TOPIC 3

VOID,VOIDABLE
AND ILLEGAL
CONTRACTS
 VOID VS VOIDABLE CONTRACTS
• A void contract is a contradiction in terms-it is not a
contract at all and creates no rights and duties
whatsoever
• A voidable contract is valid and binding, but can be set
aside by the party whose consent to the agreement
was induced improperly. Until set aside within a
reasonable time, the contract is valid.
• NB: If set aside, the contract becomes void from the
moment it has been set aside
 REAL CONSENSUS VS PRESUMED
• Real consensus can be reached either expressly or through conduct
• E.g if Mosa and Mona sign a written contract where Mosa buys a car from
Mona for M250 000, real consensus is reached between the parties (Written
Agreement).
• Maja walks into a café, points at a newspaper, places money on the
counter, picks up the newspaper and walks out, real consensus has been
reached (Conduct).
• Presumed consensus-In some situations, it is presumed that the parties
have reached consensus. i.e some contracts maybe affected by presumed
consensus
• E.g Small prints in receipts, tickets, etc. In such instances law expects the
party issuing the receipt to do everything in his/her power to draw the
attention of holder to the small print and its meaning.
• Consensus is used by parties to a contract in a situation where agreement
would never have been reached had they been aware of circumstances
surrounding the conclusion of the contract.
• At a glance it might look like the parties have reached a consensus but due to
certain factors present this is not the case.
• These factors may either be that no contract comes into being (null and void) or
that the contract can be set aside (voidable contract) if the prejudiced party
elects to do so.
• Consensus may lead to an error and Error is a misconception or
misunderstanding by one or more parties regarding certain facts, events or
circumstances. Error can exist regarding the following
The reason for concluding a contract (error of motive).
The contents of the declaration of intent of the different parties to a contract.
• The consent of the parties to a contract must be genuine and real. The consent
must not be affected by mistake or fraud, duress, undue influence or
misrepresentation.
 FACTORS WHICH INFLUENCE
CONSENSUS
1. MISTAKE
• Mistake renders a contract void
• In Roman Dutch Law mistake is called error. There can never be a contract if
the minds of the parties are not meeting due to a mistake (error).
• However, the mere fact that one of the parties to a contract acted under a
mistake does not, as a general rule, affect the validity of the contract; as there
are mistakes that are recognised by Law as mistakes of fact. They can operate
to invalidate a contract
• Such are distinguished from the unenforceable mistakes(no legal force). i.e they
do not affect the validity of a contract/they are not recognised by courts
• The unenforceable(not affecting the validity of a contract) mistakes are
Ignorance of the law, mistake of judgement, mistake of law and mistake of
motive. Only mistakes of fact operate to invalidate a contract.
 CLASSIFICATIONS OF MISTAKES THAT RENDER A
CONTRACT VOID
NB:A mistake is void if it negatives consent and nullifies the consent; then there is in
fact no agreement due to mistake
1(a) Mistake regarding the nature of the agreement (error in negotio)
• The offer of one is really not accepted by the other. The parties are not ad idem but
are at cross purposes(misunderstanding or having different aims from one another).
This is a mutual mistake as there is never any real agreement between the parties
Case:Dobbs v, Verran(1923)
1 (b) Mistake as to the identity of the party (Error in persona)
• Mistake of identity renders the contract void only if the aggrieved person proves that
the identity of the party was a material element of the contract, and he would have
only dealt with the person whom he thought he was dealing with, and
• The other party knew it.
• Thus, it is a unilateral mistake
• Case: Beyers vs MacKenzie
• The requirement is that the mistake must be reasonable in the eyes of the
law, and that it should not be the own fault of aggrieved party
1 (c) Mistake as to the identity of the subject matter of the thing(Error in
corpore)
• Here, there is no agreement as to the identity of the subject matter.
Parties are at a cross purpose
Case: Maritz v Pratley (1894)
Case:Scriven Brothers and co. vs Hiding
Case: Raffels vs Wichelhaus
1 (d) Mistake regarding the essential quality of a thing (Error in Substantia)
• The offeree may be of the impression that the article he is buying is or has
certain attributes
• E.g. buyer thinks that he is buying a golden ring, when in fact it is a bronze
ring.
• Error in substantia makes a contract void because the thing is different from
what it should be; and the buyer is not happy about it.
• It maybe a unilateral mistake or a common mistake
1 (e) Mistake as to the existence of the subject matter
• At the time of the contract, both parties believe the existence of the subject
matter of the contract, whereas it is not in existence.
• E.g. Thabo enters into a contract with Thabang to sell the home of Thabo.
Both parties did not know that the house was burnt the previous evening.
• The subject matter of the contract does not exist hence there is no contract.
Thus, it is a common mistake
• A common mistake is one in which parties are in agreement and there is
consensus ad idem. Nevertheless the contract is void because both
parties have laboured under a common mistake with respect to the
existence of the subject matter.
How to test consensus ad idem:
• The court does not look at what each party had in their minds but looks
at what an ordinary reasonable person would think.
• NB: Apart from mistake, a contract can be void on the grounds of
illegality and uncertainty.
 2. FRAUDULANT MISREPRESENTATION
• Misrepresentation renders a contract voidable.
• One of the parties deliberately conceals material fact, which will influence
the other party to enter into the contract
• Fraudulent misrepresentation is a statement which is not true. The
statement is factual and relates to the subject matter. It also induces the
other party into contract.
• Such false representation of fact must be made before or at the time of
contract . i.e The misrepresentee must have relied on the mispresentation
to enter into the contract
Case: Dibley vs Futor
Three types of misrepresentation are:
• Innocent misrepresentation – a statement made believing that it is true.
• Fraudulent misrepresentation – a statement made knowing fully that it is
not true. i.e with the intention to deceive
• Negligent misrepresentation – A statement made in belief that it is true
but the circumstances demonstrate that it is untrue.i.e No intention to
deceive
• A party who has been induced to enter into a contract by the
misrepresentation of an existing fact is entitled to set aside the contract
and claim restitution
 3. DURESS
• Duress renders a contract voidable.
• A party’s consent to a contract may be obtained by duress i.e. violence or
fear/intimidation.
• There is consent, but the consent is defective.
• The contract is, therefore, voidable at the instance of the aggrieved party
• The fear must, however, be sufficient to induce a man of ordinary
firmness to consent e.g what constitutes a fear to a woman or old man
may not be sufficient for a mature man of ordinary firmness
• In order to set aside a contract on the grounds of violence or fear, our law
requires the following elements:
a) Actual violence or actual fear e.g threat to kill or seriously injure
b) The fear must be caused by the threat of some considerable evil to
the party or his family
c) It must be the threat of imminent or inevitable evil that cannot be
avoided except by agreeing to the contract.i.e the court understands the
difficulty of a person who acts in the agony of the moment.
d) The threat or intimidation must be contra bonos mores
(unlawful/improper)
e) The moral pressure used must have caused damage. i.e the duress
must have caused the conclusion of the contract and the contract must be
prejudicial to the party under duress
 4. UNDUE INFLUENCE
• Undue influence renders a contract voidable.
• Where one party to a contract is induced or influenced by another party to
such an extend that, that person could not make an independent opinion
on the subject of the contract we say there is undue influence
Case:Williams vs. Bayley
• “Wherever two persons stand in such a relationship that while it continues
confidence is necessary reposed by one and the influence which naturally
grows out of that confidence is exerted to obtain an advantage at the
expense of the confiding party, the person so availing himself of his
position will not be formatted to retain the advantage, although the
transaction could not have been impeached if no such confidential relation
had existed.”
• Such special relationships may be described as those between attorneys
and clients, doctors and patients, parent and child, trustee and creditor etc.