ASSIGNMENT COVER PAGE

Student name Kiara Naidoo

Student number 21403049

ID number: 0003040228086

Module/subject name Business Law 1

Module/subject code BLA100

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Table of Contents

ASSIGNMENT COVER PAGE.................................................................................. 1

Table of Contents .................................................................................................... 2
Question 1: .............................................................................................................. 3
Question 2: .............................................................................................................. 4
Question 3: .............................................................................................................. 5
Question 4................................................................................................................ 6
Question 5: .............................................................................................................. 8
References ............................................................................................................. 10

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Question 1:
1.1. The rules regarding capacity to act in this age group is complex and therefore it is correct
to say that one must consult the legal rules that control the relationship between the state and
citizen. According to (Schulze et al., 2015:70-75), Sarah is a minor that falls within the age
band of 7-18 years of age. This implies that she has limited capacity to act (ability to enter into
contract) which is differentiated from legal capacities (ability to have rights and duties) and the
ability to litigate. She therefor has an intellect and is capable of forming a will but not yet that of
a solid judgment.
The legal rule under the Children’s Act is that minors of this category may act
contractually subject to the condition of assistance from someone who has full capacity to
act. Legislation also has identified exceptions to this rule under various Acts which allow
leniency of the general rule of required assistance in this age category. These include
contracts which allow only rights and no duties to be imposed on the minor, the minor’s
choice to terminate pregnancy as per the Choice of Termination of Pregnancy Act and to
withdraw money that is has been deposited into the minor’s account as per the Post Office
act. Common law makes provisions to protect children from underage marriage by limiting
the age for girls to 15 years. The Children’s Act allows children above the age of 12
(provided they are mature and have the emotional capacity) may consent to medical
treatment and access to health and safety information (Schulze et al., 2015:70-75).
Though some contracts require for additional assistance than that of a guardian such as
the alienation of land owned by the minor. Tacit emancipation may allow the minor may
conclude certain contract without assistance, despite limited capacity. The rights and
duties of the following may well be imposed regardless of legal rules to limited capacity:
minor concludes contract ad does not seek assistance; fraudulent misrepresentation of
majority (Schulze et al., 2015:70-75).

1.2. With reference to occupation as a method of becoming an owner of something we can

state the following:
Admia does not become the owner of the leather jacket through occupation. Due to the
fact that, as a requirement for occupation, the property (in this case a jacket) cannot
belong to someone else (in this case Philemeon) or must belong to nobody at all. Admia
could only become the owner if Philemon had renounced his intention to be the owner of
the jacket, then, Admia may have acquired ownership through seizure. However, this was
not the case as the jacket still belongs to Philemon (Schulze et al., 2015:30).

1.3. When faced with a legal issue, we have generally followed two categories of sources
of law. These provide a comprehensive guide on how to proceed with legal dealings. Of
these two categories are Authoritative sources and sources with Persuasive ability. The
difference lies in the fact that authoritative sources bind the courts and their rulings while
sources with persuasive authority allow for the law to be consulted and applied in a
specific way. To illustrate this, I will provide an example of each. Legislation or Statute law
is an authoritative source and binds the courts decisions due to the fact that it relates to
the creation of law through a competent authority. These laws are found in various
statutes, legislatures and bylaws that govern the rules to which cases are held. While
Textbooks and law journals are persuasive authority which means that they contribute to
the decision of the courts if they are well thought-out and methodical. These articles are
written by legal professionals and contain a vast array of topics regarding the interpretation
of specific rulings and reasons thereof (Schulze et al., 2015:3-9).

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Question 2:
2.1.1. The contract Maria had entered to with the seller of the cell phone remains valid even
though Maria purchased the phone due to her having believed that it went missing/was
stolen. If she had not made her motive part of the terms of contract as to whether she would
purchase the phone based on an existing state of affairs (phone being stolen/missing) by
elevation of a supposition in her declaration of intent when the contract was concluded then
the contract of sale remains valid. In other words, the contract of sale between Maria and the
cell phone provider is not invalidated on the basis that her other cell phone was actually not
lost/stolen.

2.1.2. Based on the lack of consensus obtained in this contract regarding each contracting
party’s declaration of intent regarding their own material understanding instead of that which
was supposed to be agreed on by both parties as a requirement for consensus in the form of
common intention, we can say there is an absence of consensus; a mistake. The mistake at
hand is one in respect to the interpretation the law attaches to offer and acceptance.
Therefore, the contract is void. If there was misrepresentation that induced Sifiso into the
agreement then there will not be a valid contract either due misrepresentation leading to a
material mistake.

2.1.3. The contract between ZIngapi and Simon in the sale of the synthetic carpet is voidable
at the instance of Zingapi due to the fact that Simon had induced her to conclude the contract
under a false/ untrue state of affairs; therefor using misrepresentation. And since
misrepresentation does not exclude consensus, the contract is not void but voidable due to
the fact that consensus was obtained in an improper way. Zingapi may rescind the contract
and claim damages which will be dependent on the degree of fault of damages from the
misrepresented fact of the synthetic carpet regardless of whether Simon misrepresented the
fact innocently, negligently or intentionally.

2.2. In order for Boaz to institute a claim against latent defects in the Merx (in this
case a scooter) regardless of the fact that he had bought it second hand, he must
first prove the following:
a) that there was a material defect in the scooter. I.e. that the petrol tank was in fact
damages and the scooter was rendered useless and unable to perform its intended
function.
b) That the petrol tank was indeed damaged when the contract of sale was
concluded.
c) That during the sale, the damage to the petrol tank was latent and not easily
detectable upon initial, fair inspection of the scooter.
d) that he (Boaz) at the time of conclusion of the contract of sale of the scooter was
in fact unaware of the damaged petrol tank (Schulze et al., 2015:156-159).

If he is successful in proving the above requirements, he qualifies for the remedy of

actio empti to enforce his rights upon the Michael. Michael will not be able to rely on
the ‘as is’ due to the fact that he stated that the scooter was in “perfect working
condition” and can therefor be subject to aedilition actions from Boaz (Schulze et al.,
2015:156-158).

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Question 3:
3.1. In this scenario the form of breach of contact that occurs is the default of creditor or mora
creditoris. This is due to the fact that the debtor (Elias) is dependent on the creditor (Gugu) for
cooperation in a bilateral juristic act: giving Elias’s access to the house in order to perform
obligation. Since this has not occurred, Elias’ duty to perform is delayed and Gugu is
automatically in mora. The reason’s why this breach of contract is the default of creditor is
because the performance is dischargeable, that is the time of performance (15th of October
2021) had arrived and Elias has the tender performance (retiling Gugu’s bathroom). The
consequences of this breach are that Elias’s duty of care is diminished and is entitled to
performance owed to him by Gugu and he will have to perform at a later stage. If performance
is rendered impossible and Elias cannot render his obligation, Gugu will still be liable for her
obligation in terms of the contract. Any default on Elias’s part with regards to the same
obligation (if any) is cancelled by Gugu’s default (Schulze et al., 2015:122-124). Elias had
taken the reasonable steps to confirm the time of performance and therefore did not
contribute to the breach by any negligence on his part.

3.2. In this scenario the form of breach of contract is repudiation. This is due to the fact that
Daniel has shown behaviour that indicates that he will not honour his obligation in terms of the
contract (i.e. making payment to Yusuf at the end of the month) for the delivery of the home
exercise bike. Daniel does this by giving Yusuf notice that he will not perform and this exists
on no justifiable basis. This already constitutes breach of contract and Yusuf has the right to
claim specific performance from Daniel. Yusuf also has the option of rejecting the repudiation
and he may wait until the end of the month comes (agreed time for performance from Daniel)
when at such a time Daniel will be committing positive malperformance and repudiation won’t
need proving. The objective test for repudiation is fulfilled as any reasonable person would
say that Daniel has no intention on fulfilling his obligation. And this perception of a reasonable
person is what will constitute this breach as repudiation (Schulze et al., 2015:124-125).

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Question 4
4.1. In a contract of sale such as the one concluded by Maria and Sifiso the risk of loss and
the advantage of any profit in consideration to the merx, in this case wild bird seed will pass
form the seller, Sifiso, onto the buyer, Maria, but only once the contract has become perfecta.
The contract will only be perfecta once all three of the following requirements are met:

a) the merx is identified and is definite. This means that the amount of bird seed has
been agreed upon by both parties, as we see that Maria’s order was ascertainable
before she decided the amount she wanted to order (two small bags, which will be
weighed by Sifiso) and the merx is now determined and identified.
b) The purchase price must be ascertained or ascertainable. We know that the purchase
price is ascertained by the fact that Maria has paid for the bird seed immediately and in
order for her to do that she would have had to know the exact amount which was
required for her to make payment.
c) Any suspensive condition in terms of the contract must be fulfilled if any. In this
contract of sale, we see that there is no suspensive condition between Sifiso and
Maria. Only a time for delivery, but this does not constitute a suspensive condition.

Therefore, the contract has become perfecta and the risk of loss, that is the loss of the bird
seed, is passed to Maria who cannot claim back her payment even though now she will
receive nothing or the damaged bird seed even though she had not yet become the
owner of the bird seed through delivery. If the parties had agreed to exclude this
consequence of passing of risk upon conclusion of the contract, then they would be
subject to another risk arrangement (Schulze et al., 2015:161-162).

4.2. All purchasers are entitled to merx free from latent defects to resolve these, the law
provides for specific legal remedies that Gary can claim with regards to his bladeless
lawnmower provided that the requirements that institute claim for latent defects are proven
and that the implied warranty of latent defects is not excluded by contracting parties.

Remedies for Gary include:

The actio redhibitoria: This would be the primary remedy for Gary as he would not have
purchased the lawnmower from his neighbour is he had known of the latent defect as it is
a material defect that renders the merx useless. Gary may claim:
a) The recompensating for improvements that he had added to the lawn mower (addition
of a blade if he adds one).
b) The reinstatement of purchase price for the lawnmower
c) Interest
d) Reimbursement of the expense for receiving and preserving of the lawnmower.
However, Gary must then return the lawnmower to his neighbour which includes any
alteration he had made to it. This is the more serious of available remedies although it is
best suited for Gary’s circumstances, he may make use of the actio quanti minoris:

This is where the defect is not of such a serious nature and Gary may claim a reduction of
the price paid for the lawnmower. The deduction is calculated by subtracting the cost of
defect from the purchase price.

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It should be noted to Gary that these actions/ remedies are only aimed at restoration and
restitution and not specifically for the claim of damages. Gary may also rely on the remedy
of the actio empti for misrepresentation where his neighbour is aware of the defects and
does not make disclosure of the missing blade or falsifies claims about the lawn mower
the Gary may claim damages according tohis negative interest (Schulze et al., 2015:156-
158).

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Question 5:
5.1. The two types of insurance we will discuss is that of indemnity insurance and
non-indemnity insurance.

Indemnity insurance is that which an insurer takes to lessen the risk to object he/she
has a vested financial interest in. The insured does this by paying a premium to an
insurer who undertakes to compensate the insured in the event such property of the
insured’s is compensated for in the occurrence of an uncertain, specified risk. If
someone owns something, it is said that the owner has an insurable interest and
would benefit from the non-occurrence of the future, uncertain, specified event (the
risk) and therefore has the right to oblige the insurer to compensate for such
damages. This insurable interest must be present at both the time of the conclusion
of the contract and at the time the risk/ damage occurs to the insured object.
Indemnity insurance can include liability insurance and property insurance (Schulze
et al., 2015:194-200). With reference to the case study, we can conclude that
Sydney has insurable interest in his Car that is because he is the owner of it and
would benefit from its continued existence to the value of what it is worth. Therefore,
Sydney can gain liability insurance so that if his car is damaged, he will be
compensated for the damage by the insurer.

Non-Indemnity insurance is the type of insurance where the insured covers damages
of a more immaterial, abstract nature that would require aid. This uncertain event
should cause non-patrimonial harm. The insured therefore takes the part of paying
out an amount in the occurrence of this uncertain, specific future event with regards
to a person’s life of which to whom the insured has an insurable interest. The life of
one’s own and one’s spouse has unlimited insurable interest whereas the life of
another party would only have insurable interest monetarily or that which relates to
the reliance of. The insurable interest on such a person’s life must be present when
the contract is concluded but need not be at the time the risk occurs in order for the
insured or beneficiary to lay claim to the payable amount as per the concluded terms
that were agreed upon. An example of non-indemnity insurance is personal accident
and life insurance (Schulze et al., 2015:194-200). With reference to the case study
the creditor, Sydney has an insurable interest on his debtor, Peter’s life due to the
fact that if Peter dies, his debt to Sydney would be paid/compensated for by the
insurer.

5.2. Yes, Sharp Insurance will have recourse for the amount paid out to Gloria due to
the insurer’s right of recourse. This right of the insurer states that upon the full
payment of the amount of damages of Gloria, Sharp Insurance has the right to take
the place the insured (Gloria) and is therefore allowed to institute action on the part of
the insured against a third party for who is responsible for the damage (Delivery van
driver) in the name of the insured. This means that Gloria only has the right to claim
compensation from either the delivery van driver or from Sharp insurance, in this

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scenario we assume she has chosen the latter. However, if the full amount (R30000)
was not paid out to Gloria then Sharp insurance would in fact not have the right of
subrogation. Subrogation does not impact the rights and duties of either party of the
case. Sharp insurance can retrieve the sum paid to Gloria from the proceeds of the
action against the third party once the insurer has received right of subrogation
(Schulze et al., 2015:196-197).

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References
Schulze, H., Kelbrick, R., Manamela, T., Stoop, P., Manamela, E., Hurter, E.,
Masuku, B. & Stoop, C. 2015. General principles of commercial law. 8th ed.
Landowne: Juta.

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