Contract Law: Void and Voidable Contracts

Questions and Answers

What are void contracts?

Agreements that do not comply with the validity requirements.

Explain voidable contracts.

Contracts that contain a legal flaw to the disadvantage of one party, but remain in effect until that party seeks to declare them void.

Define consensus in the context of contracts.

Consensus is when the minds of the parties meet on all material aspects of their agreement.

What is required for a valid contract to be formed?

The intention of the contracting parties to be bound to each other and an intentional agreement on all terms of the contract. Signup and view all the answers

What is the role of offer and acceptance in establishing consensus?

Offer and acceptance serve as an analytical tool to determine when and where a contract was concluded. Signup and view all the answers

Give an example of a circumstance that may lead to a voidable contract.

Misrepresentation, mistake, non-disclosure, duress, or undue influence. Signup and view all the answers

What is an offer?

A proposal to contract. Signup and view all the answers

What is the legal effect of an offer?

Offer is a unilateral declaration and does not create any binding obligations, but if accepted, the terms stipulated in the offer become binding. Signup and view all the answers

Can silence signify agreement in the context of offer and acceptance?

Yes, in exceptional circumstances where previous dealings between parties make it reasonable to interpret a failure to respond as an acceptance of an offer. Signup and view all the answers

What are the requirements for a valid offer?

<ol> <li>The offer must be firm. 2. The offer must be complete. 3. The offer must be clear and certain.</li> </ol> Signup and view all the answers

How can an offer be made?

An offer can be made to a specific person, group of people, or to the general public (e.g. Rewards). Signup and view all the answers

What happens if an offer is accepted?

The terms stipulated in the offer become binding. Signup and view all the answers

What must the producer of a notice, document, or visual representation do in terms of this Act or any other law?

Produce, provide, or display in plain and understandable language Signup and view all the answers

When is a notice, document, or visual representation considered to be in plain language?

When an ordinary consumer with average literacy skills could understand the content without undue effort Signup and view all the answers

What are the factors to consider in determining if a notice is in plain language according to the Act?

Context, comprehensiveness, consistency, organization, form, style, vocabulary, usage, sentence structure, and use of aids to reading Signup and view all the answers

What are the requirements for a valid offer according to the text?

The offer must be in plain and understandable language Signup and view all the answers

How should a notice, document, or visual representation be produced if no form is prescribed by the Act?

In plain language Signup and view all the answers

Who should be able to understand the content of a notice, document, or visual representation in plain language?

An ordinary consumer of the class of persons for whom it is intended Signup and view all the answers

According to Smith J, is advertising a price considered an offer to the public to enter a shop and purchase goods?

No Signup and view all the answers

What does Smith J believe would happen if advertising a price was considered an offer to the public?

It would lead to extraordinary results where thousands of members of the public might crowd into the shop and demand to be served, potentially creating a right of action against the proprietor for not performing his contract. Signup and view all the answers

In the context of supermarkets, who is generally considered to make an offer to purchase?

The customer Signup and view all the answers

Have the courts in SA decided who makes an offer when goods are displayed in supermarkets with prices?

No Signup and view all the answers

Which English case is suggested to be followed by courts in relation to offers in supermarkets?

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd Signup and view all the answers

What action by the customer is considered as making an offer in the context of supermarkets?

Presenting the articles they wish to purchase for payment Signup and view all the answers

What is the condition for a sale by auction to be considered complete?

When the hammer falls (or upon any other customary action) Signup and view all the answers

In an auction with a reserve price, under what circumstances is the thing sold to the highest bidder?

If the bid is higher than the reserve price Signup and view all the answers

What happens in an auction without a reserve when the article is knocked down to the highest bidder?

The auctioneer is considered to be making an offer to the highest bidder Signup and view all the answers

What is the result of an offeree making a counter offer?

Implied rejection Signup and view all the answers

Under what circumstances can an offer be withdrawn according to the law?

At any time before acceptance, except if it is subject to an option Signup and view all the answers

What happens if there is no time specified for acceptance of an offer?

The offer terminates after a reasonable period Signup and view all the answers

Study Notes

Valid, Void, and Voidable Contracts

A valid contract is an agreement between parties that complies with prescribed validity requirements, creating legally enforceable rights and duties for both parties.
A void contract is an agreement that does not comply with the validity requirements, making it non-existent and not legally enforceable.
A voidable contract contains a legal flaw to the disadvantage of one party, but remains in effect until the party seeks to declare it void.

Consensus

Consensus occurs when the minds of the parties meet (or at least appear to meet) on all material aspects of their agreement.
A contract comes into being if contracting parties have the intention to be bound to each other and intentionally reach an agreement on all terms of their agreement.
Agreement or unanimity between contracting parties is called consensus.
Parties must have the same understanding regarding all terms of the contract; if there is uncertainty or vagueness, consensus is not reached.

Offer and Acceptance

Consensus is generally reached through negotiations between parties, which involves declarations of intention to contract.
Express declaration of intention is derived from words (written or verbal), while implied declaration is derived from actions or behavior.
Silence can signify agreement in exceptional circumstances, such as when previous dealings between parties make it reasonable to interpret a failure to respond as an acceptance of an offer.

The Offer

A proposal to contract is an offer, which sets out all the terms on which the offeror is prepared to contract.
An offer is a unilateral declaration, creating no binding obligations, but becomes binding if accepted.
An offer can be made to a specific person, group of people, or to the general public.

Requirements for a Valid Offer

The offer must be firm, complete, and clear.
The offer must be in plain and understandable language, as per S22 Right to Information in Plain and Understandable Language.

Offers to the Public

Advertisements are not typically considered offers, but rather invitations to treat.
In supermarkets, it is unclear who makes the offer, but it may be the customer making an offer to purchase by presenting the goods for payment.
In auctions, the bidder makes an offer to the auctioneer, and the sale is complete when the hammer falls.

Termination of an Offer

Rejection can be express or implied, and making a counter-offer is considered an implied rejection.
Death of either the offeror or offeree can terminate the offer, unless the offeror promised not to withdraw the offer (option).
An offer can be terminated after a prescribed or reasonable time, and may be revoked at any time before acceptance, except if it is subject to an option.

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Contract Law: Valid, Void, and Voidable Contracts