UNIVERSITY OF LIMPOPO

TURFLOOP CAMPUS

FACULTY OF MANAGEMENT AND LAW

SCHOOL OF LAW

DEPARTMENT OF MERCANTILE AND LABOUR LAW

DEGREE AND DIPLOMA MAIN EXAMINATION MEMO MAY/JUNE: 2022

MODULE: CCOC021/CCOB021 PAPER: P1

(COMMERCIAL LAW)

TIME: 5 HOURS MARKS: 100

INTERNAL EXAMINER: Dr. V.S Neluvhalani

MODERATOR: Ms. A Dodd

THIS PAPER CONSISTS OF 7 PAGES INCLUDING COVER PAGE

INSTRUCTIONS:

1. Read the instructions carefully and answer all the questions.

2. Questions will be randomized on Blackboard.
3. The examination is online on Blackboard.
 CCOC021/CCOB021 MAIN EXAMINATIONS 2022

Question 1 (10 Marks)

Identify the form of breach in the following scenarios:

1.1 Annie and Anton enter into an agreement in terms whereof Annie will purchase Anton’s car. In terms of their
agreement Annie must pay the purchase price of R 50 000 into Anton’s bank account by no later than Friday,
29 May. By Saturday morning, 30 May, no payment had been made into Anton’s bank account.

Mora debitoris / default by the debtor.

1.2 Anita and Mohlatsi enter into an agreement in terms whereof Anita will purchase Mohlatsi’s car. In terms of
their agreement Anita must pay the purchase price of R 50 000 into Mohlatsi’s bank account by no later than
Friday, 29 May. By Saturday morning, 30 May, no payment had been made into Mohlatsi’s bank account.
Anita had repeatedly requested Mohlatsi’s bank account details, but he never provided same to her.

Mora creditoris / default by the creditor

1.3 Onalena and Obakeng enter into an agreement in terms whereof Obakeng will rent a room in Onalena’s house.
They agree that the first month’s payment will be R 10 000 – R 5 000 deposit and R 5 000 rent. On the first
day of the month, Obakeng pays Onalena R 7 000.

Positive malperformance

1.4 Mokone and Mohammed enter into an agreement in terms whereof Mokone will deliver a consignment of 10
000 facemasks to Mohammed. In terms of their agreement, the delivery is scheduled for Friday. On the
previous Monday, however, Mokone phones Mohammed and informs him that he will no longer be delivering
the masks on Friday. In fact, he proceeds to inform Mohammed that he will not be delivering the masks at
all.

Repudiation

1.5 Eric and Erica are set to get married on Saturday, 6 June. They have entered a contract with Sugar and Spice
Caterers to provide the catering for their wedding. Sugar and Spice Caterers erroneously wrote the date of the
wedding down as 16 June, and on Eric and Erica’s wedding day of 6 June, there is no food for the guests to
eat.

Prevention of performance

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Question 2 (10 Marks)

2.1 Choose the correct statement (5 marks).

2.1.1 Error regarding the person of the other contracting party:

a) Renders the contract void

b) Renders the contract voidable
c) Has no effect on the validity of the contract
d) Amounts to a breach of contract

Answer: a

2.1.2 In the case of a postal contract, acceptance of the offer takes place when the letter of acceptance:

a) Is read by the offeror

b) Reaches the offeror’s address
c) Is posted by the offeree
d) Is written by the offeree

Answer: c

2.1. 3 Adam and Bruce conclude a contract in terms of which Adam agrees to sell a prize-winning horse to
Bruce for breeding purposes. Earlier on the same day, Adam’s son neglected to close the gate to the house and
the horse is run over by a car. This fact was unknown to Adam and Bruce when they concluded the contract.
The contract is:

a) Void due to objective impossibility of performance

b) Voidable due to subjective impossibility of performance
c) Remains binding due to supervening impossibility of performance
d) Void due to legal impossibility of performance
Answer: a

2.1.4 Rectification of a contract means:

a) If a minor concludes a contract without her parents’ consent, they may give their consent after the
conclusion of the contract
b) That a written contract is amended to reflect the actual intention of the parties
c) That no oral evidence may be received by a court which contradicts, alters, adds to or varies the terms of
the written agreement
d) Upon cancellation of a contract, the parties must be restored to the position they were in prior to
conclusion of the contract
Answer: b

2.1.5 The contra preferentem rule determines that:

a) In the case of reciprocal obligations, parties should perform simultaneously

b) Ambiguities in a contract should be interpreted against the interests of the party who drafted the
document
c) The contract is presumed not to have retrospective effect unless expressly stated

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d) A party to contract has a right to cancel the contract if the other party materially breaches the contract
Answer: b

Question 2.2 True / False (5 marks).

Indicate whether the following statement/s is/are true or false. Where a statement is false, provide a
reason why it is false.

2.2.1 The South African Parliament is supreme and is entitled to take any decision that it deems fit, regardless
of the provisions of existing legislation.

• False. The Constitution is the supreme law of South Africa. Any law or conduct inconsistent with the
Constitution shall be invalid.

2.2.2 When interpreting legislation, a court need not consider the purpose of the Act in question.

• False. One of the rules of statutory interpretation is that the purpose of the Act must always be
considered in interpreting it.

2.2.3 In a civil trial, the initiating party must prove his or her claim beyond a reasonable doubt.

• Answer: False. The claim must be proven on the balance of probabilities.

2.2.4 “Objective impossibility” means that the impossibility of performance is due to the fault of one of the
parties to the contract.
• False. Objective impossibility means that it is impossible for anyone in the world to perform

2.2.5 A contract that involves the buying or selling of immovable property must be in writing and
signed by the parties or agents acting on their behalf.

• True

Question 3 (30 Marks)

Read the following scenario and answer the questions that follow.

3.1 Xolile sells a 24 carat gold ring to Yvonne for R50 000 on 14 January 2021. Yvonne travels to Johannesburg
for business and she and Xolile agree that Xolile will deliver the 24 carat gold ring to Yvonne on 5 February
2021. In the meantime, Xolile’s friend, Queen, pays a visit to Xolile and sees the 24 carat gold ring and falls in
love with it. Queen, who does not know that Xolile has already sold the 24 carat gold ring to Yvonne, makes an
offer for R65 000 and Xolile immediately accepts the offer. Queen goes home with the 24 carat gold ring on the
same evening. Upon Yvonne’s return, she is extremely upset with Xolile and demands that Xolile delivers the 24
carat gold ring to her. Advise Yvonne as to the legal remedies available to her. (10 marks)

Answer:
• This is a case of consecutive sales of the same thing where the 24 carat gold ring has already been

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delivered to the third party, Queen.

• Queen was unaware of the first contract between Xolile and Yvonne.
• In this case, ownership has been transferred to Queen as a bona fide purchaser.
• Yvonne has no remedy to recover the 24 carat gold ring.
• Yvonne only has a claim for breach of contract against Xolile.

3.2 Felicity enters a contract of purchase and sale on 17 November 2020 with Furniture City, a company that sells
and delivers furniture. In terms of the contract, Felicity buys a lounge suite for R15 000, but on condition that
she obtains a personal loan to that amount.

a) Suppose that Felicity obtains a loan on 22 November 2020. No date for delivery of the lounge suite was
determined in the contract. If the furniture is not delivered by 1 December, can it be said that Furniture
City is in breach of contract? (8 marks)

Answer:
• If no date for delivery was determined in the contract, delivery must take place within a reasonable time
after conclusion of the contract.
• Felicity will first have to write a letter of demand providing a reasonable time for the seller to perform.
• Furniture City will only be in breach of contract if it does not comply with the date in the letter of demand.
• If Furniture City does not deliver the furniture based on the date in the letter of demand, Furniture City
will be in mora.

b) Suppose Felicity is still in the process of applying for a loan and a water pipe bursts in the store on 20
November 2020. The entire lounge suite is ruined as a result thereof. Furniture City wants to know from
you who bears the risk of accidental damage and why? (12 marks)

Answer:
• The risk of accidental damage of the goods passes to the Felicity as the purchaser once the contract can
be said to be perfecta.
• A sale is regarded as perfecta when the following requirements are met:
o The contract has become unconditional,
o the price has been determined,
o and the thing sold must be determined.

In this instance the contract is not yet unconditional. Felicity has not yet complied with condition of obtaining a
loan. Therefore, Furniture City will still bear the risk of accidental damage or destruction of the goods.

Question 4 (25 Marks)

4.1 What is duress and what effect does it have on the validity of a contract? (6 marks)

• Duress may be defined as a situation in which a person suing was induced by violence, threat,
or fear to enter into a contract.
• Where this force was so great that no reasonable person could have resisted it, the law deems
that there could have been no true meeting of the minds.
• The effect is that the contract is voidable.

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4.2 Explain the doctrine of stare decisis and give an example of what its effect is in practice. (4 marks)
• Judicial precedent refers to previous court decisions, and it is one of the sources of South
African law.
• In terms of the doctrine of stare decisis, a lower court is bound to the decisions of a higher court,
as it means “to stand by previous decisions”. A court is also bound by its own previous decisions.
• For example: The High Courts will be bound to the decisions of the Supreme Court of Appeal.
• The effect hereof is that similar cases are decided in a similar way.

4.3 Briefly explain why the enactment of the National Credit Act was necessary. (5 marks)

Answer:
• The existing legislation was fragmented and outdated
• There was a need for a single credit regulation system.
• There was no proper consumer protection and
• Credit providers exploited consumers by granting credit recklessly.
• It was necessary to address the rising levels of over-indebtedness by consumers.

4.4 Discuss the impact that the Constitution of the Republic of South Africa has on eviction. (10 marks)

Answer:
• Section 26 of the Constitution is the applicable provision that deals with evictions.
• This Section 26 of the Constitution provides that no one may be evicted from their home or have their
home demolished without an order of court.
• The court order of court can only be made after the court has considered all the relevant circumstances.
• Courts have been struggling to balance this provision with the protection of property rights also
enshrined in the Constitution.
• When the tenant has been in occupation for more than 6 months at the time when proceedings are
initiated, the court must also consider whether land has been made, or can reasonably be made, available
by the municipality or any other organ of state before an eviction order may be granted.

Question 5 (25 Marks)

5.1 Daniel, a very busy entrepreneur, authorises Bongani to buy a car on his behalf. Bongani enters a contract
of sale with Just Cars but does not disclose the fact that he is acting on behalf of Daniel. The purchase price of
the vehicle is R250 000 and the monthly instalments are R5 000. Unfortunately, Daniel’s business venture fails,
and he defaults on the payments. Just Cars demands payment from Bongani. Bongani refuses liability on the
ground that he was merely acting as an agent. What are Just Cars’ rights in this instance? Advise them on
whom they can hold liable for the arrear instalments. (10 marks)

Answer:
• Just Cars has the right to elect to sue either the principal or the agent on the contract.
• If judgment is given against the agent even for only part of the debt it is a bar to an action against the
principal, even if the principal’s existence is disclosed only thereafter.

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• This ensures that the third party, being Just Cars is protected, in that the agent whom they thought would
be liable is in fact liable.
• This also ensures that a single action is available, as was intended at the time of contracting.
• Just Cars is therefore able to demand payment from Bongani and Bongani may have recourse against
the Agent, Daniel.

5.2 Nthabiseng leases Benson’s one-bedroom flat for R2500 per month. The contract of lease stipulates that the
term of the lease is from 1 January 2021 until 31 December 2021. In May 2021 Benson sells the flat to Sandile
who knew Nthabiseng was leasing the flat when he concluded the contract of sale with Benson.

a) Sandile decides that he wants to stay in the flat himself. He is of the opinion that since he is the new
owner and not a party to the original lease agreement, he can give Nthabiseng 30 days’ notice to vacate
the property. Advise Sandile on whether he will be able to do this. (6 marks)

Answer:
• In this instance, the huur gaat voor koop principle will be applicable.
• In terms of this principle, a purchaser is bound by a short lease over the property if the purchaser knew
of the lease at the time that he concluded the contract of sale.
• The purchaser therefore acquires rights in the property, but these rights are subject to the right of the
lessee.

b) Sandile notifies Nthabiseng that the rent payable will increase to R3 500 per month. Advise Nthabiseng
on whether Sandile is allowed raise the rent payable. (6 marks)

Answer:
• The successor on transfer acquires all rights the original landlord would have had in respect of the
tenant.
• The successor also succeeds to the duties owed by the original landlord and becomes bound by all the
material terms of the lease.
• Sandile will not be allowed to raise the rent, since the original agreement stipulated an amount of R2
500 and Sandile is bound by all the material terms which is originally part of the contract between
landlord and tenant.

5.3 Leona leases a garden flat from Regina for two years. During the lease she has bookshelves installed in the
wall of the lounge area with Regina’s consent. Leona wants to know whether she can remove the shelves once
the lease comes to an end. Advise her in this regard. (3 marks)

Answer:
• The tenant may remove all useful improvements.
• This must be done before termination of the lease, and the property must be restored to its previous
condition.
• Once the lease terminates, the landlord becomes the owner of the improvements.

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TOTAL: 100 MARKS

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