Chapter 12

Question 1

Define a legal right.

Answer 1

A legal right can be defined as a privilege, given and protected by law, which gives one person a claim against another person.

Question 2

Define simple joint liability.

Answer 2

A liability is a joint liability when a number of co-debtors have to perform to a creditor and the performance is divisible.
In this case, each debtor is responsible for paying their own share of debt.

Question 3

In simple joint liability, is it true that if a creditor releases one of the co-debtors from performance, they automatically release the other co-debtors as well?

Answer 3

Not true.

Question 4

What happens when a creditor releases one of the co-debtors for a joint and several debt?

Answer 4

The liability of the remaining co-debtors decreases proportionately.

Question 5

Define joint and several liability.

Answer 5

This is a liability where each co-debtor can be liable for paying the full amount of the debt.
The creditor can claim the full amount from any one of the co-debtors.

Question 6

What is a stipulatio alteri?

Answer 6

It is a contract that benefits a third-party, for example life insurance policy.

Question 7

What is a cession?

Answer 7

A cession is the legal way in which rights that belong to one person can be transferred to another person. (it is the transfer of personal rights).

Question 8

What is an agreement to cede called?

Answer 8

An agreement to cede is called a ‘transfer agreement.’

Question 9

What is the cession procedure?

Answer 9

All that is necessary for a cession is the agreement between the cedent and the cessionary. The consent of the debtor is not necessary. The cession requires no formalities to be valid.

Question 10

Who is cedent?

Answer 10

Cedent is the person who transfers his personal right to the cessionary.

Question 11

What are the requirements for a cession?

Answer 11

There are six requirements for a cession:
• The cedent must be entitled to cede the right,
• The right must be capable of being ceded,
• The parties must intend for a cession to take place.
• Any formalities agreed upon by the parties must be complied with.
• The cession must not be unlawful.
• It must not put the debtor in a worse position.

Question 12

Who are the parties to a cession?

Answer 12

Cedent and cessionary.

Question 13

What are the two rights that cannot be ceded - considered illegal and why?

Answer 13

1) the right to a pension or retirement annuity.
2) an employee’s right to compensation for injuries that happen in the workplace.
These are illegal to protect people who are poor from giving away what little they have.

Question 14

When are rights too personal to be ceded?

Answer 14

When it would make the duty more difficult or unpleasant for the debtor if a different person were to exercise that right.

Question 15

Explain the restriction ‘debtor may not be prejudiced’.

Answer 15

You are not allowed to cede a portion of the debt without the debtor’s consent, because it will cost them more if they have to make two separate payments.

Question 16

What are the two ways in which an agreement can prevent a creditor from ceding their right against the debtor?

Answer 16

1) At the time when their rights and duties are decided, the debtor and the creditor agree not to cede.
2) The cedent and cessionary at the time when they enter into the cession agreement, agree that there will be no further cession - the cessionary cannot cede their right to anyone else.

Question 17

Cession of future rights is possible/impossible?

Answer 17

Possible.

Question 18

What are the two types of cession?

Answer 18

Complete cession and cession as security for a debt.

Question 19

Explain the type: complete cession.

Answer 19

A complete cession is an agreement that intends a right, as well as any advantages that go with the right, to be given away completely to somebody else (cessionary).

Question 20

True or false: the cessionary is entitled to accept any amount please in settlement of the claim?

Answer 20

True, provided that the amount is not more than what the debtor owed to the cedent.

Question 21

Define the type: cession as security.

Answer 21

When the reason for a cession is that the cedent wants to use a personal right that they have against someone to secure a debt towards a third-party (like a bank). In this case the cedent cannot exercise any of the normal rights of a creditor, but the right remains an asset in the estate of the cedent. This type of cession allows the personal right to be returned to the cedent once the underlying debt is paid.

Question 22

What are the options available to parties when they decide that the terms of a contract are not suitable for their purposes?

Answer 22

The parties can reach agreement to change or terminate the rights and/or duties that they have in terms of a contract by:
• variation
• release
• delegatiom
• assignment
• novation
• compromise

Question 23

Explain variation.

Answer 23

Variation means changing rights and duties. The contracting parties are generally free to make changes to the contract informally or by means of new agreement. However, sometimes there are formalities required when:
• The law requires for a specific type of contract to be in writing and thus any changes to this contract have to be in writing also,
• The contacting parties have agreed that any variation has to be in writing and signed by both parties.

Question 24

Explain release.

Answer 24

Release means to relieve the parties of their duties. No formalities are required. It is as if the contract is cancelled, without anyone having a claim.

Question 25

Explain delegation.

Answer 25

When a debtor’s duties are transferred, with the creditor’s agreement, it is called a delegation. Only the duty to perform is transferred and not the right.

Question 26

Explain assignment.

Answer 26

Assignment is when both, the right and duties, of a contracting party follow away and a third-party takes the place of that party. The consent of the creditor is required.

Question 27

Explain novation.

Answer 27

Novation is the act of replacing an old duty with a new one. Both parties need to agree to the new duty for the novation to be valid.

Question 28

Explain compromise.

Answer 28

Compromise involves the settling of a legal dispute between people by making a new agreement. Like any agreement, compromise happens by one party making an offer and the other accepting it. Once the parties have reached a compromise, their rights are decided by the compromise agreement and not by the initial contract.