Commercial Law: Law of Sale, Lease, Credit, Labour, Agency, Companies, Security, and Insolvency

Vocabulary practice flashcards covering South African commercial law principles from the lecture, including the law of sale, lease, credit agreements, labour relations, agency, companies, security, and insolvency.

Essentialia of a Contract

The minimum core requirements and terms upon which contracting parties must reach consensus for a valid contract of a specific recognised type to come into existence.

Naturalia of a Contract

The natural legal consequences and automatic legal obligations that attach to a specific type of contract by operation of law, without requiring express agreement.

Incidentalia of a Contract

Additional, special, or modified terms and clauses expressly agreed upon by the parties to add to, exclude, or alter the natural consequences (naturalia) of their contract.

Contract of Sale (Koopkontrak)

A specific reciprocal contract where one party (the seller) agrees to deliver a determined or determinable thing and grant undisturbed use, and the other party (the buyer) agrees to pay a determined or determinable purchase price in money.

Obligation-Creating Agreement (Verbintenisskeppende Ooreenkoms)

An agreement that creates personal rights (creances/claims) between the parties, giving the buyer the personal right to demand delivery of the purchased item from the seller.

Real Agreement (Saaklike Ooreenkoms)

An agreement accompanied by delivery or registration that transfers a real right, such as ownership (eiendomsreg), from the owner to the acquirer.

Nemo Plus Iuris Rule

A common-law fundamental principle stating that nobody can transfer more rights to another person than they themselves have.

Res Aliena

A thing sold that belongs to a third party rather than the seller; its sale is valid between the parties, but the true owner retains the right to reclaim it with the rei vindicatio.

Res Litigiosa

A property or item that is the subject of a pending lawsuit at the time summons is served.

Emptio Rei Speratae

The conditional purchase of an expected future thing where the contract is subject to the condition that the thing comes into existence, and the ultimate purchase price is calculated according to the quantity actually produced.

Emptio Spei

The purchase of a mere hope or chance where the buyer is obliged to pay the agreed purchase price regardless of whether the expected goods come into existence or what quantity results.

Genus Sale (Genus-koop)

A contract of sale where the subject matter is defined generically by kind or category rather than as an individualized item, with specific goods to be identified and allocated later.

Sectional Title Property (Deeltitel Eiendom)

Immovable property governed by the Sectional Titles Act consisting of a defined individual unit together with an undivided share in the common property calculated according to a participation quota.

Timeshare (Tyddeelaandeel)

A property interest regulated by the Timeshare Control Act granting either ownership with time-scheduled usage (sectional scheme) or a personal right of use without ownership (share block or club).

Alienation of Land Act Formalities (Section 2(1))

Statutory requirements dictating that any deed of alienation of land must be in writing, signed by the parties or by their agents acting under written authority, excluding electronic signatures under Section $4(4)$ of the ECTA.

Cooling-Off Right (Section 29A of the Alienation of Land Act)

A statutory protection allowing a natural person buyer of residential land costing up to $R250\,000$ to revoke the offer or cancel the deed of alienation within $5$ days by delivering written and signed notice without providing reasons.

Consequences of Non-Compliance (Section 28 of the Alienation of Land Act)

Statutory rules providing that a contract failing to comply with Section $2(1)$ is null and void, but is deemed valid if both parties have performed fully; if only one performed, that party may recover performance plus statutory interest or compensation.

Duty of Custody (Bewaringsplig)

A naturalia obligation on the seller to preserve, care for, and safeguard the thing sold from the conclusion of the contract until delivery takes place.

Mora Creditoris (MC)

Default by the creditor (e.g., the buyer failing or refusing to take timely receipt of the delivered goods), which reduces the seller's liability for subsequent damage to intentional misconduct (opset) and gross negligence.

Mora Debitoris (MD)

Default by the debtor (e.g., the seller failing to make timely delivery), which places liability on the seller for all subsequent loss or damage occurring to the item.

Passing of Risk (Contractus Perfecta)

The principle that common-law risk of accidental damage passes to the buyer once the sale is perfecta, requiring mutual intention to sell/buy, a determined thing, a determined price, and no unfulfilled suspensive conditions.

Traditio Brevi Manu (Delivery with the Short Hand)

A form of constructive delivery of movables where the transferee is already in physical possession of the property and only the legal intention changes, resulting in the transferee now holding as owner.

Constitutum Possessorium

A form of constructive delivery where the seller retains physical detention of the movable item, but the underlying intention changes so that the seller now holds it on behalf of the buyer.

Attornement

A method of constructive delivery where a third party who physically holds the movable property acknowledges that they now hold it on behalf of the new owner pursuant to an agreement between the parties.

Traditio Longa Manu (Delivery with the Long Hand)

A form of constructive delivery where the seller points out the goods in the buyer's presence and places them at the buyer's physical disposal.

Clavium Traditio

A method of constructive delivery effected by handing over the keys that give the buyer physical access and exclusive control over the goods or premises where the goods are stored.

Warranty Against Eviction (Waarborg Teen Uitwinning)

A naturalia obligation on the seller warranting that the buyer will not be deprived of undisturbed possession, use, and enjoyment by a third party who holds a stronger legal title arising prior to or at the time of sale.

Latent Defect (Verborge Gebrek)

A material, non-trivial defect in the thing sold that impairs its utility or fitness for purpose, which was present at the time of sale, unknown to the buyer, and not discoverable upon a reasonable inspection by an ordinary examiner.

Patent Defect (Patente Gebrek)

A visible, obvious defect that can be observed and detected upon a reasonably careful examination of the property at the time of purchase.

Actio Redhibitoria

An aedilician remedy allowing the buyer to cancel the contract of sale, return the defective thing, and reclaim the full purchase price if the latent defect is sufficiently material.

Actio Quanti Minoris

An aedilician remedy allowing the buyer to retain the latently defective goods and claim a pro-rata reduction of the purchase price based on the actual reduction in value.

Actio Empti

A contractual action available to the buyer to claim cancellation, restitution of the purchase price, and full contractual damages (including consequential loss) for breach of express or implied warranty or fraudulent concealment.

Voetstoots Sale

A sale where the property is bought 'as is', excluding the seller's implied common-law warranty against latent defects, which remains valid unless the seller knew of the defect and deliberately concealed it to defraud the buyer.

Three R's (Section 56 of the Consumer Protection Act)

The consumer's statutory statutory remedies under the CPA to demand that a defective or sub-standard product be Repaired, Replaced, or Refunded within $6$ months of delivery at the supplier's cost and risk.

Huur Gaat Voor Koop Doctrine

A Roman-Dutch rule of law ('lease goes before sale') providing that an existing lease of immovable property survives the sale and transfer of the property, making the purchaser the new lessor bound by the terms of the lease.

Plakkaat of 1658

Historical Roman-Dutch legislation governing rural agricultural leases that restricts a tenant's claims for compensation for improvements and abolishes the tenant's right of retention (retensiereg) over the leased farmland.

Tacit Hypothec of the Lessor

A statutory and common-law real security right arising over the movable property of the lessee brought onto the leased premises, securing payment of overdue, unpaid rent.

Sublease (Onderverhuring)

A legal contract where a lessee leases the property to a third party, creating a separate contractual relationship between the tenant and subtenant while the original tenant remains liable to the primary landlord.

Cession in Lease (Sessie)

An agreement whereby the tenant transfers their rights (such as the right to use and occupy the leased property) to a third-party cessionary, while the original tenant remains bound to the landlord for their duties.

Delegation in Lease (Delegasie)

An agreement whereby the tenant transfers their obligations (such as the duty to pay rent) to a third party, requiring the express or tacit consent of the lessor.

Assignment in Lease (Assignasie)

A tripartite transaction where a tenant transfers both their rights and their obligations under the lease to a third party with the consent of the lessor, substituting the third party entirely.

Small Credit Agreement

Under the National Credit Act (as per the course notes), a credit transaction or credit facility with a monetary value of up to $R15\,000$, including all pawn transactions regardless of amount.

Intermediate Credit Agreement

Under the National Credit Act, a credit agreement with a monetary value of over $R15\,000$ and up to under $R250\,000$, excluding pawn transactions and mortgages.

Large Credit Agreement

Under the National Credit Act, a credit agreement with a monetary value of over $R250\,000$ or any mortgage agreement regardless of monetary threshold.

Reckless Credit (Roekelose Krediet)

Credit granted by a credit provider who failed to conduct a mandatory pre-agreement credit assessment, or granted credit despite the consumer lacking comprehension of the risks or resulting in over-indebtedness.

Over-Indebtedness (Skuldoortrokkenheid)

A financial status under the National Credit Act where a consumer is unable to satisfy all of their credit agreement obligations in a timely manner as contemplated in the agreements.

Section 129(1)(a) Notice (NCA)

A required statutory written notice sent by a credit provider to a defaulting consumer advising them of default and referring them to a debt counsellor, ombud, or dispute agent, required at least $10$ business days after delivery while the consumer has been in default for at least $20$ business days before enforcement.

Dispute of Right (Dispuut van Reg)

A legal dispute concerning the interpretation, application, or infringement of an existing legal right derived from a contract, statute, or collective agreement, resolvable by mediation followed by arbitration or court adjudication.

Dispute of Interest (Dispuut van Belang)

A dispute concerning the creation of new rights or changes to existing terms (such as wage increase negotiations), resolvable through collective bargaining and lawful industrial action like strikes.

Dominant Impression Test

A judicial test used to determine employee status by assessing all aspects of the relationship holistically, including employer control, organizational integration, economic dependency, working hours, and provision of tools.

Temporary Employment Service (TES / Section 198)

A labour broker entity that procures or provides workers to perform services for a client business and remunerates them; under Section 198A, qualifying employees earning below the threshold are deemed employees of the client after $3$ months.

Vicarious Liability (Middellike Aanspreeklikheid)

The strict legal liability imposed on an employer for the unlawful, delictual conduct of an employee committed during the course and scope of their employment.

Restraint of Trade (Verbod op Mededinging)

A contractual clause restricting an employee's ability to engage in competing business activities after termination of employment, valid and enforceable provided it protects a legitimate proprietary interest and is reasonable in duration, geographical area, and scope.

Substantive Fairness in Dismissal

The requirement that an employer must possess a fair and legally valid reason to dismiss an employee, grounded in misconduct, incapacity (poor work performance or ill health/injury), or operational requirements (retrenchment).

Procedural Fairness in Dismissal

The requirement that an employer must follow a just and fair procedure before dismissing an employee, upholding the rule of audi alteram partem by granting the worker a fair opportunity to present a defence.

Automatically Unfair Dismissal (Section 187 LRA)

A dismissal where the reason infringes fundamental statutory rights (e.g., participating in a protected strike, pregnancy, unfair discrimination, whistleblowing), carrying a statutory compensation award of up to $24$ months' remuneration.

Ostensible Authority (Skynvolmag / Estoppel)

A doctrine holding a principal bound to a contract entered into by an unauthorized agent because the principal's own conduct created the false impression of authority upon which a third party reasonably relied to their detriment.

Turquand Rule

A company law doctrine originating from Royal British Bank v Turquand allowing a bona fide third party dealing with a company to assume that all internal management prerequisites and authorizations have been duly complied with.

Undisclosed Principal (Versweë Prinsipaal)

A situation where an agent contracts in their own name without disclosing that they are acting on behalf of an existing principal, entitling the third party to hold either the agent or the disclosed principal liable.

Partnership (Vennootskap)

A reciprocal contractual relationship between two or more persons where each agrees to contribute money, property, rights, or labour to a joint business enterprise for their joint benefit with the object of making a profit.

Societas Leonina

An unlawful and void partnership agreement in which one or more partners are entirely excluded from participating in the profits of the enterprise.

Actio Pro Socio

An action available to a partner during the existence of a partnership to compel co-partners to fulfill their obligations under the partnership agreement and maintain utmost good faith.

Actio Communi Dividundo

An action instituted following the dissolution of a partnership to effect the physical division, liquidation, and distribution of the common partnership assets among the partners.

Piercing the Corporate Veil (Section 20(9))

A statutory remedy permitting a court to disregard the separate juristic personality of a company and hold individuals personally liable when there has been an unconscionable abuse of the company's separate existence.

Memorandum of Incorporation (MOI / AvO)

The sole founding constitutional document of a company incorporated under the Companies Act 71 of 2008 that sets out the rights, duties, and responsibilities of shareholders, directors, and the company.

Solvency and Liquidity Test

A dual statutory test requiring that the fairly valued assets of the company equal or exceed its liabilities (solvency) and that the company be able to pay its debts as they become due in the ordinary course of business for the following $12$ months (liquidity).

Business Judgment Rule (Section 76(4))

A statutory defence shielding directors from personal liability for business decisions if they took reasonably diligent steps to become informed, had no conflicting personal financial interest, and held a rational belief that the decision served the company's best interests.

Dissenting Shareholders' Appraisal Rights (Section 164)

A statutory remedy allowing minority shareholders who vote against fundamental transactions (disposal of substantial assets, amalgamations, or schemes of arrangement) to exit the company and demand payment of the fair value of their shares.

Benefit of Excussion (Beneficium Excussionis)

A common-law defence available to a surety permitting them to insist that the creditor first exhaust all legal execution procedures and remedies against the principal debtor before pursuing the surety.

Benefit of Division (Beneficium Divisionis)

A legal right allowing a co-surety to demand that the total principal debt be divided proportionally among all solvent co-sureties so that each is held liable only for their pro-rata share.

Pledge (Pand)

A form of real security over movable property created by agreement and completed through physical delivery of the item into the possession of the creditor, who retains it until the underlying debt is satisfied.

Mortgage Bond (Verband)

A form of real security created over immovable property by agreement and perfected upon registration in the Deeds Registry, giving the creditor a secured preferential claim against the land.

Lien (Retensiereg)

A real security right arising by operation of law entitling a person who is in lawful possession of another's property to retain physical possession until compensated for necessary or useful expenses incurred on that property.

Concursus Creditorum

The legal state instituted upon the granting of a provisional sequestration or liquidation order, which freezes the debtor's estate so that no individual creditor can subsequently take steps to improve their position over others.

Rehabilitation of an Insolvent

The legal termination of an individual's status of insolvency, achieved either by an order of the High Court or automatically by the lapse of $10$ years from the date of sequestration, discharging pre-sequestration debts and restoring full legal capacity.