Question 1 40 Marks

In Durban, South Africa, Lungile, a connoisseur of luxury fragrances, contacted Naledi, a boutique perfume dealer with a store in Gateway Mall, expressing interest in purchasing a rare limited-edition Chanel perfume, the “Chanel No. 5 Collector’s Edition,” on May 1, 2023. Naledi received Lungile’s inquiry via WhatsApp on May 5, 2023. Following their customary method of communication, Naledi messaged Lungile back and verbally confirmed the sale on May 15, 2023. Lungile then transferred R20,000 to Naledi on July 10, 2023.

However, Naledi later discovered that the Chanel No. 5 Collector’s Edition was no longer available in her inventory. On August 1, 2023, she contacted Lungile and explained the situation, offering a limited-edition Dior perfume as an alternative. Despite knowing that the Dior perfume was a sample bottle and not intended for retail sale, Naledi offered it to Lungile as a replacement for the Chanel fragrance. Lungile, unaware of the perfume’s true nature, agreed, stating “let’s proceed with the deal.” Later, Lungile discovered that the Dior perfume purchased from Naledi was a sample bottle, leading to a dispute over the authenticity of the perfume and the terms of their agreement.

1.1 When and where was the contract concluded? Provide reasons for your answer. (10)
1.2 Who is the offeror and who is the offeree? Explain your reasoning. (5)
1.3 Does Naledi’s conduct constitute a breach of contract? Give reasons for your response. (15)
1.4 Which court has jurisdiction over the matter? Substantiate your response. (5)
1.5 Dior found out about the counterfeit items and filed a case against Naledi. What are the grounds of Dior’s case? Justify your response. (5)
Question 2 (25 Marks)

In Durban, South Africa, Global Trade Solutions (Pty) Ltd, a leading import-export consultancy, engaged the services of Thabo, a reputable intermediary, to facilitate and secure advantageous deals for the procurement of goods from international suppliers. Thabo’s contract with Global Trade Solutions Ltd delineated his duties and boundaries of authority, implicitly confining him to specific procurement agreements within predefined parameters.

Motivated by personal financial gain, Thabo exceeded his authorized scope and initiated an undisclosed arrangement with a supplier for a substantial shipment of pharmaceutical products. This agreement fell well outside the confines of Thabo’s implicit authority and posed significant financial risks for Global Trade Solutions (Pty) Ltd.

Unbeknownst to the company, one of its executives, Manqoba, had vested interests in the pharmaceutical industry and stood to benefit greatly from the unauthorized deal. Manqoba clandestinely supported Thabo’s actions, leveraging his influence within the company to ensure the progression of the agreement.

While Global Trade Solutions (Pty) Ltd had previously tolerated minor deviations from established protocols to uphold business relationships, the unauthorized agreement orchestrated by Thabo breached a crucial threshold. The company’s management opted to disclaim the agreement, asserting that it exceeded Thabo’s implicit authority and held no binding force on Global Trade Solutions Ltd.

Unfortunately, a third party, PharmaTech Solutions (Pty) Ltd, had already expended substantial resources to prepare for the pharmaceutical shipment, operating under the assumption of a valid agreement with Global Trade Solutions Ltd. Now faced with the company’s refusal to acknowledge the deal, PharmaTech Solutions (Pty) Ltd confronts significant financial losses and potential legal entanglements.

2.1. How does agency law determine Thabo’s accountability to Global Trade Solutions (Pty) Ltd for his actions in the given scenario, and what are the potential legal consequences for Thabo? Support your answer with relevant case law? (15)

2.2. Analyse the corporate governance principle and directorial responsibilities breached by Manqoba in this scenario, providing supporting justifications with explanations. (10)

Question 3 (35)

In CyberTech Solutions (CTS), a leading tech startup, the board consists of seven non- executive board members, all of whom are qualified as Cybersecurity Specialists (CS). The expertise of Cybersecurity Specialists is particularly relevant for this role due to their proficiency in data protection, cybersecurity protocols, and risk management, which are crucial aspects of overseeing the security and governance of a company, especially in the technology sector. Additionally, all seven directors, in their early 30s, have completed training in the company’s Cybersecurity Leadership Program during their induction, indicating a commitment to professional development and effective governance practices.

Mr. Thabo Mkhize, the CEO of CTS, launched a challenge aimed at encouraging employees to propose innovative cybersecurity solutions. Among the participants, two employees, Lungile Ndlovu and Khanya Vilakazi, emerged as winners:

Khanya clinched the second prize of R15,000 for her innovative encryption algorithm, an idea she derived independently. On the other hand, Lungile, a cybersecurity analyst, devised a groundbreaking firewall system with highly effective threat detection capabilities, earning him the first prize of R50,000. Sipho, Lungile’s colleague, assisted in the development process, but Lungile believed it was a friendly gesture and did not credit him.

However, it’s later discovered that Khanya’s algorithm exhibits significant bias in criminal profiling. Despite its advanced encryption capabilities, the algorithm consistently produces skewed results when applied to data related to criminal activity, disproportionately targeting individuals of African origin. This raises serious concerns about fairness and potential legal ramifications for CTS’s technological solutions.

3.1 Discuss the central corporate governance issue in the scenario. How does this issue impact the company’s governance, and what potential challenges does it pose for the board’s decision- making processes? (10)

3.2 Analyse the potential challenges related to Sipho’s involvement in the winning idea without credit from Lungile. How can the company’s implementation of their idea lead to a potential legal dispute? (15)

3.3 Examine the ethical considerations arising from Khanya’s biased algorithm in criminal profiling, offering your opinion in your analysis (10)

Answers to Above Questions on Business Law

Answer 1: On the basis of the information provided, it can be said that the contract between Lungile and Naledi is concluded on 15th May 2023, and this is mainly because the communication of acceptance by Naledi was performed on 15 May 2023. The verbal communication was also undertaken by Naledi on 15 May 20203 which further indicates the formal acceptance of Lungile’s offer.

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