Termination of contractual relationship

Question 1

Ways contractual relationship may be terminated

Answer 1

Through new contract of:

• Release
• Compromise
• Novation

Question 2

Release

Answer 2

• bilateral act based on debtor and creditor
• creditor usually makes offer to debtor to release from contract (creditor may revoke before acceptance)
• acceptance = debtor free from contractual duties

Question 3

Compromise

Answer 3

• an agreement between parties to settle a dispute
• after compromise, contract is terminated and replaced with new settlement contract
• does not depend on validity of original contract

Question 4

Novation

Answer 4

• when parties to valid binding contract conclude a valid second contract
• with intention of terminating and substituting existing one
• only possible when original contract is valid
• if second contract isn’t valid, original one not terminated

Question 5

Requirements for a set-off

Answer 5

• debts of same nature
  
  • –> must be of equal size/quality
• debts due and payable
• liquidated debts
  
  • –> liquid debt = amount is certain or where amount can easily be determines without extrinsic evidence
  • –> both debts must be liquid
• debts between same parties in same capacity

Question 6

Merger

Answer 6

• when one person becomes both debtor and creditor of the same debt
• extinguishes obligation

Question 7

Impossibility of performance

Answer 7

• performance becomes impossible not by any one’s fault (force majeure)

Question 8

Rehabilitation after sequestration

Answer 8

• rehabilitation of debtors discharges all debts after sequestration

Question 9

Prescription periods

Answer 9

• 30 years in respect of:
  
  • –> debt secured by mortgage bond
  • –> judgement debt
  • –> debt in respect to tax
  • –> debt owing to State
• 15 years