Content of a Contact (10)

Question 1

The following three parties are involved in cession?

Answer 1

• The cedent
• The cessionary
• The third party

Question 2

The cedent is indebted?

Answer 2

to the cessionary. The cedent also has a personal right against a third party; a personal right which they, in turn, transfer to the cessionary

Question 3

Define Cession?

Answer 3

is defined as the transfer of a personal right by means of an agreement

Question 4

Cession has several consequences?

Answer 4

• After the cession takes place, the right no longer forms part of the cedent’s estate; instead, it is transferred to that of the cessionary, and now forms part of the cessionary’s estate.
• The cessionary may deal with the debt as they deem fit – meaning that they are the only person that has the right to collect the debt (Schulze et al., 2015: 140).
• Once the right is ceded to one person, it can no longer be ceded to another person, but it may be receded back to the cedent (Schulze et al., 2015: 141).

Question 5

The two forms of delivery of a pledged object?

Answer 5

• Actual Delivery
• Fictional Delivery

Question 6

Pactum commissorium (also called a lex commissoria) means?

Answer 6

that the pledged object may be retained by the creditor, and they become the owner thereof, if the debtor does not perform in terms of the contract

Question 7

A pledge agreement will typically contain?

Answer 7

certain standard clauses

Question 8

Delegation is the?

Answer 8

transfer of a duty

Question 9

In delegation, all three parties?

Answer 9

must agree to the delegation.

Question 10

Assignment refers to the situation where?

Answer 10

a contract is taken over by another, where both the rights and duties are transferred.

Question 11

What is assignment?

Answer 11

The transfer of a party’s rights and duties to another person under a contract

Question 12

Which accurately describes the transfer of duties of the
debtor in favour of the creditor to a third party whereby the creditor can claim from the third party directly?

Answer 12

Delegation

Question 13

Who can a personal right be enforced against?

Answer 13

The debtor

Question 14

Which option best describes a pledge?

Answer 14

Pledge is where personal rights are given as security and are not transferred

Question 15

What is cession?

Answer 15

The transfer of a personal right by means of an agreement between parties

Question 16

When one is held to be liable?

Answer 16

it means that one is held legally responsible.

Question 17

The concept of liability falls under the branch of law called?

Answer 17

the law of obligations.

Question 18

Most reciprocal contracts contain two obligations?

Answer 18

• first obligation is the payment of the purchase price.
• The second obligation that exists is the delivery of the object.

Question 19

The general rule in law is that if two or more people enter into a contract together?

Answer 19

they are jointly liable.

Question 20

‘Joint and several liability’ means?

Answer 20

that the full debt that is owed, may be claimed from any of the debtors all at once.

Question 21

A partnership consisting of three partners hires Kevin to do the catering for a business
event. In terms of the contract, the partnership must pay him R50 000 for services rendered. After the event was catered (i.e Kevin performed) the partnership failed to pay him for his services. Kevin now wishes to institute action against the partnership to claim the R50 000. Who must Kevin claim the money from?

Answer 21

He can claim it from the partners who are jointly and severally liable

Question 22

A partnership consisting of three partners has a debt of R50 000. The Plaintiff claims the entire amount from one of the partners. What right of recourse does this partner have if he/she paid the full amount?

Answer 22

He/she may claim the respective shares of the debt from the other two partners

Question 23

Which one of the following is an example of a contract
that holds the parties jointly and severally liable?

Answer 23

Surety contract

Question 24

What branch of the law does liability fall under?

Answer 24

The law of obligations

Question 25

George and Benjamin conclude a contract, in terms of which they borrow R 4 000 from Megan. They undertake to repay the amount of R 4 000, plus R1 000 interest. In terms of joint liability, how much will Benjamin have to pay?

Answer 25

R2500

Question 26

A condition is defined as?

Answer 26

‘an uncertain future event upon which either the commencement of the duty to perform, or the contract’s continued existence, is made dependent

Question 27

Explain Suspensive conditions?

Answer 27

When there is a suspensive condition in the contract, the performance of the party’s rights and duties will be halted (i.e. postponed), until a specific event has occurred; or the duties will be paused, when the particular event does not occur

Question 28

The contract, or rather the performance of the right or duty in terms of the contract, is on hold, or suspended, depending on one of the two situations above?

Answer 28

• Occurrence of an uncertain future event
• Non-occurrence of an uncertain future event

Question 29

A resolutive condition is a condition that?

Answer 29

determines the continued existence of the contract.

Question 30

A time clause is?

Answer 30

focused around the occurrence of a specific future event, even though it may be uncertain when exactly such an event will occur

Question 31

A suspensive time clause is defined as?

Answer 31

a clause ‘where parties agree that the duty to perform is postponed until a determined or determinable future date, even though it may be uncertain when this date will be’

Question 32

A resolutive time clause determines?

Answer 32

when the contract will terminate. The termination will occur ‘on the arrival of a certain future time’

Question 33

What is the difference between a resolutive condition and a resolutive time clause?

Answer 33

A resolutive condition is one of the terms in a contract that determines the continued existence of the contract (meaning that the contract will only terminate, once a specific event takes place). The contract comes into existence when it is concluded, and the contract is undone (i.e. terminated), when the specified event takes place.

However, a resolutive time clause stipulates the actual date when the contract will terminate; for example, 23 November 2016.

Question 34

What is the difference between a suspensive condition and a suspensive time clause?

Answer 34

A suspensive condition entails that the contract will only come into existence when a specific event occurs, whereas, a suspensive time clause is where the parties agree that the duty to perform is postponed, until a specified event occurs in the future. Therefore, the parties will only have to perform upon fulfilment of that condition.

Question 35

Distinguish between the two different forms of cession in securitatem debiti?

Answer 35

Cession for payment of a debt (in securitatem debiti) may either take the form of a pledge, or an out-and-out cession (also called a fiduciary cession or a complete cession).

Complete cession takes place where the personal right is transferred completely to the cessionary, on condition that once the debt is fully paid, the cessionary will formally cede the personal right back again.

Whereas, in a pledge, the personal rights are promised as security, and even though the right passes to the cessionary, the cedent retains an interest in that right, which is then automatically reverted to him, once the debt has been paid (Nagel et al., 2015: 113).

Question 36

An assumption clause, when agreed to by all parties, will be?

Answer 36

included in a contract where the contracting parties are uncertain about a particular aspect of the contract

Question 37

Explain Assumptions?

Answer 37

This clause is also known as a ‘supposition’ and relates to a condition that has occurred, or was already in existence, at the time of entering into the contract

Question 38

The correctness of the assumption determines?

Answer 38

whether there will be a contract or not

Question 39

A warranty is a clause in a contract that gives an undertaking?

Answer 39

that a certain state of affairs exists or does not exist, and this undertaking forms part of the contractual rights and obligations (Nagel, 2015: 119). A warranty might relate to a circumstance in the past, present or future (Nagel, 2015: 119).

Question 40

A penalty clause is a?

Answer 40

clause included in a contract that provides for certain consequences, if either party commits a breach of contract. It is defined as ‘a provision in a contract in terms of which a person who commits breach of contract must pay the other an amount, or perform something else, or forfeit something’

Question 41

When are co-debtors jointly liable?

Answer 41

The general rule in law is that if two or more people enter into a contract together, they are jointly liable to each other, and the creditor may claim repayment of the debt from both parties.

Question 42

When are co-debtors jointly and severally liable?

Answer 42

‘Joint and several’ liability means that the full debt that is owed may be claimed from any of the debtors separately or jointly from all the debtors at once. Basically, the plaintiff can choose whether to institute action against all the debtors together, or only against one of the debtors. However, once the debt has been claimed in full from one of the debtors, the other debtors are no longer liable to the creditor, as the debt has been extinguished (i.e. cancelled).

Question 43

What is the difference between an acceleration clause and a penalty clause in a contract?

Answer 43

Where it has been agreed in the contract that the debt is being liquidated (i.e. paid off) in instalments, an acceleration clause entails that once the debtor defaults on any single payment, the creditor may immediately claim the entire amount outstanding, which then becomes due and payable, even though it was agreed that the debt would be payable in instalments.

A penalty clause, however, is a clause included in a contract that sets out a predetermined consequence if either party commits a breach of contract; for example, it may state that the party who is in breach undertakes to pay the innocent party an amount of R 30 000.

Question 44

Define Lex commissoria?

Answer 44

This Latin phrase means an agreement to cancel the contract in a certain scenario (Nagel, 2006: 105). This clause allows for the creditor to cancel the contract, even where the breach is not serious (Nagel, 2006: 105), and is also called a cancellation clause.

Question 45

The jurisdiction of a court may never be?

Answer 45

excluded in a contract.

Question 46

Arbitration is often preferred as an alternative dispute mechanism, and is often specifically prescribed in a contract as an?

Answer 46

agreed upon method of dispute resolution. An arbitration clause is when the parties agree that, in the event of a dispute between them, an impartial third party will be appointed to settle the dispute, and the decision of that third party will be binding.

Question 47

Discuss the meaning of the term ‘arbitration’?

Answer 47

Arbitration is where the parties to a dispute agree to allow an impartial third party to decide the outcome of the dispute, and they agree that the decision of that third party will be binding.

Question 48

A modus is a contractual clause that?

Answer 48

places a burden or duty upon a contracting party’s right to performance of the contract

Question 49

What is an ex lege warranty?

Answer 49

A warranty that applies through the operation of law

Question 50

Patrick concludes a contract with Liz, in terms of which Patrick will supply Liz with 20 tonnes of grapes from his harvest, if the grapes are determined to be of an adequate quality to produce wine. If the grapes are not of an adequate quality to make wine Liz does not have to purchase the grapes. What type of clause is this?

Answer 50

Assumption

Question 51

Jack enters into a one-year contract with Global Gym. In terms of this contract, should Jack wish to terminate his contract before the year is up, he will have to pay a
cancellation fee. What type of clause is this?

Answer 51

Penalty clause

Question 52

Ratilwe hires Henry to build furniture for her new house. In terms of this contract the furniture must be a specific size and colour. They agreed that should the furniture not meet these minimum standards or should payment not be received, the contract may be cancelled. What type of a dause is this?

Answer 52

Lex Commissoria

Question 53

Can the jurisdiction of a court ever be excluded by
agreement by the parties in a contract?

Answer 53

No, because it infringes on the parties’ constitutional rights