Sophie Smart (2025)
PRESCRIBED READINGS
Requirements for cession
Hippo Quarries Tvl (Pty) Ltd v Eardley 1992 (A)
Skjelbreds Rederi A/s v Hartless (Pty) Ltd 1982 (A)
SARS v NWK Ltd 2011 (SCA)
Roshcon v Anchor Auto Body Builders 2014 (SCA)
Basson v Orcrest Properties (Pty) Ltd 2016 (WCHC)
Retroactive cession
Grobbelaar v Shoprite Checkers 2011 (SCA) para [19]
Pangbourne Properties Ltd v Your Life (Pty) Ltd 2013 (GSJ)
Delectus Personae
University of JHB v Auckland Park Theological Seminary 2021 (CC)
Densam (Pty) Ltd v Cywilnat (Pty) Ltd 1991 (A)
Pactum de non cedendo
Paiges v Van Ryn Gold Mine Estates Ltd 1920 (AD)
Smuts v Booyens 2001 (SCA)
Hutchison ‘Agreements in restraint of cession: time for a new approach’ (2016) 273
Cession of future rights
First National Bank of SA Ltd v Lynn NO 1996 (A)
Muller NO v Trust Bank of Africa Ltd 1981 (N)
Cowen Vested and contingent rights 1949 SALJ 404
Formality requirements
Botha v Fick 1995 (A)
Cession in securitatem debiti
Grobler v Oosthuizen 2009 (SCA)
National Bank of SA Ltd v Cohen’s Trustee 1911 (AD) 235
Marais NO v Ruskin NO 1985 (A)
Picardi Hotels (Pty) Ltd v Thekweni Properties (Pty) Ltd 2009 (SCA) (reversing the
decision of the court a quo 2008 (D))
Retmil Financial Services (Pty) Ltd v Sanlam Life Insurance Co Ltd 2013 (WCC)
1
,Sophie Smart (2025)
OVERVIEW: NATURE OF A CESSION
Cession is a bilateral juristic act whereby a (personal) right is transferred by mere agreement
between the cedent & the cessionary.
Elements of a cession
1. It is an act of transfer
2. The subject matter of the transfer is a (personal) right (res incorporalis)
3. The transfer is effected by a transfer agreement between the cedent & the cessionary.
Transfer agreement (the act of cession)
A cession requires a bilateral transfer agreement between the cedent & the cessionary, marked
by mutual intent. The cedent must intend to transfer the right, and the cessionary must intend
to receive it. This agreement can be explicit or implied & must be genuine.
• Being a bilateral consensual act between cedent & cessionary, all the pre-conditions for the
existence of a valid agreement apply to cession.
• Consensus as to the parties’ intentions:
1. Cedent must intend to transfer the right.
2. Cessionary must intend to receive the right.
• A transfer of rights (& obligations) not founded on consensus cannot properly be
characterised as a form of cession.
o TIP: Where a right is ceded on condition that the cessionary is to do something for the
cedent in return but the cessionary misunderstands or does not agree to the condition,
the cession, though valid, can be attacked on the basis that true consensus to the
obligationary agreement was lacking.
• The cession is complete when the cedent and the cessionary reach finality on the act of
cession (the act of cession being the transfer agreement).
• Whether the act of cession has been finalised, and if so whether it is authentic (or a sham),
are issues of fact to be determined on proof of the intention of the parties, irrespective of
the exact language employed (Hippo).
o If the act of cession is concluded in writing, it becomes a matter of interpretation
(Picardi). If it is concluded tacitly or by conduct, it becomes a matter of inference.
2
,Sophie Smart (2025)
REQUIREMENTS FOR A CESSION
Requirements for a valid cession
1. Cedent must have capacity to dispose of the right (nemo plus rule)
2. The right must be capable of being ceded
• Contingent rights: these rights, though not immediately enforceable, are still capable of being
ceded (e.g. rights subject to time clauses or suspensive conditions).
• Future rights (spes): the cession of future rights, or ‘spes’, is contentious. While some courts
recognise the transfer of expected future rights, others maintain that actual transfer occurs only
once the right comes into existence.
• Non-transferable rights: certain rights (e.g. claims for maintenance or personal injury) are
deemed too personal to be ceded.
• Delectus personae: if the debtor’s identity is crucial to the creditor, the right cannot be ceded
without the debtor’s consent (e.g. this often applies in employment contracts where the personal
nature of the obligation is significant).
3. Transfer agreement (the act of cession)
• Consensus: cedent must intend to transfer the right & cessionary must intend to receive it.
• Consensus as to the nature of the cession: out-and-out or in security.
• Can be explicit or implied, but it must be genuine (i.e. not a sham).
4. Formalities? Only if prescribed (Botha v Fick).
• General rule: No formalities are required for a valid cession.
• When formalities are prescribed by the parties or by statute, these must be complied with.
5. Valid underlying causa? Not a prerequisite for a valid cession (Grobbelaar v Shoprite).
• An agreement, genuine although otherwise void or voidable but reflecting a serious &
deliberate intention to transfer the right, ought therefore to suffice. The attendant obligationary
agreement may thus be void for lack of consensus or even illegality, or it may be set aside
because of fraud, duress, undue influence or for some other reason, and yet the resultant transfer
will be legally effectual, although liable, perhaps, to be reversed.
6. Legality: the transfer agreement must be lawful
• Cession is invalid if it contravenes a statute, common law, public policy or moral standards.
- Statutory prohibitions: certain rights (e.g. pension claims) are non-assignable by law.
- Fraudulent cessions: transfers intended to defraud creditors or evade tax are unlawful.
- Immoral or Public policy violations: courts may void cessions with purposes deemed
against public policy (e.g. manipulating claims to impede debt recovery).
7. Certainty: the subject-matter of the cession must be certain or ascertainable
(specificity principle)
3
, Sophie Smart (2025)
8. Debtor must not be prejudiced by the cession
• Cession should not disadvantage the debtor by increasing their burden.
- Prohibition of claim splitting: claims must be transferred wholly, not piecemeal, to avoid
burdening the debtor with multiple lawsuits.
- Protection against mala fide cessions: courts can delay judgment on a cessionary’s
claim if the cession was made in bad faith to deprive the debtor of counter-claim
opportunities.
Consequences of a cession
The right is transmitted: Cession is a transaction resulting in the cedent being divested of a
right, and the right vesting in the cessionary.
• One consequence is that the cessionary succeeds the cedent as creditor of the right and as
such is the only one entitled to administer and enforce it.
• Another consequence is expressed, as in the law of property, by the nemo plus rule:
(a) Cession cannot improve the position of the cessionary, compared to that of the cedent,
vis-à-vis the debtor or 3rd parties.
(b) Cession cannot impair the position of the debtor vis-à-vis the cedent, the cessionary or
3rd parties.
(c) The cedent, having once ceded the right, is precluded from ceding it to a second
cessionary (double cession prohibited).
(d) The cessionary takes the right as he finds it, for better or worse, with all its benefits and
privileges, but also with all its defects and disadvantages.
(e) The debtor may raise against the cessionary any defence he could have raised against
the cedent.
Things to note:
• Double cession: an out-and-out cession divests the cedent of his right. Nothing remains
for the cedent to cede afresh. Any purported subsequent cession would therefore be
ineffectual. Once there has been a complete cession, a subsequent cession cannot confer
any right on the second cessionary.
• The right is transmitted in its entirety with all its benefits & incidents: If a right
carries a preference the cessionary is entitled to it. If a voting right attaches to the right,
the cessionary is entitled to exercise it (note: a right acquired by cession after the
institution of proceedings by which the estate is placed under sequestration confers no
voting powers). If the debt bears dividends or interest, the cessionary is entitled to
4
PRESCRIBED READINGS
Requirements for cession
Hippo Quarries Tvl (Pty) Ltd v Eardley 1992 (A)
Skjelbreds Rederi A/s v Hartless (Pty) Ltd 1982 (A)
SARS v NWK Ltd 2011 (SCA)
Roshcon v Anchor Auto Body Builders 2014 (SCA)
Basson v Orcrest Properties (Pty) Ltd 2016 (WCHC)
Retroactive cession
Grobbelaar v Shoprite Checkers 2011 (SCA) para [19]
Pangbourne Properties Ltd v Your Life (Pty) Ltd 2013 (GSJ)
Delectus Personae
University of JHB v Auckland Park Theological Seminary 2021 (CC)
Densam (Pty) Ltd v Cywilnat (Pty) Ltd 1991 (A)
Pactum de non cedendo
Paiges v Van Ryn Gold Mine Estates Ltd 1920 (AD)
Smuts v Booyens 2001 (SCA)
Hutchison ‘Agreements in restraint of cession: time for a new approach’ (2016) 273
Cession of future rights
First National Bank of SA Ltd v Lynn NO 1996 (A)
Muller NO v Trust Bank of Africa Ltd 1981 (N)
Cowen Vested and contingent rights 1949 SALJ 404
Formality requirements
Botha v Fick 1995 (A)
Cession in securitatem debiti
Grobler v Oosthuizen 2009 (SCA)
National Bank of SA Ltd v Cohen’s Trustee 1911 (AD) 235
Marais NO v Ruskin NO 1985 (A)
Picardi Hotels (Pty) Ltd v Thekweni Properties (Pty) Ltd 2009 (SCA) (reversing the
decision of the court a quo 2008 (D))
Retmil Financial Services (Pty) Ltd v Sanlam Life Insurance Co Ltd 2013 (WCC)
1
,Sophie Smart (2025)
OVERVIEW: NATURE OF A CESSION
Cession is a bilateral juristic act whereby a (personal) right is transferred by mere agreement
between the cedent & the cessionary.
Elements of a cession
1. It is an act of transfer
2. The subject matter of the transfer is a (personal) right (res incorporalis)
3. The transfer is effected by a transfer agreement between the cedent & the cessionary.
Transfer agreement (the act of cession)
A cession requires a bilateral transfer agreement between the cedent & the cessionary, marked
by mutual intent. The cedent must intend to transfer the right, and the cessionary must intend
to receive it. This agreement can be explicit or implied & must be genuine.
• Being a bilateral consensual act between cedent & cessionary, all the pre-conditions for the
existence of a valid agreement apply to cession.
• Consensus as to the parties’ intentions:
1. Cedent must intend to transfer the right.
2. Cessionary must intend to receive the right.
• A transfer of rights (& obligations) not founded on consensus cannot properly be
characterised as a form of cession.
o TIP: Where a right is ceded on condition that the cessionary is to do something for the
cedent in return but the cessionary misunderstands or does not agree to the condition,
the cession, though valid, can be attacked on the basis that true consensus to the
obligationary agreement was lacking.
• The cession is complete when the cedent and the cessionary reach finality on the act of
cession (the act of cession being the transfer agreement).
• Whether the act of cession has been finalised, and if so whether it is authentic (or a sham),
are issues of fact to be determined on proof of the intention of the parties, irrespective of
the exact language employed (Hippo).
o If the act of cession is concluded in writing, it becomes a matter of interpretation
(Picardi). If it is concluded tacitly or by conduct, it becomes a matter of inference.
2
,Sophie Smart (2025)
REQUIREMENTS FOR A CESSION
Requirements for a valid cession
1. Cedent must have capacity to dispose of the right (nemo plus rule)
2. The right must be capable of being ceded
• Contingent rights: these rights, though not immediately enforceable, are still capable of being
ceded (e.g. rights subject to time clauses or suspensive conditions).
• Future rights (spes): the cession of future rights, or ‘spes’, is contentious. While some courts
recognise the transfer of expected future rights, others maintain that actual transfer occurs only
once the right comes into existence.
• Non-transferable rights: certain rights (e.g. claims for maintenance or personal injury) are
deemed too personal to be ceded.
• Delectus personae: if the debtor’s identity is crucial to the creditor, the right cannot be ceded
without the debtor’s consent (e.g. this often applies in employment contracts where the personal
nature of the obligation is significant).
3. Transfer agreement (the act of cession)
• Consensus: cedent must intend to transfer the right & cessionary must intend to receive it.
• Consensus as to the nature of the cession: out-and-out or in security.
• Can be explicit or implied, but it must be genuine (i.e. not a sham).
4. Formalities? Only if prescribed (Botha v Fick).
• General rule: No formalities are required for a valid cession.
• When formalities are prescribed by the parties or by statute, these must be complied with.
5. Valid underlying causa? Not a prerequisite for a valid cession (Grobbelaar v Shoprite).
• An agreement, genuine although otherwise void or voidable but reflecting a serious &
deliberate intention to transfer the right, ought therefore to suffice. The attendant obligationary
agreement may thus be void for lack of consensus or even illegality, or it may be set aside
because of fraud, duress, undue influence or for some other reason, and yet the resultant transfer
will be legally effectual, although liable, perhaps, to be reversed.
6. Legality: the transfer agreement must be lawful
• Cession is invalid if it contravenes a statute, common law, public policy or moral standards.
- Statutory prohibitions: certain rights (e.g. pension claims) are non-assignable by law.
- Fraudulent cessions: transfers intended to defraud creditors or evade tax are unlawful.
- Immoral or Public policy violations: courts may void cessions with purposes deemed
against public policy (e.g. manipulating claims to impede debt recovery).
7. Certainty: the subject-matter of the cession must be certain or ascertainable
(specificity principle)
3
, Sophie Smart (2025)
8. Debtor must not be prejudiced by the cession
• Cession should not disadvantage the debtor by increasing their burden.
- Prohibition of claim splitting: claims must be transferred wholly, not piecemeal, to avoid
burdening the debtor with multiple lawsuits.
- Protection against mala fide cessions: courts can delay judgment on a cessionary’s
claim if the cession was made in bad faith to deprive the debtor of counter-claim
opportunities.
Consequences of a cession
The right is transmitted: Cession is a transaction resulting in the cedent being divested of a
right, and the right vesting in the cessionary.
• One consequence is that the cessionary succeeds the cedent as creditor of the right and as
such is the only one entitled to administer and enforce it.
• Another consequence is expressed, as in the law of property, by the nemo plus rule:
(a) Cession cannot improve the position of the cessionary, compared to that of the cedent,
vis-à-vis the debtor or 3rd parties.
(b) Cession cannot impair the position of the debtor vis-à-vis the cedent, the cessionary or
3rd parties.
(c) The cedent, having once ceded the right, is precluded from ceding it to a second
cessionary (double cession prohibited).
(d) The cessionary takes the right as he finds it, for better or worse, with all its benefits and
privileges, but also with all its defects and disadvantages.
(e) The debtor may raise against the cessionary any defence he could have raised against
the cedent.
Things to note:
• Double cession: an out-and-out cession divests the cedent of his right. Nothing remains
for the cedent to cede afresh. Any purported subsequent cession would therefore be
ineffectual. Once there has been a complete cession, a subsequent cession cannot confer
any right on the second cessionary.
• The right is transmitted in its entirety with all its benefits & incidents: If a right
carries a preference the cessionary is entitled to it. If a voting right attaches to the right,
the cessionary is entitled to exercise it (note: a right acquired by cession after the
institution of proceedings by which the estate is placed under sequestration confers no
voting powers). If the debt bears dividends or interest, the cessionary is entitled to
4
