UNIVERSITY EXAMINATIONS UNIVERSITEITSEKSAMENS, UNISA |e CLA1501 (490965) October/November 2015 COMMERCIAL LAW IA. Duration 2 Hours. 80 Marks EXAMINERS FIRST MR M PHOSA SECOND PROF TE MANAMELA Closed book examination ‘This examination question paper remains the property of the University of South Africa and may not be removed from the examination venue This paper consists of 14 pages plus instructions for the completion of a mark reading sheet. —— sesssiasssnaantaat Please complete the attendance register on the back page, tear off and hand to the invigilator_| ANSWER ALL THE QUESTIONS. ‘STUDENT NUMBER: INSTRUCTIONS: 1 This paper consists of 40 multiple choice questions each counting 2 marks The paper therefore counts out of 80 marks 2 The paper consists of 14 pages in total Please make sure that your paper contains all 40 questions and all the pages 3. Please answer the questions on the mark reading sheet supplied 4 Please write your student number on this paper as well as on the mark reading sheet 5 Youmay use this paper to do your rough work on, but you are under an obligation to return this paper as well as the mark reading sheet at the end of the examination 6 Should you fail to return the English and the Afnkaans versions of this paper as well as the mark reading sheet, your mark reading sheet will not be marked 7 Make good use of the time You have more than enough time to complete this paper You have 120 minutes at your disposal to answer 40 questions, thus you have 3 minutes per question 8 — Good luck with the examination We trust that you will be successful ITURN OVER]2 CLA1501 October/November 2015 QUESTION 1 Which ONE of the following statements regarding the application of the doctrine of stare decisis: 's INCORRECT? 1 Aligh Court is bound by its own decisions until they are overruled by a superior court 2 AHigh Court is bound by the decision of a court of concurrent status within its own area of jurtsdiction 3 A High Court is not bound to follow the decision of a High Court belonging to a different area of junsdiction 4 AHigh Court can, depending on how it 1s constituted, be bound by a decision of the Supreme Court of Appeal @ QUESTION 2 Which ONE of the following statements regarding the Corpus luns Civils is CORRECT? 1 Itis a codification of Roman-Dutch law 2 Its a codification of Roman law and English law 3 tts a codification of Roman law 4 Its a codification of English law (2) QUESTION 3 Which ONE of the options below is the most important source of law in South Africa? 1 Customary law 2 Lawjournals 3 Foreign law 4 The Constitution of the Republic of South Africa, 1996 2) QUESTION 4 John bought a television-set from Paul for R1 500 Paul wants John to pay an extra R150 for the installation of the television-set but John refuses to pay the money as that was never part of the agreement In order to get the installation fee from John, Paul has to prove that the installation fee 1s established by trade usage (customary law) ‘Which ONE of the options below is a REQUIREMENT for a trade usage to be recognised as a legal rule? 1 It must have existed for at least a year 2 _ It must be observed by some of the members of the community 3 Its contents must be certain but need not be clear 4 Its contents must be clear and certain (2) ITURN OVER],3 CLA1501 October/November 2015 QUESTION 5 . Koos, John and Modise establish a company under the name KJM (Pty) Ltd and appoint King as Chief Executive Officer and Prince as Chief Fimancial Officer Which ONE of the following statements is CORRECT? 1 KJM (Pty) Ltd 1s a natural person which acquires nghts and 1s subject to duties in its capacity as a company 2 KJM (Ply) Ltd is ajunstic person which acquires nights and 1s subject to duties in its capacity as a company 3. King and Prince are junistic persons who acquire rights and are subject to duties in their capacity as a Chief Executive Officer and Chief Financial Officer respectively 4 Koos, John and Modise are the junsstic persons who acquire nights and are subject to duties in their capacity as the owners 2) QUESTION 6 Piet steals Morem's laptop and puts it in a dustbin Unaware that there 1s a laptop in the dustbin, Koketso takes the dustbin outside Dikgang, a street kid, finds the laptop in the dustbin whulst searching for food He takes the laptop and sells it to Lebo Which ONE of the following people has the right of ownership to the laptop? 1 Pret 2 = Moremi 3 Dikgang 4 Lebo 2) QUESTION 7 Which ONE of the following options has all the elements of a delict? pons an act, unlawfulness, fault, causation, and damage or injury to personality an act, unlawfulness, fault, causation and necessity unlawfulness, fault, causation, necessity and damage or injury to personality an act, unlawfulness, fault and causation @ ITURN OVER]4 CLA1501 October/November 2015, QUESTION 8 Lelo and Bobo are dog commercial law at the college Bobo wants Lelo to help him with certain. “Latin expressions” he does not understand They agree to meet in the college library a day before their commercial law examination Bobo arrives at the agreed time but Lelo does nat show up When Bobo calls Lelo on her cellphone to find out where she 1s, Lelo tells him that she is at home with a friend studying Bobo fails the examination and puts the blame on Lelo for not honouring their appointment as most of the questions in the examination paper tested students’ understanding of "Latin terms and expressions" Which ONE of the following statements is CORRECT? 1 Bobo and Lelo have a legal obligation to meet in the college library as they have agreed 2 Bobo can sue Lelo for failing to perform as they have agreed 3 Bobo and Lelo's agreement does not create any legal obligations 4 Lelo 1s in breach of contract because their intention was to create legally enforceable obligations Q QUESTION 8 Which ONE of the following statements about the requirements for the conclusion of a valid contract is INCORRECT? 1 The parties to a contract must make their intentions known to one another 2 The parties to a contract must have capacity to act 3. The contract which is objectively impossible to perform will be valid if tis legally possible to perform 4 The general rule is that no formalities are required for the formation of contracts (2) QUESTION 10 Which ONE of the following statements about electronic transactions is INCORRECT? 1 Trade that is conducted by using electronic means 1s referred to as e-commerce 2 The Electronic Communications and Transactions Act 25 of 2002 applies to wilis and alienation of land 3. The Electronic Communications and Transactions Act of 2002 promotes legal certainty for electronic transactions 4 An agreement that 1s concluded partly or wholly by means of data messages has legal force (2) ITURN OVER],5 CLA1501 October/November 2015 QUESTION 11 Mr Tender 's planning a big party to celebrate his 50th birthday He invites local politicians and businessmen Mr Money, his long-time frend, accepts the invitation and even confirms his attendance in wnting However, he changes his mind and pulls out on the eve of the party Mr Tender, who has, over the years, awarded tenders to Mr Money, was expecting him to pay for some of the costs of the party and to give him an expensive birthday present The party 1s cancelled as a result of Mr Money's withdrawal, and Mr Tender forfeits the deposit he had already paid for the venue Mr Tender is furious and wants to sue Mr Money for financial losses he has suffered Itlater transpires that Mr Money pulled out of the party because he had received death threats from Mr Tender's rivals Which ONE of the following statements is CORRECT? 1 Mr Tender cannot recover the deposit from Mr Money because the parties have not concluded a legally binding contract 2 Mr Tender cannot recover the deposit from Mr Money because Mr Money received death threats from his rivals 3. Mr Tender can recover the deposit from Mr Money because Mr Money has committed breach of contract by pulling out of the party 4 Mr Tender can successfully sue Mr Money for the birthday present 2) QUESTION 12 Tina normally shops for grocenes at a supermarket close to her home On Saturday she went to the supermarket to buy certain items After picking up the items and filling up the trolley, Tina proceeded to the till point to make payment Which ONE of the following statements is CORRECT? 1 Acontract is concluded when Tina picks up the items from the shelf 2 A contract 1s concluded when Tina pays for her shopping 3 A contract 1s concluded when the cashier at the till point takes Tina's items 4 Acontract is concluded when Tina puts the selected items in her trolley (2) QUESTION 13 Amold owns a car dealership in Pretoria He has put up several boards around his business advertising the sale of an Audi 4 at a price lower than at a nval dealership in Johannesburg The boards detail all the car specifications and the low price COMPLETE the following sentence The boards are ‘an invitation to make an offer a contractual offer an option a completed contract (2 BONS (TURN OVER]6 CLAtSO1 October/November 2015 QUESTION 14 Which ONE of the following statements is CORRECT? 1 Amor, who has become a major by virtue of marriage, will ose his or her capactty to act should the mariage be dissolved by divorce 2 Ajunistic person requires the assistance of a natural person to conclude yunistic acts 3 Aninsolvent person is disqualified from entering into a contract of mariage in community of property because he cannot be trusted with the joint estate 4 Asspouse marned out of community of property requires his or her spouse's consent in order to enter into certain transactions relating to their joint estate (2) QUESTION 15 Pule, who 1s 17 years old, has inhented livestock from hrs grandfather He currently stays in Johannesburg with his uncle, Kabi, and does not wish to return to the village before he could finish his studies Pule wants to sell the livestock and invest an estimated R200 000 profit so that he can stop being economically dependent on his father who owns a huge farm in their rural village Which ONE of the following statements is CORRECT? 1 Pule requires the court’s assistance to sell the livestock because he is a minor 2 Pule does not need his parents’ assistance to sell the livestock because he inherited it 3. Pule does not require assistance from any person to sell the livestock because he has already been emancipated 4 Pule requires the assistance of his parents to sell the livestock because he 1s a minor (2) QUESTION 16 Piet, an 11 year-old boy, enters into an agreement with Arabi, a top local trader, in terms of which he will buy a very expensive bicycle Piet purchases the state-of-the-art bicycle on credit and pays a hefty deposit in order to get delivery thereof from Arabi He normally only uses the bicycle during the summer school holidays Piet gets involved in an accident with a speeding motor vehicle while cycling down a busy street The bicycle 1s destroyed and reduced to scrap material Which ONE of the following statements is CORRECT? 1 Piet will be able to sue Arabi and secure the return of any monies already paid since the ‘contract is void 2 Arabi will only be able to sue Pret's guardian to recover the balance owed if the bicycle was a necessity for Piet 3. Arabi will be able to recover any unpaid balance even if the bike was used for pleasure 4 Piet committed breach of contract and Arabi can claim speetfic performance in terms of the contract @ ITURN OVER],7 CLAI501 October/November 2015 QUESTION 17 Which ONE of the following agreements 1s lawful? 1 Acontract which is unreasonable or unjust 2 Acontract which 1s against public policy 3 Acontract which is contrary to good morals 4 Acontract which is contrary to a statute 2) QUESTION 18 David ts employed by a company manufacturing skin care products as a sales manager In his contract of employment there 1s a clause that states that the employee agrees and undertakes that he shall not for a period of twenty-four months and within a 200 kilometre radius of the premises of the employer, after the termination of the employment contract, alone or jointly with any person, carry on a business that manufactures skin care products or related products Which ONE of the following options represents the name of the clause included in David's contract of employment? 4 Rouwkoop clause 2 Restraint of trade clause 3. General limitation clause 4 None of the above 2) QUESTION 19 Which ONE of the following statements about “gambling” is CORRECT? 1 Gambling contracts are not enforceable in a court of law 2 {tis illegal to engage in a gambling actity in South Africa 3 There are some gambling activities which are regulated by legislation in South Afnca 4 Allgambing contracts are regulated by common law 2) QUESTION 20 Which ONE of the following statements about the conclusion of a valid contract is CORRECT? The general rule is that formalities are required for each and every contract to be valid The general rule 1s that no formalities are required for the formation of contracts Parties to a contract are required by law to put the contract in writing Parties to a contract may not choose to have certain aspects of the contract in writing while other matters are agreed upon orally (2) Rene [TURN OVER]8 CLA1501 October/November 2015 QUESTION 21 Which ONE of the following statements about contracts which require formalities is CORRECT? 1 A contract of alienation of land ts valid if signed by partes’ agents acting on their written instructions 2 Acontract of suretyship must only be signed by the surety himself or herself to be valid 3 Acontract of donation under which performance 1s due in future can be concluded orally 4 Aconsumer contract has to be signed by the consumer to be valid (2) QUESTION 22 Which ONE of the following statements about the formalities of a contract is CORRECT? 1 If a written agreement was merely intended to serve as proof of the terms of an oral agreement, the oral agreement becomes binding immediately even before those terms are put in wnting 2 Ifparties toa contract negotiate the contents of the contract orally, the final agreement must also be oral/verbal 3 If'an oral agreement precedes the written agreement then it means the parties intended reduction to wnting to be a mere proof of their oral agreement 4 If parties agree that the contract must be in whiting, it can be assumed that the written document is only intended to serve as proof of the oral contract, @ QUESTION 23 A"term’ is a provision ina contract It obliges a party to act na specific manner or not to perform a specific act There are various ways in which terms can be included in contracts Which ONE of the following statements s INCORRECT? 4 2 3 Express terms are terms that are expressed im words Implied terms are terms expressed in words For a trade usage to be implied as a term of a contract it will need to meet certain requirements A tacit term 1s imported into a contract if it s reasonable and necessary for achieving the contract's desired commercial effect @ (TURN OVER],9 CLA1501 October/November 2015 QUESTION 24 A condition 1s a particular kind of term and does not include all the terms generally found in contracts Which ONE of the following statements regarding a condition is INCORRECT? 1 Conditions can be classified into various categories 2 An event that has already occurred at the time the contract 1s concluded cannot be a condition 3 Anevent must be specified and it can be certain or uncertain whether the event will indeed occur 4 A condition can be described as a contractual term which renders the operation and consequences of the contract dependent on the occurrence or non-occurrence of a spectfied uncertain future event @) QUESTION 25 Which ONE of the following statements regarding the time clause is INCORRECT? 1 Atime clause is different from a condition in the sense that the time clause is brought info ‘operation by the reaching of certain and determined or ascertainable time which has been agreed upon 2 The contract is subject to a resolutive time clause rf the duty to perform 1s postponed until a determined or ascertainable moment has arrived 3 Peter agrees to work for Johnny for a period of three years, whereafler he would like to start his own business 4 Sophia sells her old computer to Gloria on 12 Apnl They further agree that Sophia will deliver the computer only on 20 June when she gets her new computer i) QUESTION 26 While at work, Tau and Palesa agree that Palesa will purchase Tau's old lounge curtains, provided that they are blue and not green The curtains are at Tau’s house, but because he is colour-blind, he 1s not sure what the colour 1s This contract contains a Rone supposition modus warranty condition (2) (TURN OVER]10 CLA1501 October/November 2015 QUESTION 27 Which ONE of the following statements is CORRECT? 1 The terms of the contract can be incorporated orally 2 The person who signs the written agreement will not have any defence available to him or her where the validity of the contract is in question 3 In the case of unsigned documents, no evidence may be allowed to prove that the document is a true reflection of the contractual terms 4 Click-wrap agreements are also generally known as “ticket cases" (2) QUESTION 28 Which ONE of the following statements is CORRECT? 1 itis accepted that parties to a contract normally use words in their technical meaning 2 The use of surrounding circumstances in determining the meaning of the words used in a contract is prohibited by the parol evidence rule 3 When interpreting the contract, the intention of the parties can be determined by considering previous negotiations between the parties 4 If there 1s any uncertainty with regard to a word or phrase used in a contract the courts sometimes interpret such clause in favour of the party who drafted the contract @) QUESTION 29 ‘Which ONE of the following options will COMPLETE the sentence below CORRECTLY? Rectification of a contract 's permissible if the parties who apply for it can prove that 4 2 3 4 the written contract does not accurately reflect their true intention they have failed to comply with a formal statutory requirement ‘one or both parties to the contract forgot to sign the contract where signing is required by the law their contract was reduced to writing 2 TURN OVER]n CLA1501 October/November 2015 QUESTION 30 Seth and Pharrell enter into an agreement in terms of which Seth agrees to deliver borehole ‘equipment to Pharrell by tram The agreement provides for delivery to Pharrell in Randfontein, not later than 15 January On its way to Randfontein the tram is delayed as a result of a senous accident between two other trains, hence the equipment is delivered to Pharrell only on 17 January Which ONE of the following statements is CORRECT? 1 Seth 1s in breach of contract because he has not performed by the date specified in the contract 2 If Seth warrants delivery by 15 January, he will be in breach of contract even though his late performance is due to circumstances beyond his control 3 Since Pharrell did not give Seth a reasonable time within which to perform after the accident, Seth is not in breach of contract 4 Pharrell can hold Seth liable for breach of contract since it is Seth's own fault that he sent the borehole equipment by train 2) QUESTION 31 In which ONE of the following examples has REPUDIATION NOT taken place? 1 Dumelo (an employee) and Jeffrey (the employer) agree that after termination of their employment contract, Dumelo will not start the same business as Jeffrey for a penod of one year Eight months after the termination of their employment relationship Dumelo starts a similar business ust across the street Dumelo tells Jeffrey that the discussion between them did not result in a contract as they were merely talking Dumelo tnes to rescind a contract based on duress when, 1n fact, no duress ever occurred Dumelo and Jeffrey agree that Dumelo will butld a house for Jeffrey and they also agree that Dumelo will use his money to buy the necessary building materials A few days later Dumelo informs Jeffrey that he 1s waiting for Jeffrey to buy the materials im order for him to start with the work as agreed He denies that they ever agreed that he (Dumelo) would buy the matenal @) QUESTION 32 Which ONE of the following options will terminate contractual obligations? Rone ‘supervening impossibility of performance where the debtor 1s in mora supervening impossibility of performance where the creditor is in mora initial impossibility of performance prevention of performance 2 ITURN OVER]12 CLAISO1 October/November 2015 QUESTION 33 Where a contract does not specify a particular date or time for performance, the debtor is placed in mora by a letter of demand stating a reasonable time within which performance should take place Which ONE of the following factors will NOT be taken into account when the courts determine the reasonableness of the time given to the debtor to perform (in a letter of demand)? 1 the intention of the parties 2 the parties’ economic rights only 3. the period specified in the letter of demand for performance and the penod that has lapsed 4 accompanying difficulties and delays, as actually contemplated by the parties at the ‘conclusion of the contract (2 QUESTION 34 Which ONE of the following options is NOT a ground upon which a court will refuse an order for specrfic performance? 1 Where the defendant would be unreasonably harshly affected 2 Where the order would comprise an injustice 3. Where the order would be inequitable under all the circumstances 4 Where the defendant refuses to render specific performance (2) QUESTION 35 Which ONE of the following statements regarding the consequences of cancellation of a contract ts CORRECT? 1 The general rule 1s that if either one or both of the parties have performed, whatever has been performed must not be returned 2 Ifrestitution has become impossible, the party who 1s cancelling the contract is not relieved of the duty to return the performance which has been received, even if the i mpossibilty 1s not due to his of her fault 3 Ifitis impossible for the guilty party to return the innocent party's performance, the innocent party must nevertheless return the guilty party's performance 4 Acourt may, in certain circumstances, dispense with restitution if the court considers it equitable to do so, irrespective of the innocent party's ability to make restitution 2) ITURN OVER]13 CLAI5O1 October/November 2015 QUESTION 36 ‘Steven undertakes to deliver 200 litres of fresh milk at Deon’s premises at 10 00 on 20 February ‘Steven arnves to deliver the milk but finds the premises locked It transpires that Deon failed to make arrangements to receive the milk on that day Deon has thus breached the contract through mora creations Based on this scenario, with regard to the duty to mitigate damages, which ONE of the following statements is CORRECT? 1 Steven will be able to recover his loss by attempting another delivery at a later stage 2 If Steven leaves the fresh milk outside the premises in the sun and it tums sour, he will nevertheless be able to recover the cost of replacing the milk even though he had not taken reasonable steps to limit his loss 3. If Steven takes the milk back and stores to deliver it some other time, he will not be able to. claim the extra costs of delivery and storage as damages 4 The onus 1s on Steven to prove that he could have limited his loss by taking reasonable steps (2) QUESTION 37 Which ONE of the following statements 1s a consequence of cession? 1 The cessionary does not have the night to collect the debt, 2 The cesstonary can no longer cede his or her right to any person 3. The cedent can no longer cede his or her right to another person 4 The cessionary only receives advantages attached to the right but not disadvantages (2) QUESTION 38 Terrence undertakes to build a wall around Robert's property However, Terrence realises that he has too much work and persuades Chad to take over the job Terrence, Robert, and Chad now agree to this arrangement Which ONE of the following terms will COMPLETE the sentence below CORRECTLY? Terrence's obligation 1s extinguished because of delegation settlement set-off cession (2) Rona TTURN OVER}4 CLA1501 October/November 2015 QUESTION 39 Liam orders a "Ferran car” cake for his son's third birthday party from Charity Liam agrees to pay R700 for the cake and Chanty agrees to deliver the cake at Liam's house at 9h00 on the day of the party Which ONE of the following circumstances 1s an example of supervening impossibility of performance which terminates the obligations arising from the contract? 1 Chanty oversleeps and only delivers the cake at 11.00, one hour after the start of the birthday party 2 Chanty's kitchen 1s destroyed in a fire caused by lightning and she cannot bake the cake 3 Chanty drives at a very high speed to Liam's house and the cake 1s destroyed in an accident 4 Chanty does not possess the necessary skill to decorate party cakes and the cake resembles a BMW car (2) QUESTION 40 Vuyo owes Bonang R20 000 which she fent him two months ago Which ONE of the following statements is CORRECT? 1 2 3 Bonang may refuse to accept payment of Vuyo's debt if not tendered by Vuyo himself Nothing except an amount of R20 000 from Vuyo to Bonang will qualify as payment of his debt Hf Vuyo and Bonang get married im community of property Vuyo's debt will automatically terminate f Gabriel owes Vuyo R25 000, Vuyo may cede his claim against Gabriel to Bonang to the amount of R20 000 2) TOTAL: 80 ° UNISA 2015— ‘eRe UNIVERSITEIT VAN SUID-AFRIKA UNIVERSITY OF SOUTH AFRICA UNI SA EXAMINATION MARK READING SHEET EKSAMEN-MERKLEESBLAD =-- : _ PART 1 (GENERAL/ALGEMEEN) DEEL 1 = sums, ms S_ _armuames = L 7 ere eset eeecere aetna : =- eee eee S- BSSRSe ee [LLG EA | For use by examnation invigiator = REEL peed] (Egy sel | Ve orbrak seu etsomenopsiene -— fess 9 e5) MRAM 50 e52 062) fess 52 CMM 52 52 ¢ = SMT Se unear mums as ur riuo um comecrer ohne BaP De COOR STUOIM ROMA VSSTRK MET 1 Sonor 1 Moone tou we PART 2 (ANSWERS/ANTWOORDE) DEEL 2 7 7 fa anaes) mea) Pw aaa = POnawe|ml Ss aaaee] [bo gaawes) [we aaaaal = PRaaes (De eases} fa Raa es] fa eas = Pee ge) s boas) fk aka ie naa comaws) [a aaawsl fe aaaael | m aaa PRESS fe desesy |e mas es, [Ne asas Pingaas) |S Games, | a dunacee| [in ddan ioaaas) [a anaes! | a gaacea| | ie qian SMR LR SERRE PS RRS [a NURSES nmaaws! |e wmawel | 9 aan) g bigs wows a SPREE Pe wae aes. a a Manesy |e ns SRE eOS |e ERAS | a ay Bo dren arney Boab gay 5 "oO Heb area ob] womans) | aarararsl aM! | m a.cnaracsd anes! |e Gara] | iw qian) Emden |S maacod| | ae debate al = binpnaad |e eS iniorasd | ie auavanan se = B tiaras Sades, | is gaan = 2 nas sh mararch as css eay an = a mana mara) | & manasa eS = Bo trdsaneg @ ware | traparanes hae = oneal W | S Geass) [gh gnang) Pee = SRR LS GR | SENSE Sng = = » a meas |e marae! 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