WHAT IS A CONTRACT?

A contract is a bilateral juristic act, founded on agreement. That is legal language for an agreement between people (natural persons or commercial entities) which creates certain rights and obligations between them. Thus, put simply a contract can be defined as an agreement entered into by two or more persons with the intention of creating a legal obligation or obligations.

The word “agreement” means that there is consensus between the parties to the contract. In other words, their minds meet regarding all material aspects of their agreement. Without consensus there can be no agreement, and therefore no contract.

Parties have freedom of contract, which means that they can agree to anything that is possible and lawful. Once the parties have reached an agreement, the terms of their agreement are binding on them.

The question is often asked, what if later on in the contractual relationship, one of the parties wants to make amendments to the contract for some reason? Can they unilaterally change the terms of the agreement to suit their current needs?

Unless the parties agree to change the terms of the contract, or have agreed at the inception of the contract that one or both of the parties can make certain unilateral changes, a new agreement must be reached to incorporate that which the one party seeks to amend.

For example, a well-known gym contracts with a 17-year-old and in signing the agreement, the gym states that as long as the new member remains on his current contract, he will always pay the student rate (notwithstanding inflation of course).

10 years later, the gym advises the member that they will be moving his contract to adult membership fees as he is now a working adult.

At the inception of the contract, the offer was made – and accepted – that the member will pay the student rates as long as he remains a member. Clearly, there was consensus on a material aspect of the contract, and in fact the parties’ minds met on this aspect, inducing the member to join. He also fulfils his obligations by paying his monthly premium and remaining a member. The gym cannot unilaterally alter the terms of the contract and force the member, out of the blue, to pay adult rates. They are bound by the terms of the contract.

Furthermore, in terms of section 50 of the Consumer Protection Act, the supplier (the gym in the example above) must provide the consumer with a copy of the written agreement, or of the transactions arising out of the contract if it was not in writing.

For legal advice, contact our professional team on 041 501 9800.

THE ROLE OF THE RENTAL HOUSING TRIBUNAL – how it can help you.

The Rental Housing Tribunal was established in 2001 to help resolve disputes between tenants and landlords. The members are appointed by the provincial Minister of housing and charged with the important task of implementing the Rental Housing Act.
The Tribunal informs both landlords and tenants of their rights and obligations, investigates and mediates relevant matters and aims to get the parties to reach a resolution. The landlord and tenant are the parties to make a final decision about the mediation; if they are in agreement it can be made an order of court.
It is also important to note that the services of the Tribunal are free to both tenants and landlords, and parties can choose to represent themselves, making the Tribunal a cost effective means for parties to resolve disputes.
In addition the Tribunal can mediate on both written and verbal lease agreements, deposit refunds etc. Although the lease may be verbal, it is important to note the complaints to the Tribunal must be in writing.

For more information on the process of lodging a complaint with the Tribunal, please read:
http://www.bizcommunity.com/Article/196/569/162161.html

For advice, contact our team on 041 501 9800.

It is our pleasure to introduce Kugen Pillay as the newest member of our professional team at Goldberg & de Villiers Inc.

Kugen recently joined us as a Director in the Dispute Resolution & Litigation Department and specialises in Dispute Resolution and General Litigation, Recoveries, Contract Litigation, Corporate and Commercial Litigation, Property Law Litigation, Insurance Litigation, Road Accident Fund Claims, Personal Injury Litigation, Medical and Professional Negligence Litigation, State Liability Litigation, Family Law Litigation, Municipal and Administrative law.

Kugen obtained his Bachelor of Law degree at the University of Port Elizabeth (now Nelson Mandela Metropolitan University) in 2006 and completed his articles with a respected Port Elizabeth firm.

After completion of articles, Kugen was employed as a professional assistant with a respected Uitenhage firm. Kugen attended to Uitenhage matters on our behalf as a correspondent whereby we established a relationship with him over time that lead to us inviting him to join our team.

Kugen has over the years had exposure to and gained vast experience in both Magistrates and High Court Litigation.

Please feel free to contact Kugen should you require his services.

Kugen can be contacted via e-mail at kugen@goldlaw.co.za or telephonically on 041 – 501 9800.

DIRECTORS AND THE “DELINQUENCY” DANGER

“Directors have clear responsibilities to the public in the form of investors, creditors, shareholders, employees to perform in a fashion wherein not only does the company behave in an accountable manner to these stakeholders but that it adheres to a level of transparency which ensures that the principle of accountability is vindicated” (extract from judgment below)

Directors face many challenges, not least amongst them the constant danger of being held personally liable for any failure to comply with their statutory duties.   In addition to facing civil claims for losses sustained, and even possible criminal liability, directors risk being declared “delinquent”.

And that’s no small thing, with serious categories of misconduct risking disqualification from holding any directorship or senior management position for a period ranging from 7 years to a lifetime.

A range of less serious categories of misconduct could result in “probation”-  risking disqualification for up to 5 years, supervision by a mentor, remedial education, community service and payment of compensation.

Who can apply for a delinquency order?

Applying for a delinquency order is an effective means of holding directors to account.   Thus, most applications are by the affected company itself, its shareholders, its officers, or trade unions/employee representatives.   Application can also be made by the Takeover Regulation Panel, certain organs of state and the CIPC (Companies and Intellectual Property Commission).

7 years in the wilderness after an International Airport plan fails

Now, in what could be a sign of things to come, the CIPC has itself taken the bull by the horns and applied successfully for a delinquency order

  • The CIPC asked for a lifetime delinquency order against a director of a public company which had, it said, bought land for some R140m in order to erect an international airport at a cost of R1bn.
  • The company raised substantial sums of money from public share subscriptions but no Civil Aviation licence to proceed with the planned airport ever eventuated (there was dispute over whether it had even been applied for).
  • Allegations were made that the company continued trading whilst commercially insolvent (at the end it had R600 in its bank account), amounts had been transferred from the company bank account to the director’s bank account, and the company had no proper accounting system.
  • Finding for the CIPC, the Court held that “It was grossly negligent for a director to have allowed a company to continue business in so parlous and insolvent a set of circumstances, to extract company cash in order to pay directors fees and to continue business in the clear knowledge that the Civil Aviation Authority was not prepared to grant permission for the crucial element of  (the company)’s business and to allow a public company to operate without proper accounting systems.”
  • The Court declined to grant the lifetime delinquency order asked for, but declared the director delinquent for 7 years.   That’s 7 years in the wilderness for him as far as any possibility of company directorship or senior management position is concerned.

Note that although this particular case involved a public company, these provisions apply to all directors of all types of company.

(With thanks to LawDotNews)

For specialist advice on company law contact Cindy Jonker who heads up the Corporate and Commercial Law Department at Goldberg & de Villiers Inc. on 041 501 9806 /   cindy@goldlaw.co.za

COLLECTING ARREAR LEVIES: A NEW RISK FOR YOUR BODY CORPORATE

“… the difficulty experienced by bodies corporate in collecting arrear levies is not a novel one. It is part of a ‘socio-economic problem’” (extract from judgment below)

Levy collections are the life blood of sectional title schemes, and collecting them is likely to get harder with the economic fallout from our downgrade to junk status.

So if you own property in a scheme, and particularly if you are a trustee of your body corporate, you need to know about the new SCA (Supreme Court of Appeal) decision which puts at risk the body corporate’s right to apply for sequestration of levy defaulters.

Why apply for sequestration?

Applying for the sequestration of a recalcitrant debtor’s estate can be a very powerful debt collection tool. But it should generally only be used as a last resort, and it isn’t always open to you. The facts of the SCA case provide a perfect example –

• Two sisters jointly owned a sectional title unit, bonded to a bank.

• When the sisters fell into arrears, the body corporate obtained judgments against them for a total of some R115k.

• Their movable assets were sold by public auction, but for only R3k.

• The body corporate then obtained a warrant of execution against the unit and sold it for R170k. The sale however was abandoned when the bank refused to accept the selling price.

• Having exhausted “all reasonable execution remedies”, the body corporate applied to the High Court for the sequestration of one of the owners. The clear benefit to the body corporate of doing so was that the trustee of the insolvent estate would have sold the unit, and – per the Insolvency Act’s provisions – the arrear levies claim would have been paid as “a cost of realisation” i.e. before the bondholder’s secured claim.

• Unsurprisingly, the bondholder opposed the sequestration application, arguing that as its bond instalments were up to date, no creditor would benefit from a sequestration other than the body corporate.

• The High Court refused to order sequestration, and the SCA upheld that decision on appeal.

There must be advantage to creditors as a whole

To understand why the body corporate’s application failed, we turn to the Insolvency Act’s requirement that there must be “reason to believe that it will be to the advantage of creditors of the debtor if his estate is sequestrated”. Bear in mind here that on sequestration what counts is creditors in the plural – as the Court put it “the rights of the creditors as a group are preferred to the rights of the individual creditor.”

In a nutshell, to succeed in sequestrating a debtor’s estate, you need to prove “a tangible benefit to the general body of creditors”. There should be “a reasonable prospect of some pecuniary benefit to the general body of creditors as a whole”, a requirement that will be fulfilled “where it is established that there is reason to believe that there will be advantage to a ‘substantial proportion’ or the majority of the creditors reckoned by value”.
The body corporate failed in this case because it was unable to show pecuniary (monetary) benefit to any creditor other than itself.

Catch-22, and nipping arrears in the bud

“A catch-22 is a paradoxical situation from which an individual cannot escape because of contradictory rules” (Wikipedia)

That leaves bodies corporate in a real “catch-22” situation. You are obliged by law to collect levies, but you risk not being able to do so if you have to rely on what should be your strongest fall-back position – realising the value in the sectional title unit itself.

The bottom line for bodies corporate is this – unless and until our laws are changed to grant bodies corporate immunity from the Insolvency Act’s provisions, you need to prioritise and strengthen your levy monitoring and collection procedures so as to nip any arrear situations in the bud.

(With thanks to LawDotNews)

For specialist advice on sequestration and liquidation proceedings contact Cindy Jonker who heads up the Corporate and Commercial Law Department at Goldberg & de Villiers Inc. on 041 501 9800.

WHEN DO VOUCHERS EXPIRE?

Gift vouchers have become a popular gift for special occasions. Retailers and suppliers of goods and services allow you to purchase a spendable amount of money or a specific service at their outlet which can be redeemed by the special person you are purchasing it for. Whether it is a clothing store, home and furniture store, or a massage at your favourite massage parlour, you get to redeem the voucher for something which you can personally enjoy.

But what happens to those vouchers that slip in between the cushions on the couch, or get left over the summer in your favourite winter jacket, only to be discovered a year later. Has the voucher expired, or can you still “cash it in?”

According to section 63 of the Consumer Protection Act, vouchers expire after a period of 3 years after the date on which they are issued. This can, however, be extended at the discretion of the retailer / supplier.

It is advisable that monetary values be placed on vouchers, as the value of a service or particular thing can depreciate substantially over 3 years.

Do not allow yourself to be bullied into believing that your voucher has expired if it is less than 3 years since it was issued – you have a right to the value of that voucher.

For more information, contact us on 041 501 9800.

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