QUESTION 1 (8 marks)

Identify the various ways in which an agent’s authority can be terminated?

QUESTION 2 (7 marks)

In your own words explain the importance of having a contract of sale reduced to writing with specific reference to the Alienation of Land Act 68 of 1981.

QUESTION 3 (9 marks)

The National Credit Act (35 of 2005) is part of a comprehensive legislation overhaul designed to protect the consumer in the credit market and make credit and banking services more accessible. The National Credit Act (NCA) was introduced “to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers.”

Required:

Throughout the National Credit Act (NCA), the consumer is afforded a number of rights. Mention the general rights that the consumer is given in terms of the NCA.
QUESTION 4 (9 marks)

Read the following scenarios below and identify the form of delivery that has taken place. With reference to the scenario provide a reason for your answer.

Note to student: One (1) mark will be awarded for correctly stating the form of delivery. Two (2) marks will be awarded for the correct explanation of your answer.

4.1 Cape Arts (Pty) Ltd is an art studio and gallery which sells and showcases modern contemporary art and design sculptures. Cape Arts is selling a 2 meter tall stone sculpture of a beautiful African princess. Gerrad is an avid art collector and wants to buy the sculpture of the African princess and points out the sculpture to the representative of Cape Arts. While Gerrad is pointing at the sculpture, he utters the words “I want to buy this beautiful sculpture right there, it is truly magnificent.” (3 marks)

4.2 Jackie takes her Jeep Wrangler to the panel beater shop to be resprayed to a metallic black colour. While Jackie’s car is at the panel beater shop, Christa wants to buy the car and makes an offer to Jackie. The offer is so good, Jackie cannot refuse it and as a result sells her Jeep Wrangler to Christa, while the car is still at the shop. (3 marks)

4.3 Claire is selling a silver and crystal watch for R350. Nancy wants to buy the watch. Nancy pays the purchase price and Claire physically hands over the watch to Nancy. (3 marks)
QUESTION 5 (16 marks)

Francesco (lessor) is the owner of a large house situated at No.10 Church Street, Cape Town. He decides to lease the house to Fidel (lessee). Fidel is very impressed with the house, as he has a wife and three children, and the place is big enough for the whole family. Francesco proceeds to draw up a contract setting out the following terms: The house situated at No.10 Church Street, Cape Town is to be leased for a period of 5 years. Fidel agrees to pay Francesco an unidentifiable amount of money per month as the rental amount in return for the use and enjoyment of the property.
Fidel signs the contract and soon moves into his dream home.

Required:

Determine whether a valid contract of lease came into effect.

QUESTION 6 (19 marks)

Liam works for a company called Impact Solutions (Pty) Ltd, and he is a logistics and procurement administrator in the Procurement Department at Impact Solutions. One day, Liam meets with a potential supplier, Rebecca, who is interested in a significant deal with Impact Solutions. During their meeting, Liam is extremely impressed with Rebecca and her proposal that he feels like Impact Solutions must do business with her. Liam then falsely represents that he has the necessary authority to sign contracts on behalf of Impact Solutions, even though he doesn’t have the required authority from his company, as it is only the procurement manager who can sign contracts on behalf of Impact Solutions. Rebecca, the supplier, relies on Liam’s representation of authority and believes that Impact Solutions is committed to the deal.

She invests a significant amount of time and resources in preparing for this business transaction, ordering additional materials, and hiring more staff to meet Impact Solutions’ anticipated demands. Rebecca is excited about the partnership and has faith in Liam’s representation.

However, when Rebecca sends over the contract for Liam to sign on behalf of Impact Solutions so the transaction can get underway, Liam hesitates and eventually confesses to his managers that he never had the authority to commit the company to this deal with Rebecca. Impact Solutions refuses to honour and bind themselves to the agreement that Liam had promised to Rebecca, leaving Rebecca in a difficult situation. She has already invested money and resources into the deal based on
Liam’s fraudulent misrepresentation.

Required:

6.1 With reference to the scenario above, identify the typical parties involved in an agency relationship. (For example: X is the …., Y is the …. etcetera) (3 marks)

6.2 Determine and discuss the liability of Liam in this scenario by taking the facts of the scenario into consideration. (9 marks)
Note to student: Apply as you answer your question. Remember the question states “taking the facts of the scenario into consideration”, therefore you must always make reference to the information/ facts provided in the scenario to answer the question(s).

6.3 Assume that Liam had been duly appointed as an agent for Impact Solutions (Pty) Ltd. Apart from the overarching responsibilities of an agent, what are some of the additional duties that Liam must strive for and perform as an agent? (7 marks)

QUESTION 7 (13 marks)

Siya is a landlord who owns a small apartment in Cape Town. He has a tenant named Rachel, who has been living in the apartment for the past year. Rachel had been a responsible tenant, always paying her rent on time. However, in the past few months, Rachel started experiencing financial difficulties due to unexpected medical bills. As a result, she falls behind on her rent for three consecutive months. Rachel has not been able to pay the rent, and she has not communicated with Siya regarding her financial troubles. Siya, as the landlord, is worried about his income being affected by the unpaid rent.

Required:

7.1 Discuss the applicable remedy that is available to Siya as the landlord of the apartment. (7 marks)

7.2 Briefly explain how Siya can make the remedy discussed in question 7.1. above enforceable over Rachel’s movables. (2 marks)

7.3 Mention the rights that Siya obtains once the remedy identified in question 7.1. above has been made enforceable by a court of law. (4 marks)

QUESTION 8 (9 marks)

Thomas is a 16-year-old high school student, who dreams of having the latest gaming console. He visits a local electronics store, and there he meets a salesperson named Alex. Thomas tells Alex about his desire to purchase the gaming console but explains that he doesn’t have enough money to buy it.

Alex, eager to make a sale, informs Thomas about a financing option offered by the store. Without explaining the legal implications, Alex helps Thomas fill out a credit application for a store credit card that would allow him to purchase the gaming console on credit. Thomas, unaware of the legal complexities of credit agreements, eagerly agrees to the arrangement.

The credit application is approved, and Thomas leaves the store with the gaming console. The monthly payments start going off Thomas’s mother credit card and she is furious once she discover what Thomas had done.

Required:

8.1 Discuss the legality of the credit agreement entered into between Thomas and the gaming store. (6 marks)

Note to student: In other words determine whether the credit agreement between Thomas and the electronic store is lawful or not. Try to mention only the relevant information. Scenario questions require you to apply the legal principles where applicable and come to a conclusion. Refer to the relevant section(s) of legislation.

8.2 Thomas’s mother is furious and wants to know what can be done regarding the credit agreement between her son and the gaming store. She wants the credit agreement cancelled. She approaches you, a legal expert for advice. Advise the mother as to whether the credit agreement is enforceable. (3 marks)

QUESTION 9 (5×2=10 marks)

Match the description in Column A with the correct type of agreement in Column B.

Answers to Above Questions on Commercial Law

Answer 1: There are different important ways in which the authority of an agent can be terminated. The most important once include the expiration of time, fulfillment of the main purpose for which the agreement is entered into, express revocation, implied revocation, death of any of the party involved, bankruptcy, mutual agreement etc.

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