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MODULE NAME: MODULE CODE:

LAW OF CONTRACT LACO6211

ASSESSMENT TYPE: EXAMINATION (PAPER ONLY)

TOTAL MARK ALLOCATION: 120 MARKS
TOTAL HOURS: 2 HOURS (+10 minutes reading time)
INSTRUCTIONS:
1. Please adhere to all instructions in the assessment booklet.
2. Independent work is required.
3. Five minutes per hour of the assessment to a maximum of 15 minutes is dedicated to
reading time before the start of the assessment. You may make notes on your question
paper, but not in your answer sheet. Calculators may not be used during reading time.
4. You may not leave the assessment venue during reading time, or during the first hour or
during the last 15 minutes of the assessment.
5. Ensure that your name is on all pieces of paper or books that you will be submitting. Submit
all the pages of this assessment’s question paper as well as your answer script.
6. Answer all the questions on the answer sheets or in answer booklets provided. The phrase
‘END OF PAPER’ will appear after the final set question of this assessment.
7. Remember to work at a steady pace so that you are able to complete the assessment within
the allocated time. Use the mark allocation as a guideline as to how much time to spend on
each section.
Additional instructions:
1. This is a CLOSED BOOK assessment.
2. For multiple-choice questions, give only one response per question. The marker will ignore
any question with more than one answer, unless otherwise stated. You should, therefore, be
sure of your answer before committing it to paper.
3. Answer All Questions.
4. NO dictionaries allowed.

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Question 1 (Marks: 15)

Answer the following questions:

Q.1.1 List the requirements for a valid offer. (4)

Q.1.2 List three factors that limit a natural person’s capacity to act. (3)

Q.1.3 Identify and describe two requirements for a valid contract. (4)

Q.1.4 List and describe the two forms of pactum de contrahendo. (4)

Question 2 (Marks: 20)

INSTRUCTIONS FOR ANSWERING MULTIPLE CHOICE QUESTIONS MCQS
(a) Answer the following questions by choosing the most correct statement in each instance
and by writing the corresponding letter of the alphabet next to the question number, e.g.
2.1 – 1; 2.2 – 2; 2.3 – 3, etc.
(b) There is ONLY ONE correct answer.
(c) NO marks will be allocated when more than ONE answer is given.
(d) KINDLY NOTE: Where a question contains an assumption, the assumption is applicable to
that question only unless the context indicates otherwise.

Q.2.1 Cedar Woods (Pty) Ltd has an asset value of R1,7 million. Cedar Woods (Pty) Ltd (2)
concludes an agreement with Elfie Carpenters CC who has an asset value of R2,5
million. In terms of the agreement Elfie Carpenters CC will supply Cedar Woods
(Pty) Ltd with 100 wooden doors at a price of R500 each. The total price for the
transaction is R50 000 which is paid immediately. Identify the correct statement:
(1) The Consumer Protection Act 68 of 2008 is applicable as the asset value of the
consumer (Cedar Woods (Pty) Ltd) is below the threshold of R2 million.
(2) The Consumer Protection Act 68 of 2008 is applicable as the asset value of the
consumer (Elfie Carpenters (Pty) Ltd) is above the threshold of R2 million.
(3) The Consumer Protection Act 68 of 2008 is not applicable as the asset value
of the consumer (Cedar Woods (Pty) Ltd) is below the threshold of R2 million.
(4) The Consumer Protection Act 68 of 2008 is not applicable as the consumer is
a juristic person.

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Q.2.2 Identify which one of the following options is not a requirement for set-off to (2)
operate.
(1) The debts may exist between the same two persons in different capacities.
(2) The debts must be of the same nature.
(3) Both debts must be due and enforceable.
(4) Both debts must be liquidated.

Q.2.3 An unrehabilitated insolvent needs his trustee’s consent to - (2)

(1) receive a donation.
(2) obtain employment.
(3) get married.
(4) buy a house.

Q.2.4 Identify the correct statement in respect of the rectification doctrine. (2)
(1) A claim for rectification will never circumvent the parol evidence rule.
(2) After a claim for rectification has been made, all evidence that is relevant to
demonstrate the parties’ true intention is inadmissible.
(3) A third party who alleges that the parties mistakenly included a term in a
contract may apply for rectification thereof.
(4) Rectification is not an exception to the parol evidence rule.

Q.2.5 Which one of the following is not taken into account when interpreting a contract? (2)
(1) The textual context.
(2) The language used by the parties having regard to the ordinary rules of
grammar and syntax.
(3) The purpose of the contract.
(4) Inadmissible evidence as determined by the parol evidence rule.

Q.2.6 Which one of the following statements is correct? (2)

(1) A child aged 10 has no capacity to act.
(2) A child aged five may validly contract with the assistance of a parent.
(3) A child aged 18 requires the assistance of their parents to validly contract.

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(4) A child aged 14 may validly contract with the assistance of a parent.

Q.2.7 When parties to a contract agree on a new contract which replaces the old (2)
contract completely, this action is known as -
(1) Merger.
(2) Novation.
(3) Delegation.
(4) Cession.

Q.2.8 Terms that are included in a contract as they meet the particular needs of parties (2)
to the contract are known as -
(1) incidentalia.
(2) naturalia.
(3) essentialia.
(4) pacta de contrahendo.

Q.2.9 An innocent misrepresentation inducing a party to contract will render the (2)
contract -
(1) void.
(2) voidable.
(3) valid.
(4) unenforceable.

Q.2.10 Abe believes he is purchasing a genuine Nike Air Max sneaker from the Nike store (2)
in Mall of Africa. When he arrives home he discovers that the sneaker is a Nike Air
Pegasus and not a Nike Air Max. This form of mistake is known as -
(1) error in corpore.
(2) error in persona.
(3) error in negotio.
(4) error in substantia.

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Question 3 (Marks: 20)

Identify the following clauses.

Q.3.1 David agrees to buy Sandile’s farm as long as he will be able to draw water from (2)
the river adjacent to the farm.

Q.3.2 Denise donates her house to the church on condition that the church uses it to (2)
provide shelter to homeless people.

Q.3.3 The management and staff of Billy’s Grub Joint will not be held liable for any loss (2)
of customers’ belongings which may occur on the premises.

Q.3.4 Tshepo pays for his sister’s university fees, however if she fails any modules he (2)
will no longer pay for her fees.

Q.3.5 The owners of a piece of land and WWE Construction have entered into an (2)
agreement in terms of which a mall is to be constructed by the 31st of August
2018. Parties agree that in the event that the mall is not completed by the
agreed date, the owners of the land shall be entitled to deduct 10% of the
construction price for every day that the mall remains incomplete after the
agreed date.

Q.3.6 Anisha allows Alex to use her car for a period of two months, after which he (2)
must return it to her.

Q.3.7 Amy and Sarai enter into an agreement whereby Sarai sells her phone to Amy (2)
excluding Sarai’s liability for any latent defects.

Q.3.8 If Thulani passes all of his modules this semester, his brother will pay for his (2)
university fees from next semester.

Q.3.9 Terms used to identify or classify a contract as one of the specific contracts (2)
recognised by our common law.

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Q.3.10 Samantha concludes a contract with Jenna in terms of which Samantha will (2)
purchase Jenna’s house upon her death.

Question 4 (Marks: 20)

Q.4.1 Jacob and Aadil agree that Aadil would commence landscaping Jacob’s garden on
Friday, 04 May 2018. Aadil arrives at Jacob’s house on the agreed day and cannot gain
access to the premises as Jacob is on holiday in the Maldives.
Q.4.1.1 Identify and discuss the form of breach of contract depicted above. (2)
Q.4.1.2 List at least four requirements that must be met for the form of (4)
breach of contract as identified in Q.4.1.1.
Q.4.1.3 What remedies are available to Aadil in the event of such a breach? (3)
Q.4.1.4 Assume for this question only, that Jacob forgot about his (2)
agreement with Aadil and went shopping with his wife early that
morning. Does Jacob’s conduct amount to breach of contract?
Provide a reason for your answer.
Q.4.1.5 Assume for this question only, that Jacob was unable to accept (2)
performance because he was in a coma after suffering a stroke.
Would he be guilty of breach of contract? Provide a reason for your
answer.

Q.4.2 Eva is obsessed with the colour rose gold. She takes her car to Nandi Auto Repairs to
spray paint it rose gold. Shaun, the owner of Nandi Auto Repairs, agrees to spray paint
the car rose gold for an amount of R25 000. Upon collection, Eva finds that Shaun spray
painted her car yellow gold.
Q.4.2.1 Identify the form of breach of contract committed by Shaun. (1)
Q.4.2.2 Eva is livid and makes it clear to Shaun that she will not pay him a (6)
cent. Shaun is adamant that Eva should fulfil her obligations by
making payment to him. Discuss in detail whether Eva may withhold
performance. Your answer should contain any applicable
requirements.

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Question 5 (Marks: 10)

Q.5.1 Busi enters into a contract of sale with Siya. In terms of the contract, Busi will sell her
laptop to Siya for R3000. Busi decides that she wants to donate R3000 to a local charity
called “We Care”. She would like to know if it is possible to transfer the monies owed
to her by Siya to the charity, “We Care”.
Q.5.1.1 Identify the method of transferring this right. (1)
Q.5.1.2 Identify the cedent in the agreement. (1)
Q.5.1.3 List three requirements which must be met in order for the transfer (3)
of the right to take legal effect.

Q.5.2 Kevin, a 15-year-old, sold his DVD player to Sam for an amount of R3 000. Sam did not
pay Kevin the purchase price and the debt became enforceable on 15 March 2018.
Q.5.2.1 Discuss the prescription period regarding the debt owed to Kevin by (2)
Sam.
Q.5.2.2 Discuss whether the running of prescription would be affected in (3)
casu.

Question 6 (Marks: 15)

Q.6.1 Rosina goes to Bull-Doza the Rapper’s concert with her friend, Lazlo. The cashier (6)
at the counter hands Rosina her ticket with the terms printed on the back. She
ignores what the cashier is saying to her and immediately places the tickets in her
handbag and runs into the venue. During the concert, Rosina trips and falls over
an electricity cable and breaks her leg. Rosina approaches the organisers of the
concert to compensate her for the damages suffered, which includes the loss of
income and medical expenses that she incurred.

The organisers of the concert inform her that they are not liable for the loss and
points out that the ticket contains a term that excludes liability for any loss,
damage or injury sustained by an attendee of the concert or their property.
Furthermore, the organisers point out signs with the same terms as reflected on
the ticket, all over the venue. By applying the interpretive rules indicate who
would be liable for the loss suffered by Rosina.

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Q.6.2 Abigail and Bongani are parties to a partnership whereby they grow and cultivate
wheat. The partners take out a loan from Terrence, a local loan shark, for an amount of
R20 000.
Q.6.2.1 Identify the form of liability that applies by operation of the law to (1)
the partnership between Abigail and Bongani.
Q.6.2.2 Assume that Terrence demands payment from Bongani and he pays (3)
Terrence an amount of R15 000 only. Explain the legal position of all
parties.

Q.6.3 Mr Kale is in the business of buying, redeveloping and leasing buildings. He enters into
an agreement with Senzo, an estate agent, to lease a block of flats in Hillbrow on his
behalf.
Q.6.3.1 Name and describe the nature of the agreement described above. (2)
Q.6.3.2 Assume that Senzo enters into a contract of lease for one of the flats (3)
with Sam but fails to disclose that he is acting on behalf of Mr Kale.
Fully discuss the consequences of the contract.

Question 7 (Marks: 20)

Q.7.1 Sam, a psychiatrist, sees a farm that he wishes to take over. It comes to his
attention that this piece of land belongs to Brenda, who is a long-term patient of
his. Sam convinces Brenda to sell her farm to him for R100 000 even though it is
worth R3 000 000. Your answer should contain the requirements of this factor.
Q.7.1.1 Name and define the factor which affects consensus. (4)
Q.7.1.2 What are the consequences for the validity of the contract? (1)
Q.7.1.3 What are the requirement for this factor? (5)
Q.7.1.4 Describe the type of relationship that exists between Sam and Brenda. (1)

Q.7.2 Lorraine concludes a contract with Mikayla in terms of which Mikayla will deliver 5kg of
illegal blood diamonds in exchange for R300 000. Mikayla delivers the illegal blood
diamonds and claims the purchase price from Lorraine. Lorraine refuses to pay the
purchase price.

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Q.7.2.1 Discuss whether Mikayla will be successful in claiming the purchase (5)
price from Lorraine.
Q.7.2.2 Discuss whether Mikayla will be successful reclaiming the illegal (4)
blood diamonds from Lorraine.

END OF PAPER

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