Question 1 (13 marks)
In your own words, explain the concept of an obligation. In your answer mention the two primary sources of the law of obligations.

Question 2 (12 marks)

Modern South African Law of Contract stems from two bases upon which a contract is created. Identify and explain the dual basis upon which South African Law of Contract is established.

Question 3 (10 marks)

Read the excerpt below and answer the question that follows:

“Our law allows a party to set up his own mistake in certain circumstances in order to escape liability under a contract into which he has entered. But where the other party has not made any misrepresentation and has not appreciated at the time of acceptance that his offer was being accepted under a misapprehension, the scope for a defence of unilateral mistake is very narrow, if it exists at all. At least the mistake (error) would have to be reasonable (iustus) and it would have to be pleaded.”

Source: National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958 (2) SA 473 (A).

Required:
In light of the excerpt above, discuss the doctrine of iustus error in terms of mistake in a contract.

Question 4 (15 marks)

Determine the contractual capacity of the underlined parties in the following scenarios. In addition, also explain whether those parties can enter into the contract with or without assistance.
Notes to student: One (1) mark will be awarded for stating the contractual capacity of the parties. Two (2) marks will be awarded for the explanation of regarding whether the parties can enter into the contract with or without assistance.
a) Demi is a five-year old girl and wants to purchase a Malibu Barbie doll at the Barbie Convention. (3 marks)

b) Nicolas is a 20-year-old male that suffers from a number of psychiatric conditions, including a severe form of psychosis. As a result of these conditions, his mental capacity is greatly impaired. However, Nicolas wants to purchase a car for himself from the Toyota car dealership. (3 marks)

c) Max Steel (Pty) Ltd. is a mining company and wants to buy a piece of land in Sterkfontein so that they can mine for minerals. (3 marks)

d) Sarah and Abraham are married in community of property. Sarah wants to pledge the house furniture in order to secure a debt. (3 marks)

e) Gilbert is a single 30-year-old male and wants to purchase his dream holiday house alongside the beach in Club Mykonos in Langebaan. (3 marks)

Question 5 (25 marks)
Read the fictious scenario below and answer the questions that follow:
Ramsey Properties sells residential and commercial buildings to enterprises and buyers. However, the business has been struggling financially over the past few years because the property market has been negatively affected by the Covid-19 pandemic and there has been a constant rise in the interest rate. Therefore, there is a low demand for buying property. Ramsey Properties is in desperate need of making a sale so that they can keep the business afloat. In particular, Ramsey Properties is selling a small yet modern block of offices in the Cape Town CBD for R5 million rand and if they make this sale, then Ramsey Properties would make a generous profit from the sale.
Aaron is the owner of a successful tech company and sees the office block that Ramsey Properties is selling. Aaron is very interested in buying the office block because the size and location of the building is perfect for his business, and his clients. Since the office block is in the Cape Town CBD, it will also attract new clients and grow his business even more. Aaron expresses his interest to Ramsey Properties and a viewing of the building is soon set up. However, there is one major issue that is wrong with the building, there is extremely poor ventilation in the building and the air-conditioning system has a water leak which is causing dampness.
Ramsey Properties is in desperate need of a sale and decides not to tell Aaron about this fact, as it would risk Aaron not wanting to buy the building anymore. Soon, Aaron and a representative of Ramsey Properties view the building and everything goes well, and there are no obvious issues or concerns. Aaron is very impressed with the office block and asks the representative, if there are any defects or issues with the building that he should be aware of. The representative of Ramsey Properties says “No, there’s no major defects or issues with the building at all, everything is in order and ready for you to move in.” Aaron relies on this impression and agrees to buy the office building. The sale contract between Ramsey Properties and Aaron is drafted and one of the clauses in the contract state that the building is in excellent condition, without any material defects and complies with the local building standards and regulations. Aaron is initially happy with the office building and everything appears to be going well. However, after 6 months Aaron notices the water leaks of the air-conditioning system is causing a lot of dampness on the walls and the poor ventilation is causing a significant amount of toxic black mould to develop on the walls and ceiling of some of the office spaces. Aaron is extremely upset because toxic black mould is dangerous and can cause illness, and he has already spent so much money buying the

Required:

You are the lawyer for Aaron, and your client wants to pursue a legal action against Ramsey Properties. Evaluate the type of misrepresentation that has taken place and what Aaron needs to prove in order for the cause of action to be successful against Ramsey Properties. (20 marks)

Note to student: In your answer first identify the type/classification of misrepresentation that has taken place between the two parties. Thereafter, provide a very brief explanation of what that type of misrepresentation entails. Lastly and most importantly, list and APPLY the requirements or elements that are applicable to the misrepresentation to the set of facts presented to you in the scenario.
Note to student: Try to mention only the relevant information. Scenario questions require you to apply the legal principles where applicable and come to a conclusion. In your conclusion state whether all the elements have been satisfied, and whether Aaron would have entered into the contract.

Identify and discuss the remedy that Aaron has available to him. Would Aaron be entitled to any compensation with regards to his financial position? (5 marks)

Question 6:

FJ and Stacey are a loving engaged couple and are preparing for their dream wedding in December 2024. Since Stacey and FJ both come from wealthy families, they want to protect their assets. They have been talking about how their assets and gains should be distributed or divided when their marriage comes to an end because of death or divorce. FJ and Stacey verbally agree to enter into an ante-nuptial contract and get married out of community of property.

Required

With reference to the scenario, is the ante-nuptial contract in its current form valid? (2 marks)

Discuss whether FJ and Stacey’s ante-nuptial contract in its current form is enforceable against third parties. (7 marks)

Question 7 (8 marks)

Read the fictitious scenario below and answer the question that follows:

Tamar applies for the job position of Sociology Educator at an esteemed private higher education institution called Ambition College. Tamar was successful during all the rounds of interviews and assessments. On the 21st of August 2023, Ambition College extended an offer to Tamar, offering her the job of Sociology Educator in the Psychology and Sociology department. In terms of the offer letter, Tamar is expected to notify Ambition College of her acceptance of the job offer by 25 August 2023. By the 1st of September 2023, Tamar has still not notified Ambition College as to whether she accepts the job offer or not.

Required:

Since all that time has passed from the 21st of August 2023, discuss whether the job offer from Ambition College is still available to Tamar or has the offer lapsed?

Question 8:

Roger and James are close friends and they share a love for video games. Roger has a Sony PlayStation 5 console and three games that he is selling for R15 000, since he prefers playing on an Xbox. Roger offers to sell the Sony PlayStation 5 console and the three games to his close friend James. James is delighted and really wants to buy the PlayStation 5, however he does not have all the money available at the moment, but any delay on his part entails the risk that Roger might sell the PlayStation 5 to someone else. Roger then offers to give James three days, whereby he can raise the necessary funds to pay for the PlayStation 5. Both Roger and James agree to this, and Roger also promises that he will not sell the PlayStation 5 console to someone else or withdraw the offer during that stipulated time period.

Required:

Identify and briefly discuss the nature of the type of contract that is being illustrated in the scenario above. (6 marks)

Assume that James rejects the main offer, which is the sale of the Sony PlayStation 5 console, what would then happen to the contract? (2 marks)

Answers to Above Questions Principles of Contract

Answer 1: The concept of obligation can be defined in legal term whereby it implies a binding duty or responsibility of a person towards another. It acts as a legal obligation to fulfill certain expectations or requirements. The law of obligations has two important sources such as contractual obligation and tortious obligations.

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