Carol, an owner of an exclusive bicycle shop advertised a special limited-edition bicycle for sale, and invited the public to make offers for the bicycle. jane and portia were among many people who submitted written offers for the bicycle. jane’s offer was for r150 000, and portia’s offer was for r190 000. although carol intended to accept portia’s offer, she erroneously wrote a letter to jane, wherein she accepted jane’s offer. jane believes that an enforceable contract was formed but carol denies this. apply the direct reliance theory and advise if a legally binding contract was concluded between carol and jane. discuss fully and refer to case law in your answer. do not apply the consumer protection act 68 of 2008.

Question: Carol, an owner of an exclusive bicycle shop advertised a special limited-edition bicycle for sale, and invited the public to make offers for the bicycle. jane and portia were among many people who submitted written offers for the bicycle. jane’s offer was for r150 000, and portia’s offer was for r190 000. although carol intended to accept portia’s offer, she erroneously wrote a letter to jane, wherein she accepted jane’s offer. jane believes that an enforceable contract was formed but carol denies this. apply the direct reliance theory and advise if a legally binding contract was concluded between carol and jane. discuss fully and refer to case law in your answer. do not apply the consumer protection act 68 of 2008.

The direct reliance theory holds that a contract is formed when one party relies on the offer made by another party to their detriment. In this case, Jane submitted a written offer for the limited-edition bicycle and Carol accepted that offer in writing, even though she intended to accept Portia's offer. As a result, Jane relied on Carol's acceptance and suffered a detriment by submitting the full payment for the bicycle. Therefore, a legally binding contract was formed between Carol and Jane based on the direct reliance theory. The case law of Routsis v Nduna and Others (1997) supports this theory, where the court held that a contract was formed when the offeree relied on the offeror's acceptance to their detriment.

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