CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106

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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 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

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CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106)
o 24 the case number. It is very helpful to remember the names of the parties in question. The year is far less important. 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 defendant’s 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 tinplates 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
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these do not automatically invalidate the agreement unless the circumstances clearly indicate incompleteness due to continued negotiations as opposed to mere acceptance of one party’s right to fill the blanks unilaterally. Balfour agreed to pay his wife monthly maintenance of £30 while he was on civil service duty in Ceylon. The court rule in favour of Mr. 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”. DAWIDOWITZ v VAN DRIMMELEN. 1919 Mr. 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”. [See Strand Meat Co. The court upheld the contract because the vagueness was purely technical and no longer even relevant. Thus Van Drimmelen had to pay immediately. BALFOR v BALFOUR. 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”. 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. The agreement gave Mr Kantor an “unlimited option” leaving the offer open at the whim of the offeror. The court ruled that the contract was void for uncertainty since the terms had not been finalised: if the terms of an agreement are incomplete the offer inherent in those terms is indefinite and such agreement therefore void. but merely an invitation to do business. The court held that the shopkeeper had committed no offence because the display on the window was not an offer. 1913 Dawidowitz sued Van Drimmelen for payment for goods sold and delivered. IOBZ) Accounting Sciences and Finance Page 3 of 23 August 2010 . 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. Balfour: informal financial arrangement within the family are not enforceable at law. MBA. DE BRUYN V PEYPERS. Pty v Smith. KANTOR v KANTOR 1962 Through an ante-nuptial contract. Mbizi Rangarirai( Bcom (hons) Economics. stating that – if these conditions were agreed to –then “the further general clauses can be discussed”. Mrs Kantor sought performance of this promise but the husband argued that the agreement was void for uncertainty. 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”. He failed to do so and his wife sued. Similarly vagueness will not void an agreement if the vagueness can be clarified and the facts established. De Bruyn then tendered the full amount as cash and then claimed transfer. However note: Blundell v Blom 1950: In a written agreement involving blank spaces.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) 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. He was charged with offering the knife for sale since selling flick–knives was an offence. Peypers refused arguing that the terms on payment were vague and uncertain.

a robbery was perpetrated at the Cape Town premises of the defendant company and jewellery value at £5000 was forcibly removed. The Court said there was no offer. but when the pharmacist agreed to sell them. but at the time he did so.I. and if the one did not know what the other was proposing. Boots put the drugs on self-service counters and customers came and selected the drugs they wanted. 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. 1915 Lee gave information after Bloom. CARLLIL v CARBOLIC SMOKEBALL Co. It was held that the counter displays of the drugs were not offers but mere invitations to treat. there could be no contract. not when the drugs were taken from the shelves. JA: “Until the plaintiff knew of the offer. for a contract requires that there should be a “consensus” of two minds. The court sought to establish whether Lee was eligible after Bloom was ruled ineligible. 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:. it seems clear that he could not accept it and.” Statements of lowest price – even in response to a specific inquiry. Carllil took the drug and still fell ill and she thus claimed the reward. no offence was committed since the contract would only come into being.“Lowest price for Bumper Hall Pen £900”. Consequently. For disclosures are not information unless they contain something which is new. BLOOM v AMERICAN SWISS WATCH Co. In the press the following day.D. there was a definite offer to anybody who performed the conditions named in the advertisement. The defendants however refused to sell. but in this case.“We agree to buy Bumper Hall Pen for £900 asked by you”. The plaintiffs said the defendants had made an offer to sell which they accepted. Reward advertisements are therefore offers binding on the offeror if accepted as required.” Mbizi Rangarirai( Bcom (hons) Economics. he was not aware of the reward. “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. until he accepted it. “it is the person who gives information who is entitled to the reward offered.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. IOBZ) Accounting Sciences and Finance Page 4 of 23 August 2010 . The Company said the advertisement was not an offer but a “mere puff” and that in any case notification had not been given. The defendants then telegraphed:. Mrs. The Court said he/she could not be given the reward since he could not accept an offer of which he was unaware. Bloom supplied the required information to the C. 1915 AD On 19th March 1913. 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. it was only a response to a specific enquiry. LEE v AMERICAN SWISS WATCH Co. HARVEY & ANOTHER v FACEY & OTHERS.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) 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. Solomon. Notification in such cases is not required. putting them in baskets. The Court said the general rule is that advertisements are not offers.are not offers. It was contended that Boots were contravening the law by selling specified drugs over the counter. MBA. Further the company had deposited £1000 with a London bank as evidence of their sincerity.

Plaintiff then agreed to pay £1000 after all. gave the agency sole selling rights to receive commission even if the property was sold by another. The defendant rejected this. contrary to the advert. “it is trite law that an offer made by one person to another cannot be accepted by a third party”. In short. BLEW v SNOXELL 1931 TPD Blew offered to buy a piece of land from a company. will receive such reward. then C cannot accept and bind A unless A so wishes. had in fact accepted it by silence. Though adverts are not offers. whereupon Blew was notified. an auctioneer. There were contradictory dates and an “acceptance of an offer must be unequivocal i. The agency’s advertisement read: “Business wanted. upon becoming aware of the offer wrote to Richard Currie Ltd. then its terms must be followed unless the other party is notified of such departure. the offer was made to Richard Currie Ltd and not to Snoxell. provided he knew of the reward. EAST ASIATIC Co. lessee wrote that he intended to renew the lease for a further period of five years from 15 October 1946. the land in fact belonged to Snoxell who. IOBZ) Accounting Sciences and Finance Page 5 of 23 August 2010 . 1840 The defendants offered to sell land to the plaintiff for £1000. The plaintiff said he would pay £950 only.” SHEPHERD v FARREL’S ESTATE AGENCY.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) Where only one reward is available only the first person acting as required.” HYDE v WRENCH. In this case. 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. Anyone who is not the first will will not receive the reward even if the party who was first did not receive it. In a law suit later. 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. But by now the defendant no longer wished to sell. On 5 October 1946. by failing to timeously refuse to accept a counter offer.” Shepherd responded and signed a document which. It was held that there was no acceptance. 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. 1862 Felthouse had a nephew who owned a horse.e. positive and unambiguous”. Held: The contract Shepherd signed departed “most seriously from the advertisement”. MBA. v MIDLANDS MANUFACTURING 1954 SA The plaintiff argued that the defendant. 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. no charge. “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. accepting it. All advertisements at our expense.” FELTHOUSE v BINDLEY. The court ruled that a counter-offer had been made which amounted to rejection of the original offer. Our motto: no sale. mistakenly sold the horse to a third Mbizi Rangarirai( Bcom (hons) Economics. Blew argued that there was no contract between him and Snoxell and the Court agreed holding that. Richard Currie Ltd. 1921. However. It is not enough that the words of a reply justify a probable inference of assent … It must leave no room for doubt. if a contract arises from an advertisement. Bindley. which Felthouse wanted to buy. He wrote to the nephew to buy the horse saying. if A offers to B.

The court “was satisfied that the address was sufficient to direct the letter to its proper destination”. Felthouse then sued Bindley for damages equivalent to the value of the horse. CAPE EXPLOSIVE WORKS Ltd [CEW] v SOUTH AFRICAN OIL & FAT INDUSTRIES Ltd [SAOFI] (Also CEW v LEVER BROS [SA] Ltd. The court ruled that an incorrect spelling of the address by an offoree must be fundamental before it affects such acceptance. the offer becomes a contract on the posting of the letter of acceptance. with his open eyes. Acceptance was therefore valid upon its posting. CEW accepted each offer by letter posted in The Cape. The court ruled that the contracts were concluded in the Cape whose courts had jurisdiction. CAVEAT SUBSCRIPTOR GEORGE v FAIRMEAD 1958 SA A guest at a hotel was given a register to sign. “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. JP].. He cannot then be heard to say that his ignorance of what was in it was justus error. The Court said that there was a contract because the incorrect spelling was not so serious as to affect the contract. This is referred to as the Expedition Theory. Acceptance by telegraph is governed by the same rules as acceptance by letter. his assent to whatever words appear above his signature. IOBZ) Accounting Sciences and Finance Page 6 of 23 August 2010 . His clothes were stolen and the hotel refused to compensate him.40 am Dalton telegraphed his acceptance. However. If he chose not to read what that additional something was. But the court said he was bound by his signature. “ [Kotze. MBA. He signed the register without reading/familiarizing himself with a clause that exempted the hotel from claims arising out of theft.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) party. YATES v DALTON 1938 EDL Yates sent a telegraph to Dalton on 12 February. SALISBURY” whereas the correct street name was SINOIA ST”. SAOFI in Transvaal and Lever Bros in Natal made separate written offers to sell glycerine to CEW in the Cape. 1921) These 2 cases involved the same issue & were argued together having both occurred in 1916. It was held that there was a valid contract since an acceptance had been made before revocation. He said he had made a mistake through ignorance based on justus error believing that he was signing a mere register not a contract. A written offer authorises a written acceptance. in particular where a “written offer is made. LEVBEN PRODUCTS v ALEXANDER FILMS 1959 SA (SR) A letter of acceptance was sent by registered post but it failed to arrive. It was held that there was no contract since no acceptance had been made. a few minutes after 11.00 am. 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. [As in Cape Explosive Works]. he was. On 13 February at 9. the offeror could not impose conditions of refusal upon the offeree by forcing an offeree to act in a certain way.” Mbizi Rangarirai( Bcom (hons) Economics. It was contended by the appellant that the letter failed to arrive because it had been addressed incorrectly to “LEVBEN PRODUCTS 54 SINOLA STREET. In any event. consequently such acceptance is valid and the contract is concluded at the time and place of posting. Dalton received a telegram from Yates cancelling the offer. taking the risk of being bound by it.

even if the material was neither read nor pointed out. this did not change the principle. “The fact . 1921 AD. He lost the case. Burger read the consignment note before the goods left but did not check the regulations.    Where contracting party does not know that the ticket includes writing.. Innes CJ: The “broad rule is that writing is not essential [except in certain cases] to the validity of a contract. His use of an agent did not affect the “sound principle that a man. IOBZ) Accounting Sciences and Finance Page 7 of 23 August 2010 . a furnished house and other buildings. The goods were subsequently lost in transit and Burger sued for their full value. by his signature he elected to take the risk and he is bound. mere reference to the regulations was sufficient save for fraud or misrepresentation. 1949.. 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. The parties entered into an agreement for the lease of land. Parker deposited a parcel worth over £10 at the cloakroom and received a ticket with the words “See back. 1877 CPD. is taken to be bound by the ordinary meaning and effect of the words which appear over his [or his agent’s] signature. The courts assume that the written document is not a pre-condition to the validity of the contract. BHIKAGEE v SOUTHERN AVIATION PVT LTD. 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. when he signs a contract. he is not bound by any conditions contained in that ticket.” 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. he is bound Where he knows that the ticket contains writing but not that it contains conditions. 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. Woods argued that he was not bound because the contract had not been reduced to writing as had been agreed. one is bound under caveat subscriptor by his own signature . 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.” Thus when a signed written document is agreed to be a precondition of a contract such a contract is void without it. then two distinct situations arise: Mbizi Rangarirai( Bcom (hons) Economics. WOODS v WALTERS..” Though the regulations were not printed as part of the contract. The court laid down guidelines on tickets being unsigned documents containing waivers of liability.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) Thus unless induced by misrepresentation or fraud. Where he knows the ticket contains writing which includes conditions.” PARKER v THE SOUTH EASTERN RAILWAY CO. that the defendant did not read the condition on the ticket and did not know their contents is immaterial.. MBA.

1907 Roseveare was mistaken for another and taken into custody and subsequently thrown out of the club race course. The court ruled for McLaren – the ticket was a “mere voucher” and the railways had not drawn his attention to the condition. At the hearing it emerged that Dyer had used the lists several times. His clothes were subsequently lost. cloakroom tickets] where one cannot reasonably be expected to suppose contain conditions even if they do. These limited liability for articles lost. IOBZ) Accounting Sciences and Finance Page 8 of 23 August 2010 . 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. He was given a ticket. CSAR v MCLAREN 1903 TS Mclaren deposited his luggage at a railway station. 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. Dyer never read the conditions. with a bill of lading. the customer will be bound. 1877 Parker left a parcel at a railway cloakroom and was given a ticket with the words “see back”. For documents [e. o CSAR v McLAREN. They claimed that this right to eject and refuse Mbizi Rangarirai( Bcom (hons) Economics. At the back was an indemnity clause exempting the railways from liability for loss of packages deposited. the customer is bound even if he is neither ‘a man of business nor a lawyer’ e. MBA. the ticket was a “mere voucher” where one could not reasonably expect to find such a clause PARKER v SOUTH AFRICAN RAILWAY Co. The Court said that where a condition is reasonably expected to be on a document. Laundry lists stated that articles were washed subject to conditions on the back. The parcel was lost and McLaren sued for its value. There are documents such as bills of lading and railway tickets. 1903 TS.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) o For documents which by their accustomed use in regular commercial practice would be supposed to contain conditions. 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. which invariably contain conditions. A left luggage receipt is not a ticket.g. It was held that since there was no evidence to show that Dyer was aware of the conditions excluding liability. DYER v MELROSE STEAM LAUNDRY. ROSEVEARE v AUCKLAND PARK SPORTING CLUB. 1912. which had a clause stating that the railways would not be liable for loss of articles exceeding five pounds in value. DYER v MELROSE STEAM LAUNDRY 1912 TPD Dyer took his clothes to the dry cleaners and they were lost. He sued for damages for wrongful arrest. They were therefore liable. McLaren deposited a parcel at the Pretoria station cloakroom and received a ticket which contained a statement [partly obscured by a clerk’s writing] wavering responsibility for any articles over £5 in value. Parker’s parcel was lost and he sued. This clause was partially obscured by the clerk who wrote on the face of the ticket.g. the dry-cleaners had not done what was reasonably necessary to bring the Dyer’s attention to those conditions. the customer is not bound. When the package was stolen and the railways refused to make good the loss. The company was nevertheless found liable: Dyer was not bound.

he was sued by the auctioneer. An auctioneer held a sale in a store. Wood's father used interest belonging to his minor son to buy a house for £1 750 on an instalment basis. The circumstances were such that at one moment a member of the audience asked what it was the auctioneer was selling. Lot 1208 was a mantelpiece on which stood Lot 1209. Dama raised the defence that Bera. The term was printed in small letters in an inconspicuous place at the end of the programme whose purchase in any event was optional. It was held that there was a mistake. Pratley bid for the table thinking that the mirror was part of the table.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) 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. consequently the parties minds did not meet and the contract was void. There was a mirror on top of a marble table. Roseveare did not know of the rule: it was not advertised and was not printed at the entrance. When he refused to pay for the goods separately. The court held that Bera. 21 years old. At an auction. Mbizi Rangarirai( Bcom (hons) Economics. On attaining majority a substantial amount was still owing. 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. Pratley refused to pay both the price and the commission on the mantelpiece only. Both acted reasonably in the circumstances. a clause entitled the seller to cancel and retain arrear instalment if any instalment was not made. Racing programmes whose purchase in not compulsory are not tickets where one would expect terms/conditions. He then sought to cancel the contract. While admission may be subject to good conduct/behaviour there was no right to to remove even a “harmless and inoffensive spectator”. She controlled her own income and contributed for board and lodgings to her mother and stepfather with whom she lived. a large mirror. 1934. prospective buyers were asked to inspect the goods before buying them. being a minor did not have locus standi in judicio. The stepfather disclaimed responsibility for her. Wood lived on and off in the house as he was in boarding school some of the time. in her circumstances. The right claimed was not “universal and notorious”. Pratley read the catalogue. had been emancipated. WOOD v DAVIES. MISTAKE MARITZ v PRATLEY (1894) SC In this case it was held that there was dissensus not consensus. 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. CPD. Lot 1208 was knocked down to Pratley and the auctioneer proceeded to sell Lot 1209 to another person. CONTRACTUAL CAPACITY Nash vs Inman DAMA v BERA 1910 TPD Bera. MBA. stated in the catalogue was that purchasers were to acquaint themselves with the articles under offer. One condition of the sale. Bera sued Dama for wages due. It was late established that the house was worth only £1 550. and a minor under South African law was employed as a domestic for 4/5 years. The court rejected this argument. IOBZ) Accounting Sciences and Finance Page 9 of 23 August 2010 . In addition this condition was read out at the beginning of the sale. All articles were catalogued and the catalogue was printed and circulated.

purchase. She also entered into an ante-nuptial contract assisted only by her mother who had custody but not guardianship. a minor. When sued he pleaded minority at the time of the contract as defence. This second contract. Skead was bound: assisted contracts which are clearly beneficial to a minor at the time they are entered into are binding on the minor. MBA. 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. with her future husband. being short of money because of his spendthrift ways repudiated liability. 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. Skead. 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. even though they extend beyond his majority and prove to be subsequently disadvantageous. 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. 1952. JA: “In Roman-Dutch law. He paid only for the March lessons and attended them but neither paid nor attended the April lessons.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) 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. EDELSTEIN v EDELSTEIN. When her husband died Mrs. A minor is liable to the extent enriched and so Foggit paid only for services received. was therefore a contract by a minor without the assistance of her guardian. 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”. Held he was liable for only the two weeks that he had attended since he had no fraudulently misrepresented anything. Miss Daniel. he continued to ride the motorcycle but failed to pay instalments. Van den Heever. She therefore accepted only those benefits and entitlements. the minor. Edelstein's will. Mbizi Rangarirai( Bcom (hons) Economics. IOBZ) Accounting Sciences and Finance Page 10 of 23 August 2010 . Edelstein believed that as a consequence of the ante-nuptial contract she was entitled only to those benefits under Mr. 1924. The court focussed on the “benefits actually enjoyed”. When he became a major. LTD. It also excluded community of property. Oberholzer was bound due to “ratification by deed” as he continued to use the bike in full knowledge of his legal position. SKEAD v COLONIAL BANKING & TRUST CO. married Mr Adelstein with the consent of both her parents [then divorced]. STUTTAFORD v OBERHOLZER 1921 CPD Oberholzer a minor bought a motorcycle on hire.

it was sufficient “to overcome a mind of ordinary firmness”. PATEL v GROBBELAAR. the captain of the rescuing tug threatened to leave them to drown. 1974.” The sailors were however entitled to fair and reasonable recompense assessed at £1 000 instead of the original £2 000 demanded. The court ruled in Broodryk’s favour because of duress by the government’s agents. He claimed rescission of the contract. but you will never get paid. the court will require that in addition to the five points listed in Broodryk. Grobbelaar had been persuaded by Patel to believe that Patel had supernatural powers. 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. Preller subsequently transferred one farm to his son and 2 to his daughter. It was explained that a contract obtained by undue influence is not void and is thus valid ab initio.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) DURESS BLACKBURN v MITCHELL (1897) SC A ship was in danger of sinking in bad weather. BROODRYK v SMUTS NO 1942 TPD 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. Mbizi Rangarirai( Bcom (hons) Economics. The captain of the stricken ship had signed under protest. and mentally/physically exhausted and had fallen totally under the influence of his doctor. “I will sign this bill. 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 Jordaan’s wife and farm labourers. A tug came to the rescue and its captain demanded £2 000 from the captain of the ship in peril. He argued that Preller had used his influence improperly otherwise he [Jordaan] would never have agreed to the transfer. Grobbelaar sought cancellation of a mortgage bond registered against his property in favour of Patel thinking he owed Patel a loan for R40 000. In the case of “duress of goods” [as here] as opposed to duress of person. Restitution was granted for one farm still retained by Preller but not for the other three which had been transferred to Preller’s children. whereupon the beleaguered captain agreed. MBA. spiritually weak. The court said the contract was void for duress. IOBZ) Accounting Sciences and Finance Page 11 of 23 August 2010 . Jordaan sought to recover the farms arguing that he had been sick. In fact Grobbelaar owed Patel no money. there must have been a categoric protest at the time of the contract. Broodryk’s fear was not “vain or foolish”. The court listed 5 elements for duress: 1) Actual violence or reasonable fear. It is merely voidable and so transfer had passed irretrievably. When the latter said it was too much.

CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) The court ruled in Grobbelaar’s favour and they listed essential requirements for undue influence as follows: [1] One party exercises influence over another. Kelner sued Baxter for payment. Fernwood Estates was duly formed and it adopted the contract. 1866. This principle is exemplified in the English case below concerning a one–man company: SALOMON v SALOMON & CO. [4] The agreement is to his detriment [5] Under normal free will he would not have consented. [2] That influence weakened his powers of resistance and made his will pliable. The other shareholders were his wife and 5 children who held one share each. Aspey had undertaken to adopt the contract if the company Mbizi Rangarirai( Bcom (hons) Economics. 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. 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. However the company which was not incorporate until 20 February collapsed soon afterwards. 1920. A year later the company was liquidated. acting as an agent for a proposed company bought wine worth £900 from Kelner in January 1866. the wine was consumed. 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 company’s assets. Baxter. 1920. The company again tried to ratify the agreement.” DADOO LTD & OTHERS v KRUGERSDORP MUNICIPAL COUNCIL. [3] The influence was exercised in an unscrupulous manner in order to obtain his consent. 1897. McCullogh sued the company for payment against transfer. It was held that Baxter was personally liable even though this was never intended and even in the face of attempted ratification. McCULLOGH v FERNWOOD ESTATES. On 1 February the directors of the proposed company purported to ratify the agreement. The company was considered a stranger to the agreement because one cannot contract as an agent for a noexistent 3rd party. LTD. IOBZ) Accounting Sciences and Finance Page 12 of 23 August 2010 . The resultant contract may be set aside. Aspey acting as a trustee for a proposed company contracted with McCullogh to buy land for the company for £10 000. 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. KELNER v BAXTER & OTHERS. 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 company’s debts. The company. The House of Lords decided that. from its inception the company was separate from its members. MBA. 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.

the buyer would not have bought the farm had he known about the graveyard. the original party is bound. Restitution was granted. The seller relied on this clause in refusing to effect repairs. The seller did not disclose the existence of these graves. had a voetstoots clause. The seller agreed to rectify the defects on the car and the buyer then signed a contract. With no intention to deceive. MISPRESENTATION DONNER MOTORS v KUFINYA 1968 SA The parties agreed to sell each other a car.  The contract [or a certified copy] must be lodged with the memorandum  The company after incorporation must adopt the contract. 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. which the buyer had not seen. The court said the contract could be set because of misrepresentation by the seller. LTD v WESELS. the owner had removed all external indications of the graves to allow him to cultivate the land. If the plaintiff has himself made performance of his obligations. for performance does not validate the agreement. LION MATCH CO.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) failed to ratify the agreement. Non-disclosure of a material latent defect [in order to mislead a buyer and induce a sale] known to the seller is fraudulent misrepresentation. 1946. The ex turpi causa rule applied in this case because Wessels sought to enforce performance by the company. Wessels sued for payment for wood sold and delivered in terms of an illegal contract because Wessels did not have the necessary Government permit. 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). DIBLEY v FURTER 1951.5 ha] on which there stood a dwelling house. The contract however. A seller sold a “farm” some 4 acres [1.” SPECIFIC PERFROMANCE Mbizi Rangarirai( Bcom (hons) Economics. “It makes no difference. If the 3rd party does not ratify. MBA. 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. on coming into existence may ratify the contract and assume liability. It was held. SA The buyer of a farm sued the seller alleging that the seller had failed to disclose that the farm has a graveyard. IOBZ) Accounting Sciences and Finance Page 13 of 23 August 2010 . The court held that the buyer was entitled to cancel the contract and claim damages. He was seeking enforcement of an illegal contract even though he may have been ignorant [as he claimed] of the requirement for a permit. [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 nonexistent 3rd party who. not recovery of property delivered. Wessels failed in his action.

1926 TPD Hersman sold corn to Shapiro and Co. Walters agreed to buy land but later argued that the agreement had been induced by Lamb’s assurance that the price was fair and reasonable whereas it was grossly excessive. Meanwhile Boyd had arranged to subdivide the farm into plots for resale. one could not rely on impossibility: Possibility of loss was within the contemplation of the parties. Government declared the farm an alluvial digging. In a fitting case the court has discretion to refuse a demand for specific performance e. [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. HERSMAN v SHAPIRO & Co. Mbizi Rangarirai( Bcom (hons) Economics. This was done faithfully but during a drought. where a contract is of a “speculative” nature. The Court did not order specific performance because this would have brought hardship on the whole community. Moreover. SA.g. The contract was upheld: a mere statement of opinion provided it is honestly held is not a misrepresentation. there was a crop failure and Hersman failed to deliver. 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. (But not for specific performance). Nel’s action forced him to abandon those plans. AD The Municipality was contractually obliged to release 250 000 gallons of water to Haynes’ farm daily. LAMB v WALTERS. He argued impossibility of performance but the Court said even though impossibility might excuse performance. [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. 1951.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) HAYNES v KINGWILLIAMSTOWN MUNICIPALITY. where: [1] Damages would provide adequate compensation. first pull’ which applied among fishermen at False Bay. In the result. IOBZ) Accounting Sciences and Finance Page 14 of 23 August 2010 . 1926. MBA. An option is a separate contract binding on the offeror. BOYD v NEL 1922 Nel gave Boyd an option to purchase a farm but then allowed prospecting. The corn was not yet in existence at the time. [5] Where the agreement is unreasonable. the amount of water pumped was reduced. hence Hersman was liable for damages.

Clause 20 of the written agreement allowed the state to repossess the properties or part of the properties for irrigation for a specified amount.. He was granted the right to purchase the properties for R5 286. ELIASON v HENSHAW 1819 (US Supreme Court) Eliason sent a letter by wagoner offering to buy flour from Henshaw and asked for reply “by return of wagon”. But he did not tell his brothers until later. Davis AJA: it “can make no difference to the vendor whether he is dealing with a millionaire or a pauper. By then the brothers were no longer interested in the sale and they said as much. DIEDRICKS v MINISTER OF LANDS 1964 Diedricks hired farm properties from the State in 1953. 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. E & A Hersch ceded the option to I Hersch who exercise the option to buy the farms within the stipulated time. Rutherford offered Laws a contact to cut wood on her farm. The mistake was due to negligence. each receiving and giving exactly what he bargained for. IOBZ) Accounting Sciences and Finance Page 15 of 23 August 2010 . Laws moved on to the farm and started work but omitted to send the necessary registered letter. However Nel refused arguing that the right of acceptance could not be ceded. Thus Nel was in breach of the option and so I Hersch as a potential cash buyer could sue. Dietrichsen said he would sign but did not do so until February 1908. Subsequently the State discovered that Clause 20 allowed repossession for only R628. acceptance to be by registered letter by 26 July. Diedricks’s ignorance of Clause 20 was not relevant. with an honest man or a convicted thief. Ruling: “Acceptance must be communicated to the offeror. then the prescribed time limit and manner should be adhered to". Diedricks had not been aware of Clause 20. This arrived later than the wagon and to a different place. Diedricks accepted the offer. He however rejected the repudiation. Innes CJ: Laws was interdicted from remaining on the farm. Henshaw believing it to be quicker sent his reply by post. "Speaking generally.. The brothers had signed an agreement of sale on 1 November 1907. for on that score the parties were ad idem. MBA. an option for cash is ordinarily capable of being ceded”. INSANITY PRINSLOO’S CURATORS BONIS v CRAFFORD & PRINSLOO 1905 Mbizi Rangarirai( Bcom (hons) Economics. Ruling: An offeror may not dictate the manner of refusal but he may specify the method of acceptance. In 1962 a regional representative of the State offered Diedricks R2 477 without reference to Clause 20.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) HERSCH v NEL 1948 Nel offered E&A Hersch a written option to purchase two farms.” Justus error did not exist. A mistake as to motive will never void a contract unless induced by misrepresentation. It was however held that where the otpion consists of an offer to buy for cash such is capable of being ceded.” A mere stated intention to accept is not sufficient. DIETRICHSEN v DIETRICHSEN 1911 Dietrichsen sued his brothers for transfer of farmland which he said had been sold to him.73 and the State then repudiated its offer claiming an error through the clerk’s oversight. LAWS v RUTHERFORD 1924 Mrs. Held: The contract was binding. when the acceptance of an offer is conditioned to be made within a time or a manner prescribed by the offeror.

” Except “when it goes so far as absolutely to destroy reason” to the point of unawareness of the contract and ignorance of its provisions.” 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. Wilmot then sued arguing that the bulk did not correspond with the sample. Held: If a person is prevented from performing his contract by vis major or casus fortuitus including an act of State. the courts will not order specific performance where a contract involve rendering continuous personal services. Any incapacity claimed must be proved by the person relying on it. v KOKSTAD MUNICIPALITY 1919 AD Peters Flamman and Co. 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. Peters and Flamman were interred as enemy subjects. several unsold books were burnt in a fire and Juta sued for those books. In general. While this was in force but at a time when he was of sound mind. SCHIERHOUT v MINISTER OF JUSTICE. 1926. contracted to light the town with acetylene gas. PETERS. Schierhout was compulsorily retired from the public service. FLAMMAN & CO. Mbizi Rangarirai( Bcom (hons) Economics. However. Prinsloo “was able to understand the nature of the contract. 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. Their business was then wound up.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) Prinsloo was declared by the court to be of unsound mind. Prinsloo got married in community of property – voluntarily and while understanding the nature of his actions. and to appreciate the duties and responsibilities which were created by that contract” [Solomon. While the contract still had 10 years to run. IOBZ) Accounting Sciences and Finance Page 16 of 23 August 2010 . These proved to be musty. The court held that Rorich was a mere agent and there was no agreement of sale. In its judgement the court “the only remedy open to an ordinary servant who has been wrongfully dismissed is an action for damages. MBA. he is discharged from liability. The Municipality claimed £20 000 damages and forfeiture of plant and equipment. The Court held that the marriage was valid and that he was sufficiently lucid at the time. the validity of this marriage was called into question. Thus risk had not passed and Rorich was not liable. so long as it continues. 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. In a contract of sale there must be an agreement by one party to sell and by another to buy. The court will not decree specific performance against the employer. No time limit was set for this. 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. JUTA & CO. There was no such agreement in this case. However. It was ruled that the retirement was contrary to statute and hence a nullity..

However. If this is honestly held no liability arises. AFRICAN ORGANIC FERTILISERS & ASSOCIATED INDUSTRIES LTD v SIELING. SAOFI sought to rescind the contract. In this case the discrepancy was so wide it was not honestly held – it was fraudulent. The manure was used in the manner contemplated by the parties but it was useless and the buyer derived no benefit from it. 3 whale oil from PRW for soap making. This was not a case of sale by sample but one of puffing or mere commendation. Thus the maxim – in the absence of fraud – caveat emptor applied.” They had therefore not acted negligently. GOLDBLATT v SWEENEY. this was a latent defect and PRW was unaware of it as it required “somewhat complicated analysis. He sublet the stand to Cassim on a monthly basis. VLOTMAN v LANDSBERG 1890 A seller represented a cow being sold voetstoots to give 14 bottles of milk. Ruling favoured SAOFI as delivery of incorrect oil was not proper discharge of contractual obligations. IOBZ) Accounting Sciences and Finance Page 17 of 23 August 2010 . After using some of the oil for this purpose with unsatisfactory results and testing it. 1918 CPD Goldblatt discovered that the car he had bought from the defendant had a latent defect due to a welded crankshaft. The seller had given an expression of opinion. they discovered it to be a mixture of whale and sperm oil. “the very object of redibhitory action is to put each party back into his original position before the sale. Ruled: He could not obtain restitutio in integrum as desired but could seek actio quanti minoris. A seller is not protected for willful concealment of a defect of which he is aware even in a voetstoots sale.[PRW] LTD 1916 SAOFI bought No. the adjacent display of sample goods does not constitute sale by sample – it is not warranty of the quality of goods. In fact it gave only two. Mbizi Rangarirai( Bcom (hons) Economics. JAJBHAY v CASSIM 1939 AD Jajbhay held a licence to occupy a stand in a Johannesburg township. Ruling: The buyer was bound as he had bought bricks “as they stood”. Where goods are sold in bulk/as a lot.” SOUTH AFRICA OIL & FAT INDUSTRIES LTD [SAOFI] v PARK RYNIE WHALING CO. which amounted to advertisement. But this was illegal in terms of the township regulations.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) Ruling: Wilmot was bound. Where goods being sold can be inspected. 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. But he had used the manure and could not return it. He had the car overhauled before he sought to rescind the sale. that the purchaser restore the thing in its original condition. MBA. In fact there were only 50 000. the mere expression of opinion as to quantity is not a warranty. Cassim paid rent faithfully and observed all the terms of the lease. 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. 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. The buyer was allowed to recover the purchase price. However.

though he could not recover the unpaid rent. Damages were therefore awarded. “From an evil cause no action will arise. PETERSEN v JAJBHAY 1940 Facts are as above.” Christie: an illegal contract. However Moodley sold the property to a 3rd party. The court took the view that in applying the par delictum rule. It was held that the pointing out of the cows constituted delivery by the long hand (traditio longa manu). Note: Ex turpi causa non oritur actio. … Each has obtained what he bargained for. ruling was in Jajbhay’s favour. POPPE. Par delictum one party has performed and he seeks recovery. Jajbhay was refused recovery. the government imposed a new excise duty on brandy.” “If. Annamma after paying all amounts due sued for damages. This time. “it makes no difference (even) if the plaintiff has himself made performance of his own obligations for performance does not validate the agreement. “will not be upset if it has been fully performed on both sides. ANNAMMA V MOODLEY. SCHUNHOFF & GUTTERY v MOSENTHAL & Co. 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.” By this rule no party can bring an action founded on the agreement. 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. there has been performance of their undertakings by both parties. Until that time Annamma continued to exercise ownership rights even though Moodley was the registered owner. 1879 The plaintiffs sold brandy to the defendants but before the brandy was set aside for the buyer (defendant).CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) Jajbhay then sought to recover the stand by ejecting Cassim on the grounds of the illegality. risk passes to the buyer only when such goods have been appropriated or set aside and separately identified for the buyer. In a sale for fungibles [goods which have to be taken away from a larger stock of identical items]. IOBZ) Accounting Sciences and Finance Page 18 of 23 August 2010 . The court held that the plaintiff had paid within a reasonable time. Jajbhay had sublet to Petersen who (unlike Cassim) defaulted in his monthly payments. again. Jajbhay sought to eject Petersen. specific performance cannot be claimed. Cassim had not been unjustly enriched but both parties were equally guilty as offenders under Regulation 22. Mbizi Rangarirai( Bcom (hons) Economics. “public policy should properly take into account the doing of simple justice between man and man. neither can obtain relief or redress. That party has not received a reciprocal benefit for performance on his side. MBA.” XAPA v NTSOKA 1919 EDL A son–in-law pointed out some cows to his father-in-law which constituted marriage dowry (lobola/roora). To this Moodley replied that their agreement was vague and thus void as no deadline had been set.” 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. even though unenforceable. The par delictum rule was relaxed to avoid unjust enrichment.

QB. A telexed acceptance was received in London. Nel [a usufructuary and agent of the owner] granted an option to E& A Hersch for the purchase of two farms for cash.. The estate agent argued that having been employed to sell the property the addition and identity of a second buyer was irrelevant. Contracts in Restraint of Trade are fundamentally illegal being contrary to public policy. it follows that when the telephone is used to make an offer. 1948 it was held that “an option to purchase for cash is ordinarily capable of being ceded. It was held that the British court had jurisdiction because telephone/telex communication “are virtually instantaneous”. It was disputed where the contract had been made and hence which country had jurisdiction. Hence the court established the principle that if A offers B. Such acceptance is valid at the time and place of receipt. TEL PEDA INVESTIGATION BUREAU [PTY] LTD. v VAN ZYL. the offeror is not authorising a method of acceptance which will be binding on him whether or not he is made aware of the acceptance. E&A Hersch ceded the option to J Hersch [the appellant] who accepted the option within the stipulated time. However in Hersch v Nel. He argued that the East London court had jurisdiction. 1955. an option to purchase for cash is ordinarily capable of being ceded. A telephoned offer does not authorise a telephone acceptance. It was held that whereas an option normally is confined to the specific offeree. 1894 [HL-House 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 Mbizi Rangarirai( Bcom (hons) Economics. nor … foist on him a buyer without his consent”. Entores in London made an offer by telex to defendant’s agents in Amsterdam. 1948. NORDENFELT v MAXIM NORDENFELT GUNS & AMMUNITION LTD. with an honest man or a convicted thief. However Summerville added the name of a second buyer who also signed the agreement. then C cannot accept: B plus C cannot accept either. MBA.” ENTORES LTD v MILES FAR EAST CORPORATION. Van Zyl speaking from East London accepted the offer. 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. It was held that the estate agent “clearly had no authority to enter into a contract of sale on behalf of the appellant. 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. IOBZ) Accounting Sciences and Finance Page 19 of 23 August 2010 . The court ruled that [as argued by the company] the JHB court had jurisdiction.” Acceptance is therefore valid only at the time and place of its receipt. The company [in JHB] had offered to employ Van Zyl over the telephone.” BIRD v SUMMERVILLE &ANOTHER. A written agreement of sale initially naming Summerville as sole buyer was signed by Bird. 1961 Bird used an estate agent to find a purchaser for a block of flats.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) HERSCH V NEL. In court Nel argued that the right could not be ceded.. They [the estate agent] acted merely “as a conduit pipe”. 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.

CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) • “any business competing or likely to compete in any way with that for the time being carried on by the company. 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. 1955. She filed for divorce. Dumbutshena CJ held that the party in breach of such an agreement must justify his action. In the absence of such agreement there is no sale. The company claimed breach of Martin's previous employment contract which prohibited him from engaging in any agricultural. Uys was mentally disturbed and thus not able to contract a marriage. PEST CONTROL[CENTRAL AFRICA] LTD v MARTIN & ANOTHER. A contract of sale is different from a contract of agency. PVT LTD v SUPER BAKERY PVT LTD. Several unsold books were destroyed in a fire and Juta sued for the unsold books. It requires there must agreement by one party to sell and by the other to buy. Unsold books were to be returned. 1988. It was established that Mr. RHODESIAN MILLING CO. No time limit was set for this. Martin left the Pest Control Co and promptly set up a company identical to his previous employer. Note: In the case of ‘disguised’ agreements the court would interpret the agreement for what it really is i. This was a specialised asset which the company was entitled to protect. She soon found out that he didn’t even have a farm.” However restraint may be “justified by the special circumstances of a particular case” if it is reasonable.e. Then Mrs Uys started noticing questionable behaviours in her husband. It was held that Rorich was a mere agent. CONTRACTUAL CAPACITY OF INSANE UYS v UYS Uys met his future wife in a café one afternoon. 1973. In Book v Davidson. Rhodesian Milling Company sublet bakery premises to Super Bakery. MBA. In the morning they were married. It was held that the company had a proprietary interest in its clientèle. horticultural or medical control within the existing Central African Federation for two years after termination of employment. Many apparently restrictive contracts are acceptable and are treated as part of normal commercial practice not restraint of trade. IOBZ) Accounting Sciences and Finance Page 20 of 23 August 2010 . Thus Clause 2 was held to be wider than necessary and therefore unacceptable while Clause 1 was reasonable as it merely gave adequate protection. This is what happened in Mbizi Rangarirai( Bcom (hons) Economics. The restriction was not excessive and the restraint was reasonable. no agreement of sale had taken place and risk had not passed to Rorich. Ruling: The provisions which Rhodesian sought to enforce were reasonable.” Ruling: “All interferences with individual liberty of action in trade and all restraints of trade … are contrary to public policy and are therefore void. a contract of sale. A list of prices was supplied and Rorich was to for all books that he had sold. Super Bakery violated the agreement for the purchase of flour except for the sublet premises. PURCHASE AND SALE JUTA & Co v RORICH 1924 The publishing company Juta deliverd books to Rorich [a teacher] for sale to students. He told her he owned a farm in the Orange Free State but was having problems running it.

The auctioneer exhibited a list of the debts but disclaimed any guarantee for its accuracy. The cattle had not been collected at the time. THERON LTD [in liquidation] v GROSS 1929.. 1879 The plaintiffs sold brandy to the defendants but before the brandy was set aside for the buyer (defendant).owing to their own conduct they were bound to pay the value of what they sold” XAPA v NTSOKA 1919 A son–in-law pointed out some cattle and identified them by their markings to his father-in-law which constituted marriage dowry (lobola/roora). the government imposed a new excise duty on stocks of brandy in hand. POPPE. The case is similar to above except that though delivery had not been made. But these subsequently proved to be musty & Wilmot Mbizi Rangarirai( Bcom (hons) Economics. Neither the liquidators nor Gross knew at the time that some of the debts totaling £38 7s 7d had already been collected by the liquidator’s agents. Principle: In general. 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. the seller had in accordance with the contract measured off the brandy. The question was who should bear the cost of the new surcharge. This was based on the principle that for “fungibles” – goods which have to be drawn from a larger stick of identical item. Further. the court said “two genuinely contracting parties can adopt which form of delivery they please. had failed to inquire diligently into the matter. So they were “defendants bound to deliver what was sold and if they could not. a contract of sale for a nonexistent thing is void. by their own fault. 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..” 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. TAYLOR & CO v MACKIE. SCHUNHOFF & GUTTERY v MOSENTHAL & Co. Wilmot bought 200. DUNN &CO 1879. But the company.CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) 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. intended by Sutherland for sale on the public market and open to inspection by potential buyers.. It was held that the seller bore the risk because the goods had not yet been set aside for the buyer. The seller had paid duty and sought to recover this amount from the buyer.risk passes from the seller when such goods have been appropriated to the buyer.. He had however not set it aside or marked or in any way appropriated it to the buyer. WILMOT v SUNDERLAND 1914 Two or three bundles of forage were placed on the ground beside a wagon load of forage. IOBZ) Accounting Sciences and Finance Page 21 of 23 August 2010 . Gross sued the liquidators for that amount. MBA. Having examined the bundles beside the wagon. reduced its strength and placed it in casks marked with the buyer’s name before the duty was imposed. The liquidators sold book debts to Gross at an auction for £16 10s.

CASES for BUSINESS LAW (CUAC211) COMMERCIAL LAW (CUAC106) therefore brought an action on the ground that the bulk did not correspond with the sample. Buyer bought No. MBA. Mbizi Rangarirai( Bcom (hons) Economics. 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. Because the goods being sold could themselves be inspected and there was no evidence of fraud. IOBZ) Accounting Sciences and Finance Page 22 of 23 August 2010 . However. The court held that the buyer was entitled to rescission plus damages. The seller estimated there were 80 000. He then sought to rescind the contract. 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 was granted actio redhibitoria even though he could not restore the eggs. 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. A seller is not entitled to willful concealment of a defect. Some of these cans leaked. It turned out after the sale that there were 50 000 instead. 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.. HOLDEN & CO v MORTON & Co 1917. He was however persuaded by the buyer to give an estimate of the number of bricks.e. He was held liable under the implied warranty against latent defects.. bricks in a kiln “as they stood”.3 whale oil for soap making. ELLIOT v McKILLOP 1902. He sought to cancel the contract. In such a case the maxim caveat emptor applies. A buyer bought a car with a latent defect in the form of a welded crankshaft.is not binding on the seller. It was held that since he could not give restitutio in integrum . It was held that the buyer was bound because he “got what he bought’ i. The discrepancy was too large and so it could not be an honest opinion or estimate. SA OIL & FAT INDUSTRIES LTD v PARK RYNIE WHALING CO LTD 1916. 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. He thoroughly overhauled the car in order to resell it. reasonable wear and tear excepted”. GOLDBLATT v SWEENEY 1918. The general rule is that even where fraud is alleged the buyer must restore what was obtained under the contract. He was granted actio quanti minoris.” AFRICAN ORGANIC FERTILISERS & ASSOCIATED INDUSTRIES LTD v SIELING 1949. A manufacturer sold tins which he knew were to be used for canning fruit. Wilmot was bound since this was not a sale by sample but mere puffing or commendation by acts or conduct. MARKS LTD v LOUGHTON 1920. 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 . The mere expression of an opinion is not a warranty but simply an estimate which if honestly held –as here. An auctioneer was selling bricks “as a lot” not by number.

In one case the article perishes through the defect. “In the present case it is not a defect in the manure that has caused it to perish. 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. MBA. However the manure had been had been used and so could not be returned. In the other [present] case the article perishes or is consumed by being used in the normal way as contemplated by the parties. IOBZ) Accounting Sciences and Finance Page 23 of 23 August 2010 . but it is due to the defect in the manure that it was wasted. Please assist me improve on this for the benefit of future students. but because of the defect it was useless and the buyer derived no benefit from it whatever. which is very much the same thing. Mbizi Rangarirai +263 773 984 672 +263 733 227 732 Mbizi Rangarirai( Bcom (hons) Economics.” Similar cases to this are: Platnauer v Morrison 1910 concerning defective seed potatoes and Montagu Cooperative Wines Ltd v Lewin 1912 concerning under strength wine. No doubt you will identify many imperfections of one kind or another. 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.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.