For a valid agreement to come into being, consensus good faith, intention, capacity to contract, lawful, it must be possible of performance and the sanctity of contract must be reached.
If the intention to be bound is lacking the offeror can be said to lack animus contrahendi. In the above scenario there is no consensus but dissensus. According to the wills theory no contract would have arised as consent is a prerequisite for the enforceability of a contract. The misrepresentation about the Fire’s ancestry is irrelevant as at the time of the conclusion of the contract John genuinely and without any fault on his part believed that to be the case hence is the dissensus not a material mistake but an error in substantia as both parties had the same thing in mind, the same horse, hence is the mistake not material. Peter made a mistake as to the obligation he wished to create hence no consensus has been reached between the parties .The facts in the above case is similar to that of Du Toit v Atkinson’s Motors Bpk 1985 (2) SA 889 (A) in this case there was a dispute regarding the sale of a motor vehicle subsequent to an oral agreement. The agreement contained an exemption clause. The court held that Atkinson mislead Du Toit by not informing him about same and a contract does not come into existence when there is an absence of intention to be legally bound animo contrahendi , the court held that the mistake regarding the exemption clause was material . There is no legal duty in South Africa to disclose an exemption clause. Peter and John we’re not in agreement with regards to the exemption clause in the contract as John knew that in the oral agreement there was no exemption clause whilst in the written clause there was an exemption clause, Peter was unaware of the clause which exempted John from any liability of any representations made during the negotiations. In Allen v Sixteen Stirling Investments (Pty) Ltd 1974 (4) SA 164 (D) there was discrepancies regarding the performance of the contract as the defendant misrepresented the property to the plaintiff the plaintiff purchased the property based on the misrepresentation by the agent hence was same found to be material, the learned Judge stated that misrepresentation did not constitute consent and same was therefore invalid. In Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (2) SA 234 (A) in cases where actual consensus is not present contractual liability may arise on the doctrine of quasi mutual assent or the direct reliance theory. Harms AJA stated his conclusion as follows ‘In my view, therefore, the decisive question in a case like the present is this: did the party whose actual intention did not conform to the common intention expressed, lead the other party, as a reasonable man, to believe that his declared intention represented his actual intention? . . . To answer this question, a three-fold enquiry is usually necessary, namely, firstly, was there a misrepresentation as to one party’s intention; secondly, who made that representation; and thirdly, was the other party misled thereby? . . The last question postulates two possibilities: Was he actually misled and would a reasonable man have been misled?” Peter led John into reasonable belief that consensus had been reached thus Peter mispresented his true intentions to be bound by the contract and misled John. However if the reasonable persons test would be applied one could say that John was not misled as he was aware of that there was no exemption in the oral agreement but there was an exemption clause in the written agreement and Peter would to be under the impression that there was no exemption clause in the written agreement as well , and John had a legal duty to point out the variance .In Freeman v Cooke 1848 154 ER 652, “If whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party and that other party upon belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other parties’ terms”. The contract is thus invalid and voidable based on the lack of actual consensus it is void ab initio. A clause that excludes liability for misrepresentation will fall with the contract where the fundamental mistake that precludes consensus was induced by a misrepresentation, whether made innocently or not.
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