Reaching agreement

• Contract


  An agreement between two people which creates rights, duties and obligations – both parties have to agree on something, and it must be clear as what they are agreeing to – both parties must seriously intend to be bound
• Approaches for the rationale of holding individuals bound by their contract


  • Wills Theory – subjective approach based on what the parties were thinking at the time of conclusion of the contract
  • Declaration Theory – objective approach based on how people behave as opposed to how they think
  • Reliance Theory - combination of the above 2 theories – one party reasonably relying on an agreement between the parties based on the behaviour of the other party
• South Africa follows the Wills theory, but in the absence of subjective agreement the reliance theory can be followed
• Offer


  The way in which the offeror declares his intention to conclude a contract and specifies the terms of the contract
• Acceptance


  The offeree's declaration of his intention to conclude a contract with the offeror
• Concluding a contract


  The contract is concluded where and when the offeror is informed of acceptance
• Requirements for a Valid Offer

  • Completeness – it must contain all the terms that the offeror wants to include in the contract
  • Clarity – it must be made in a way that the offeree can understand exactly what contract the offeror wants
  • Contract Intention – the offeror must intend to be bound by the contract
• Scenarios where the law has developed guidelines to determine whether a statement is an offer


  • Advertisements – merely an invitation to do business
  • Rewards – if an advertisement offers a reward, the intention is that anyone who fulfils the conditions, will be paid a reward
  • Auctions – w/o reserve – the auctioneer makes an offer to sell the product to the highest bidder, by bidding this person accepts the offer and thereby creates a contract – with reserve – the auctioneer is not making an offer he is inviting people to do business and they make the offer by making bids
• Generally there are no formalities required for an offer, however there are certain instances when the law requires an offer to come in a prescribed form, such as in writing
• Requirements for a Valid Acceptance

  • By the offeree – it must be accepted by the intended offeree
  • Contract Intention – the offeree must have the intention to conclude a legally binding contract by accepting the offer
  • Clarity – there must be an unequivocal expression of the offeree's acceptance
  • Matching – acceptance must correspond with the terms set out in the offer
  • Timelines – must be accepted within the given timeframe
• If there are statutory formalities for the type of contract involved, acceptance must comply with those formalities
• Completion of acceptance


  Acceptance is completed, and a contract created only when the offeror knows about the acceptance
• Requirements for Concluding Contracts when parties are communicating at a distance


  • Postal Contracts – the expedition theory is used – the contract comes into existence when and where the letter of acceptance is mailed
  • Telephonic Contracts and Faxes – contract is formed at the time and place the offeror hears the acceptance
  • Electronic Contracts – ito the ECTA contracts by data message, SMS, or emails are concluded at the time and place where acceptance was received by the offeror
• Options


  An offer where the offeror agrees to keep the offer open for a specific period of time – this offer is irrevocable for a specific period of time
• Rights of First Refusal

  A contract between 2 people where the one person agrees that should they ever decide to enter into a particular contract, they will make an offer to the other person first – this is not an offer, it is a guarantee that if the person does make an offer in future, it will be to that specific person
• If the right of first refusal applies to a contract of sale it is called a right of pre-emption