Law Cases

CASES
for BM 105: BUSINESS LAW 1
MIDLANDS STATE UNIVERSITY
FACULTY OF COMMERCE
DEPARTMENT OF BUSINESS MANAGEMENT
BUSINESS LAW ONE (BM 105)
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 list 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 practicing manager
and currently for your examination.
Acknowledgement:
When I joined MSU in March 2006 I taught BM 105 [Business Law 1] for one semester with Mr. Percy Saungweme
who prepared the original set of cases for use on the module. I have relied heavily on his seminal contribution. I
however took the opportunity to amend, add on and expand on the cases. I owe him a debt of gratitude for allowing
me to use his original cases and for inducting me into this subject.
In this task I also made use of E.C. MacColl: Case briefs in Contract and Sale for Zimbabwean Students. Students
are referred to this rich and fuller.
I am also grateful to my son Rangarirai for typing the additional material as I created it during his brief post
graduation vacation in July/August 2007. I remain fully responsible for content and for presentation and typographical
accuracy.
What is the approach to be used in studying cases?
The following approach is proposed:
• You first read the basic legal principles pertaining to law on the area being studied e.g. in the law of
contract read the basics: what is a contract what is an offer etc?
• Then look for the cases that relate to the area being studied e.g. on the concept of offers in the law of
contract you may read Humphrey v Cassell 1923 TP 280.
• In the examination, give a brief description of the case and the decision that the court arrived at together
with the underlying principles– ratio decidendi.
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 CASE
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
• 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 AG – Attorney General is the defendant
o Paweni Trading Corp (Pvt) Ltd is the respondent/ defendant
o 1990 the year the case was tried
o ZLR – the Zimbabwe Law Report
o 24 the case number.
CONTRACTS
The offer must be clear and precise. It must not be equivocal or ambiguous.
Humphreys v Cassell 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
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CASES for BM 105: BUSINESS LAW 1
Cassell was compelled to pay immediately. Where an offer is vague and imprecise any consequent agreement is
void.
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 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 TS
A shopkeeper advertised tobacco at a special price. He had a placard outside his shop. One evening, Crawley (a
customer) entered the shop and bought a pound of tobacco. He left the shop and within five minutes came back for
some more tobacco. This time, the shopkeeper refused to sell him the tobacco. Crawley refused to leave the shop
without the tobacco and the shopkeeper had to call a constable to remove him. Crawley was then charged with
trespassing. His contention was that the shopkeeper had made an offer which he accepted. The Court had this to say
in that case:
“In the present case it seems to me there is no contract. The mere fact that a tradesman advertises the price at which
he sells goods does not appear to me to be an offer to any member of the public to enter the shop and purchase
goods, nor do I think that a contract is constituted when any member of the public comes in and tenders the price
mentioned in the advertisement. It would lead to most extraordinary results – … There is nothing as far as I know
which obliges a tradesman to sell to any customer who chooses to present himself in his shop …”
FINESTONE v HAMBURG 1907
Hamburg undertook to let a hotel to Finestone on certain conditions, stating that –if these conditions were agreed to –
then “the further general clauses can be discussed”. The court ruled that the contract was void for uncertainty since
the terms had not been finalised: if the terms of an agreement are incomplete the offer inherent in those terms is
indefinite and such agreement therefore void.
However note: Blundell v Blom 1950: In a written agreement involving blank spaces, these do not automatically
invalidate the agreement unless the circumstances clearly indicate incompleteness due to continued negotiations as
opposed to mere acceptance of one party’s right to fill the blanks unilaterally.
KANTOR v KANTOR 1962
Through an antenuptial contract, a prospective husband promised to settle and renew furniture and domestic effects
on his future wife “at such times and in such quantities as may be expedient to him”. Mrs Kantor sought performance
of this promise but the husband argued that the agreement was void for uncertainty.
The court held that the agreement was indeed unenforceable since the terms were unclear and left the donor “free to
act or not at all”. The agreement gave Mr Kantor an “unlimited option” leaving the offer open at the whim of the
offeror.
DAWIDOWITZ v VAN DRIMMELEN, 1913.
Dawidowitz sued Van Drimmelen for payment for goods sold and delivered. Van Drimmelen refused and claimed to
be protected by a special agreement to pay in monthly instalments according to his capacity to pay and “according to
circumstances”. It was ruled that the contract was “void for vagueness” and because it left the amount payable
entirely dependent “on the will of one of the parties”. Thus Van Drimmelen had to pay immediately.
DE BRUYN V PEYPERS, 1955
DE Bruyn leased 2 farms from Peypers for 6 years under an option allowing him to buy the farms for 8 000 pounds –
half down and the balance in instalments at an interest rate to e agreed upon. De Bruyn then tendered the full
amount as cash and then claimed transfer. Peypers refused arguing that the terms on payment were vague and
uncertain.
The court upheld the contract because the vagueness was purely technical and no longer even relevant. Similarly
vagueness will not void an agreement if the vagueness can be clarified and the facts established. [Strand Meat Co.
Pty v Smith, 1930 where a client was to pay “to the best of my ability”]
FISHER v BELL 1961 (1) QB
A shopkeeper displayed a flickknife for sale in his shop window. He was charged with offering the knife for sale since
selling flick–knives was an offence. The court held that the shopkeeper had committed no offence because the
display on the window was not an offer, but merely an invitation to do business.
PHARMACEUTICAL SOCIETY OF GREAT BRITAIN v BOOTS CASH CHEMIST 1953 (1) QB
There were certain drugs that could not be sold over the counter except with the supervision of a pharmacist. Boots
put the drugs on selfservice counters and customers came and selected the drugs they wanted, putting them in
baskets. It was contended that Boots were contravening the law by selling specified drugs over the counter. It was
held that the counter displays of the drugs were not offers but mere invitations to treat. Consequently, no offence was
committed since the contract would only come into being, not when the drugs were taken from the shelves, but when
the pharmacist agreed to sell them.
HARVEY & ANOTHER v FACEY & OTHERS, 1893
The plaintiffs sent a telegram to the defendant regarding the price of a certain piece of land…” Will you sell us
Bumper Hall Pen? Telegraph lowest cash price–answer paid” The defendants replied: “Lowest price for Bumper
Hall Pen£900”. The defendants then telegraphed: “We agree to buy Bumper Hall Pen for £900 asked by you”. The
defendants however refused to sell. The plaintiffs said the defendants had made an offer to sell which they accepted.
The Court said there was no offer, it was only a response to a specific enquiry. “The mere statement of lowest price
at which the vendor would sell contains no implied contract to sell at that price to the persons making the inquiry.”
Statements of lowest price – even in response to a specific inquiry are not offers.
CARLLIL v CARBOLIC SMOKEBALL Co.1893 QB
A company took out an advertisement undertaking to pay £100 to any person who still fell ill with flu after taking a
new drug as directed. Mrs. Carllil took the drug and still fell ill and she thus claimed the reward. Further the company
had deposited £1000 with a London bank as evidence of their sincerity. The Company said the advertisement was
not an offer but a “mere puff” and that in any case notification had not been given. The Court said the general rule is
that advertisements are not offers, but in this case, there was a definite offer to anybody who performed the
conditions named in the advertisement. Notification in such cases is not required. Reward advertisements are
therefore offers binding on the offeror if accepted as required.
BLOOM v AMERICAN SWISS WATCH Co.915 AD
On 19th March 1913, a robbery was perpetrated at the Cape Town premises of the defendant company and jewellery
value at £5000 was forcibly removed. In the press the following day, there appeared a notice in these terms that a
reward of £500 was offered to any person who could supply information leading to the arrest of the thieves and
recovery of the jewellery. Bloom supplied the required information to the C.I.D. but at the time he did so, he was not
aware of the reward. The Court said he/she could not be given the reward since he could not accept an offer of which
he was unaware. Solomon, JA: “Until the plaintiff knew of the offer, it seems clear that he could not accept it and,
until he accepted it, there could be no contract, for a contract requires that there should be a “consensus” of two
minds, and if the one did not know what the other was proposing, the two minds never came together …” A person
acting as required by a reward advertisement will receive that reward only if he was aware of the reward when he so
acted. {See also Lee v American Swiss Watch Co. 1914]
HYDE v WRENCH, 1840
The defendants offered to sell land to the plaintiff for £1000. The plaintiff said he would pay £950 only. The defendant
rejected this. Plaintiff then agreed to pay £1000 after all. But by now the defendant no longer wished to sell. The court
ruled that a counteroffer had been made which amounted to rejection of the original offer.
BOERNE v HARRIS 1949 SA (AD)
A lessee had an option to renew a lease for five years from 15 April 1947 provided such option was exercised by 15
October 1946. On 5 October 1946, lessee wrote that he intended to renew the lease for a further period of five years
from 15 October 1946. It was held that there was no acceptance. There were contradictory dates and an “acceptance
must be unequivocal”. An offeror is entitled to know in clear terms whether the offeree accepts his proposal “An
offeror is entitled to know in clear terms whether the offeree accepts his proposal. It is not enough that the words of a
reply justify a probable inference of assent … It must leave no room for doubt.”
SHEPHERD v FARREL’S ESTATE AGENCY, 1921.
The agency’s advertisement read: “Business wanted. Our motto: no sale, no charge. All advertisements at our
expense.” Shepherd responded and signed a document which, contrary to the advert, gave the agency sole selling
rights to receive commission even if the property was sold by another. Held: The contract Shepherd signed departed
‘most seriously from the advertisement”. Though adverts are not offers, if a contract arises from an advertisement,
then its terms must be followed unless the other party is notified of such departure.
BLEW v SNOXELL 1931 TPD
Blew offered to buy a piece of land from a company, Richard Currie Ltd. However, the land in fact belonged to
Snoxell who, upon becoming aware of the offer wrote to Richard Currie Ltd, accepting it, whereupon Blew was
notified. In a law suit later, Blew argued that there was no contract between him and Snoxell and the Court agreed
holding that, “it is trite law that an offer made by one person to another cannot be accepted by a third party”. In this
case, the offer was made to Richard Currie Ltd and not to Snoxell. In short, if A offers to B, then C cannot accept and
bind A unless A so wishes.
EAST ASIATIC Co. v MIDLANDS MANUFACTURING 1954 SA
The plaintiff argued that the defendant, by failing to timeously refuse to accept a counter offer, had in fact accepted it
by silence. The court held that no contract existed since “mere silence cannot be taken as acceptance unless there is
some duty upon the defendant to speak.”
FELTHOUSE v BINDLEY, 1862
Felthouse had a nephew who owned a horse, which Felthouse wanted to buy. He wrote to the nephew to buy the
horse saying, “If I hear no more about him I will consider the horse to be mine”. The nephew did not reply but decided
to keep the horse for Felthouse. Bindley, an auctioneer, mistakenly sold the horse to a third party. Felthouse then
sued Bindley for damages equivalent to the value of the horse. It was held that there was no contract since no
acceptance had been made. In any event, the offeror could not impose conditions of refusal upon the offeree by
forcing an offeree to act in a certain way.
LEVBEN PRODUCTS v ALEXANDER FILMS 1959 SA (SR)
A letter of acceptance was sent by registered post but it failed to arrive. It was contended by the appellant that the
letter failed to arrive because it had been addressed incorrectly to “LEVBEN PRODUCTS 54 SINOLA STREET,
SALISBURY” whereas the correct street name was SINOIA ST”. The Court said that there was a contract because
the incorrect spelling was not so serious as to affect the contract.
The court ruled that an incorrect spelling of the address by an offoree must be fundamental before it affects such
acceptance. The court “was satisfied that the address was sufficient to direct the letter to its proper destination”.
Acceptance was therefore valid upon its posting.
YATES v DALTON 1938 EDL
Yates sent a telegraph to Dalton on 12 February. On 13 February at 9.40 am Dalton telegraphed his acceptance.
However, a few minutes after 11.00 am, Dalton received a telegram from Yates cancelling the offer. It was held that
there was a valid contract since an acceptance had been made before revocation. Acceptance by telegraph is
governed by the same rules as acceptance by letter. [As in Cape Explosive Works].
CAPE EXPLOSIVE WORKS Ltd [CEW] v SOUTH AFRICAN OIL & FAT INDUSTRIES Ltd [SAOFI] (Also CEW v
LEVER BROS [SA] Ltd, 1921)
These 2 cases involved the same issue & were argued together having both occurred in 1916. SAOFI in Transvaal
and Lever Bros in Natal made separate written offers to sell glycerine to CEW in the Cape. CEW accepted each offer
by letter posted in The Cape. In the 2 cases the jurisdiction of the Cape court was disputed on the grounds that the
contracts were finalised in the Transvaal and Natal respectively.
The court ruled that the contracts were concluded in the Cape whose courts had jurisdiction; in particular where a
“written offer is made, the offer becomes a contract on the posting of the letter of acceptance. “ [Kotze, JP]. A written
offer authorises a written acceptance; consequently such acceptance is valid and the contract is concluded at the
time and place of posting. This is referred to as the Expedition Theory.
CAVEAT SUBSCRIPTOR
GEORGE v FAIRMEAD 1958 SA
A guest at a hotel was given a register to sign. He signed the register without reading/familiarizing himself with a
clause that exempted the hotel from claims arising out of theft. His clothes were stolen and the hotel refused to
compensate him. He said he had made a mistake through ignorance based on justus error believing that he was
signing a mere register not a contract. But the court said he was bound by his signature.
“When a man is asked to put his signature to a document he cannot fail to realise that he is called upon to signify by
doing so, his assent to whatever words appear above his signature.. If he chose not to read what that additional
something was, he was, with his open eyes, taking the risk of being bound by it. He cannot then be heard to say that
his ignorance of what was in it was justus error.”
Thus unless induced by misrepresentation or fraud, one is bound under caveat subscriptor by his own signature

even if the material was neither read nor pointed out.
WOODS v WALTERS, 1921 AD.
The parties entered into an agreement for the lease of land, a furnished house and other buildings. Woods argued
that he was not bound because the contract had not been reduced to writing as had been agreed.
The court ruled that Woods was bound to lease the property to Walters because the parties were clearly ad idem and
there was no evidence that they should not be bound until the written lease had been done/executed.
Innes CJ: The “broad rule is that writing is not essential [except in certain cases] to the validity of a contract.. But the
mere mention of a written document during the negotiation will be assumed to have been made … with the view of
convenience of record and facility of proof.” Thus when a signed written document is agreed to be a precondition of a
contract such a contract is void without it. The courts assume that the written document is not a precondition to the
validity of the contract.
BURGER v CENTRAL SOUTH AFRICAN RAILWAYS [CSAR] 1903 TS
Burger delivered goods to the railways for carriage through an agent who signed a consignment note stating that it
was issued subject to section 47 of the Goods Traffic Regulations. Burger read the consignment note before the
goods left but did not check the regulations. The goods were subsequently lost in transit and Burger sued for their full
value.
He lost the case. His use of an agent did not affect the “sound principle that a man, when he signs a contract, is
taken to be bound by the ordinary meaning and effect of the words which appear over his [or his agent’s] signature.”
Though the regulations were not printed as part of the contract, this did not change the principle; mere reference to
the regulations was sufficient save for fraud or misrepresentation.
BHIKAGEE v SOUTHERN AVIATION PVT LTD, 1949.
Bhikagee sought to escape liability on grounds that he could not read English and that the terms had not been
brought to his attention and had not been explained. “The fact .. that the defendant did not read the condition on the
ticket and did not know their contents is immaterial.. by his signature he elected to take the risk and he is bound.”
PARKER v THE SOUTH EASTERN RAILWAY CO., 1877 CPD.
Parker deposited a parcel worth over £10 at the cloakroom and received a ticket with the words “See back.” A
condition at the back stated that the railways would not be responsible for articles exceeding £10 in value. The parcel
was lost and Parker sued.
The court laid down guidelines on tickets being unsigned documents containing waivers of liability.
 Where contracting party does not know that the ticket includes writing, he is not bound by any conditions
contained in that ticket.
 Where he knows the ticket contains writing which includes conditions, he is bound
 Where he knows that the ticket contains writing but not what it contains conditions, then two distinct
situations arise:
o For documents which by their accustomed use in regular commercial practice would be
supposed to contain conditions, the customer is bound even if he is neither ‘a man of business
nor a lawyer’ e.g. with a bill of lading.
o For documents [e.g. cloakroom tickets] where one cannot reasonably be expected to suppose
contain conditions even if they do, the customer is not bound.
CSAR v McLAREN, 1903 TS.
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. McLaren was aware
there was writing on the ticket but he did not realise it contained a condition – and this was not pointed out to him and
there was no notice. The parcel was lost and McLaren sued for its value.
The court ruled for McLaren – the ticket was a “mere voucher” and the railways had not drawn his attention to the
condition. A left luggage receipt is not a ticket.
DYER v MELROSE STEAM LAUNDRY, 1912.
Laundry lists stated that articles were washed subject to conditions on the back. These limited liability for articles lost.
Dyer never read the conditions. His clothes were subsequently lost. At the hearing it emerged that Dyer had used the
lists several times. The company was nevertheless found liable: Dyer was not bound.
CSAR v MCLAREN 1903 TS
Mclaren deposited his luggage at a railway station. He was given a ticket, which had a clause stating that the
railways would not be liable for loss of articles exceeding five pounds in value. This clause was partially obscured by
the clerk who wrote on the face of the ticket. When the package was stolen and the railways refused to make good
the loss, Mclaren sued and the court held that the railways had not done what was sufficiently necessary to bring the
attention of the customer to the conditions. In any event, the ticket was a “mere voucher” where one could not

reasonably expect to find such a clause
PARKER v SOUTH AFRICAN RAILWAY Co. 1877
Parker left a parcel at a railway cloakroom and was given a ticket with the words “see back”. At the back was an
indemnity clause exempting the railways from liability for loss of packages deposited? Parker’s parcel was lost and
he sued. The Court said that where a condition is reasonably expected to be on a document, the customer will be
bound. There are documents such as bills of lading and railway tickets, which invariably contain conditions.
DYER v MELROSE STEAM LAUNDRY 1912 TPD
Dyer took his clothes to the dry cleaners and they were lost. It was held that since there was no evidence to show
that Dyer was aware of the conditions excluding liability, the drycleaners had not done what was reasonably
necessary to bring the Dyer’s attention to those conditions. They were therefore liable.
MISTAKE
MARITZ v PRATLEY (1894) SC
In this case there was dissensus not consensus. An auctioneer held a sale in a store. All articles were catalogued
and the catalogue was printed and circulated. Pratley read the catalogue. One condition of the sale, stated in the
catalogue was that purchasers were to acquaint themselves with the articles under offer. In addition this condition
was read out at the beginning of the sale. Lot 1208 was a mantelpiece which stood on Lot 1209, a large mirror.
The auctioneer called for bids for what he intended to be Lot 1208 [the mantelpiece/table] alone but Pratley bid

thinking that the mirror [Lot 1209] was also included. Lot 1208 was knocked down to Pratley and the auctioneer
proceeded to sell Lot 1209 to another person. The circumstances were such that at one moment a member of the
audience asked what it was the auctioneer was selling.
Pratley refused to pay both the price and the commission on the mantelpiece only. The court held that there was no
sale due to bona fide mistake: Pratley did not agree to purchase the same thing that the seller/auctioneer was
endeavouring to sell. Both acted reasonably in the circumstances.
At an auction, prospective buyers were asked to inspect the goods before buying them. There was a mirror
on top of a marble table. Pratley bid for the table thinking that the mirror was part of the table. When he
refused to pay for the goods separately, he was sued by the auctioneer. It was held that there was a
mistake, consequently the parties minds did not meet and the contract was void.
CONTRACTUAL CAPACITY
DAMA v BERA 1910 TPD
Bera, 21 years old, and a minor under South African law was employed as a domestic for 4/5 years. She controlled
her own income and contributed for board and lodgings to her mother and stepfather with whom she lived. The
stepfather disclaimed responsibility for her. Bera sued Dama for wages due. Dama raised the defence that Bera,
being a minor did not have locus standi in judicio. The court held that Bera, in her circumstances, had been
emancipated.
WOOD v DAVIES, 1934. CPD.
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.
SKEAD v COLONIAL BANKING & TRUST CO. LTD, 1924.
A minor [8 days before his majority] signed a promissory note on an endowment policy valued 750 in his favour on
the authority of his guardian. Skead, the minor, being short of money because of his spendthrift ways repudiated
liability.
Skead was bound assisted contracts which are clearly beneficial to a minor at the time they are entered into are
binding on the minor, even though they extend beyond his majority and prove to be subsequently disadvantageous.
EDELSTEIN v EDELSTEIN, 1952.
STUTTAFORD v OBERHOLZER 1921 CPD
Oberholzer a minor bought a motorcycle on hire purchase. When he became a major, he continued to ride the
motorcycle but failed to pay instalments. When sued he pleaded minority at the time of the contract as defence.
Oberholzer was bound due to “ratification by deed” as he continued to use the bike in full knowledge of his legal
position.
TONNE v FOGGIT 1938 TPD
Foggit a minor child entered into a contract without the knowledge of his father or natural guardian to take lessons at
a college for two weeks in March and for the whole of April –fees being payable in advance. He paid only for the
March lessons and attended them but neither paid nor attended the April lessons. Held he was liable for only the two
weeks that he had attended since he had no fraudulently misrepresented anything. The court focussed on the
“benefits actually enjoyed”. A minor is liable to the extent enriched and so Foggit paid only for services received.
DURESS
BLACKBURN v MITCHELL (1897) SC
A ship was in danger of sinking in bad weather. A tug came to the rescue and its captain demanded two thousand
pounds from the captain of the ship in peril. When the latter said it was too much, the captain of the rescuing tug
threatened to leave them to drown, whereupon the beleaguered captain agreed. The court said the contract was void
for duress.
The captain of the stricken ship had signed under protest. “I will sign this bill, but you will never get paid.” The sailors
were however entitled to fair and reasonable recompense assessed at £1 000 instead of the original £2 000
demanded.
In the case of “duress of goods” [as here] as opposed to duress of person, the court will require that in addition to the
five points listed in Broodryk, there must have been a categoric protest at the time of the contract.
BROODRYK v SMUTS NO 1942 TPD
Broodryk a married man and with one child alleged he had enlisted for military service following threats by two govt
officials that he would be regarded as hostile and interned unless he did. He claimed rescission of the contract.
The court listed 5 elements for duress:
1) Actual violence or reasonable fear.
2) Fear must arise from threat of considerable evil to the party or his family
3) Threat must be of imminent/inevitable evil
4) Threat or intimidation must be contra bonos mores
5) The pressure used must have caused damage.
The court ruled in Broodryk’s favour because of duress by the government’s agents. Broodryk’s fear was not “vain or
foolish”; it was sufficient “to overcome a mind of ordinary firmness”.
UNDUE INFLUENCE
PRELLER v JORDAN 1956 SA
Jordaan [an elderly farmer] donated and transferred 4 farms to Preller [his doctor and advisor] to be administered by
Preller for the benefit of Jordaan’s wife and farm labourers. Preller subsequently transferred one farm to his son and
2 to his daughter. Jordaan sought to recover the farms arguing that he had been sick, spiritually weak, and
mentally/physically exhausted and had fallen totally under the influence of his doctor. He argued that Preller had
used his influence improperly otherwise he [Jordaan] would never have agreed to the transfer.
Restitution was granted for one farm still retained by Preller but not for the other three which had been transferred to
Preller’s children. It was explained that a contract obtained by undue influence is not void and is thus valid ab initio. It
is merely voidable and so transfer had passed irretrievably.
PATEL v GROBBELAAR, 1974.
Grobbelaar sought cancellation of a mortgage bond registered against his property in favour of Patel thinking he
owed Patel a loan for R40 000. Grobbelaar had been persuaded by Patel to believe that Patel had supernatural
powers. In fact Grobbelaar owed Patel no money.
The court ruled in Grobbelaar’s favour and they listed essential requirements for undue influence as follows:
[1] One party exercises influence over another.
[2] That influence weakened his powers of
resistance and made his will pliable.
[3] The influence was exercised in an unscrupulous manner in order to obtain his consent.
[4] The agreement is to his detriment
[5] Under normal free will he would not have consented.
Under undue influence one party achieves dominance over another and uses that dominance improperly to persuade
the other into a prejudicial contract which he would not otherwise make. The resultant contract may be set aside.
Company as a separate legal entity: on its formation a company acquires the capacity to have its own rights and
duties apart from its members. This principle is exemplified in the English case below concerning a one–man
company:
SALOMON v SALOMON & CO. LTD, 1897.
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 pounds secured by a bond over the company’s assets. The other shareholders were his
wife and 5 children who held one share each. A year later the company was liquidated. It then had assets sufficient
for the secured debentures only and nothing remained for the unsecured creditors who argued that S. 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 House of Lords decided that, from its inception the company was separate from its members.
Even “though it may be that after incorporation the business is precisely the same as it was before and the same
persons are mangers and the same hands receive the profits.”
McCULLOGH v FERNWOOD ESTATES, 1920.
Aspey acting as a trustee for a proposed company contracted with McCullogh to buy land for the company for 10 000
pounds. The company, Fernwood Estates was duly formed and it adopted the contract. McCullogh sued the
company for payment against transfer.
One may contract in an individual capacity [not as agent] for the benefit of a nonexistent 3rd party who, on coming
into existence may ratify the contract and assume liability. If the 3rd party does not ratify, the original party is bound.
Note: Section 32 of the Companies Act on preincorporation contracts: a party may contract for a company in the
process of formation as an agent without incurring liability even if the contract is not ratified provided:
 Contract is in writing
 The person must profess to act as agent/trustee of the unformed company
 The memorandum on registration must allow for the adoption of the contract in one of its objects.
 The contract [or a certified copy] must be lodged with the memorandum
 The company after incorporation must adopt the contract.
MISPRESENTATION
DONNERS MOTORS v KUFINYA 1968 SA
The parties agreed to sell each other a car. The seller agreed to rectify the defects on the car and the buyer then
signed a contract. The contract however, had a voetstoots clause, which the buyer had not seen. The seller relied on
this clause in refusing to effect repairs. The court said the contract could be set because of misrepresentation by the
seller.
DIBLEY v FURTER 1951, SA
The buyer of a farm sued the seller alleging that the seller had failed to disclose that the farm has a graveyard. It was
held, the buyer could not seek audition relief but could rely on fraudulent misrepresentation by the seller because
even though the farm could still be used for the purpose for which it was bought (the graveyard had been ploughed
over), the buyer would not have bought the farm had he known about the graveyard. Restitution was granted.
A seller sold a “farm” some 4 acres [1.5 ha] on which there stood a dwelling house. A substantial portion
of the farm had been used as a graveyard in which over 80 people had been buried in the four years
before the sale. With no intention to deceive, the owner had removed all external indications of the graves
to allow him to cultivate the land. The seller did not disclose the existence of these graves. The court held
that the buyer was entitled to cancel the contract and claim damages.
Nondisclosure of a material latent defect [in order to mislead a buyer and induce a sale] known to the seller is
fraudulent misrepresentation.
LION MATCH CO. LTD v WESELS, 1946.
Wessels sued for payment for wood sold and delivered in terms of an illegal contract because Wessels did not have
the necessary Govt permit. Wessels failed in his action. He was seeking enforcement of an illegal contract even
though he may have been ignorant [as he claimed] of the requirement for a permit. The ex turpi causa rule applied in
this case because Wessels sought to enforce performance by the company; not recovery of property delivered. “It
makes no difference. If the plaintiff has himself made performance of his obligations, for performance does not
validate the agreement.”
SPECIFIC PERFROMANCE
HAYNES v KINGWILLIAMSTOWN MUNICIPALITY. 1951. SA. AD
The Municipality was contractually obliged to release 250 000 gallons of water to Haynes’ farm daily. This was done
faithfully but during a drought, the amount of water pumped was reduced. The Court did not order specific
performance because this would have brought hardship on the whole community. In a fitting case the court has
discretion to refuse a demand for specific performance e.g. where:
[1] Damages would provide adequate compensation.
[2] The thing claimed is readily available elsewhere
[3] It would be difficult for the court to enforce its decree
[4] Specific performance entails rendering services of a personal nature.
[5] Where the agreement is unreasonable.
[6] The decree would produce injustice or would be inequitable under the circumstances
[7] The order would operate unreasonably hard on the defendant
Kingwilliamstown owed a public duty to residents.
LAMB v WALTERS, 1926.
Walters agreed to buy land but later argued that the agreement had been induced by Lamb’s assurance that the
price was fair and reasonable whereas it was grossly excessive.
The contract was upheld: a mere statement of opinion provided it is honestly held is not a misrepresentation.
HERSMAN v SHAPIRO & Co.1926 TPD
Hersman sold corn to Shapiro and Co. The corn was not yet in existence at the time. However, there was a crop
failure and Hersman failed to deliver. He argued impossibility of performance but the Court said even though
impossibility might excuse performance, where a contract is of a “speculative” nature, one could not rely on
impossibility: Possibility of loss was within the contemplation of the parties, hence Hersman was liable for damages.
(But not for specific performance).
VAN BREDA v JACOBS 1921 AD
Custom will be enforceable by the courts where it is
1) Reasonable
2) Certain
3) Long standing
4) Uniformly observed
5) Consistent with statute
The court decided that the defendants had violated the custom of 'first come, first pull’ which applied among
fishermen at False Bay.
BOYD v NEL 1922
Nel gave Boyd an option to purchase a farm but then allowed prospecting. In the result, Government declared the
farm an alluvial digging. Meanwhile Boyd had arranged to subdivide the farm into plots for resale. Nel’s action forced
him to abandon those plans.
An option is a separate contract binding on the offeror.
LAWS v RUTHERFORD 1924
Mrs. Rutherford offered Laws a contact to cut wood on her farm; acceptance to be registered letter by 26 July. Laws
moved on to the farm and started work but omitted to send the necessary registered letter. Innes CJ: Laws was inter
dicted from remaining on the farm. "Speaking generally, when the acceptance of an offer is conditioned to be made
within a time or a manner prescribed by the offeror, then the prescribed time limit and manner should be adhered to".

DIETRICHSEN v DIETRICHSEN 1911
Dietrichsen sued his brothers for transfer of farmland which he said had been sold to him. The brothers had signed
an agreement of sale on 1 November 1907. Dietrichsen said he would sign but did not do so until February 1908. But
he did not tell his brothers until later. By then the brothers were no longer interested in the sale and they said as
much.
Ruling: “Acceptance must be communicated to the offeror.” A mere stated intention to accept is not sufficient.
ELIASON v HENSHAW 1819 (US Supreme Court)
Eliason sent a letter by wagoner offering to buy flour from Henshaw and asked for reply “by return of wagon”.
Henshaw believing it to be quicker sent his reply by post. This arrived later than the wagon and to a different place.
Ruling: An offeror may not dictate the manner of refusal but he may specify the method of acceptance.
DIEDRICKS v MINISTER OF LANDS 1964
D hired farm properties from the State in 1953. He was granted the right to purchase the properties for R5 286.
Clause 20 of the written agreement allowed the state to repossess the properties or part of the properties for
irrigation for a specified amount in 1962 a regional representative of the State offered D R2 477 without reference to
Clause 20. d accepted the offer. Subsequently the State discovered that Clause 20 allowed repossession for only
R628.73 and the State then repudiated its offer claiming an error through the clerk’s oversight. D had not been aware
of Clause 20. he however rejected the repudiation.
Held: The contract was binding. It [the mistake] was “merely incidental … it relates only to the reasoning or motivation
of the party seeking to escape… not to the identity or nature or even to the quality of the subject matter of the
contract, for on that score the parties were ad idem, each receiving and giving exactly what he bargained for.” Justus
error did not exist. The mistake was due to negligence. D’s ignorance of Clause 20 was not relevant. A mistake as to
motive will never void a contract unless induced by misrepresentation.
INSANITY
PRINSLOO’S CURATORS BONIS v CRAFFORD & PRINSLOO 1905
Prinsloo was declared by the court to be of unsound mind. While this was in force but at a time when he was of
sound mind, Prinsloo got married in community of property – voluntarily and while understanding the nature of his
actions. However, the validity of this marriage was called into question.
The Court held that the marriage was valid but he was sufficiently lucid at the time.
VAN METZINGER V BADENHURST 1953
Drunkenness renders a contract void where it destroys reason absolutely for contracts entered into while the person
is “in this state, so long as it continues.”
PETERS, FLAMMAN & CO. v KOKSTAD MUNICIPALITY 1919 AD
Peters Flamman and Co. contracted to light the town with acetylene gas. While the contract still had 10 years to run,
Peters and Flamman were interred as enemy subjects. Their business was then wound up. The Municipality claimed
£20 000 damages and forfeiture of plant and equipment.
Held: If a person is prevented from performing his contract by vis major or casus fortuitus including an act of State,
he is discharged from liability.
JUTA & CO. LTD v RORICH 1924
The publishing company delivered books to Rorich (a teacher) for sale to pupils. He was given lists of prices and had
to return unsold books. No time limit was set for this. However, several unsold books were burnt in a fire and Juta
sued for those books.
The court held that Rorich was a mere agent and there was no agreement of sale. Thus risk had not passed and
Rorich was not liable. In a contract of sale there must be an agreement by one party to sell and by another to buy.
There was no such agreement in this case.
WILMOT v SUTHERLAND 1914
Bundles of forage were placed beside a wagon loaded with more forage. The customer examined the bundles beside
the wagon and then bought 200 bundles. These proved to be musty. Wilmot then sued arguing that the bulk did not
correspond with the sample.
Ruling: Wilmot was bound. This was not a case of sale by sample but one of puffing or mere commendation, which
amounted to advertisement. Thus the maxim – in the absence of fraud – caveat emptor applied. Where goods being
sold can be inspected, the adjacent display of sample goods does not constitute sale by sample – it is not warranty of
the quality of goods.
ELLIOT v McKILLOP 1902
An auctioneer selling bricks “as a lot” not by number estimated (at the request of the customer) the number of bricks
to be about 80 000. In fact there were only 50 000.
Ruling: The buyer was bound as he had bought bricks “as they stood”. The seller had given an expression of opinion.
Where goods are sold in bulk/as a lot, the mere expression of opinion as to quantity is not a warranty. If this is
honestly held no liability arises.
VLOTMAN v LANDSBERG 1890
A seller represented a cow being sold voetstoots to give 14 bottles of milk. In fact it gave only two. In this case the
discrepancy was so wide it was not honestly held – it was fraudulent. A seller is not protected for willful concealment
of a defect of which he is aware even in a voetstoots sale.
GOLDBLATT v SWEENEY. 1918 CPD
Goldblatt discovered that the car he had bought from the defendant had a latent defect due to a welded crankshaft.
He had the car overhauled before he sought to rescind the sale.
Ruled: He could not obtain restitutio in integrum as desired but could seek actio quanti minoris. “the very object of
redibhitory action is to put each party back into his original position before the sale, that the purchaser restore the
thing in its original condition.”
SOUTH AFRICA OIL & FAT INDUSTRIES LTD [SAOFI] v PARK RYNIE WHALING CO.[PRW] LTD 1916
SAOFI bought No. 3 whale oil from PRW for soap making. After using some of the oil for this purpose with
unsatisfactory results and testing it, they discovered it to be a mixture of whale and sperm oil. SAOFI sought to
rescind the contract.
Ruling favoured SAOFI as delivery of incorrect oil was not proper discharge of contractual obligations. However, this
was a latent defect and PRW was unaware of it as it required “somewhat complicated analysis.” They had therefore
not acted negligently. However, SAOFI could no longer return the unused oil in its original condition following the
tests made. They were therefore granted actio quanti minoris being the difference between the purchase price and
the actual value of the thing sold.
AFRICAN ORGANIC FERTILISERS & ASSOCIATED INDUSTRIES LTD v SIELING, 1949
A buyer sought to rescind a sale of kraal manure which was unfit for the purpose the seller knew the buyer had
intended it. But he had used the manure and could not return it.
The manure was used in the manner contemplated by the parties but it was useless and the buyer derived no benefit
from it. The buyer was allowed to recover the purchase price.
JAJBHAY v CASSIM 1939 AD
Jajbhay held a licence to occupy a stand in a Johannesburg township sublet illegally in terms of regulation to Cassim
on a monthly basis. Cassim paid rent faithfully and observed all the terms of the lease. Jajbhay then sought to
recover the stand by ejecting Cassim on the grounds of the illegality.
The court took the view that in applying the par delictum rule, “public policy should properly take into account the
doing of simple justice between man and man.” The rule is therefore subject to exceptions and thus restoration of
something given under an illegal contract if public policy is not affected by the exception.
Cassim had not been unjustly enriched but both parties were equally guilty as offenders under Regulation 22.
Jajbhay was refused recovery.
Par delictum one party has performed and he seeks recovery. That party has not received a reciprocal benefit for
performance on his side.
PETERSEN v JAJBHAY 1940
Facts are as above; Jajbhay had sublet to Petersen who (unlike Cassim) defaulted in his monthly payments. Jajbhay
sought to eject Petersen.
This time, ruling was in Jajbhay’s favour, though he could not recover the unpaid rent. The par delictum rule was
relaxed to avoid unjust enrichment.
Note
Ex turpi causa non oritur actio
“From an evil cause no action will arise.” By this rule no party can bring an action founded on the agreement; specific
performance cannot be claimed. “it makes no difference (even) if the plaintiff has himself made performance of his
own obligations for performance does not validate the agreement.”
“If, again, there has been performance of their undertakings by both parties, neither can obtain relief of redress. …
Each has obtained what he bargained for.”
Christie: an illegal contract, even though unenforceable, “will not be upset if it has been fully performed on both
sides.”
XAPA v NTSOKA 1919 EDL
A son–inlaw pointed out some cows to his fatherinlaw which constituted marriage dowry (lobola/roora). It was held
that the pointing out of the cows constituted delivery by the long hand (traditio longa manu).
POPPE, SCHUNHOFF & GUTTERY v MOSENTHAL & Co. 1879
The plaintiffs sold brandy to the defendants but before the brandy was set aside for the buyer (defendant), the
government imposed a new excise duty on brandy. The question was who should bear the cost of the new
surcharge? It was held that the seller bore the risk because the goods had not yet been set aside for the buyer.
In a sale for fungibles [goods which have to be taken away from a larger stock of identical items], risk passes to the
buyer only when such goods have been appropriated or set aside and separately identified for the buyer.
ANNAMMA V MOODLEY. 1943
To cover a shortfall of Annamma agreed to sell and transfer land to Moodley until he could raise sufficient money to
cover all costs and charges for retransfer. Until that TIME Annamma continued to exercise ownership rights even
though Moodley was the registered owner. However Moodley sold the property to a 3rd party.
Annamma after paying all amounts due sued for damages. To this Moodley replied that their agreement was vague
and thus void as no deadline had been set. The court held that the plaintiff had paid within a reasonable time.
Damages were therefore awarded.
HERSCH V NEL. 1948.
Nel [a usufructuary and agent of the owner] granted an option to E& A Hersch for the purchase of two farms for cash.
E&A Hersch ceded the option to J Hersch [the appellant] who accepted the option within the stipulated time. In court
Nel argued that the right could not be ceded. It was held that whereas an option normally is confined to the specific
offeree, it may nevertheless be ceded to a 3rd party where it involves cash because “it can make no difference to the
vendor whether he is dealing with a millionaire or a pauper, with an honest man or a convicted thief.. an option to
purchase for cash is ordinarily capable of being ceded.”
BIRD v SUMMERVILLE &ANOTHER, 1961
Bird used an estate agent to find a purchaser for a block of flats. A written agreement of sale initially naming
Summaerville as sole buyer was signed by Bird. However Summerville added the name of a second buyer who also
signed the agreement. The estate agent argued that having been employed to sell the property the addition and
identity of a second buyer was irrelevant.
It was held that the estate agent “clearly had no authority to enter into a contract of sale on behalf of the appellant,
nor … foist on him a buyer without his consent”. They [the estate agent] acted merely “as a conduit pipe”. Hence the
court established the principle that if A offers B, then C cannot accept: B plus C cannot accept either. However in
Hersch v Nel, 1948 it was held that “an option to purchase for cash is ordinarily capable of being ceded.”
ENTORES LTD v MILES FAR EAST CORPORATION, 1955. QB.
Entores in London made an offer by telex to defendant’s agents in Amsterdam. A telexed acceptance was received in
London. It was disputed where the contract had been made and hence which country had jurisdiction. It was held that
the British court had jurisdiction because telephone/telex communication “are virtually instantaneous”. Such
acceptance is valid at the time and place of receipt.
TEL PEDA INVESTIGATION BUREAU [PTY] LTD. V VAN ZYL. 1965
VAN Zyl in East London sued Tel Peda in Johannesburg for unpaid money in respect of an investigation he had
carried out for the company. The company [in JHB] had offered to employ Van Zyl over the telephone. Van Zyl
speaking from east London accepted the offer. He argued that the East London court had jurisdiction.
The court ruled that [as argued by the company] the JHB court had jurisdiction. A telephoned offer does not authorise
a telephone acceptance. Parties in telephonic communication are inter praesentes [in each others’ presence]: “In
order to speak to each other they make use of an instrument that enables them to do so.. it follows that when the
telephone is used to make an offer, the offeror is not authorising a method of acceptance which will be binding on
him whether or not he is made aware of the acceptance.” Acceptance is therefore valid only at the time and place of
its receipt.
Contracts in Restraint of Trade are fundamentally illegal being contrary to public policy.
NORDENFELT v MAXIM NORDENFELT GUNS & AMMUNITION LTD. 1894 [HLHouse of Lords]
Nordenfelt sold his gun & ammunition business to Maxim and undertook that over a period of 25 years he would not
engage directly or indirectly in:
• Any similar business or
• “any business competing or likely to compete in any way with that for the time being carried on by the
company.”
Ruling: “All interferences with individual liberty of action in trade and all restraints of trade … are contrary to public
policy and are therefore void.” However restraint may be “justified by the special circumstances of a particular case” if
it is reasonable. Thus Clause 2 was held to be wider than necessary and therefore unacceptable while Clause 1 was
reasonable as it merely gave adequate protection.
In Book v Davidson, 1988, Dumbutshena CJ held that the party in breach of such an agreement must justify his
action.
RHODESIAN MILLING CO. PVT LTD v SUPER BAKERY PVT LTD. 1973.
RHODESIAN milling sublet bakery premises to Super Bakery. In the agreement Super Bakery was to buy all its flour
for that bakery and any other it had or might have in future from Rhodesian Milling. Super Bakery violated the
agreement for the purchase of flour except for the sublet premises.
Ruling: The provisions which Rhodesian sought to enforce were reasonable. Many apparently restrictive contracts
are acceptable and are treated as part of normal commercial practice not restraint of trade.
To my Students:
I hope you derived some value from these selected cases. No doubt you will identify many imperfections of one kind
or another. Please assist me improve on this for the benefit of future students. The cases selected focus on contract
and sale only. In due course I hope to include cases on other topics covered in the module.
S. Mlambo. 011 867 258
September 2007. 054 – 227 517

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Thus unless induced by misrepresentation or fraud, one is bound under caveat subscriptor by his own signature

attention of the customer to the conditions. In any event, the ticket was a “mere voucher” where one could not

The auctioneer called for bids for what he intended to be Lot 1208 [the mantelpiece/table] alone but Pratley bid

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Thus unless induced by misrepresentation or fraud, one is bound under caveat subscriptor by his own signature ­

attention of the customer to the conditions. In any event, the ticket was a “mere voucher” where one could not

The auctioneer called for bids for what he intended to be Lot 1208 [the mantelpiece/table] alone but Pratley bid

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Thus unless induced by misrepresentation or fraud, one is bound under caveat subscriptor by his own signature