MRL3701 - STUDY UNIT 11 - Uncompleted Contracts and Legal Proceedings Not Yet Finalized Exam Questions with 100% Correct Answers

PURCHASE OF GOODS IN TERMS OF INSTALLMENT AGREEMENT Correct Answer Section 84 (1) provides, on sequestration of the buyer's estate, the seller automatically acquires a hypothec over the res vendita whereby the balance outstanding under the agreement is secured. As no one may have a hypothec over his own property, ownership in the res vindita passes from seller to insolvent estate. EFFECT OF SEQUESTRATION OF THE BUYER'S ESTATE Correct Answer the seller loses his right of ownership in the property and simultaneously becomes a creditor with a hypothec over the property. THE TRUSTEE OF THE BUYERS ESTATE MUST Correct Answer 1 deliver the res vendita to him 2. thereafter seller is deemed to hold it as security for his claim 3. and has the rights of secured creditor to realise his security as prescribed by the Act. INSTALLMENT AGREEMENT ENVISAGED BY PARAS a, b and c(i) OF DEFINITION OF INSTALLMENT AGREEMENT IN S1 OF THE NCA IS ONE IN TERMS OF WHICH Correct Answer 1. all or part of the price is deferred and is so to be paid by period payments 2. possession and use of the property is transferred to the buyer 3. ownership of the property passes to the buyer only when the agreement is fully complied with. SECTION 84(1) OF THE INSOLVENCY ACT PRESUPPOSES AN AGREEMENT STILL IN FORCE Correct Answer this section DOES NOT apply if the seller has, prior to sequestration, cancelled the agreement on account of the buyer's default and the buyer has not obtained reinstatement in terms of the NCA. SECTION 84(1) PRESUPPOSES Correct Answer That the seller is the owner of the res vendita - no hypothec arises in favour of a seller who is not the owner IN TERMS OF ACTION 84(2) OF THE INSOLVENCY ACT Correct Answer if debtor returns the property to the seller within one month before sequestration the trustee may demand that the seller deliver the property to him or its value at the date of return subject to payment to the creditor by the trustee or to deduction by the creditor from the value of the property of the difference between the total amount payable under the transaction and the total amount actually paid under it.