Summary CLA1501_ COMMERCIAL LAW_ BEST STUDY NOTES NOVEMBER 2021.

CLA1501_ COMMERCIAL LAW_ BEST NOTES NOVEMBER 2021. AUTHORITATIVE SOURCE OF SA LAW: 2 types of sources: Authoritative – court is bound by & Persuasive – used/interpret in particular way to convince court ruling. 1) Statute Law or Legislation 1.1 General:  Dutch legislation passed between if approved & accepted by SA Law  English statues don‟t apply to SA unless by official proclamation regarding the union of SA or colonies 1.2 The Constitution of RSA 1996  Is the supreme law of the Republic  Any law contrary to its provisions may be declared invalid  Regulates government – sets out structure of state & its organs – providing for their functions & powers Constitution Sources of Law Authoritative  Legislation  Judgements  Customary Law  Old Authorities Persuasive  Foreign Law  Textbooks & Journals Page 2 of 23  Constitution was adopted to (achieved through Bill of Rights): i. Heal divide of past & establish society based on democratic values, social justice & basic human rights ii. Foundation for democratic society in which government is based on will of people and all are equally protected by Law iii. Improve quality of life & free potential of each iv. Build united democratic RSA & enable it to take rightful place as sovereign state 2) Customary Law (Trade usages)  Does not consist of written rules – develops from habits of community & carried throughout generations.  For customary rule to become legal: a) Must be reasonable b) Must exist for long time c) Must be recognised & observed by community d) Contents of rule must be clear 3) Judgements of Courts 2 types of courts: 1. Superior Courts (unlimited jurisdiction) 2. Lower Courts (limited jurisdiction) Constitutional Court (Hears matters regarding the interpretation of the Constitution – Jhb) Supreme Court of Appeal (Only court of appeal for High Courts; all matter except constitutional – Bloemfontein) High Court (Can hear any matter arising within their jurisdiction & certain constitutional matters e.g. fundamental rights entrenched- most major cities)  Divorce  Mental Capacity  Sequestration of estate  Liquidation of Company  Will Magistrate Court Small Claims Court Courts of tribal leaders Note: Bill of Rights:  Applies to all law  Binds 3 branches of government: legislative, executive & judiciary  State must protect, respect, promote & fulfil the rights of BOR  Divided by 1st & 2nd generation 1 st generation: takes power away from the state – imposing duty not to act in certain way e.g .discriminate 2 nd generation: positive socio-economic rights = obligates state to provide society with certain basic needs e.g. health care Must keep record of proceedings Legislature; branch of government having the power to make laws Executive branch: administrative or supervisory authority in government Judiciary: all judges of the government Page 3 of 23 4) Old Authorities Body of law by old authorities (Dutch & Roman) = Common Law 5) Foreign Law Judge may turn to modern countries‟ law for guidance – not an authoritative law in SA, only persuasive. Constitution provides for interpreting BOR a court of law must consider international law & consider foreign law. 6) Textbooks & Law Journals No authority of their own but persuasive influence. OFFICERS OF THE SUPERIO COURTS: Registrar (Superior Court) Appointed in each Superior Court = smooth running of court. Issue process (Summonses/ warrants etc), enrolment of cases, issuing orders of court & maintain records Sherrifs (High Court) Serve processes & execute judgement & orders of court Master (in some High Courts) Various administrative & quasi-judicial function regarding deceased & insolvent estates, liquidation & judicial management of companies, minors, & disabled people. Legal Practitioners Advocates – appear in High Courts  Don‟t deal directly with the public, nor do they appear in Magistrate Courts.  Deal with litigations & legal opinions.  Has passed Bar Exam Attorneys – appear in Magistrate Court  Aid in drawing up contracts/ will (can act as notary & conveyancer)  Deal directly with members of public who need legal advice or representation.  May refer clients to advocates  Passed Board Exams & done articles of clerkship & can appear in High & Low courts Clerk (Magistrate Court) Same duties as registrar but only in Magistrate Court Page 4 of 23 COURT JUDGEMENTS: Doctrine of Stare Decisis: Function of judge – state, interpret and apply existing law – does not make new law unless: “Judge-made law” = new interpretation, adaptation or extension of Common Law principle may give rise to new law. E.g. if principle is no loner in accordance of modern views, judge may decide principle no longer exists. NB: Court is bound by its decision regardless if it is later considered incorrect. Unless over ruled by a Superior Court. Only time a court can override its own legal opinion is if previous decision is clearly shown to be wrong. A High Court is bound by judgements of another High Court‟s decision (they usually stick to it any ways) Magistrate Court is bound by judgements of Superior Courts, if High Courts are conflicting then Magistrate Court is bound by its High Court within its jurisdiction. Ratio Decidendi: “Reason for decision” – underlying reason for court‟s ruling Every decision is not imposing rule of law Obiter Dictum: “Incidental Remark” = Additional Remarks Can be persuasive for other court rulings INTERPRETATION OF STATUTES Law of an Act of Parliament or legislation must be determined. Various theoretical rules and methods used objectively to determine what the Statue seeks to achieve. Stare Decisis shows that a source of law is decisions of judiciary on what law is – courts are bound by legislation as interpreted by the court until Superior Court places different interpretation on it or legislature amends it. Note NB: Does NOT mean court determines statue law but does mean Lower Court applies Higher Court’s interpretation of the wording rather than the wording of the Act itself. Any statute that conflicts with Constitutional Law can be declared invalid. “decision stands” Page 5 of 23 Process to ascertain meaning: Statue requires interpretation Constitutional Principles (values) General Principles (language & context) Interpretation Act (definitions) Pronounce purpose and interpretation of statute INTRODUCTION TO THE SCIENCE OF LAW Law- system of rules which apply in a community Right - any right a legal subject has regarding specific legal object and which is protected by law = subjective right. Law is divided in 2: Public Law Private Law overlap ÷International/ constitutional/ administrative/ criminal laws & law of procedure ÷ law of persons/ family/ personality/ patrimonal Control relationship between citizens & the state Legal rules govern relationship between citizens & their dealings with each other Person’s assets/ liabilities etc = monetary measurable Page 6 of 23 Legal Subjects: Natural persons – human beings Juristic person – e.g companies, universities, municipality etc SUBJECTIVE RIGHTS: Right of Legal Object (legally claim to right) Real Right Intellectual Property Right Personality Rights Personal Rights Ownership Servitudes (Property rights) Mortgage and Pledge (Right of security – fail to settle debt then mortgagee can sell property) Artist, writer inventor Right to a patent Physical integrity or reputation of person Rights in terms of conduct, performance (doing or giving something) One person owes another money Page 7 of 23 PRIVATE LAW Law of Persons Family Law Law of Personality Patrimonial Law Who are legal subjects Becomes legal at birth only if born alive, ceases at death (but body & assets still protected for sake of creditors & heirs) Classes of legal subjects (minors don‟t have same rights as adults) Status (affected by age/ sex/ marriage/ sanity/ decent etc.) Marriage: Husband & Wife Parents & Children Excluding cousins & in-laws (right to privacy/ non defamation etc) Physical being, dignity and reputation. Protected by Criminal Law and Civil Law Relation between people concerning their physical & psychical integrity Sum of assets & liabilities (anything with $ value) Law of Succession  Will of deceased estate – consist of assets & liabilities.  Executor not bound to deceased debts but can be and can sue Law of Intellectual Property  Products of human spirit that may be of economic value to discoverer/ inventor. Patents, copyrights, trademarks, goodwill etc Law of Obligations  Contract (1 obligated to deliver, 1 obligated to pay)  Delict (crime/offense) – damage is caused by declit then offender must pay damages to owner  Unjustified Enrichment (If A erroneously deposits $ into B‟s account, B must return it to A) Law of Property *(see below table for further details) *Law of Property: “Granting and recognition of rights over property”  The Right of Ownership Power over property May not use as you like: dependant on public law Ownership: Person who has the right of ownership over property is not necessarily the possessor. Possession direct or indirect control over property – physical control and at same time intents to possess it Page 8 of 23 Note: You can’t deprive someone of possession against their will even if its your stuff Acquisition of Ownership Occupation Seizure of property that belongs to no one (think catching wild bird) Original method of acquiring ownership Prescription Take ownership after 30 years as if you were the owner (but only if you‟ve been using it uninterrupted for 30 years) Movable Property Delivery of property (e.g. delivery of bought vehicle) Immovable Property Property only after registration at Deeds office (even if $ paid its not yours till it is registered)  Servitudes “Limited Real Right over the property” Ownership protected by the remedy “reivindicatio”. Owner may reclaim their property from any person who wrongfully possesses it (think: D stole B‟s pen & gave it to C). But owner can not forcefully take it from person but should claim item in court action of rightful ownership. Also if A damages/destroys B‟s property, B can claim damages against A. Praedial – have the right to drive or walk over the plot of another Personal Servitudes – Usufruct: wife may live on property if husband dies, and children receive ownership upon her death.  Mortgage and Pledge Limited real rights over property LAW OF DELICT: Elements of delict: Voluntary human act Unlawfulness Fault (either intent or negligence Causation Damage or impairment of personality Remedies: Interdict & payments of damages – 3 types of proven loss: 1) Patrimonial loss 2) Recovering sentimental damage 3) Pain & suffering Original methods of acquiring ownership Grounds of justification a) Necessity b) Self-defence c) Consent  Consent to injury  Consent to risk of injury d) Statutory authority e) Provocation Derivative methods of acquiring ownership Protection of ownership & possession Page 9 of 23 LAW OF CONTRACT Contract: Agreement concluded by two or more persons with the serious intention of creating legally enforceable obligations. Obligation is a bond between persons, which creates rights and privileges between persons. Obligation may arise from a contract but also from a delict. A right is an advantage that entitles the holder of the right to demand that another person should do something or refrain from doing something. A duty is a responsibility imposed by law, and obliges or binds a person to performance 2 Most NB aspects of a contract are: i. Intention/ aim of creating the legal obligation ii. The legal results rights and duties that follow Requirements for the formation of a valid contract: Consensus between parties & objectives of contract Legal capacity to act (can they perform that particular act which gives rise to the contract?) Legally (juridical) possibility of the agreement Physical possibility of performance (e.g. walking to Mars is not possible) Observation of any formalities prescribed for the contract (if all formalities observed is it valid) Valid contract only if all the above requirements have been satisfied – there may still be an agreement if some of these conditions exist but will NOT constitute a contract. Freedom to Contract  Cornerstone of modern law  Generally free to choose with whom and on what grounds one wants to contract  Freedom to contract can be limited in certain circumstances. A person may for e.g. not conclude contracts which are unlawful or illegal. Contracting electronically: E-Commerce – business conducted over internet/web – not a contract unless stated so. CONSENSUS Consensus = “agreement between parties involved” Consensus is basis for every contract A contract cannot be valid in the absence of consensus Consensus can only be reached if:  Intention to be contractually bound – to create legal obligation seriously Page 10 of 23  Common Intention (same intention) – if one thinks they are selling and the other that they are hiring it is not common intent i.e. they must be on the same page  Make the intention KNOWN – can be written contract or oral agreement can also be intentional like buying groceries at a shop. Offer and Acceptance  Declaration made by person (offerer)  Acceptance by offereree Falling away of offer: (5 reasons) 1) Expiry of offer 2) Revocation – withdraws offer but must inform offereree & do so before they accept 3) Rejection – if offereree rejects offer they cannot change their mind & try to accept 4) Counter-offer 5) Death – of either party before acceptance Requirements regarding offer and acceptance (Reaching consensus requires every party must declare his or her intention to create enforceable rights and duties)  Offeror will be legally bound by the mere acceptance  Offer must be complete (i.e. contain all details re offer)  Clear and certain  Accepted verbally or written  Addressed to specific person  The offer and acceptance must be communicated to al parties concerned What is not considered an offer? i. Invitation to make an offer ii. Statement of intent iii. Calling for tenders/ quotes etc. iv. Auctions Dispatch theory Contract comes into being at the place and time when the letter of acceptance is posted CONCENSUS AND DEFECTS IN WILL The distinction between void and voidable contracts hinges on whether or not consensus existed between the contracting parties. 1) Absence of consensus – mistake: Mistake exists when 1 or more of the parties misunderstanding a material fact/legal rule relating to proposed contract. ≠consensus, therefore ≠contract. = subjective attitude Proposes T’s & C’s Note: Advertising a product is an invite to do business, it is not an offer to sell the item instead the purchaser makes offer to buy Page 11 of 23 But: Parties can be held to their declaration of intent (instead of their true intention) unless circumstances are such that the mistake is reasonable. Requirements to be met to render mistake contract void. i. The mistake relates to a fact, or a legal rule or principle (thinking that the appliance is a washing machine when it is actually a tumble dryer) ii. The fact or rule or principle is material (material means essential/relevant/NB to the contract & in eyes of the law) (identity of parties known, time/place of transaction (performance) known, but mistake about object performance = reasonable mistake hence consensus not met) iii. The mistake (whether of fact or of law) is also reasonable (the reasonableness of the mistake is tested objectively – one asks whether the reasonable person in this situation would make the same mistake) 2) Misrepresentation “Untrue statement or representation concerning an existing fact/state of affairs by a party with the aim and result of inducing the other party into concluding the contract” A contract will be voidable due to misrepresentation if following requirements are met: a) Misrepresentation: Untrue statement concerning an existing fact/condition b) Duress: Unlawful threat of harm or injury made by a party to conclude a contract c) Undue Influence: Contracting parties must not abuse their power of influence to persuade other parties to conclude contracts.