Commercial Law 9th Edition.pdf

Commercial Law 9th E General Principles of Commercial Law NINTH EDITION HEINRICH SCHULZE BLC LLB (Pret) LLD (Unisa) Advocate Professor of Law in the Department of Mercantile Law, University of South Africa ROSHANA KELBRICK BA (Pret) LLB (Stell) LLM LLD (Unisa) Attorney Professor of Law in the Department of Mercantile Law, University of South Africa TUKISHI MANAMELA BProc LLB (Unin) LLM (Unisa) Advocate Associate Professor in the Department of Mercantile Law, University of South Africa PHILIP STOOP BCom LLB LLM (Pret) LLD (Unisa) Associate Professor in the Department of Mercantile Law, University of South Africa EDDIE HURTER BLC LLB (Pret) LLD (Unisa) Senior Lecturer in the Department of Mercantile Law, University of South Africa ERNEST MANAMELA BProc LLB (Unin) LLM (Unisa) Associate Professor in the Department of Mercantile Law, University of South Africa Chrizell STOOP LLB LLM (Pret) LLD (Unisa) Associate Professor in the Department of Mercantile Law, University of South Africa BOAZ MASUKU LLB LLM (Unisa) Senior Lecturer in the Department of Mercantile Law, University of South Africa Contents Preface to the Ninth Edition Table of Cases Table of Statutes Section A: Introduction 1 The South African Legal System 2 Introduction to the Science of Law Section B: General Principles of the Law of Contract 3 Law of Contract: Introduction 4 Consensus 5 Capacity to Perform Juristic Acts 6 The Agreement must be Possible 7 Formalities 8 Terms of the Contract 9 Interpretation of the Contract 10 Breach of Contract 11 Remedies for Breach of Contract 12 Transfer and Termination of Personal Rights Section C: Specific Contracts 13 The Contract of Sale 14 The Contract of Lease 15 The Contract of Insurance 16 Credit Agreements Section D: Specific Aspects of Commercial Law 17 Labour Law 18 Intellectual Property Law and Franchising 19 Alternative Dispute Resolution 20 The Law of Agency 21 Forms of Business Enterprise 22 The Law of Competition 23 Security 24 Banking Law: Selected Topics 25 Payment: Negotiable Instruments 26 Other Methods of Payment 27 The Law of Trusts 28 The Law of Insolvency 29 The Law of Administration of Estates 30 Consumer Protection Index Page 1 Section A: Introduction Chapter 1 The South African Legal System 1.1 A short history of the law 1.2 Sources of the law 1.3 The courts in the Republic 1.4 The doctrine of stare decisis 1.5 Interpretation of statutes 1.6 Court judgments 1.1 A short history of the law Law is a social science; it has to provide for the changing needs of a developing community and consequently is inseparably bound up with the community it has to serve. For a thorough understanding of the law it is essential to have a knowledge not only of the community in which it functions, but also of its history and of the factors which led to its origin and development. This is why every study of the law includes a study of the history of the law. Another reason is that a knowledge of legal history helps to evaluate probable trends of future development. South African law, unlike, for example, most European continental legal systems, is not codified (that is, recorded in one comprehensive piece of legislation). The law applying in the Republic is drawn from various authoritative sources. The principal sources are statutes and decided cases, but sometimes a judge or other jurist has to go further back in history to solve a legal problem, and turns to Roman law or the works of the writers on Roman-Dutch law to shed light on the problems. Roman law and Roman- Dutch law are also recognised sources of the law. South African law today is the product of different sources. First, it has its origins in Roman law. Secondly, during the fifteenth and sixteenth centuries, Roman law became fused with Dutch customary law — hence the term Roman-Dutch law — and it was this law that Van Riebeeck brought to South Africa. Thirdly, as can naturally be expected in view of the country’s history, English law exerted a considerable influence on RomanDutch law. Each one of these historical sources will be dealt with very briefly. 1.1.1 Roman law Roman law traditionally spans the period from 753 BC to AD 568. At the beginning of this period, Rome was a small, relatively primitive state with most of its population living on farms around the city. Its economy was based mainly on agriculture, with no trade to speak of. The nucleus of the community was the family with the oldest male ascendant at its head. Not only was he the sole owner of all the family property, whether acquired by himself or his dependants, but he was also the holder of all power, including the power of life and death, over the members of his family and his slaves. The law was correspondingly primitive. Rome, however, developed rapidly until it stood at the head of a vast empire which extended over virtually the entire Western Europe and large portions of Africa and Asia. Obviously, the law had to adapt to and make provision for these changed circumstances, and, in consequence, a highly sophisticated legal system, capable of dealing with the exigencies of increasing wealth, expanding trade and an influx of foreigners, evolved. From AD 291 attempts were made to codify Roman law and these attempts culminated in a codification known as the Corpus Iuris Civilis, which appeared during the reign of Emperor Justinian in the sixth century. Today, this work is still the primary authoritative source on which South African courts draw when reverting to Roman law to solve a legal problem. 1.1.2 Roman-Dutch law The Roman Empire declined and fell in AD 476 but this did not mean that Roman law disappeared. During the Middle Ages, traces of Roman law remained for two reasons. In the first place, every person, wherever such person might be, was judged according to the law of his or her own tribe or country and, therefore, former Roman citizens were treated according to Roman law. In the second place, the church exerted great influence during this period and canon law was based mainly on Roman law; this, of course, contributed to the preservation of Roman law. During the fifteenth and sixteenth centuries, particularly, Roman law was received in the Netherlands and became mixed with the existing Dutch customary law. The works of Roman-Dutch jurists, the statutes of Holland (as far as they are still in force) and the collections of old Dutch opinions and court decisions, form the source of present-day South African law. 1.1.3 English law In 1652 Jan van Riebeeck brought Roman-Dutch law to the Cape, but the administration of justice during the seventeenth and eighteenth centuries left much to be desired. After 1814, the year in which the Cape was formally ceded to Great Britain, the existing Roman-Dutch law remained in force but various factors contributed to a reception of English law. The direct and indirect influence of English law was encouraged. Appeal to the Privy Council in London was instituted, the jury system was introduced, and the Orphan Chamber was replaced by the Master of the Supreme Court. English law was often directly drawn on for new legislation: for example, a code of criminal procedure was introduced in 1826; the entire English law of evidence was introduced in 1830, and the English system