PVL3702: AMENDMENTS TO THE STUDY GUIDE

Please note that the prescribed textbook for the PVL3702 module for 2023 is
Hutchison & Pretorius (eds) The Law of Contract in South Africa 4th ed (2022)
Oxford, Cape Town.

The amendments to the study guide which are set out hereinbelow, has become
necessary because a new edition of the aforesaid textbook has been prescribed.

STUDY UNIT 1:

There are no amendments for Study Unit 1.

STUDY UNIT 2:

Under the heading, “LEARNING MATERIAL” on page 8, remove the reference to “1.7
- 1.77” with 1.8 - 1.8.7 – It should read, “Prescribed textbook, chapter 1, sections
1.8 - 1.8.7.”

1 INTRODUCTION

On page 8 replace the reference to “1.7.1” with 1.8.1 – The sentence should read,
“Study section 1.8.1 of the textbook.”

2 ACTUAL SUBJECTIVE AGREEMENT

On page 9 replace the reference to “1.7.2” with 1.8.2 – The sentence should read,
“Study section 1.8.2 of the textbook.”

3 APPARENT OR OBJECTIVE AGREEMENT

On page 9 replace the reference to “1.7.3” with 1.8.3 – The sentence should read,
“Study section 1.8.3 of the textbook.”
4 THEORIES OF CONTRACT

On page 9 replace the reference to “1.7.4” with 1.8.4 – The sentence should read,
“Study section 1.8.4 of the textbook.”

5 APPROACH TO CONTRACT: SUBJECTIVE OROBJECTIVE?

On page 10 replace the reference to “1.7.5” with 1.8.5 – The sentence should read,
“Study section 1.8.5 of the textbook.”

6 DUAL BASIS OF CONTRACT IN MODERN LAW

On page 10 replace the reference to “1.7.6” with 1.8.6 – The sentence should read,
“Study section 1.8.6 of the textbook.”

7 PROVING THE EXISTENCE OFA CONTRACT

On page 10 replace the reference to “1.7.7” with 1.8.7 – The sentence should read,
“Study section 1.8.7 of the textbook.”

STUDY UNIT 3:

Under the heading, “LEARNING MATERIAL” on page 12, remove the reference to
“1.8 - 1.8.4” with 1.9 – 1.9.4 – It should read, “Prescribed textbook, chapter 1,
sections 1.9 - 1.9.4.”

Also under the heading, “LEARNING MATERIAL” on page 12 add the following two
cases: “Botha v Rich 2014 (4) SA 124 (CC); and Beadica 231 CC v Trustees for the
time being of the Oregon Trust 2020 (5) SA 247 (CC).”

1 INTRODUCTION: CORNERSTONES OF CONTRACT

On page 13 replace the reference to “1.8” with 1.9 – The sentence should read,
“Study section 1.9 of the textbook.”
2 THEGOALS OF CONTRACT LAW

On page 13 replace the reference to “1.8.1” with 1.9.1 – The sentence should read,
“Study section 1.9.1 of the textbook.”

3 COMPETING VALUES IN THE LAW OF CONTRACT

On page 13 replace the reference to “1.8.2” with 1.9.2 – The sentence should read,
“Study section 1.9.2 of the textbook.”

4 FREEDOM AND SANCTITY OF CONTRACT

On page 13 replace the reference to “1.8.3” with 1.9.3 – The sentence should read,
“Study section 1.9.3 of the textbook.”

5 GOOD FAITH AND EQUITY IN CONTRACT

On page 14 replace the reference to “1.8.4” with 1.9.4 – The sentence should read,
“Study section 1.9.4 of the textbook.”

On page 14, after the last sentence under this sub-heading, add the following
sentence: “Also study the approach taken by the Constitutional Court in Botha v Rich
2014 (4) SA 124 (CC), and Beadica 231 CC v Trustees for the time being of the
Oregon Trust 2020 (5) SA 247 (CC).”

STUDY UNIT 4:

Under the heading, “LEARNING MATERIAL” on page 16, remove the reference to
“1.9” with 1.10 – It should read, “Prescribed textbook, chapter 1, section 1.10.”

CONTENT OF THIS STUDY UNIT

On page 16 replace the reference to “1.9” with 1.10 – The sentence should read,
“Study section 1.10 of the textbook.”
STUDY UNIT 5:

Under the heading, “LEARNING MATERIAL” on page 18, remove the reference to
“1.10” with 1.7 – It should read, “Prescribed textbook, chapter 1, section 1.7.”

Also under the heading, “LEARNING MATERIAL” on page 18 add the following two
cases: “Botha v Rich 2014 (4) SA 124 (CC), Beadica 231 CC v Trustees for the time
being of the Oregon Trust 2020 (5) SA 247 (CC), and AB v Pridwan Preparatory
School 2020 (5) SA 327 (CC).”

CONTENT OF THIS STUDY UNIT

On page 18 replace the reference to “1.10” with 1.7 – The sentence should read,
“Study section 1.7 of the textbook.”

On page 18, after the last sentence in the first paragraph under this sub-heading, add
the following sentence: “See also the approaches taken by the Constitutional Court in
Beadica 231 CC v Trustees for the time being of the Oregon Trust 2020 (5) SA 247
(CC), and AB v Pridwan Preparatory School 2020 (5) SA 327 (CC).”

STUDY UNIT 6:

There are no amendments for Study Unit 6.

STUDY UNIT 7:

3 WHEN AND WHERE ACCEPTANCE TAKES EFFECT

On page 26 at the beginning of the second paragraph under this heading, add
the following sentence: “Study sections 2.3.2 - 2.3.2.5 and 2.3.2.8 of the textbook.”
STUDY UNIT 8:

Under the heading, “LEARNING MATERIAL” on page 28 add the following case:
“Mokone v Tassos Properties CC 2017 (5) SA 456 (CC). Study this case to the
extent that it is mentioned in this document.”

1.7 FORMALITIES CONCERNING OPTIONS

On page 33, at the end of the second last paragraph, after the last sentence, add
the following sentences: “In Mokone v Tassos Properties CC 2017 (5) SA 456 (CC),
the Constitutional Court held that a right of pre-emption agreement pertaining to land
is valid even if it does not comply with the statutory formalities set out in section 2(1)
of the Alienation of Land Act 68 of 1981 (which deals with the sale or alienation of
land). Although the Mokone case dealt with a pre-emption and not an option, the
reasoning in the judgment hardly leaves any doubt that the formality requirements in
the Alienation of Land Act do not apply in the context of an option to buy or sell land.”

2.3 FORMALITIES CONCERNING RIGHTS OF PRE-EMPTION

On page 36, replace the last sentence in paragraph 2.3 on page 36 with the
following sentences:

“This applies to the main agreement concluded between the parties for the sale of
land. Sometimes it transpires that a pre-emption agreement is concluded first,
contemplating that in the future (although it is definitely not certain because of the
nature of a pre-emption agreement), there may be a main agreement concluded for
the actual sale of the land. No doubt, the main agreement (if it is ever concluded) must
comply with the statutory writing and signature prescribed formalities for such an
agreement to be valid (see the wording of section 2(1) of the Alienation of Land Act 68
of 1981, on page 32 of the study guide). But in Hirschowitz v Moolman 1985 (3) SA
739 (A), the court went a step further and held that the pre-emption agreement
pertaining to land, must also comply with the writing and signature formalities
prescribed by the said statute for the sale of land. However, this ruling in Hirschowitz
has now been overruled by the Constitutional Court in Mokone v Tassos Properties
CC 2017 (5) SA 456 (CC). In the Mokone case, the court held that a right of pre-
emption agreement relating to land is valid, even if it does not comply with the statutory
formalities set out in section 2(1) of the Alienation of Land Act 68 of 1981.”

ACTIVITY

On page 37 replace the entire content of paragraph (d) with the following
sentences:

“In so far as immovable property is concerned, there seems to be no reason why an

option contract must comply with the formality provisions in section 2(1) of the
Alienation of Land Act 68 of 1981. This reasoning is consistent with the reasoning of
the Constitutional Court in Mokone v Tassos Properties CC 2017 (5) SA 456 (CC),
even though the judgment related to an option and not a pre-emption. The Mokone
case held that a pre-emption agreement relating to immovable property is valid even
if it was not reduced to writing and signed by the parties. Therefore, in this context, the
formalities in the said Act do not apply to a pre-emption agreement.”

STUDY UNIT 9:

There are no amendments for Study Unit 9.

STUDY UNIT 10:

Under the heading, “LEARNING MATERIAL” on page 42 add the following two cases:

“National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958 (2) SA
473 (A); and Slip Knot Investments 777 (Pty) Ltd v Du Toit 2011 (4) SA 72 (SCA).”

7 RECONCILIATION OF THE SUBJECTIVE AND OBJECTIVE APPROACHES

On page 45, replace the reference to “3.7.2” with 3.7.3 – The sentence should read,
“Study sections 3.7 - 3.7.3 of the textbook.”

On page 46, towards the end of the first paragraph, replace the reference to
“3.7.2” with 3.7.3. The sentence should read, “Refer to figure 3.3 in section 3.7.3 of
the textbook……”

On page 46, at the end of the second paragraph, replace the reference to “3.7.2”
with 3.7.3.

On page 46, add the following sentence at the end of the second paragraph:

“Note also that where the error is caused by the misrepresentation of a third party,
direct reliance trumps over a material mistake on the part of the contract denier. See
the discussion of Slip Knot Investments 777 (Pty) Ltd v Du Toit 2011 (4) SA 72 (SCA)
in section 3.7.2.”

STUDY UNIT 11:

There are no amendments for Study Unit 11.

STUDY UNIT 12:

There are no amendments for Study Unit 12.

STUDY UNIT 13:

There are no amendments for Study Unit 13.

STUDY UNIT 14:

There are no amendments for Study Unit 14.

STUDY UNIT 15:

Summary

On page 67, replace the reference to “9” with 10. It should read, “Consult point
10”.

STUDY UNIT 16:

1 INTRODUCTION

On page 68, replace the reference to “4.5” with 4.7. It should read, “Study section
4.7 of the textbook.”
STUDY UNIT 17:

Under the heading, “LEARNING MATERIAL” on page 72 add the following two cases:
“Botha v Rich 2014 (4) SA 124 (CC); Beadica 231 CC v Trustees for the time being of
the Oregon Trust 2020 (5) SA 247 (CC); and AB v Pridwin Preparatory School 2020
(5) SA 327 (CC).

3.2 STATUTORY ILLEGALITY

On page 73, after the second paragraph under this sub-heading, add a new
paragraph with the following sentence: “Study sections 7.2.3.3.1 and 7.2.3.3.2 in
the textbook, relating to constitutional invalidity in the context of private and public
agreements respectively.”

3.3 UNFAIR CONTRACTS

Replace the last paragraph on page 73, with the following paragraphs:

“Study section 7.2.3.5 of the textbook. A basic distinction should be made between
contracts falling within the provisions of the Consumer Protection Act 68 of 2008 (the
CPA) and all other contracts. The CPA has empowered the courts with an equitable
jurisdiction. Study the factors the court must take into account.

Study the decision of Appellate Division in Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A)
and that of Constitutional Court in Barkhuizen v Napier 2007 (5) SA 323 (CC). Study
the interpretation of the Barkhuizen case by the Supreme Court of Appeal and note
how this approach differs from that in the Sasfin case. Most recently, in Beadica 231
CC v Trustees for the time being of the Oregon Trust [2020] ZACC 13, the majority in
the Constitutional Court held that abstract values such as good faith, fairness and
reasonableness, are not self-standing rules of contract law that can be applied directly
to find that a contract term cannot be enforced. The majority held that this stance was
consistent with the jurisprudence of the Constitutional Court judgments in Barkhuizen
v Napier 2007 (5) SA 323 (CC) and Botha v Rich 2014 (4) SA 124 (CC). To this extent,
the majority in the Constitutional Court in Beadica, pointed out that it was in agreement
with the jurisprudence of the Supreme Court of Appeal that such abstract values
cannot operate on a free-standing basis for courts to intervene in contractual
relationships [79, 82].

Study the “Pause for Reflection” regarding inequality of bargaining power, and the
existing protection of the weaker party as well as possible future development. The
influence of the Constitution and Ubuntu will lead to the transformation of the law of
contract in this regard. Also revisit study unit 3 and section 1.9.4 of the textbook, where
the focus is on good faith and equity.”

3.4 UNFAIR ENFORCE OF A CONTRACT

On page 74, under this sub-heading replace all the content with the following
paragraphs:

“Study section 7.2.3.6 of the textbook. The possibility of this defence surfaced in
Barkhuizen v Napier 2007 (5) SA 323 (CC) and was thought to be applied in Botha v
Rich 2014 (4) SA 124 (CC). But in Beadica 231 CC v Trustees for the time being of
the Oregon Trust [2020] ZACC 13, the majority emphasised that the judgment in Botha
v Rich 2014 (4) SA 124 (CC) must be understood in the statutory context of the case,
where section 27 of the Alienation of Land Act 68 of 1981 was at issue, pertaining to
an instalment sale agreement falling under the ambit of this Act [59]. The majority in
Beadica pointed out that it was within this statutory ambit that the court in Botha did
not allow the enforcement of a cancellation clause by the seller, taking into account
that the purpose of this Act is to protect purchasers’ like Ms Botha who partially paid
the purchase price for immovable property. And in Beadica, the majority in the court
iterated that Botha did not elevate notions of good faith and fairness to be independent
substantive contract rules which justify the intervention of the courts, relating to the
enforcement of contractual terms [57]. In this regard, the court [59] reasoned as
follows:

“[t]here has been significant criticism of this Court’s judgment in Botha. Much
of the academic commentary on Botha assumes that Botha is authority for the
general proposition in our law of contract that a party who breaches its
contractual obligations can avoid the termination of a contract by claiming that
termination would be disproportionate or unfair in the circumstances. This
assumption, which was implicitly endorsed by the Supreme Court of Appeal in
this matter, is based on a misreading of the ratio decidendi (rationale for the
decision) in Botha and rests on a misconception of what that case was about.
Botha did not rewrite the legal position on equity in our law of contract. This
Court did not hold in Botha that disproportionality or unfairness are separate,
self-standing grounds, upon which a court may generally refuse to enforce
contractual provisions. Botha must be understood within the context of the
relevant statutory scheme in issue. Botha was primarily concerned with the
question whether the seller’s contractual right to cancel for breach could be
enforced within the statutory scheme created by section 27(1) of the Act.”

In Beadica, the majority in the Constitutional Court held that abstract values such as
good faith, fairness and reasonableness, are not self-standing rules of contract law
that can be applied directly to find that a contract term cannot be enforced [79-82]. It
held that this stance was consistent with the jurisprudence of the Constitutional Court
judgments in Barkhuizen v Napier 2007 (5) SA 323 (CC) and Botha v Rich 2014 (4)
SA 124 (CC). To this extent, the majority in the Constitutional Court in Beadica, pointed
out that it was in agreement with the jurisprudence of the Supreme Court of Appeal
that such abstract values cannot operate on a free-standing basis for courts to
intervene in contractual relationships [79, 82].

In Beadica, the appellants failed to timeously give notice of their intention to exercise
their rights to renew their respective lease agreements. The majority in this case held
that the appellants failed to give adequate reasons as to why they did not timeously
comply with the renewal clauses [93, 95]. Accordingly, the majority in Beadica inferred
that there were no circumstances that prevented the appellants from complying with
the renewal clauses, and that they merely neglected to do so [95].

Similar to the approach adopted in Barkhuizen, the majority in Beadica found that
because adequate reasons were not provided for the failure to comply with the renewal
clauses, the court was not in a position to decide if enforcement of the renewal clauses
were contrary to public policy [95]. Therefore, the majority in Beadica concluded that
the appellants failed to discharge the onus to prove that the enforcement of the
renewal clauses were contrary to public policy [95]. The result of this was that the
appellants leases terminated automatically on the termination dates of the leases [97].
The majority also acknowledged that whilst its judgment presented a harsh outcome
for the appellants, such an outcome itself, without providing an explanation as to why
they failed to comply with the terms of the renewal clauses, does not provide a
sufficient basis to find that the enforcement of these clauses were against public policy
[96]. It was also held [80] that “a court may not refuse to enforce contractual terms on
the basis that the enforcement would, in its subjective view, be unfair, unreasonable
or unduly harsh.”

It is important to know that the majority judgment in Beadica does not mean that
fairness has no role to play in a public policy enquiry as to whether a contract term
should be enforced. On the contrary, it held [72] that:

“It is clear that public policy imports values of fairness, reasonableness and justice.
Ubuntu, which encompasses these values, is now also recognised as a constitutional
value, inspiring our constitutional compact, which in turn informs public policy. These
values form important considerations in the balancing exercise required to determine
whether a contractual term, or its enforcement, is contrary to public policy”.

In Barkhuizen, fairness formed part of this public policy enquiry and in Beadica the
court held that Barkhuizen is the leading and binding authority for this type of enquiry
[58, 146]. Furthermore, in Beadica [80] the court held that “only where a contractual
term, or its enforcement, is so unfair, unreasonable or unjust that it is contrary to public
policy that a court may refuse to enforce it.” Therefore, these values still play an
important role for this type of public policy enquiry, but exactly how the courts will
objectively apply the content of this quotation is uncertain, and perhaps it will unfold
on a case-by-case basis. For now, what is clear is that in accordance with Barkhuizen
and Beadica, an adequate and valid reason should be advanced as to why a
contractual term has not been complied with, before a court will consider if
enforcement of the relevant term would be contrary to public policy. Without a valid
reason or explanation for non-compliance with a term of a contract, even evidence of
a harsh outcome alone, will not readily suffice to rule that enforcement will be contrary
to public policy.

Also revisit study unit 3 and section 1.9.4 of the textbook, where the focus is on good
faith and equity.”
STUDY UNIT 18:

2 WAGERING AND GAMBLING CONTRACTS

On page 76, under this sub-heading replace the reference to “study points 10
and 11” with: “study points 11 and 12”.

Summary

On page 77, replace the reference to “Consult points 10-15” with: “Consult points
13-16”.

STUDY UNIT 19:

There are no amendments for Study Unit 19.

STUDY UNIT 20:

There are no amendments for Study Unit 20.

STUDY UNIT 21:

There are no amendments for Study Unit 21.

STUDY UNIT 22:

There are no amendments for Study Unit 22.

STUDY UNIT 23:

3.1 ESSENTIALIA, NATURALIA AND INCIDENTALIA

The first sentence under this sub-heading should read: “Study section 10.3 and
10.3.1”.
STUDY UNIT 24:

INTERPRETATION OF CONTRACTS

Replace paragraphs 1 to 5 on page 99-101 with the following:

“1 INTRODUCTION
Study section 11.1 of the textbook. The courts are seldom called upon to interpret
oral contracts, because the process of proving the terms of the contract usually
simultaneously clarifies the meaning of the terms (Christie and Bradfield Contract
199). A party’s testimony on the wording of their oral contract usually reflects his or
her understanding of the meaning of the words and not a mere recollection of the
wording itself. In contrast thereto, the court often has to construe the actual wording
of a written contract (Christie and Bradfield Contract 199).
Interpretation is an objective process and involves determining what the language
used in the contract means. The testimony of the parties as to what either of them had
in mind at the time of conclusion of their contract is thus irrelevant (Shakawa Hunting
& Game Lodge (Pty) Ltd v Askari Adventures CC 44/2014 [2015] ZASCA 62 (17 April
2015) par 12).
Initially, the courts followed a textual approach to contractual interpretation. The textual
approach involved a step-by-step approach. The ordinary or grammatical meaning of
the words was first determined. The next step was to consider the textual context of
the contract as a whole. Only if the intention of the parties could not thus be
determined, was the extended context considered.
However, in recent years, we have seen the courts move from a textual to a unitary
contextual approach to the interpretation of contracts. The starting point is the
language of the document in the light of the ordinary rules of grammar and syntax, but
the words should be read from the beginning in the context of the document as a whole
and in the light of all the relevant circumstances surrounding the conclusion of the
contract (factual matrix).

2 THE PURPOSE OF THE CONTRACT

Study section 11.2 of the textbook.

3 THE WORDS USED BY THE PARTIES

Study section 11.3 of the textbook.

4 THE TEXTUAL CONTEXT

Study section 11.4 of the textbook.

5 THE BROADER CONTEXT

Study section 11.5 of the textbook with all its subsections. Understand what function
the parol evidence rule plays in the interpretation of contracts. The parol evidence rule
has recently undergone changes. The integration aspect of the parol evidence rule
functions just as before, but the interpretation aspect has recently been modified: The
unclear distinction between background and surrounding circumstances has been
abolished.

Consequently, all evidence regarding the circumstances surrounding the conclusion

of the contract (factual matrix) is now permissible subject to two limitations. The first is
the limit of the basic rule of evidence: evidence must be relevant. The second is that
no direct evidence of the parties’ subjective intentions is permissible. This means that
the following evidence regarding the circumstances surrounding the conclusion of the
contract (factual matrix) are inter alia permissible: the apparent purpose of the
provision under consideration, the purpose of the contract, background to the
preparation and production of the document in question (circumstances in which the
document came into being), the correspondence which passed between the parties
leading up to the conclusion of their agreement and the way the parties carried out
their agreement (Natal Joint Municipal Pension Fund v Endumeni Municipality 2012
(4) SA 593 (SCA) 603–604; Dexgroup (Pty) Ltd v Trustco Group International (Pty) Ltd
2013 (6) SA 520 (SCA) 526; Unica Iron and Steel (Pty) Ltd v Michandani 2016 (2) SA
307 (SCA); Hangar v Robertson (211/2015) [2016] ZASCA 102 (10 June 2016) par
10).

Study section 11.5.1.6 of the textbook relating to the application of the parol
evidence rule in the context of a case dealing with delectus personae. In this regard,
in University of Johannesburg v Auckland Park Theological Seminary 2021 (6) SA 1
(CC), the Constitutional Court confirmed the unitary approach to interpretation relating
to contracts as set out by the Supreme Court of Appeal in Natal Joint Municipal
Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA). The Constitutional
Court also emphasised that context must always be considered even if the meaning
of the contract on the face of it appears to be completely clear. Therefore, it is not
necessary for ambiguity to be present for the context to be considered. According to
the Constitutional Court, extrinsic evidence may also be adduced to determine the
context or purpose of the contract with the aim to determine its meaning. Students
should understand that the Constitutional Court has not clarified all matters pertaining
to the application of the parol evidence rule. In this regard, study section 11.5.1.6 in
the textbook.

Now study the section 11.5.2 of the textbook. The parol evidence rule can be
circumvented by alleging a tacit term or by applying for rectification. Do not study the
“Counterpoint” in section 11.5.2.

6 CANONS OF CONSTRUCTION

Study sections 11.6 and 11.7 of the textbook. You only have to read carefully the
‘‘Counterpoint’’ in section 11.6 for an example of the application of the contra
proferentem rule.

7 INTERPRETATION OF DISCLAIMERS, INDEMNITIES AND EXEMPTION

CLAUSES

Study point 10 of ‘‘This chapter in essence’’ at the end of chapter 11 of the

textbook.

8 THE OBJECTIVE APPROACH TO INTERPRETATION OF CONTRACTS

Study section 11.9 of the textbook.”

STUDY UNIT 25:

There are no amendments for Study Unit 25.

STUDY UNIT 26:

There are no amendments for Study Unit 26.

STUDY UNIT 27:

There are no amendments for Study Unit 27.

STUDY UNIT 28:

There are no amendments for Study Unit 28.

STUDY UNIT 29:

There are no amendments for Study Unit 29.

STUDY UNIT 30:

There are no amendments for Study Unit 30.

STUDY UNIT 31:

There are no amendments for Study Unit 31.

STUDY UNIT 32:

There are no amendments for Study Unit 32.

STUDY UNIT 33:

There are no amendments for Study Unit 33.

STUDY UNIT 34:

There are no amendments for Study Unit 34.

STUDY UNIT 35:

There are no amendments for Study Unit 35.

STUDY UNIT 36:

4 THE CONSEQUENCES OF CESSION

Replace the second paragraph on page 135 with the following paragraph:

“Study section 14.5–14.5.5. However, you do not have to study the ‘‘Counterpoint’’
in section 14.5.5.”

STUDY UNIT 37:

There are no amendments for Study Unit 37.

STUDY UNIT 38:

There are no amendments for Study Unit 38.

STUDY UNIT 39:

There are no amendments for Study Unit 39.

The Law of Contract Lecturers:

MS LB MTSWENI Email: mtswelb@unisa.ac.za

MS T MONYELA emonyet@unisa.ac.za
ADV R ISMAIL ismair@unisa.ac.za