@ a glance...

Unit 4 (Learning outcome 8) – Theories:

Time and place of the contract

Prescribed Resources
Textbook

Bhana, D.; Bonthuys, E. and Nortje, M. 2015. Students’ Guide to the Law of Contract 4th ed.
Claremont: Juta.
Study Chapter 3 par 3.4

Learning outcome 8:
Identify and describe the four theories that are used when determining the time and place of
the conclusion of a contract

Assessment criteria:
8.1 Explain why it is relevant to determine the time and the place that a contract is
concluded.
8.2 Determine the time and place of the conclusion of a contract when it has been accepted
using the theories of formation of contract.
8.3 Discuss the theories of formation of contract.
8.4 Discuss the information theory as the general rule and apply it to a set of facts.
8.5 Explain the exception to the general rule.
8.6 Determine the time and place of the conclusion of a contract when it has been accepted
using the theories of formation of contract.
8.7 Briefly explain the declaration theory.
8.8 Explain the expedition theory, with reference to case law.
8.9 Discuss the reception theory, with reference to its application in electronic transactions.
8.10 List the four rules of time and place of formation.
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Unit 4 LO 8 @ a glance
  4 Theories:

Information Reception Declaration Expedition

Contract Contract is The contract is The contract is
concluded when concluded when concluded when concluded when
and where and where and where and where the
offeror has offeror receives offeree declares acceptance is
knowledge that the acceptance, / expresses his transmitted
his offer is whether he is acceptance. (e.g. via post) to
accepted. The aware or not. the offeror. (I.e.
acceptance is when the offeree
communicated to posts the
offeror. acceptance to the
offeror).

 Know each theory in detail.

 Which theory is the general rule in South Africa?
 Which exceptions apply to the general rule?
 Identify and discuss which theory applies in the case of:
o Face to face contracting
o Telephone calls
o Fax
o Post
o E-mail and SMS communication
 When will the expedition theory apply?
 When will the reception theory apply? Here you must specifically focus on the
Electronic Communications and Transactions Act 25 of 2002. In this regard
you must study Jafta v Ezemvelo KZN Wildlife [2008] 10 BLLR 954 (LC) and
practice exercises 3.26 – 3.27.

NOTE: A contract can only be concluded in one place, at one time. You need to
identify which theory is the applicable theory in each scenario

Study Mind Map 3.3 in great detail and make use of the short and concise summary in
the textbook on p. 84 – 85.
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Unit 4 LO 8 @ a glance
 student@work
You must complete the following exercises in your textbook to master the section of
work.

LO 8: Exercise 3.22 – 3.25

Exercise 3.26

Exercise 3.27

Please also deepen your learning on units 2 – 4 by working through the following

activity:

1. X’s daughter struggles with math. X is concerned about her daughter’s upcoming

matric exams and decides to secure the services of a qualified math tutor. Whilst

looking through the newspapers on the morning of 2 March, X sees an

advertisement which had been placed by a Math Tutoring Centrum trading as ‘Math

Magicians’. The advert read as follows:

‘Why live in fear of your upcoming math exam? Let our wizards help you! Math

Magicians offers math tuition from 7 to 11. Our tuition service meets the

highest standards of professionalism. All our tutors are fully qualified math

teachers. With Math Magicians at your home, you need never have another

sleepless night.’ Phone us now on 011-8974356.

X phones Math Magicians on 2 March, and speaks to Y, the owner of the business. X

mentions the advert and tells Y that she requires a tutor immediately. Y confirms that

their tutors are highly trained and indicates that the centre would be able to offer

the services of a tutor every weekday for two hours at a cost of R3000 per months.

Y confirms that this service would be available immediately, but that it would be

‘necessary for some paperwork to be drawn up to set out the incidental terms or

specifics’, and that the documents would be sent to X as soon as possible.

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Unit 4 LO 8 @ a glance
On the 3rd of March X arrives home to find Z, a tutor from Math Magicians, tutoring

math to her daughter at her home. For two months Z tutors X’s daughter, and X pays

Math Magicians the required R3000 per month.

On 14 March certain documents from Math Magicians arrives in the mail for X. The

documents had been posted by Math Magicians on 9 March. It read ‘Contract for Math

Tutoring Services’ and contained three pages of fine print. At the end of the document

was a space for two signatures. Y, on behalf of Math Magicians, had already signed the

document in the space allocated to Math Magicians. The instructions on the cover of

the document requested X to sign the document and fax it to Math Magicians at the

number indicated.

On the evening of 14 March, X signed the documents without bothering to read them.

However, she only remembers to fax it to Math Magicians late in the afternoon of 22

March. The fax arrived at Math Magicians’ offices in Johannesburg at 5pm on 22 March

and is read by Y on 23 March.

Based on the above set of facts, answer the following questions:

a) Would you consider the above advertisement to be a valid offer? Explain your

answer with reference to the definition and requirements for a valid offer.

b) Would you consider Y’s telephonic conversation with X an offer?

c) Assume that the above telephonic conversation doesn’t constitute an offer, explain

whether the documents mailed by Math Magicians constitute a valid offer?

d) Assume that valid acceptance took place when X signed and faxed the documents

back to Math Magicians. Identify at what time and what place the contract was

concluded and give detailed reasons for your answer.

e) Would your answer in (d) above be different, if Y’s instructions on the cover letter

of the document read that the signed document must be faxed to her e-mail, as

she would be in East London for a few days on business? X faxes it to her e-mail

address late in the afternoon of 22 March. Y only manages reads her e-mail the next
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morning.
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Unit 4 LO 8 @ a glance
GUIDELINES:

a) Study public offers for a full discussion. Here are some key points to consider:

 An offer is an invitation by one party to create obligations with another with the

intention that the obligations will become legally binding upon acceptance by that

other party.

 Requirements for valid offer.

 Ask if the advert is sufficiently certain and complete - does it contain the

particulars of the service rendered or the price payable.

b) The conversation mentions further details. Could it be that Y intends further terms?

The written document contains fine print…

 All material terms should be set out in the agreement, which at the least should

contain essentialia and incidentalia.

 What about outstanding matters regarding the incidental terms that still need to

be negotiated? Discuss.

c) Are the terms now complete? Discuss.

d) Study the theories on the time and place of the contract. Key ideas to investigate:

 The general rule is the information theory – the contract is concluded when the

offeror becomes aware of the acceptance.

 Exceptions to the general rule:

o offeror stipulates a specific method of acceptance;

o postal contracts and

o Electronic contracts.

 Ask if the above set of facts relate to any of the three exceptions. In this case Math

Magicians (the offeror) stipulates a method of acceptance.

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Unit 4 LO 8 @ a glance
 Time and place of formation will then depend on the method chosen – what method

did Math Magicians stipulate? ___________________________________

 Ask yourself if the postal contract rule applies here. Remember, the offeror

stipulated a different method of acceptance.

 Do you know what rule of formation applies in the case of direct communication,

telephone, fax, post, fax to e-mail, SMS, WhatsApp, normal e-mail etc.? Make sure

that you know which theory applies in each case! NB!

 If a specific rule of time and place applies to the chosen method, the contract

will be formulated according to those rules. Apply the relevant theory in each case.

e) As stated in (d) above, do you know the difference between normal fax and fax to

e-mail, and which theory applies in each case? Do you know what an electronic

transaction is and how to precisely define it?

 Study the definition of an electronic transaction in terms of the Electronic

Communications and Transactions Act 2002.

 Reception theory applies to ECAT– so what time and what place, according to the

reception theory. Study the reception theory and its application in detail.

TO RECAP:

Terminology (Contractual concepts)

Agreement - 3 Requirements

 Consensus
 Expressed agreement
 Animus contrahendi

Requirements for a valid contract – 6 Requirements

1. Agreement
o Offer & Acceptance
o Termination
6

o Time and place (4 theories)

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Unit 4 LO 8 @ a glance
 o Pacta de contrahendo
o Error
o Improperly obtained consensus
2. Contractual capacity (Read only)
3. Formalities
4. Certainty
5. Possibility
6. Legality

Contents of a contract

Parties to a contract

Breach of Contract

Remedies for Breach

Transfer and Extinction of Obligations

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Unit 4 LO 8 @ a glance