CLA1503/201/1/2023

Tutorial Letter 201/1/2023

Commercial Law 1C
CLA1503

Semester 1

Department of Mercantile Law

This tutorial letter contains important information about your module.

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 CONTENTS
Page

1 GENERAL ....................................................................................................................................3
2 FEEDBACK FOR ASSIGNMENT 01 ............................................................................................ 3
3 FEEDBACK FOR ASSIGNMENT 02 ............................................................................................ 9
4 INFORMATION ABOUT THE MAY/JUNE 2023 EXAMINATION ............................................... 13

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 CLA1503/201/1/2023

Dear Student

1 GENERAL
This tutorial letter contains feedback on Assignment 01 and 02. It also provides a general guide
on the May/June 2023 examination.

2 FEEDBACK FOR ASSIGNMENT 01

QUESTION 1

FEEDBACK
(Chapter 1: The South African Legal System)

4 is CORRECT. The Constitution of the Republic of South Africa, 1996 is the supreme law of
South Africa. It applies to all law, and binds natural and juristic persons, the legislature, the
executive and all other organs of the state.

1 is INCORRECT. English law is indeed a source of South African law, but not the supreme law.
When the Cape was ceded to Great Britain in 1814, the South African legal system then in
operation, was influenced by English law.

2 is INCORRECT. Roman Dutch law is one of the sources of South African law, but not the
supreme law. Roman law was gradually received in the Netherlands and became mixed with the
existing Dutch customary law, and Roman-Dutch law resulted from this process. Jan Van
Riebeeck brought this Roman Dutch law to the Cape in 1652, when he established a settlement
here.

3 is INCORRECT. Statute law is also known as legislation. It is the most important source of law,
enacted by parliament and provincial legislatures, and includes proclamations, regulations and
by-laws enacted by subsidiary legislative bodies such as the State President, ministers and
municipalities. But statute law is not the supreme law of South Africa, as any legislation that is
contrary to the provisions of the Constitution could be declared unconstitutional.

QUESTION 2

FEEDBACK
(Chapter 2: Introduction to the Science of Law)

1 is CORRECT. The Law of contract is a division of Private law. Private law regulates the
relationships between persons or private individuals, and Public law the relationships between
the state and its subjects. The state can, however, in certain circumstances also act in a private
law capacity.

2 is INCORRECT. Criminal law forms part of Public law. The state prohibits certain actions as
crimes. When a crime is committed, the state prosecutes the accused with the aim of punishing
the person who committed the crime. As crimes are prohibited by the state, criminal law is a
division of public law.

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3 is INCORRECT. International law is not a division of Private law. International law regulates the
relationships between two or more states. International law forms part of Public International law
which is a division of public law.

4 is INCORRECT. Although it is difficult to categorise Company law, it is usually considered to be

part of Mercantile law, which contains aspects of the law that relate to both Private and Public
law. Company law is not considered to be part of Private law.

QUESTION 3

FEEDBACK
(Chapter 3: Law of Contract)

3 is CORRECT. All five requirements for a valid contract have been satisfied. Online contracts
are regarded as valid contracts. The Electronic Communications and Transactions Act 25 of 2002
regulates electronic contracts.

1 is INCORRECT, because the guests did not bind themselves in a contractual relationship with
Kgomotso. At most their actions amounted only to a social appointment or agreement but there
is no enforceable contractual relationship. There was no serious intention on the part of the
contracting parties to be legally bound.

2 is INCORRECT. By definition a contract is an agreement between two or more people. One

cannot agree with oneself, as Thabo does, unless if one acts in a different capacity on each side
of the contract. Otherwise, there must be more than one person to a contract.

4 is INCORRECT. This agreement is not physically executable since moon and stars cannot be
sold. Rights and duties in a contract must be physically executable. Therefore, the requirements
for a valid contract have not been satisfied.

QUESTION 4

FEEDBACK
(Chapter 4: Consensus)

1 is CORRECT. Tim did not commit breach of contract because no contract existed between Tim
and Dintwa or Tim and Angie because of lack of consensus. There was no common intention to
be legally bound.

2 is INCORRECT. The fact that his car broke down is irrelevant and is not the reason why the
booking fee cannot be recovered from Tim. The true reason is that no contract existed between
Tim on the one hand and Dintwa and Angie on the other hand.

3 is INCORRECT. The fact that Dintwa made an incorrect representation to Tim is likewise
irrelevant and is not the reason why the booking fee cannot be recovered from Tim. There is no
contract between Tim on the one hand and Dintwa and Angie on the other hand because of the
lack of a common intention to be legally bound.

4 is INCORRECT. There was no consensus between Tim and Dintwa to be contractually bound,
but at most a social arrangement between two friends without any intention to be legally bound.
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QUESTION 5

FEEDBACK
(Chapter 5: Capacity to perform Juristic Acts)

2 is the CORRECT answer, because Steven, as an unrehabilitated insolvent may not take up
employment with a general dealer without the consent of his curator. Moreki is a general dealer.
If the purchase of the van has a negative effect on the insolvent estate (which isn’t clear from the
information) Steven will need the consent of his curator to enter into the contract of sale. Steven
can therefore not conclude either of the contracts independently.

1 is an INCORRECT answer, because Gloria has capacity to conclude both the contracts. She
obtained full capacity to act on marriage and because she is married out of community of property,
she does not need her spouse’s consent to conclude contracts. This is true for both the contract
of employment and the contract of sale.
3 is an INCORRECT answer, because Arthur has capacity to conclude both the contracts. A
spouse married in community of property has full capacity to act as far as employment is
concerned, and regarding their joint estate, both he and his wife have full capacity to act
independently, although the consent of the other spouse is required in certain instances. The
buying of a vehicle is not one of those instances. (Note that in the case of most standard contracts
you will find that space is provided for the consent of the other spouse in a marriage in community
of property, to be on the safe side and to avoid the necessity of establishing which form of consent,
if any, is required).

4 is an INCORRECT answer, because Themba does have full capacity to conclude both the
contracts. He is clearly emancipated. He lives separately from his parents, he is economically
independent and when Themba’s parents emigrated they left him behind, not from neglect but
because of a conscious decision on their part that it would be best for him.

QUESTION 6

FEEDBACK
(Chapter 6: The Agreement must be Possible)

4 is CORRECT. Tebogo and Ismael’s agreement is contrary to good morals. An act is contrary to
good morals if it is contrary to the community’s perception of what is proper and decent and in
accordance with the conscience of the community. Contracts which are aimed at promoting
sexual misconduct are contrary to the South African community’s perceptions of what is proper
and decent.

1 is INCORRECT. Even though Tebogo and Ismael have consensus, what they agreed upon is
not legally possible as it is contrary to the community’s perception of what is proper and decent
and in accordance with the conscience of the community. The contract is contrary to good morals
and legally impossible.
2 is INCORRECT. The fact that parties have capacity to conclude juristic acts does not mean that
parties may conclude contracts that are not permitted by law. The contract between Tebogo and
Ismael is contrary to common law because it is against good morals.

3 is INCORRECT. A contract is contrary to public policy if it is harmful to the interests of the public
at large, for example agreements misusing or thwarting the administration of justice, agreements
regarding crimes and delicts, agreements affecting the safety of the state, agreements restraining
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a person’s freedom to participate in legal intercourse and agreements restraining a person’s
freedom to participate in commercial intercourse.

QUESTION 7

FEEDBACK
(Chapter 7: Formalities)

2 is CORRECT. In terms of the General Law Amendment Act 50 of 1956 a contract of suretyship
is valid only if it is in writing and is signed by or on behalf of the surety. The contract of suretyship
between Irene and Maria is not in writing and is therefore not valid.

1 is INCORRECT. In terms of the General Law Amendment Act 50 of 1956 a contract of suretyship
is valid only if it is in writing and is signed by or on behalf of the surety. The contract between
Irene and Maria is not in writing and is therefore not valid.

3 is INCORRECT. Consensus exists if parties are mutually aware of one another’s intention. A
common intention to contract with each other and to create a legal relationship must therefore
exist. The intention can be made known in writing, orally or by means of conduct. Irene agreed
by nodding her head. The facts therefore do not indicate a lack of consensus. However, in terms
of the General Law Amendment Act 50 of 1956, a contract of suretyship is valid only if it is in
writing and is signed by or on behalf of the surety. The contract between Irene and Maria is not
in writing and is therefore not valid, as the formalities required by law have not been complied
with.

4 is INCORRECT. An agreement will only be contrary to the good morals of the community if the
contract is contrary to the community’s perception of what is proper and decent. This agreement
is lawful, but the statutory formalities have not been complied with.

QUESTION 8

FEEDBACK
(Chapter 8: Terms of contract)

2 is CORRECT. As soon as the contract is concluded, a contractual relationship between Moses

and More arises, although it is subject to a suspensive time clause, and performance is only
claimable when Simon dies.

1 is INCORRECT. For a time clause a certain and determined or ascertainable/determinable

future event is required. It is certain that Simon will die although it is uncertain when he will die.
The moment for performance is therefore determinable. When the contract is concluded, a
contractual relationship between the parties arises. Here we have a suspensive time clause, and
performance is claimable only when Simon dies.

3 is INCORRECT. This is an example of a suspensive time clause where the contractual

relationship arises on conclusion of the contract but where the performance is claimable at a later
stage. Although this term is a time clause, it is not resolutive, but suspensive. It is a time clause
because it is dependant on the occurrence of an event that is certain to occur (it is certain that
Simon will die). It is suspensive because the obligations flowing from the contract will only come
into effect when the future event occurs (whenever Simon dies). Although a contractual
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relationship arises between the parties when the contract is concluded, performance can only be
claimed when Simon dies. In the case of a resolutive term the obligations flowing from the contract
will only have effect until the future event occurs.

4 is INCORRECT. Although this term is suspensive, it is not a condition, but a time clause. A
condition is subject to the occurrence or non-occurrence of a specified uncertain future event,
whereas a time clause is subject to a specified certain future event, either determined or
ascertainable. This time clause is suspensive because the obligations flowing from the contract
will only come into effect when the future event occurs (whenever Simon dies), although a
contractual relationship arose between the parties when the contract was concluded.

QUESTION 9

FEEDBACK
(Chapter 10: BREACH OF CONTRACT)

1 is CORRECT. Repudiation as a form of breach of contract is any behaviour by a party to a

contract indicating that he or she does not intend to honour his or her obligations. Paul’s indication
constitutes repudiation.

2 is INCORRECT. Mora debitoris as a form of breach of contract occurs when a debtor does not
perform at the agreed time and the delay is due to his or her own fault. Paul will not perform after
the agreed time but has indicated that he does not intend to perform at all. This constitutes
repudiation.

3 is INCORRECT. Positive malperformance occurs when the debtor commits an act which is
contrary to the terms of the contract. Paul would have committed positive malperformance if he
had, for example, delivered wine of a quality lower than export quality.

4 is INCORRECT. Prevention of performance by the debtor occurs when he or she culpably

renders his or her own performance impossible. Prevention of performance by the creditor occurs
where a creditor culpably renders the debtor’s performance impossible. In respect of the delivery
of the wine, Chris is the debtor. He would have committed prevention of performance if he had,
for example, destroyed the bottles of wine. In respect of the receipt of the price agreed upon, Paul
is the creditor. But as the price has been paid, he can no longer prevent Chris form performing.

QUESTION 10

FEEDBACK
(Chapter 11: Remedies of Breach of Contract)

2 is CORRECT. The damage to the harvest is damage which will normally flow from the kind of
breach of contract in question. Therefore, it may reasonably be supposed to have been
contemplated by the parties as a probable consequence of breach of contract.

1 is INCORRECT. Mpho’s liability is limited to such damage as normally flows from the kind of
breach of contract in question, or, alternatively, such damage as was actually foreseen by the
parties, or may reasonably be supposed to have been contemplated by them as a probable
consequence of breach of contract.

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3 is INCORRECT. The damage to the harvest is damage which will normally flow from the kind
of breach of contract in question. Therefore, it may reasonably be supposed to have been
contemplated by the parties as a probable consequence of breach of contract. Kgomotso can
therefore claim the R8 000 damage to the harvest from Mpho. Kgomotso cannot claim the R10
000 damage in respect of the goldmine, as this is neither damage that normally flows from the
breach of the type of contract in question (ie the repair of a tractor), nor could it have been
foreseen by Mpho (Kgomotso did not inform him of the fact that he used the tractor for pumping
water out of the goldmine as well).

4 is INCORRECT. There is a duty on Kgomotso to mitigate his damages and Mpho will not be
held liable for damage which the innocent party could have limited by exercising reasonable care.

[TOTAL: 10 MARKS]

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3 FEEDBACK FOR ASSIGNMENT 02

QUESTION 1

FEEDBACK
(Chapter 14: Contract of Lease)

2 is CORRECT. The lessee may claim a reduction in rent if he had the repairs affected after the
lessor failed to respond to a demand to have the repairs done.
1 is INCORRECT. The lessee remains liable for rent until he vacates the property leased or until
he puts it at the disposal of the lessor again.
3 is INCORRECT. The lessor (Jason) must continue to maintain the subject of the lease in a
condition which is reasonably fit for the purpose for which it is being leased.
4 is INCORRECT. The lessor (Jason and not Tammy) must continue to maintain the subject of
the lease in a condition which is reasonably fit for the purpose for which it is being leased.

QUESTION 2

FEEDBACK
(Chapter 20: Law of Agency)

2 is CORRECT. It is NOT a requirement for estoppel that the third party must have been aware
that the agent was not authorised. On the contrary, it is a requirement for estoppel that the third
party must NOT have been aware that the agent lacked authority.
1 is INCORRECT. It is a requirement for estoppel that the third party must have acted to his or
her detriment on the strength of the representation made by the principal.
3 is INCORRECT. It is a requirement for estoppel that the representation that authority existed,
must be attributable to the principal or to someone for whose conduct he or she is responsible.
4 is INCORRECT. It is a requirement for estoppel that the representation must have been of
such a nature that it could reasonably have been expected to mislead the third party. The court
will look at the circumstances of both the third party and the principal. Two things must be
shown: first, that a reasonable person in the position of the third party would have inferred from
the conduct or words of the principal that the purported agent was authorised to conclude the
particular contract and, secondly, that a reasonable person in the purported principal's position
would have expected the words or conduct to induce this belief.

QUESTION 3

FEEDBACK
(Chapter 23: Security)

2 is CORRECT. The General Law Amendment Act 49 of 1996 requires that a contract of surety
must be in writing and signed by or on behalf of the surety in order to be valid.
1 is INCORRECT. Not all the requirements for the conclusion of a valid contract of surety have
been met. The General Law Amendment Act requires that a contract of surety must be in writing
and signed by or on behalf of the surety in order to be valid.
3 is INCORRECT. Although the contract above is indeed invalid, the reason is not the fact that it
is an accessory contract. The reason for its invalidity is the fact that it was not in writing and signed

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by the surety, as is required by the General Law Amendment Act. The fact that it is an accessory
contract does not influence its validity.
4 is INCORRECT. The General Law Amendment Act requires that a contract of surety must be
in writing and signed by or on behalf of the surety in order to be valid.
QUESTION 4

FEEDBACK
(Chapter 30: Consumer Protection)

2 is the CORRECT answer, because it is NOT a defence against bundling if the stores that sell
the goods, find it beneficial as it increases their sales.
1 is an INCORRECT answer, because it is a defence against bundling if the convenience of the
bundled goods outweighs the limitation of the consumer’s right to choose suppliers.
3 is an INCORRECT answer, because it is a defence against bundling if such bundling is
economically beneficial to the consumer.
4 is an INCORRECT answer, because it is a defence against bundling if such bundled goods are
offered separately and at individual prices.

QUESTION 5

FEEDBACK
(Chapter 12: Transfer and Termination of Personal Rights)

3 is CORRECT. Cession is the transfer of rights from one party to another. Cession is thus an
agreement between the holder of a right (Sharks General Motors) and a third party (Freedom
Bank), in terms of which the holder of the right cedes the right (to claim payment from Jabu) to
the third party. In this set of facts Sharks General Motors received the purchase price from
Freedom Bank and ceded its right to claim payment from Jabu to Freedom Bank. Freedom Bank
becomes the holder of the right and can claim the purchase price, and the interest, from Jabu.
1 is INCORRECT. Delegation takes place when a debtor delegates his or her obligation towards
a creditor, to a third party, who becomes the new debtor in respect of that creditor. In this set of
facts the debtor, Jabu, does not delegate his obligation to pay to another debtor. It is the first
creditor, Sharks General Motors that cedes its right to Freedom Bank, who becomes the new
creditor. In delegation the co-operation of all three parties is required.
2 is INCORRECT. Settlement is an agreement by which parties settle a dispute between them
about an actual or supposed obligation.
4 is INCORRECT. Merger occurs when the same person becomes both debtor and creditor in
respect of the same debt and consequently the obligation is extinguished by operation of law. The
reason for this is that one cannot owe something to oneself.
QUESTION 6

FEEDBACK
(Chapter 13: Contract of Sale)

2 is CORRECT. Delivery with the short hand occurs when the purchaser is already in possession
of the merx, but does not hold it as the owner, and then subsequently holds it as the owner. Craig
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was already in possession of the horse when he bought it from Grabe.

1 is INCORRECT. Actual delivery entails the physical handing over of the merx by the seller to
the purchaser. Grabe did not hand the horse over after it was bought by Craig.
3 is INCORRECT. In the case of symbolic delivery the merx is not physically handed over to the
purchaser, but something else is delivered to the purchaser which enables him or her to obtain
control of the merx, for example when the seller of a motor vehicle hands the keys of the car to
the purchaser. Nothing was handed over to Craig as a symbol that he bought the merx.
4 is INCORRECT. Delivery with the long hand entails the pointing out of the merx and its being
made available to the purchaser. This method is used where the merx is too large or heavy to be
handed over physically, for example cattle. The horse was not pointed out, it was already in
Craig’s possession.

QUESTION 7

FEEDBACK
(Chapter 13: Contract of Sale)

2 is CORRECT. Parties have to agree on the purchase price and merx before the contract can
be described and treated as a contract of sale. These two characteristics are, therefore, the
essentialia of a contract of sale. For a contract to qualify as a specific type of contract certain
essentialia or characteristics must be present. The reason for classifying a contract as a specific
contract is that certain naturalia or natural consequences flow from the contract.
1 is INCORRECT. Although the purchase price is indeed an essentiale of a contract of sale,
delivery is not. Although the purchaser is entitled to delivery of the merx, delivery is a common
law right to which the purchaser is entitled. Delivery of the merx is not an essentiale of the contract
of sale.
3 is INCORRECT. A contract is classified as a specific contract if certain essentialia are present.
The rights and duties flowing from a contract of sale, flow automatically from the fact that the
contract can be classified as such. The rights and duties are consequences of the contract having
been so classified, and not the reason why a contract can be classified as such.
4 is INCORRECT. The transfer of ownership is usually the primary purpose of the parties to a
contract of sale. It is not one of the essentialia of a contract of sale, nor is it an automatic
consequence of the execution of a contract of sale.

QUESTION 8

FEEDBACK
(Chapter 14: Contract of Lease)

3 is CORRECT. The general rule is that the rent payable in terms of a contract of lease must
sound in money. There is one exception to this rule. Where the rent consists of a share in the
fruits of the object of the rent or the property let, the contract of lease is valid. Troy can validly
lease his citrus farm to Brian in exchange for a certain portion of the produce produced each
season.
1 is INCORRECT. The general rule is that the rent payable in terms of a contract of lease must
sound in money. There is one exception to this rule. Where the rent consists of a share in the
fruits of the object of the rent or the property let, the contract of lease is valid. Although the rent
in this instance is not determinable as an amount of money, the contract is valid.
2 is INCORRECT. The fact that the contract of lease between Troy and Brian is a “long lease”
which is not registered against the title deed of the property does not make the contract of lease
invalid. The Formalities in respect of Leases of Land Act 18 of 1969, only provides that long leases
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shall not be binding on a creditor or successor under onerous title (that is, someone who has
given value for the property) of the lessor for longer than ten years, unless such lease is registered
against the title deed of the property, or unless the creditor or successor had knowledge of such
a contract of lease.
4 is INCORRECT. The contract of lease is not invalid because the lease period exceeds ten
years. The Formalities in respect of Leases of Land Act 18 of 1969, only provides that long leases
shall not be binding on a creditor or successor under onerous title (that is, someone who has
given value for the property) of the lessor for longer than ten years, unless such lease is registered
against the title deed of the property, or unless the creditor or successor had knowledge of such
a contract of lease.

QUESTION 9

FEEDBACK
(Chapter 15: Law of Insurance)

2 is CORRECT. In non-indemnity insurance compensation is paid for non-patrimonial loss, such

as the death of the loved one, in the event that the risk insured against, occurs.
1 is INCORRECT. The actual payment of the premium is not an essential requirement for the
creation of the insurance contract, but the undertaking to do so is.
3 is INCORRECT. In indemnity insurance compensation is paid for patrimonial loss, such as the
loss of or damage to property as a result of fire and theft, in the event that risk insured against,
occurs.
4 is INCORRECT. The undertaking by the insurer to pay the amount agreed upon in the event of
the damage or loss insured against, is indeed a requirement for a valid insurance contract.

QUESTION 10

FEEDBACK
(Chapter 30: Consumer Protection)

3 is CORRECT. In terms of section 18 of the Consumer Protection Act, a notice or statement in

terms of which the consumer will be liable for loss or damage, is only enforceable if the consumer
was grossly negligent, reckless, malicious or guilty of criminal conduct. Peter’s accidental slipping
does not constitute gross negligence, recklessness or malice.
1 is INCORRECT. In terms of section 18 of the Consumer Protection Act, a notice or statement
in terms of which the consumer will be liable for loss or damage, is only enforceable if the
consumer was grossly negligent, reckless, malicious or guilty of criminal conduct. Peter’s
accidental slipping does not constitute gross negligence or recklessness.
2 is INCORRECT. In terms of section 18 of the Consumer Protection Act, a notice or statement
in terms of which the consumer will be liable for loss or damage, is only enforceable if the
consumer was grossly negligent, reckless, malicious or guilty of criminal conduct. Peter’s
accidental slipping does not constitute gross negligence or recklessness.
4 is INCORRECT. Section 18 of the Consumer Protection Act provides that a notice or statement
in terms of which the consumer will be liable for loss or damage, is only enforceable if the
consumer was grossly negligent, reckless, malicious or guilty of criminal conduct. This is
regardless of whether the consumer saw the notice or not.

[TOTAL: 10 MARKS]
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4 INFORMATION ABOUT THE MAY/JUNE 2023 EXAMINATION

The CLA1503 May/June 2023 examination will be randomised Multiple Choice questions and
an open book. You will be expected to answer 50 questions asked from all Chapters that are
prescribed for this Module within a duration of 2hours.

We wish you all the best.

YOUR LECTURERS

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