, MRL3701 ASSIGNMENT 1 SEMESTER 2 2026
DUE DATE: 13 AUGUST 2026
Question 1:
Act of Insolvency in Terms of Section 8(a)
Section 8(a) of the Insolvency Act 24 of 1936 provides that a debtor commits an act of
insolvency where, in the Republic or elsewhere, he or she makes a written or oral
statement to a creditor that he or she is unable to pay any of his or her debts.1 The
provision is concerned with an express or implied representation by the debtor that he
or she is unable to meet a particular debt or debts. The fact that a debtor is experiencing
financial difficulties is not, by itself, sufficient to constitute an act of insolvency under
this section. There must be a statement made by the debtor to a creditor which conveys
an inability to pay.2 Accordingly, the creditor relying on s 8(a) must establish the
existence of the statement and demonstrate that it amounts to an admission by the
debtor of an inability to pay a debt.
The intention behind the debtor's statement is also relevant when determining whether
an act of insolvency has occurred. The courts have indicated that the statement must be
considered in its proper context, and the debtor's intention may be inferred from the
circumstances surrounding the communication.3 It is therefore not necessary in every
case for the debtor to use the exact words "I am unable to pay my debts". A statement
may constitute an act of insolvency where, when objectively considered in its context, it
conveys that the debtor cannot meet the relevant obligation.4 The creditor must
nevertheless provide sufficient evidence to establish that the requirements of s 8(a)
1
Insolvency Act 24 of 1936, s 8(a).
2
Meskin & Co v Friedman 1948 (2) SA 555 (W) 559–560.
3
Bock v Duburoro Investments (Pty) Ltd 2009 (2) SA 59 (SCA) para 10.
4
Estate Salzmann v Van Rooyen 1946 AD 121, 131–132.
DUE DATE: 13 AUGUST 2026
Question 1:
Act of Insolvency in Terms of Section 8(a)
Section 8(a) of the Insolvency Act 24 of 1936 provides that a debtor commits an act of
insolvency where, in the Republic or elsewhere, he or she makes a written or oral
statement to a creditor that he or she is unable to pay any of his or her debts.1 The
provision is concerned with an express or implied representation by the debtor that he
or she is unable to meet a particular debt or debts. The fact that a debtor is experiencing
financial difficulties is not, by itself, sufficient to constitute an act of insolvency under
this section. There must be a statement made by the debtor to a creditor which conveys
an inability to pay.2 Accordingly, the creditor relying on s 8(a) must establish the
existence of the statement and demonstrate that it amounts to an admission by the
debtor of an inability to pay a debt.
The intention behind the debtor's statement is also relevant when determining whether
an act of insolvency has occurred. The courts have indicated that the statement must be
considered in its proper context, and the debtor's intention may be inferred from the
circumstances surrounding the communication.3 It is therefore not necessary in every
case for the debtor to use the exact words "I am unable to pay my debts". A statement
may constitute an act of insolvency where, when objectively considered in its context, it
conveys that the debtor cannot meet the relevant obligation.4 The creditor must
nevertheless provide sufficient evidence to establish that the requirements of s 8(a)
1
Insolvency Act 24 of 1936, s 8(a).
2
Meskin & Co v Friedman 1948 (2) SA 555 (W) 559–560.
3
Bock v Duburoro Investments (Pty) Ltd 2009 (2) SA 59 (SCA) para 10.
4
Estate Salzmann v Van Rooyen 1946 AD 121, 131–132.
