THE LAW OF CONTRACT

It is my feeling that the following list of questions reflect the essence of the law of
contract, and if you can answer them all then you will be on top of your subject. Once
again, you will be best placed to answer these question if you search for your answers
from (i) our lectures and class discussions; (ii) Professor Sharrock’s textbook; and (iii)
any other relevant material that I post on our web site. But please remember that knowing
the law is not all that there is to our studies, we must also be able to apply the law to a
given set of facts – read as many cases as you can, that will help you to develop the skill.

As I mentioned to you in class, we will write the contract test (which is weighted at 35%
of your yearmark) in the second week of lectures in the third quarter. In other words the
second week of lectures after you get back from the mid-year break.

Contractual capacity
1. What are the essential requirements for a valid contract?1
2. What does contractual capacity refer to?
3. Who has, and has not, got contractual capacity?
4. What is the position in respect of minors? What is the general rule and what is the
authority for the rule (in other words what case set out the rule)?
5. What exactly is a minor? How is minority status lost?
6. Is there is a difference between express emancipation (when an application to court
is made) and tacit emancipation (when we need to infer emancipation from the
facts)? How do these operate?
7. Who can consent to a contract on behalf of a minor? Who will be a “guardian”?
8. Are there any statutes that will allow a minor to enter into a valid contract
unassisted by a guardian?
9. Have you looked at the case of Edelstein v Edelstein?
10. What factors will the courts consider before deciding that a minor has been tacitly
emancipated by his/her guardian? Do you have authority (cases) to back this up?
11. What is the legal effect of a minor’s contract where the minor was not assisted?
12. What forms of assistance (consent) can a guardian give to a minor in order that the
contract become valid?
13. Can a minor ever be held bound to a contract entered into without assistance?
14. Do you understand the law governing the position of a fraudulent minor? On what
basis can the “innocent” major party recover her losses from the minor? You should
look at some cases on this as well.
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15. What is the contractual capacity of married women? How does their matrimonial
property regime effect their contractual capacity? What different kinds of
matrimonial regimes are there and how do they differ?
16. When would one spouse require the written consent of the other to contract? Why is
this? What is the source of this law? What would happen if this consent was not
obtained?
17. Please also consider the contractual capacity of insolvents and juristic persons.

Agreement between the parties

18. There must be “agreement between the parties” - what exactly does this requirement
mean?
19. What are the rules for a valid offer?
20. What are the rules for a valid acceptance?
21. Does an advertisement constitute an offer? What is your authority for this?
22. What are the reasons given in Crawley v Rex for the rule regarding offers in
adverts?
23. What is the significance for contract law of Bloom v American Swiss?
24. Please look at the rules of offer and acceptance for both tenders and auctions.
25. Why is it important to know whether an auction is or is not “with reserve”?
26. An offer is available for acceptance for a certain period only. When will an offer
lapse? Is there a difference between an offer lapsing and one that has been revoked?
27. Can silence ever amount to the acceptance of an offer?
28. When will an “acceptance” not be one but rather a counter-offer?
29. What point came out of the case of Bird v Summerville?
30. Consider the effect of an acceptance that doesn’t meet the prescribed manner for
acceptance that was stipulated in the original offer.
31. Can there ever be a contract without “consensus ad idem”?
32. Do you understand the reasonable reliance theory? Please look at all the cases
and see why it is that I like to use estoppel as the basis for this approach.
33. What is the caveat subscriptor rule?
34. Are there any exceptions to the reasonable reliance theory? Please look at the cases
of Horty Investments v Interior Acoustics and also Diamond v Kernick.
35. Do you understand what Sharrack is saying in chapter 4 (fifth edition)? What is a
“gentlemans agreement” and can it ever be binding?
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The terms of the contract must be clear and certain

36. What does this mean? What if the language in the contract is vague and non-
specific? Have you read the case of Trooks Tea Room v Shaik?
37. Do you understand what Sharrack is talking about at p 81-82 when he writes about
clauses which bind a debtor at “the debtors option”?

The contract must be legal

38. What is the legal effect of an unlawful contract? What does this mean?
39. How can contracts be illegal?
40. Is a contract that conflicts with a statute illegal in the sense that the agreement will
be void? What is the general rule and how do the courts approach the issue?
41. Can a party to a contract be compelled to perform under the contract if a statute
prohibits that kind of conduct? Is the position any different where the conduct is
prohibited under the common law (as in it constitutes a common law crime)?
42. Can one ever contract out of the common law?
43. What is the effect of an illegal contract? Identify the general rule and the
consequences thereof.
44. You must understand everything to do with restraint of trade agreements. What two
kinds are there? When will a person be restrained? Are these contracts lawful? What
was said in Magna Alloys v Ellis? What factors make a restraint “reasonable” as
opposed to one that is unreasonable? Please look at all the cases.
45. What is public policy (a definition)? When are contracts unlawful because they are
contrary to public policy? Has the Bill of Rights effected our idea of what good
public policy is – if so, then how?
46. What if the parties to a restraint of trade agreement both agree (at the time of
signing the contract) that all the terms are fair and reasonable? Can one of them still
challenge the contract later?

The contract must be possible to perform

47. What is the general rule on “possibility”?
48. Is there a difference as to whether the performance was always impossible (from the
beginning) or whether it only later became impossible (supervening impossibility)?

Contractual formailities
49. What are “formalities” in the context of when a contract is valid and enforceable?
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50. Do all contracts need to be in writing? If not all, then which ones do?
51. Please look at the formalities for contracts where land is being sold and then also
contracts under the Credit Agreements Act. Both of these are special contracts with
special formalities – you must know what these formalities are?

Misrepresentation in the law of contract

52. What does it mean to say that a contract is void? How is this different to one that is
merely voidable?
53. What is a misrepresentation in contract? What are the essential elements of a
misrepresentation? Please understand each one individually (they are best
appreciated when read together with the cases that illustrate them).
54. When can silence amount to a misrepresentation? What is a non-disclosure? Have
you looked at the case of Dibley v Furter?
55. When is there a duty to speak? Can you give some examples, and cite some
authority?
56. Is there a difference between a misrepresentation of “fact” and one of “opinion”?
57. Why is Bird v Murphy such an important case on the law regarding
misrepresentation? What do we learn from the case?
58. What does “materiality” refer to? In other words, what makes a term (or a
misrepresentation) a material as opposed to an immaterial one?
59. What is “puffing” and the legal effect thereof?
60. What is the difference between a representation and a warranty? What is the legal
significance of the distinction?
61. What remedies would an aggrieved party to a contract have, if she was induced to
do business on the strength of a misrepresentation? Would it matter whether the
misrepresentation was made fraudulently, or negligently, or perhaps even
innocently?

Some other aspects to contract law

62. What are the rules (i) ex turpi causa; and (ii) in pari delicto? What do they mean and
how do they work? When can the par delictum rule be relaxed?
63. What is a condition in a contract? What is the legal effect of a condition? What is
the difference between a suspensive condition and a resolutive condition?
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64. Is there a difference between “express” terms in a contract and “implied” terms?
How can a party imply a term into a contarct?

I hope that these questions serve as a useful guide to assist you in your preparation.