COMMERCIAL LAW 1A

WEEK 4
2024
Consensus
 WHAT IS CONSENSUS?
• Wills/intentions of parties
• Creates legal consequences
• 3 Requirements:

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OFFER AND ACCEPTANCE
1. The concepts of offer & acceptance
• OFFER - Declaration of intent by offeror - in which he/she indicates
an intention to be contractually bound - to offeree and if accepted
leads to contract concluded.
• ACCEPTANCE - Unqualified declaration of intent made by offeree.
Agrees to exact terms as offered.
 SO – Offeror invites the offeree to consent to the creation of an
obligation/s between the offeror and offeree

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 REQUIREMENTS FOR THE OFFER AND ACCEPTANCE
1. Firm – both offer & acceptance must be made with the intention to be legally
bound by offer and acceptance. Upon acceptance parties accept terms the terms
unconditionally. Jokes are not serious offers
2. Complete – all terms included which the offeree will abide (offer)
3. Clear, certain & unambiguous (offer & acceptance) so rights + duties are
ascertainable/determinable. No contract arises if it is vague or ambiguous
4. Formalities? (offer & acceptance) in writing or verbally or tacitly. The law will
sometimes prescribe formalities for certain contracts
5. Addressed to specific person / group of persons (offer) it can only be accepted by
those to whom the offer applies
6. Must be communicated (offer & acceptance) an offer is completed only once it
has been communicated to the offeree and acceptance is completed once it is
communicated to the offeror.
You must explain the requirements in full in a test situation. If you say an offer must be firm, this does not explain what a
firm offer entails.

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CONSEQUENCES OF AN OFFER AND ACCEPTANCE
• CONSEQUENCES OF AN OFFER:

• No contractual obligation can arise from an offer alone!

• Offer lapses (ENDS) if:

o Only valid for a certain period of time
o Offeror revokes offer
o Offeree rejects the offer
o Counter offer by offeree
o If offeror or offeree dies before accepting the offer

• CONSEQUENCES OF AN ACCEPTANCE
o Contract is formed

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Special rules with regard to offer and acceptance
1. Invitation to make an offer
• Advertisements - a request or invitation to make an offer or do business is not a true
offer.
2. Statements of intent
• Further negotiations are needed. Regarded as documents which indicate his/her
intention to contract
3. Calling for tenders
• Submit offers which may then be accepted or rejected
4. Auctions
• Certain conditions apply
• Bidder is the offeror
• Auctioneer extends an invitation to those who are present to make an offer and can
accept or reject a bid regardless of whether it is the highest bid – only where it is
presumed the auction is held subject to reservation

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MOMENT AND PLACE OF CONCLUSION
 A contract arises at the moment when, and at the place where consensus is reached
(Do not forget the other requirements for a valid contract must be present).
 This happens where each party becomes aware of the intention of the other party –
the offeror becomes aware of the offeree’s acceptance of the offer.
 Formation of the contract is important because it can still be revoked before accepted
or for enforcement of rights + duties & the calculation of interest.
 When and where the offeror and offeree are in each other’s presence the offer and
acceptance is usually easily to determine the place and time of formation of the contract.
 However there are instances where both parties are not in the same place and not in
each other’s presence. One needs to look at the method of communication used to
determine when and where the contract came into existence.

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 APPLICATION MEANING – WHEN AND WHERE?

EXPEDITION/DISPATCH THEORY REAL POSTAL COMES INTO EXISTENCE WHEN

AND WHERE THE OFFEREE
DISPATCHES ACCEPTANCE TO
OFFEROR
NB! BOTH OFFER & ACCEPTANCE
MUST BE MADE BY POST

RECEPTION THEORY EMAIL COMES INTO EXISTENCE WHEN

SMS OFFEROR RECEIVES
WHATSAPP ACCEPTANCE AND WHERE THE
OFFEROR NORMALLY RESIDES

INFORMATION/ASCERTAINMENT IN PERSON COMES INTO EXISTENCE WHEN

THEORY TELEPHONE OFFEROR TAKES CONGISANCE
FAX OF ACCEPTANCE & WHERE THEY
RECEIVE THE NOTIFICATION.
GENERAL THEORY ACCEPTED IN
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SA
 QUESTIONS
1. If Alex posts his offer to buy Bee’s car for R100 000 on 1 December 2023 from Cape Town to Bee in Jhb and Bee
telephones Alex on 5 December 2023 and accepts the offer. When and where does the contract come into existence?

2. If Kanye emails his offer on 1 December 2023 from Cape Town to Rihanna in Jhb. Rihanna sms’s Kanye on 5
December 2023 and accepts the offer. Kanye only reads the SMS on the 6th December. When and where does the
contract come into existence? Which theory applies?

3. Cait is selling a diamond ring for R12 000. Jess, who lives in Durban, sends an offer to Cait on 16 March 2023 by
email to purchase the ring for R10 000. Cait, who lives in Jhb, receives the offer on 18 March. Cait then emails Jess
on the 20th of March in Jhb accepting her offer. Jess receives the acceptance on 21 March in Durban. She only reads
the email on the 25th of March. Which theory applies? When and where is the contract concluded?

4. On 13 February 2023, Mel advertises the sale of her car on Facebook for R90 000 from her house in Port Elizabeth.
Sipho telephones Mel on 15 February and offers Mel R80 000 for the car from his office in East London. Mel needs
some time to decide and Sipho leaves his contact details should Mel accept the offer. Mel emails Sipho from Durban
on 17 February and asks whether Sipho can buy the car for R85 000. On 21 February, Sipho sends a fax from work to
Mel agreeing on the price of R85 000. Mel receives the fax only on 22 February but reads it on 24 February when she
is back home. Which theory applies? When and where was the contract concluded?

REMEMBER TO FOCUS ON ACCEPTANCE 9

FACTORS INFLUENCING CONSENSUS
1. Total absence of consensus
• Mistake / Error / fault

2. Improperly obtained consensus

• Misrepresentation
• Undue influence
• Duress

• If consensus is absent (1) then no valid agreement comes into existence –

Contract VOID!
• If consensus is improperly obtained (2) = Contract VOIDABLE

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MISTAKE(ERROR) – ABSENCE OF CONSENSUS
• Requirements to be proven for mistake:
1. Mistake relates to misunderstanding fact, legal rule or legal principle regarding the
contract;
2. is material to contract;
3. Mistake is reasonable (objective test of a reasonable person in the same situation).

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 MISREPRESENTATION – IMPROPERLY OBTAINED CONSENSUS
• An untrue/false statement OR representation of fact or state of affairs made expressly or
tacitly by one party of the contract with the aim & result to induce the other party into
concluding the contract.
• Contract = voidable at the instance of the deceived party
• Must be 1) a misrepresentation of fact,
2) made by one party to the other
3) must be unlawful
4) material and must have an influence on reason why contract was concluded,
5) made intentionally, negligently or innocently
1. Intentional misrepresentation – a false statement of a material fact is made with the intention of
inducing a contract. (may claim damages in delict or rescind contract)
2. Negligent misrepresentation – a false statement with the intention of inducing a contract but it is
made negligently (person makes statement which s/he believes is true but does not take steps
to verify its truth (may claim damages in delict or rescind contract)
3. Innocent misrepresentation – a false statement made with the intention of inducing the contract but
it is not made fraudulently or negligently (may NOT claim damages, but can rescind the contract)
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DURESS
• Causes a person to do something which s/he would not have normally done –
unlawful threat of harm or injury made by one party to the other that causes a
contract to be concluded – usually a threat or physical violence

• 2 forms:
1. Prejudiced party acts w/o being aware and physically forced to sign the contract -
having no contractual capacity = void contract (You DO NOT know what
contract you have entered into)
2. Person acts in a way in which he would never have before - retains contractual
capacity - CONSENSUS IS REACHED, but would not have been reached
had it not been for the duress = voidable contract – the threat of harm made
the person conclude the contract
• For duress, consent has been improperly obtained and therefore the
contract is voidable. Innocent party can rescind or uphold the contract and
claim damages 13
DURESS CONTINUED…
 Requirements:
1. there must be actual physical violence or reasonable fear of violence which
overwhelms the resistance of a reasonable person in the same position
2. The threat must be of an imminent or inevitable evil. A person could not have
averted the danger other than agreeing to the contract
3. The threat of harm or violence must be unlawful.
4. Duress must be exercised by one contracting party against the other
5. The threat must cause the threatened person to conclude the contract

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UNDUE INFLUENCE

• Person concludes a contract because of some kind of influence, consensus

improperly obtained – improper or unfair conduct by one that persuades the
other – usually a special relationship.
• Contract is voidable

Requirements for undue influence:

oParty must have acquired an influence over the victim
oParty must used his influence to weaken victim’s ability to resist
oInfluence must have been used to persuade victim to consent to transaction
which he wouldn't have normally entered into.

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