South African common law requirements for a valid contract. Chapter 4

• Published date: 01 January 2005
• Pages: 23-49
• Author: Jason Mikellyn Charles Johnson
• Date: 01 January 2005
• DOI: 10.10520/EJC74032

CHAPTER 4

SOUTH AFRICAN COMMON LAW REQUIREMENTS

FOR A VALID CONTRACT

4.1 South African Common Law requirements for a valid

contract

Since this dissertation concerns investigating the validity of contracts

concluded over the Internet, it is essential to briefly overview the

requirements for a valid contract so that they can be examined in-

dividually in the context of Cyberlaw.

It is important to remember that consensus alone is not sufficient

for the conclusion of a lawful and binding contract51 and that it is

thus necessary to distinguish between a contract that has been

concluded and a valid contract. This is crucial in the context of

cyperspace and online-type agreements, because it is easy for

agreements to be reached and “contracts” concluded without ne-

cessarily complying properly with all the requirements for validity.

In addition to offer and acceptance (forming the basis of consensus)

the requirements52 for a valid contract are that the parties must have

the required contractual capacity, the performances undertaken

at the time of contracting must have been possible, the contract as

well as its purpose and object must be lawful and all necessary

formalities must have been complied with. In addition to this the

performances must be such that they are determined or determi-

nable with a degree of certainty.

The Electronic Communications and Transactions Act will also have

to be consulted to investigate any developments in relation to new

requirements for online contracts. While it is essential to investi-

gate the Act, it also has to be borne in mind that the Act has not

stood the test of time and may be altered by a declaration of un-

constitutionality for whatever reason.

4.1.1 Offer and acceptance

South African law of contract relies on an invitation to bring about

the creation of an obligation (called an offer) and the affirmative

response (referred to as the acceptance).53 Merely because the

acceptance of an offer has prima facie taken place does not mean

that consensus has been reached. “Consensus”, is a rather com-

plex notion in itself and the requirements for it to be present shall

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51 Van Rensburg ea 1994:211.

52 Van der Merwe ea 2003:8.

53 Van der Merwe ea 2003:48.

be investigated in more detail below.Whether or not there is con-

sensus (in the simple sense) may be deduced purely from the facts

surrounding the offer and acceptance of the agreement at hand.

An offer is defined by Van der Merwe54 as

an expression of will, made with the intention of creating an

obligationary relationship on certain or ascertainable terms

with another (the addressee), and brought to the attention

of the addressee, so as to enable him to establish the con-

tract by accepting the offer as it was made.

The question relating to whether or not an advertisement, amounts

to an offer in the legal sense of the word or merely an offer to ne-

gotiate shall be discussed later, as this is very relevant with respect

to online contracts.

Generally speaking, offers may be accepted or rejected by the

other contracting party.In addition to this, the offer may be revoked

at any time prior to acceptance.55 Revocation is only effective once

it has been communicated to the other party.56 An offer lapses au-

tomatically after a reasonable amount of time, unless it has been

accepted.57 The offer may contain conditions regarding the time,

manner and place of acceptance.

Acceptance is defined by Van der Merwe58 as “a declaration of

will which indicates assent to the proposal contained in the offer”.

It is important that the parties must have the intention to enter into

a binding contract. Acceptance must be unconditional and comply

with any conditions set out in the offer, regarding how, when and

where acceptance must occur.If the person to whom the offer is

made does not wish to accept the offer in its present form, but

makes suggestions as to possible amendments the offer, is deem-

ed to have been rejected and a counter-offer made.It should how-

ever be borne in mind that not every suggestion regarding the ori-

ginal offer may be construed as a rejection thereof. A mere inquiry

intended to clarify or cast light upon certain aspects of the offer is

not to be understood as a rejection thereof or a counter-offer.

As appears from the aforementioned, the concepts of offer and ac-

ceptance are much intertwined with the Common Law requirement

for the validity of a contract, namely consensus.Due to the similarity

between the concepts, a lack of consensus may frequently be due

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54 Van der Merwe ea 2003:50.

55 Van der Merwe ea 2003:53.

56 Yates v Dalton 1938 EDL 177.

57 Dietrichsen v Dietrichsen 1911 TPD 486: 496.

58 Van der Merwe ea 2003:54.