Abstract
In Absa Bank Ltd v Trzebiatowsky (2012 (5) SA 134 (ECP)) the court was faced with a defence that has become all too common within the context of suretyship agreements, namely that of iustus error, or rather material and reasonable mistake rendering the contract void. Traditionally the courts have been wary of releasing a signatory of a contractual document from liability in the absence of some form of misrepresentation on the part of the contract assertor, but in Brink v Humphries & Jewell (Pty) Ltd (2005 (2) SA 419 (SCA)) the Supreme Court of Appeal adopted a far more lenient approach, one which opened the door for potential abuse of this defence, especially it seems so where suretyships are involved. The Trzebiatowsky decision is relevant for confirming the more traditional approach as opposed to the one largely ushered in by Brink and for sensibly reflecting the issues relevant to adjudicating these cases.
Highlights
In Absa Bank Ltd v Trzebiatowsky (2012 (5) SA 134 (ECP)) the court was faced with a defence that has become all too common within the context of suretyship agreements, namely that of iustus error, or rather material and reasonable mistake rendering the contract void
The courts have been wary of releasing a signatory of a contractual document from liability in the absence of some form of misrepresentation on the part of the contract assertor, but in Brink v Humphries & Jewell (Pty) Ltd (2005 (2) SA 419 (SCA)) the Supreme Court of Appeal adopted a far more lenient approach, one which opened the door for potential abuse of this defence, especially it seems so where suretyships are involved
Without attempting to formulate a hard and fast rule, in the first instance sketched above there may be factors that point to a duty to inform, whereas in the latter instance there may be factors suggesting the contrary (see further Hutchison in Glover Essays in Honour of AJ Kerr 46–47; Pretorius 2009 Obiter 772–773). The rationale behind this is that since the iustus error approach is usually regarded as an indirect application of the reliance theory (Van Rensburg 1986 THRHR 453; Hutchison and Pretorius The Law of Contract 103; and Lubbe and Murray Farlam and Hathaway Contract: Cases, Materials and Commentary (1988) 168), the question really seems to be whether the contract assertor is entitled to assume reasonably that the signatory has assented to the terms in question (Slip Knot Investments 777 (Pty) Ltd v Du Toit supra par 12; Roomer v Wedge Steel (Pty) Ltd supra 543B–C; and Hutchison in Glover Essays in Honour of AJ Kerr 43ff)
Summary
In Absa Bank Ltd v Trzebiatowsky (2012 (5) SA 134 (ECP)) the court was faced with a defence that has become all too common within the context of suretyship agreements, namely that of iustus error, or rather material and reasonable mistake rendering the contract void. The courts have been wary of releasing a signatory of a contractual document from liability in the absence of some form of misrepresentation on the part of the contract assertor, but in Brink v Humphries & Jewell (Pty) Ltd (2005 (2) SA 419 (SCA)) the Supreme Court of Appeal adopted a far more lenient approach, one which opened the door for potential abuse of this defence, especially it seems so where suretyships are involved. The Trzebiatowsky decision is relevant for confirming the more traditional approach as opposed to the one largely ushered in by Brink and for sensibly reflecting the issues relevant to adjudicating these cases
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