BER Sem Test 2

Question 1

How is a debt relationship created

Answer 1

By a delict, contract, or any one of the various legal causes such as negotiorum gestio or enrichment

Question 2

What is the preferred security for creditors and why is this form of security preferred

Answer 2

Real security
- Its advantageous for creditors
- Assets/things of a debtor are bound as security for the debt
- Creditor w/ real security enjoys priority over other creditors without this security.

Question 3

Define a suretyship contract

Answer 3

A contract in terms of which a third party (surety) binds themself to the creditor (principal creditor) for the proper performance of the whole or part of the debt of another (the principal debtor)

Question 4

Nature of surety contract

Answer 4

• Should the principal obligation come to an end, the suretyship will also lapse

Question 5

Formation of suretyship contract

Answer 5

• Normal contract requirements
• Principal debtor need not even be aware of the contract (but cannot be against their will).
• s6 of the General Law Amendment Act 50 of 1956 requires the terms of a suretyship contract to be in writing and signed by or on behalf of the surety in order to be valid
• Contract should mention identities of principal creditor and the surety, name of principal debtor, nature of the secured obligation, as well as the extent to which the debt is secured, and must be signed by or on behalf of the surety

Question 6

Consequences of suretyship

Answer 6

• If the principal debtor defaults on his payment obligation, the creditor may demand performance from either the principal debtor or the surety

Question 7

What are the benefits of a surety

Answer 7

Benefit of excussion (beneficium excussionis)
- Surety may insist that principal creditor first demand performance from principal debtor before claiming performance from them
Benefit of division (beneficium divisionis)
- Any surety who held liable by principal creditor may demand that obligation be divided pro rata among the different sureties and that they should be held liable for their pro rata share of the debt only
Benefit of cession of actions (beneficium cedendarum actionum)
- The surety who has performed may demand transfer and cession of all securities and personal rights of the creditor against the debtor and co-sureties
Recourse against co-sureties
- The surety who pays the full principal debt is by operation of law entitled to claim a pro rata portion of the debt from each co-surety, even though, as a rule, no contractual relationship exists between co-sureties.
Recourse against principal debtor
- The surety who has fully satisfied the principal obligation is by operation of law entitled to claim the amount of his/her performance from the main debtor

Question 8

Explain termination of a suretyship

Answer 8

-Completion of obligation (performance/payment/whatever)
- Effluxion of time
- If original suretyship contract is, without the surety’s consent, materially altered to his/her prejudice

Question 9

Define mortage

Answer 9

Mortgagee obtains a limited real right over immovable property of the mortgagor, or the property of a third person, in order to secure payment of a debt owed by the mortgagor (debtor) to the mortgagee.

Question 10

Define a pledge

Answer 10

• A pledge provides a limited real right that secures a debt owed to the creditor by placing
  a movable object of the pledgor (debtor) or that of a third person in the possession of the
  creditor.
• Only movable property, and not immovable property, can be pledged
• It is essential that parties agree that the pledged object will be delivered to the pledgee
• Pledge is not valid if the object
  is delivered without the consent of its owner

Question 11

What are general characteristics and requirement of a pledge or mortgage

Answer 11

Accessory nature
- There must be a principal obligation that may originate from contract, delict or any other cause recognised by law
- The obligation between the pledgor/mortgagor (debtor) and the pledgee/mortgagee (creditor), is also accessory by nature.
- Meaning if there is no obligation, the real security is terminated
Dual relationship
Pledgor and mortgagor
- Only owner/representative can pledge an or mortgage immovable property
- Authority plays a role in rep (tacit or express)

Question 12

Termination of mortgage/pledge

Answer 12

• Performance/satisfaction of obligation
• By total destruction of the hypothecated object
• When period for which security was granted expires
• When the pledgee loses possession of the pledged object
• When the pledgee or mortgagee tacitly waives his/her security
• Order of court

Question 13

Describe an agreement to pledge

Answer 13

• pledgor has the duty to deliver the pledged object to the pledgee
• no formalities for the conclusion of this type of agreement, but the parties may on they own

Question 14

Describe an delivery of a pledge

Answer 14

• prerequisite for the creation of a pledge is that the pledged object must be delivered to the pledgee

Question 15

What clauses are often incl. in a pledge agreement

Answer 15

Pactum commissorium or lex commissoria lex commissoria lex commissoria
- provides that the pledgee may retain the pledged object as owner thereof if the pledgor does not pay his/her debt
- THIS CLAUSE IS INVALID
Use and enjoyment of pledged object (pactum antichresis)
- entitles the pledgee to use and enjoy the object as well as its fruits, and it is often used as a substitute for the debtor’s interest liability
- This clause is VALID, if it was agreed to
Summary execution (parate executie)

Question 16

What are duties of pledgee

Answer 16

• take proper care of the pledged object while in your possession
• pledgee may claim from the pledgor expenses incurred for the maintenance of the thing

Question 17

Describe an agreement to mortgage and registration of mortgage

Answer 17

• parties first agree on the contents of the obligation, for instance the interest to be paid
• They also agree that the bond will be registered in the deeds office

Question 18

Duties of mortgagee

Answer 18

• similar to those of the pledgee

Question 19

Describe the landlord’s tacit hypothec

Answer 19

• lessor (landlord) of immovable property obtains a tacit hypothec over the movable property (including money) of the lessee (tenant), present on the property, as well as on the natural fruits produced by such property
• lessor may, in terms of the hypothec, have the relevant goods attached if the lessee falls in arrears with the payment of rent

Question 20

What property is subject to the landlord’s tacit hypothec

Answer 20

• movables belonging to the lessee
• assets of a sublessee, but only to the extent to which the sublessee is in arrears with payment of rent to the sublessor
• goods present on the property belonging to third parties (owner of goods must consent)

Question 21

Describe liens

Answer 21

• If someone spends money on another person’s item, they are allowed to keep it until they are remunerated the expense incurred

Question 22

What are the 3 types of types of liens

Answer 22

• debtor-creditor lien
• salvage or storage lien
• improvement lien