JUNE 2017 EXAMINATION

MODULE DESCRIPTION : LAW OF CONTRACT

MODULE CODE : JLC 211/JLCV 201

FACULTY : LAW

QUALIFICATION : LLB

EXAMINATION DATE : June 2017

SESSION STARTS AT : 09:00

DURATION (IN MINUTES) : 120

TOTAL MARKS : 60

PAGES : 8

ADDENDUMS : NONE

EXAMINER : 1. T HOKWANA

MODERATOR : 1. PROF. M TAIT

INSTRUCTIONS : QUESTION PAPER MUST BE RETURNED

REQUIREMENTS : MULTIPLE CHOICE ANSWER SHEET

EXAMINATION ANSWER BOOK

DO NOT TURN THE PAGE BEFORE TOLD TO DO SO

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SECTION A [Answer this section on the multiple answer sheet provided]

1. QUESTION 1

1.1 Which of the following statement(s) is/are correct?

I. Where a contract is reduced to writing and the written instrument unintentionally fails
to reflect the common intention of the parties, the contract is voidable.

II. Where a contract is reduced to writing and the written instrument unintentionally fails
to reflect the common intention of the parties, the contract is void.

III. Where a contract is reduced to writing and the written instrument unintentionally fails
to reflect the common intention of the parties, there is no mistake (no dissensus).

IV. Where a contract is reduced to writing and the written instrument unintentionally fails
to reflect the common intention of the parties, the parties usually will rectify the
contract themselves.

A. III & IV only

B. I only

C. I, III & IV only

D. II, III & IV only

E. I & IV only.

1.2 Which of the following statement(s) is/are correct?

I. A simple obligation means that the parties have specified exactly the performance to
be made.

II. An alternative obligation means normally that the debtor can choose a performance
from a specified genus, or family of performances.

III. A generic obligation means normally that the performance to be made by the debtor
is specified but the debtor can choose to make a different specified performance.

IV. An alternative obligation normally allows the debtor to choose between two or more
specified options for performance.
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A. I & IV only

B. I, II & III only

C. II, III & IV only

D. I, III & IV only

E. All the statements are correct.

1.3 Which of the following statement(s) is/are correct:

I. The courts employ the officious bystander test to determine whether a tacit term
should be read into a contract or not.

II. A tacit term can only be read into a contract if it is capable of clear and exact
formulation.

III. A tacit term can only be read into a contract if it is not in conflict with a clear and
express term of the contract.

IV. A tacit term is a term not explicitly agreed upon but it can nevertheless form part of
the contract because of, for example, trade usage.

A. II & III only

B. I, II & III only

C. I, III, IV only

D. II, III & IV only

E. All the statements are correct.

1.4 John owns a flat in Cape Town but he has never seen the property and does not know
whether the flat has a sea view. He sells the flat to Jane who has also not seen the flat and
does not know either if it has a sea view. The parties base the contract on the
understanding that if the flat has a sea view the contract will proceed. This is an example
of a

A. condition
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B. modus

C. supposition

D. potestative condition

E. None of the above.

1.5 Which of the following statement(s), if any, is/are correct?

I. Essentialia are those terms automatically included in any contract belonging to one of
the classes of specific contracts traditionally recognised by our law.

II. Incidentalia are those terms automatically included in any contract belonging to one
of the classes of specific contracts traditionally recognised by our law.

III. An advantage of incidentalia is that the parties do not have to specifically negotiate
and agree upon them.

IV. Essentialia are implied by law (ex lege).

A. I only

B. I, II & III only

C. III only

D. All the statements are correct.

E. None of the statements is correct.

1.6 Which of the following statement(s) is/are correct?

I. An agent who signs a contract for the sale and transfer of land on behalf of a
principal, must be authorised in writing to sign the contract.

II. An antenuptial contract must be notarially executed and registered within 3 months
from date of signature in the Deed’s Office to be valid between the contracting
parties.

III. An executory contract of donation is not valid unless the terms are embodied in a
written document and signed by the donor.

IV. A long-term lease of land (10 years or more) only has effect against third parties if
the lease is registered against the title deed of the property.
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A. I & III only

B. II & IV only

C. II , III & IV only

D. I, III & IV only

E. All the statements are correct.

1.7 Which of the following statement(s) is/are correct?

I. The expedition theory applies to contracts concluded by telephone.

II. The general rule is that a contract comes into being only when the acceptance is
communicated to the mind of the offeror.

III. The information theory holds that the offeror must learn of the acceptance of his/her
offer by the offeree before actual consensus can be said to have been attained.

IV. If the expedition theory applies then it is presumed that the offeror intended the
contract to be concluded as soon as the offeree signs the offer indicating
acceptance.

A. I & III only

B. II & III only

C. III & IV only

D. II only

E. I, II & IV only.

1.8 Which of the following statement(s) is/are correct?

I. Where the principal gives the agent written authority to act on behalf of the principal,
such written instrument is referred to as a power of attorney.

II. Representation is the phenomenon that occurs when one person (agent) concludes a
juristic act on behalf of another person (principal) provided that the agent has the
necessary authority to act.
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III. A ‘contract’ concluded by an agent without authority with a third party is ultra vires
and cannot be ratified by the principal.

IV. When the agent has actual authority to act on behalf of a principal, but contracts in
his own name (although secretly on behalf of the principal) without disclosing that
s/he (the agent) is acting as an agent, then the doctrine of the unidentified principal
comes into play.

A. I & II only

B. III only

C. I, II & IV only

D. II, III & IV only

E. I, II, III & IV only.

1.9 With reference to Maseko v Maseko 1992 (3) SA 190 (W) indicate which of the following
statements is/are correct:

I. The contract was illegal because it was morally reprehensible because it was designed
to mislead creditors.

II. The contract was illegal because it undermined the institution of marriage.

III. The contract was illegal because it perpetrated fraud against the courts in the divorce
proceedings.

IV. The court stated that the design of the contract (to mislead creditors) were both
immoral and against public policy.

A. IV only

B. I & II only

C. I, II & III only

D. II & III only

E. All the statements are correct.

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1.10 Which of the following statement(s) is/are correct?

I. The par delictum rule provides that where two contracting parties are equally morally
guilty the party in possession is in the stronger position.

II. The par delictum rule is based, amongst others, on the public policy consideration
that unlawful contracts should be discouraged.

III. The par delictum rule prohibits the enforcement of an unlawful contract by means of
a claim for specific performance.

IV. The par delictum rule is an absolute rule and may not be relaxed by the courts.

A. I & II only

B. III only

C. I, II & III only

D. I, II & IV only

E. All of the statements are correct.

[10 x 1 = 10]

SECTION B [Answer this section in the examination answer book provided]

QUESTION 2

2.1 Name the requirements for a valid contract. (6)

2.2 There are two bases on which to establish a contract in modern South African law. Name
them. (2)

2.3 What are the characteristic features (nature) of a contract? Name them and explain very
briefly what is understood by each of these characteristics . (8)

2.4 Name four (4) instances where the law imposes a legal duty to speak on a contracting
party. (4)

[20]
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QUESTION 3

Parties often conclude contracts where the performance at the time of concluding the contract
cannot always be spelled out with certainty. The parties may then agree on different
mechanisms which may be used to establish performance. Explain different examples of such
mechanisms. [10]

QUESTION 4

Joe is a software developer. On 1 January 2012 he commenced working for SA Software Ltd .
This is a company that writes software programmes for the automotive industry in the Eastern
Cape Province. In his contract of employment there is a clause stating the following:

“I agree that upon my resignation from SA Software Ltd I will not take up a position in the field of
software development for the automotive industry in the whole of South Africa for a period of
one year. “

In January has a serious disagreement with his boss and resigns. He starts working for another
software company named Autosoft Ltd in Gauteng. On 1 April 2015 his previous employer sues
him for breach of contract on the basis that he has not complied with the term in his contract of
employment. He comes to you for advice.

Advise Joe regarding the validity of the clause. [10]

QUESTION 5

Nadia and Leigh have signed a contract with Keisha in terms of which they are liable to Keisha
jointly and severally as co-debtors in the amount of R100 000.00. Explain to the debtors what
the implications are of them being jointly and severally liable. (5)

QUESTION 6

Provide a definition for the following contractual terms:

6.1 Time clause (1)

6.2 Supposition (1)

6.3 Modal clause (or modus) (1)

6.4 Exemption clause (1)

6.5 Non-variation clause (1)

TOTAL MARKS: [60]