAMSTOWN MUNICIPALITY. 1951. SA. AD The Municipality was contractually obliged to release 250 000 gallons of water to Haynes farm daily. This was done faithfully but during a drought, the amount of water pumped was reduced. The Court did not order specific performance because this would have brought hardship on the whole community. In a fitting case the court has discretion to refuse a demand for specific performance e.g. where: [1] Damages would provide adequate compensation. [2] The thing claimed is readily available elsewhere [3] It would be difficult for the court to enforce its decree [4] Specific performance entails rendering services of a personal nature. [5] Where the agreement is unreasonable. [6] The decree would produce injustice or would be inequitable under the circumstances [7] The order would operate unreasonably hard on the defendant Kingwilliamstown owed a public duty to residents. LAMB v WALTERS, 1926. Walters agreed to buy land but later argued that the agreement had been induced by Lambs assurance that the price was fair and reasonable whereas it was grossly excessive. The contract was upheld: a mere statement of opinion provided it is honestly held is not a misrepresentation. HERSMAN v SHAPIRO & Co.1926 TPD
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Hersman sold corn to Shapiro and Co. The corn was not yet in existence at the time. Moreover, there was a crop failure and Hersman failed to deliver. He argued impossibility of performance but the Court said even though impossibility might excuse performance, where a contract is of a speculative nature, one could not rely on impossibility: Possibility of loss was within the contemplation of the parties, hence Hersman was liable for damages. (But not for specific performance). VAN BREDA v JACOBS 1921 AD Custom will be enforceable by the courts where it is 1) Reasonable 2) Certain 3) Long standing 4) Uniformly observed 5) Consistent with statute The court decided that the defendants had violated the custom of 'first come, first pull which applied among fishermen at False Bay. BOYD v NEL 1922 Nel gave Boyd an option to purchase a farm but then allowed prospecting. In the result, Government declared the farm an alluvial digging. Meanwhile Boyd had arranged to subdivide the farm into plots for resale. Nels action forced him to abandon those plans. An option is a separate contract binding on the offeror. HERSCH v NEL 1948 Nel offered E&A Hersch a written option to purchase two farms. E & A Hersch ceded the option to I Hersch who exercise the option to buy the farms within the stipulated time. However Nel refused arguing that the right of acceptance could not be ceded. It was however held that where the otpion consists of an offer to buy for cash such is capable of being ceded. Thus Nel was in breach of the option and so I Hersch as a potential cash buyer could sue. Davis AJA: it can make no difference to the vendor whether he is dealing with a millionaire or a pauper, with an honest man or a convicted thief... an option for cash is ordinarily capable of being ceded. LAWS v RUTHERFORD 1924 Mrs. Rutherford offered Laws a contact to cut wood on her farm; acceptance to be by registered letter by 26 July. Laws moved on to the farm and started work but omitted to send the necessary registered letter. Innes CJ: Laws was interdicted from remaining on the farm. "Speaking generally, when the acceptance of an offer is conditioned to be made within a time or a manner prescribed by the offeror, then the prescribed time limit and manner should be adhered to". DIETRICHSEN v DIETRICHSEN 1911 Dietrichsen sued his brothers for transfer of farmland which he said had been sold to him. The brothers had signed an agreement of sale on 1 November 1907. Dietrichsen said he would sign but did not do so until February 1908. But he did not tell his brothers until later. By then the brothers were no longer interested in the sale and they said as much. Ruling: Acceptance must be communicated to the offeror. A mere stated intention to accept is not sufficient. ELIASON v HENSHAW 1819 (US Supreme Court)
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Eliason sent a letter by wagoner offering to buy flour from Henshaw and asked for reply by return of wagon. Henshaw believing it to be quicker sent his reply by post. This arrived later than the wagon and to a different place. Ruling: An offeror may not dictate the manner of refusal but he may specify the method of acceptance. DIEDRICKS v MINISTER OF LANDS 1964 Diedricks hired farm properties from the State in 1953. He was granted the right to purchase the properties for R5 286. Clause 20 of the written agreement allowed the state to repossess the properties or part of the properties for irrigation for a specified amount. In 1962 a regional representative of the State offered Diedricks R2 477 without reference to Clause 20. Diedricks accepted the offer. Subsequently the State discovered that Clause 20 allowed repossession for only R628.73 and the State then repudiated its offer claiming an error through the clerks oversight. Diedricks had not been aware of Clause 20. He however rejected the repudiation. Held: The contract was binding. It [the mistake] was merely incidental it relates only to the reasoning or motivation of the party seeking to escape not to the identity or nature or even to the quality of the subject matter of the contract, for on that score the parties were ad idem, each receiving and giving exactly what he bargained for. Justus error did not exist. The mistake was due to negligence. Diedrickss ignorance of Clause 20 was not relevant. A mistake as to motive will never void a contract unless induced by misrepresentation. INSANITY PRINSLOOS CURATORS BONIS v CRAFFORD & PRINSLOO 1905 Prinsloo was declared by the court to be of unsound mind. While this was in force but at a time when he was of sound mind, Prinsloo got married in community of property voluntarily and while understanding the nature of his actions. However, the validity of this marriage was called into question. The Court held that the marriage was valid and that he was sufficiently lucid at the time. Prinsloo was able to understand the nature of the contract.. and to appreciate the duties and responsibilities which were created by that contract [Solomon, J] VAN METZINGER V BADENHURST 1953 Drunkenness renders a contract void where it destroys reason absolutely for contracts entered into while the person is in this state, so long as it continues. Except when it goes so far as absolutely to destroy reason to the point of unawareness of the contract and ignorance of its provisions. Any incapacity claimed must be proved by the person relying on it. SCHIERHOUT v MINISTER OF JUSTICE. 1926. Schierhout was compulsorily retired from the public service. He disputed this action and continued to serve then he sued to recover salary due to him for services he rendered for three months after his compulsory retirement. It was ruled that the retirement was contrary to statute and hence a nullity. In its judgement the court the only remedy open to an ordinary servant who has been wrongfully dismissed is an action for damages. The court will not decree specific performance against the employer. this is due to the inadvisability of compelling one person to employ another whom he does not trust for nor court could by its order compel a servant to perform his work faithfully and diligently. In general, the courts will not order specific performance where a contract involve rendering continuous personal services.
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PETERS, FLAMMAN & CO. v KOKSTAD MUNICIPALITY 1919 AD Peters Flamman and Co. contracted to light the town with acetylene gas. While the contract still had 10 years to run, Peters and Flamman were interred as enemy subjects. Their business was then wound up. The Municipality claimed 20 000 damages and forfeiture of plant and equipment. Held: If a person is prevented from performing his contract by vis major or casus fortuitus including an act of State, he is discharged from liability. JUTA & CO. LTD v RORICH 1924 The publishing company delivered books to Rorich (a teacher) for sale to pupils. He was given lists of prices and had to return unsold books. No time limit was set for this. However, several unsold books were burnt in a fire and Juta sued for those books. The court held that Rorich was a mere agent and there was no agreement of sale. Thus risk had not passed and Rorich was not liable. In a contract of sale there must be an agreement by one party to sell and by another to buy. There was no such agreement in this case. WILMOT v SUTHERLAND 1914 Bundles of forage were placed beside a wagon loaded with more forage. The customer examined the bundles beside the wagon and then bought 200 bundles. These proved to be musty. Wilmot then sued arguing that the bulk did not correspond with the sample. Ruling: Wilmot was bound. This was not a case of sale by sample but one of puffing or mere commendation, which amounted to advertisement. Thus the maxim in the absence of fraud caveat emptor applied. Where goods being sold can be inspected, the adjacent display of sample goods does not constitute sale by sample it is not warranty of the quality of goods. ELLIOT v McKILLOP 1902 An auctioneer selling bricks as a lot not by number estimated (at the request of the customer) the number of bricks to be about 80 000. In fact there were only 50 000. Ruling: The buyer was bound as he had bought bricks as they stood. The seller had given an expression of opinion. Where goods are sold in bulk/as a lot, the mere expression of opinion as to quantity is not a warranty. If this is honestly held no liability arises. VLOTMAN v LANDSBERG 1890 A seller represented a cow being sold voetstoots to give 14 bottles of milk. In fact it gave only two. In this case the discrepancy was so wide it was not honestly held it was fraudulent. A seller is not protected for willful concealment of a defect of which he is aware even in a voetstoots sale. GOLDBLATT v SWEENEY. 1918 CPD Goldblatt discovered that the car he had bought from the defendant had a latent defect due to a welded crankshaft. He had the car overhauled before he sought to rescind the sale. Ruled: He could not obtain restitutio in integrum as desired but could seek actio quanti minoris. the very object of redibhitory action is to put each party back into his original position before the sale, that the purchaser restore the thing in its original condition. SOUTH AFRICA OIL & FAT INDUSTRIES LTD [SAOFI] v PARK RYNIE WHALING CO.[PRW] LTD 1916 SAOFI bought No. 3 whale oil from PRW for soap making. After using some of the oil for this purpose with unsatisfactory results and testing it, they discovered it to be a mixture of whale and sperm oil. SAOFI sought to rescind the contract. Ruling favoured SAOFI as delivery of incorrect oil was not proper discharge of contractual obligations. However, this was a latent defect and PRW was unaware of it as it required
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somewhat complicated analysis. They had therefore not acted negligently. However, SAOFI could no longer return the unused oil in its original condition following the tests made. They were therefore granted actio quanti minoris being the difference between the purchase price and the actual value of the thing sold. AFRICAN ORGANIC FERTILISERS & ASSOCIATED INDUSTRIES LTD v SIELING, 1949 A buyer sought to rescind a sale of kraal manure which was unfit for the purpose the seller knew the buyer had intended it. But he had used the manure and could not return it. The manure was used in the manner contemplated by the parties but it was useless and the buyer derived no benefit from it. The buyer was allowed to recover the purchase price. JAJBHAY v CASSIM 1939 AD Jajbhay held a licence to occupy a stand in a Johannesburg township. But this was illegal in terms of the township regulations. He sublet the stand to Cassim on a monthly basis. Cassim paid rent faithfully and observed all the terms of the lease. Jajbhay then sought to recover the stand by ejecting Cassim on the grounds of the illegality. The court took the view that in applying the par delictum rule, public policy should properly take into account the doing of simple justice between man and man. The rule is therefore subject to exceptions and thus restoration of something given under an illegal contract if public policy is not affected by the exception. Cassim had not been unjustly enriched but both parties were equally guilty as offenders under Regulation 22. Jajbhay was refused recovery.

Par delictum one party has performed and he seeks recovery. That party has not received a reciprocal benefit for performance on his side.
PETERSEN v JAJBHAY 1940 Facts are as above; Jajbhay had sublet to Petersen who (unlike Cassim) defaulted in his monthly payments. Jajbhay sought to eject Petersen. This time, ruling was in Jajbhays favour, though he could not recover the unpaid rent. The par delictum rule was relaxed to avoid unjust enrichment. Note: Ex turpi causa non oritur actio. From an evil cause no action will arise. By this rule no party can bring an action founded on the agreement; specific performance cannot be claimed. it makes no difference (even) if the plaintiff has himself made performance of his own obligations for performance does not validate the agreement. If, again, there has been performance of their undertakings by both parties, neither can obtain relief or redress. Each has obtained what he bargained for.

Christie: an illegal contract, even though unenforceable, will not be upset if it has been fully performed on both sides.
XAPA v NTSOKA 1919 EDL A sonin-law pointed out some cows to his father-in-law which constituted marriage dowry (lobola/roora). It was held that the pointing out of the cows constituted delivery by the long hand (traditio longa manu). POPPE, SCHUNHOFF & GUTTERY v MOSENTHAL & Co. 1879 The plaintiffs sold brandy to the defendants but before the brandy was set aside for the buyer (defendant), the government imposed a new excise duty on brandy. The question was who should bear the cost of the new surcharge? It was held that the seller bore the risk because the goods had not yet been set aside for the buyer.
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In a sale for fungibles [goods which have to be taken away from a larger stock of identical items], risk passes to the buyer only when such goods have been appropriated or set aside and separately identified for the buyer. ANNAMMA V MOODLEY. 1943 To cover a shortfall of funds,Annamma agreed to sell and transfer land to Moodley until he could raise sufficient money to cover all costs and charges for re-transfer. Until that time Annamma continued to exercise ownership rights even though Moodley was the registered owner. However Moodley sold the property to a 3rd party. Annamma after paying all amounts due sued for damages. To this Moodley replied that their agreement was vague and thus void as no deadline had been set. The court held that the plaintiff had paid within a reasonable time. Damages were therefore awarded. HERSCH V NEL. 1948. Nel [a usufructuary and agent of the owner] granted an option to E& A Hersch for the purchase of two farms for cash. E&A Hersch ceded the option to J Hersch [the appellant] who accepted the option within the stipulated time. In court Nel argued that the right could not be ceded. It was held that whereas an option normally is confined to the specific offeree, it may nevertheless be ceded to a 3rd party where it involves cash because it can make no difference to the vendor whether he is dealing with a millionaire or a pauper, with an honest man or a convicted thief.. an option to purchase for cash is ordinarily capable of being ceded. BIRD v SUMMERVILLE &ANOTHER, 1961 Bird used an estate agent to find a purchaser for a block of flats. A written agreement of sale initially naming Summerville as sole buyer was signed by Bird. However Summerville added the name of a second buyer who also signed the agreement. The estate agent argued that having been employed to sell the property the addition and identity of a second buyer was irrelevant. It was held that the estate agent clearly had no authority to enter into a contract of sale on behalf of the appellant, nor foist on him a buyer without his consent. They [the estate agent] acted merely as a conduit pipe. Hence the court established the principle that if A offers B, then C cannot accept: B plus C cannot accept either. However in Hersch v Nel, 1948 it was held that an option to purchase for cash is ordinarily capable of being ceded. ENTORES LTD v MILES FAR EAST CORPORATION, 1955. QB. Entores in London made an offer by telex to defendants agents in Amsterdam. A telexed acceptance was received in London. It was disputed where the contract had been made and hence which country had jurisdiction. It was held that the British court had jurisdiction because telephone/telex communication are virtually instantaneous. Such acceptance is valid at the time and place of receipt. TEL PEDA INVESTIGATION BUREAU [PTY] LTD. v VAN ZYL. 1965 VAN Zyl in East London sued Tel Peda in Johannesburg for unpaid money in respect of an investigation he had carried out for the company. The company [in JHB] had offered to employ Van Zyl over the telephone. Van Zyl speaking from East London accepted the offer. He argued that the East London court had jurisdiction. The court ruled that [as argued by the company] the JHB court had jurisdiction. A telephoned offer does not authorise a telephone acceptance. Parties in telephonic communication are inter praesentes [in each others presence]: In order to speak to each other they make use of an instrument that enables them to do so.. it follows that when the telephone is used to make an offer, the offeror is not authorising a method of acceptance which will be binding on
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him whether or not he is made aware of the acceptance. Acceptance is therefore valid only at the time and place of its receipt. Contracts in Restraint of Trade are fundamentally illegal being contrary to public policy. NORDENFELT v MAXIM NORDENFELT GUNS & AMMUNITION LTD. 1894 [HLHouse of Lords] Nordenfelt sold his gun & ammunition business to Maxim and undertook that over a period of 25 years he would not engage directly or indirectly in: Any similar business or any business competing or likely to compete in any way with that for the time being carried on by the company.

Ruling: All interferences with individual liberty of action in trade and all restraints of trade are contrary to public policy and are therefore void. However restraint may be justified by the special circumstances of a particular case if it is reasonable. Thus Clause 2 was held to be wider than necessary and therefore unacceptable while Clause 1 was reasonable as it merely gave adequate protection. In Book v Davidson, 1988, Dumbutshena CJ held that the party in breach of such an agreement must justify his action. RHODESIAN MILLING CO. PVT LTD v SUPER BAKERY PVT LTD. 1973. Rhodesian Milling Company sublet bakery premises to Super Bakery. In the agreement Super Bakery was to buy all its flour for that bakery and any other it had or might have in future from Rhodesian Milling. Super Bakery violated the agreement for the purchase of flour except for the sublet premises. Ruling: The provisions which Rhodesian sought to enforce were reasonable. Many apparently restrictive contracts are acceptable and are treated as part of normal commercial practice not restraint of trade. PEST CONTROL[CENTRAL AFRICA] LTD v MARTIN & ANOTHER. 1955. Martin left the Pest Control Co and promptly set up a company identical to his previous employer. The company claimed breach of Martin's previous employment contract which prohibited him from engaging in any agricultural, horticultural or medical control within the existing Central African Federation for two years after termination of employment. It was held that the company had a proprietary interest in its clientle. This was a specialised asset which the company was entitled to protect. The restriction was not excessive and the restraint was reasonable. CONTRACTUAL CAPACITY OF INSANE UYS v UYS Uys met his future wife in a caf one afternoon. He told her he owned a farm in the Orange Free State but was having problems running it. In the morning they were married. Then Mrs Uys started noticing questionable behaviours in her husband. She soon found out that he didnt even have a farm. She filed for divorce. It was established that Mr. Uys was mentally disturbed and thus not able to contract a marriage. PURCHASE AND SALE

JUTA & Co v RORICH 1924


The publishing company Juta deliverd books to Rorich [a teacher] for sale to students. A list of prices was supplied and Rorich was to for all books that he had sold. Unsold books were to
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be returned. No time limit was set for this. Several unsold books were destroyed in a fire and Juta sued for the unsold books. It was held that Rorich was a mere agent, no agreement of sale had taken place and risk had not passed to Rorich. A contract of sale is different from a contract of agency. It requires there must agreement by one party to sell and by the other to buy. In the absence of such agreement there is no sale.

Note : In the case of disguised agreements the court would interpret the agreement for what it really is i.e. a contract of sale. This is what happened in Treasurer-General v Lippert [1881] where an agreement of sale was described as a contract of agency & surety in order to evade payment of transfer duty.
THERON LTD [in liquidation] v GROSS 1929. The liquidators sold book debts to Gross at an auction for 16 10s. The auctioneer exhibited a list of the debts but disclaimed any guarantee for its accuracy. Neither the liquidators nor Gross knew at the time that some of the debts totaling 38 7s 7d had already been collected by the liquidators agents. Gross sued the liquidators for that amount. The court ruled in favour of Gross and awarded him the full amount of 38 7s 7d even though he had paid a lesser amount.

Principle: In general, a contract of sale for a nonexistent thing is void. But the company, by their own fault, had failed to inquire diligently into the matter. So they were defendants bound to deliver what was sold and if they could not....owing to their own conduct they were bound to pay the value of what they sold
XAPA v NTSOKA 1919 A sonin-law pointed out some cattle and identified them by their markings to his father-inlaw which constituted marriage dowry (lobola/roora). The cattle had not been collected at the time. It was held that the pointing out of the cattle constituted delivery by the long hand (traditio longa manu) which a fictitious form of delivery especially appropriate where the item is bulky or heavy making actual delivery difficult. Further, the court said two genuinely contracting parties can adopt which form of delivery they please. For this from of symbolic delivery there must be: An intention to adopt that from of delivery There must be pointing out in praesenti Placing the item at the disposal of the buyer Clear identification and ascertainment of the thing beyond any doubt and placing the merx at the disposal of the deliveree. POPPE, SCHUNHOFF & GUTTERY v MOSENTHAL & Co. 1879 The plaintiffs sold brandy to the defendants but before the brandy was set aside for the buyer (defendant), the government imposed a new excise duty on stocks of brandy in hand. The question was who should bear the cost of the new surcharge. The seller had paid duty and sought to recover this amount from the buyer. He had however not set it aside or marked or in any way appropriated it to the buyer. It was held that the seller bore the risk because the goods had not yet been set aside for the buyer. This was based on the principle that for fungibles goods which have to be drawn from a larger stick of identical item- risk passes from the seller when such goods have been appropriated to the buyer. TAYLOR & CO v MACKIE, DUNN &CO 1879. The case is similar to above except that though delivery had not been made, the seller had in accordance with the contract measured off the brandy,, reduced its strength and placed it in casks marked with the buyers name before the duty was imposed.
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August 2010

CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106)


WILMOT v SUNDERLAND 1914 Two or three bundles of forage were placed on the ground beside a wagon load of forage, intended by Sutherland for sale on the public market and open to inspection by potential buyers. Having examined the bundles beside the wagon, Wilmot bought 200. But these subsequently proved to be musty & Wilmot therefore brought an action on the ground that the bulk did not correspond with the sample. Wilmot was bound since this was not a sale by sample but mere puffing or commendation by acts or conduct. In such a case the maxim caveat emptor applies. Because the goods being sold could themselves be inspected and there was no evidence of fraud. ELLIOT v McKILLOP 1902. An auctioneer was selling bricks as a lot not by number. He was however persuaded by the buyer to give an estimate of the number of bricks. The seller estimated there were 80 000. It turned out after the sale that there were 50 000 instead. It was held that the buyer was bound because he got what he bought i.e. bricks in a kiln as they stood. The mere expression of an opinion is not a warranty but simply an estimate which if honestly held as here- is not binding on the seller. VLOTMAN v LANDSBERG 1890 SC A seller represented that a cow being sold voetstoots gave 14 bottles of milk per day when in fact it gave only two. The court held that the buyer was entitled to rescission plus damages. The discrepancy was too large and so it could not be an honest opinion or estimate. A seller is not entitled to willful concealment of a defect. GOLDBLATT v SWEENEY 1918. A buyer bought a car with a latent defect in the form of a welded crankshaft. He thoroughly overhauled the car in order to resell it. He then sought to rescind the contract. It was held that since he could not give restitutio in integrum , he was not entitled to actio redhibitoria but only to actio quanti minoris it was held that the very object of redhibitory action is to put each party back to its original position before the sale ... reasonable wear and tear excepted. HOLDEN & CO v MORTON & Co 1917. A manufacturer sold tins which he knew were to be used for canning fruit. Some of these cans leaked. He was held liable under the implied warranty against latent defects. This warranty applies where are unfit for their ordinary purpose but also for their special purpose provided the seller knew of such purpose at the time of the sale. SA OIL & FAT INDUSTRIES LTD v PARK RYNIE WHALING CO LTD 1916. Buyer bought No.3 whale oil for soap making. After using some of the oil and not getting satisfactory results he tested some of the oil and found out that he had in fact receive a mixture of whale and sperm oil which was not suitable for soap making. He sought to cancel the contract. He was granted actio quanti minoris. MARKS LTD v LOUGHTON 1920. Loughton [the buyer] sought to rescind a sale of eggs which had been condemned and subsequently destroyed by the local authority as unfit for human consumption. He was granted actio redhibitoria even though he could not restore the eggs. The general rule is that even where fraud is alleged the buyer must restore what was obtained under the contract. However, in this case after delivery without any fault on the part of the purchaser the subject matter of the contract of sale has perished owing to the very defect complained of. AFRICAN ORGANIC FERTILISERS & ASSOCIATED INDUSTRIES LTD v SIELING 1949.
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CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106)


Buyer sought to rescind a sale of kraal manure which proved unfit for a purpose the seller knew of at the time of the sale. However the manure had been had been used and so could not be returned. The court distinguished this case from SA Oil &Fat Industries Ltd v Park Rynie Whaling Co Ltd 1916 where the buyer still had the commodity which could not be restored for the reason that it had been mixed with other ingredients but still having a market value. This case was ruled similar to Marks Ltd v Loughton 1920. In the present case it is not a defect in the manure that has caused it to perish, but it is due to the defect in the manure that it was wasted, which is very much the same thing. In one case the article perishes through the defect. In the other [present] case the article perishes or is consumed by being used in the normal way as contemplated by the parties, but because of the defect it was useless and the buyer derived no benefit from it whatever. Similar cases to this are:

Platnauer v Morrison 1910 concerning defective seed potatoes and Montagu Co-operative Wines Ltd v Lewin 1912 concerning under strength wine. Neither could be returned but the buyers were able to recover the purchase price

To my Students : I hope you derived some value from these selected cases. No doubt you will identify many imperfections of one kind or another. Please assist me improve on this for the benefit of future students. Mbizi Rangarirai +263 773 984 672 +263 733 227 732

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August 2010