Allen v Sixteen Sterling Investments (Pty) Ltd 1974 (4) SA 164

Allen v Sixteen Sterling Investments (Pty) Ltd 1974 (4) SA 164

Facts

Allen entered into a written agreement to purchase a property from Sixteen Sterling Investments (Pty) Ltd. The agreement was based on a misrepresentation by Sixteen Sterling Investments' agent that the property was a certain size. Allen relied on this misrepresentation and entered into the agreement without inspecting the property.

After Allen had entered into the agreement, he discovered that the property was actually smaller than he had been told. Allen sought to cancel the agreement on the grounds that he had made a mistake. Sixteen Sterling Investments refused to cancel the agreement and demanded that Allen perform his obligations under the agreement.

Issue

The main issue in the case was whether Allen was entitled to cancel the agreement on the grounds that he had made a mistake.

Reasons

The Durban and Coast Local Division of the Supreme Court of South Africa held that Allen was entitled to cancel the agreement. The court found that Allen had made a unilateral error in corpore, which is a mistake about the identity of the subject matter of the contract. The court also found that Sixteen Sterling Investments' agent had been negligent in making the misrepresentation about the size of the property.

Unilateral error in corpore

A unilateral error in corpore is a mistake about the identity of the subject matter of the contract. In this case, Allen made a unilateral error in corpore because he was mistaken about the size of the property.

Negligence

Sixteen Sterling Investments' agent was negligent in making the misrepresentation about the size of the property. The agent had a duty to take reasonable steps to verify the size of the property before making a representation about it. The agent failed to take reasonable steps to verify the size of the property and therefore made a negligent misrepresentation.

Conclusion

The court held that Allen was entitled to cancel the agreement on the grounds that he had made a unilateral error in corpore induced by Sixteen Sterling Investments' agent's negligent misrepresentation.

Summary

The case of Allen v Sixteen Sterling Investments (Pty) Ltd 1974 (4) SA 164 is a landmark case in South African contract law. The case is particularly important for its analysis of the following issues:

• The concept of unilateral error in corpore;
• The effect of negligent misrepresentation on the formation of a contract; and
• The right to cancel a contract on the grounds of unilateral error in corpore induced by negligent misrepresentation.

Concept of unilateral error in corpore

A unilateral error in corpore is a mistake about the identity of the subject matter of the contract. It is a type of material mistake that can render a contract void.

Effect of negligent misrepresentation on the formation of a contract

Negligent misrepresentation is a false statement made by one party to a contract to the other party, without any intention to deceive, but without taking reasonable steps to verify the truth of the statement. Negligent misrepresentation can induce the other party to enter into the contract and, if so, the contract may be voidable.

Right to cancel a contract on the grounds of unilateral error in corpore induced by negligent misrepresentation

If a party to a contract makes a unilateral error in corpore induced by the other party's negligent misrepresentation, that party may be entitled to cancel the contract. This is because the party's consent to the contract was not free and genuine.

Impact of the Case

The case of Allen v Sixteen Sterling Investments (Pty) Ltd 1974 (4) SA 164 has had a significant impact on the law of contract in South Africa. The case has clarified the concept of unilateral error in corpore, the effect of negligent misrepresentation on the formation of a contract, and the right to cancel a contract on the grounds of unilateral error in corpore induced by negligent misrepresentation.