Table Of Content

Commercial Law Sixth Edition Dedicated to Professor Chris (CJ) Nagel Founding Editor and Managing Editor 1993 – 2019 viam sapientiae monstrabo tibi Commercial Law Sixth Edition CJ NAGEL (Ed) B KUSCHKE (Ed) BA LLB LLD (Pret) BLC LLB (Pret) LLD (Unisa) Professor University of Pretoria Deputy Dean and Associate Professor University of Pretoria J BARNARD LLB (Pret) LLM (Unisa) LLD (Pret) Associate Professor University of Pretoria A BORAINE BIur LLB (Pret) LLM (Wits) LLD (Pret) Dean and Professor University of Pretoria MM BOTHA BLC LLB LLM BCom(Hons) (Pret) MCom (UJ) LLD (NWU) Professor University of Pretoria R BRITS BCom(Law) (Stell) LLB (Stell) LLD (Stell) Associate Professor University of Pretoria H COETZEE BCom (Law) LLB LLM LLD (Pret) Associate Professor University of Pretoria EP JOUBERT LLB LLM LLD (Pret) Senior Lecturer University of Pretoria KM KERN LLB LLM (RAU) Partner Bowman Gilfillan Inc DJ LÖTZ BIur LLB (Pret) LLM (Wits) LLD (Pret) Professor University of Pretoria K NEWAJ BCom (Law) (NUM) LLB (Unisa) LLM LLD (Pret) Lecturer University of Pretoria JM OTTO BA LLB LLD (Pret) Professor University of Johannesburg SM PAPADOPOULOS BLC LLB LLM (Pret) Senior Lecturer University of Pretoria S RENKE BLC LLB LLM LLD (Pret) Associate Professor University of Pretoria M ROESTOFF BLC LLB LLD (Pret) Professor University of Pretoria BPS VAN ECK BLC LLB LLD (Pret) Professor University of Pretoria Members of the LexisNexis Group worldwide South Africa LexisNexis (Pty) Ltd www.lexisnexis.co.za DURBAN 215 Peter Mokaba Road(cid:3)(North Ridge Road), Morningside, Durban, 4001 JOHANNESBURG Building 8, Country Club Estate Office Park, 21 Woodlands Drive, Woodmead, 2080 CAPE TOWN First Floor, Great Westerford, 240 Main Road, Rondebosch, 7700 Australia LexisNexis, CHATSWOOD, New South Wales Austria LexisNexis Verlag ARD Orac, VIENNA Benelux LexisNexis Benelux, AMSTERDAM Canada LexisNexis Canada, MARKHAM, Ontario China LexisNexis, BEIJING France LexisNexis, PARIS Germany LexisNexis Germany, MÜNSTER Hong Kong LexisNexis, HONG KONG India LexisNexis, NEW DELHI Italy Giuffrè Editore, MILAN Japan LexisNexis, TOKYO Korea LexisNexis, SEOUL Malaysia LexisNexis, KUALA LUMPUR New Zealand LexisNexis, WELLINGTON Poland LexisNexis Poland, WARSAW Singapore LexisNexis, SINGAPORE United Kingdom LexisNexis, LONDON United States LexisNexis, DAYTON, Ohio © 2019 First Edition 1995 Fourth Edition 2011 Second Edition 2000 Fifth Edition 2015 Reprinted 2001, 2002, 2003, 2004, 2005 Reprinted 2016, 2018 Third Edition 2006 Reprinted 2007 ISBN softcover 978 0 639 00890 5 e-book 978 0 639 00891 2 Copyright subsists in this work. No part of this work may be reproduced in any form or by any means without the pub- lisher’s written permission. Any unauthorised reproduction of this work will constitute a copyright infringement and render the doer liable under both civil and criminal law. Whilst every effort has been made to ensure that the information published in this work is accurate, the editors, authors, writers, contributors, publishers and printers take no responsibility for any loss or damage suffered by any person as a result of the reliance upon the information contained therein. Editor: Beryl Kirsten Technical Editor: Salome Govender Preface Since the publication of the Fifth Edition of Commercial Law in 2015, a number of changes in our laws have necessitated the publication of an updated version. New legislation and case law have been added where relevant, reflecting the law as at 1 October 2019. Commercial Law aims at dealing comprehensively with the most important disciplines in the field of commercial law, including the general law of contract, aspects of specific nominate contracts including purchase and sale, letting and hiring, credit agreements, insurance and carriage, labour law, construction and professional services, as well as the law pertaining to security, payment methods, insolvency, alternative dispute resolution and consumer protection law. The book unlocks the basic principles of civil law for students in law and in other disciplines such as in the economic, management and business sciences, and in the broader fields of engineering and construction. In this edition we honour the life of Professor Chris (CJ) Nagel, the founding and managing editor of all previous editions, to whom this Sixth Edition is dedicated. Although his passing during this update has left a huge void in academia, we retain his legacy in the form of everlasting academic literature. His valuable contributions as author, co-author and editor of various publications have played an integral role in the development of South African legal texts. The books Commercial Law and Business Law are known in industry and tertiary institutions as the “Nagel books” – another tribute to and recognition of his contributions spanning more than 25 years. We also bid farewell to a long-time co-author, Professor Fanie (SR) van Jaarsveld, who contributed to the book from its very first edition. He has now passed his baton to new writers who take his vision into the future. In particular, in this edition, Part III on Agency has been revised and extended. The chapters in Part VII on insurance law have been updated to reflect the position under the new Insurance Act, and the Regulations and Policyholder Protection Rules issued in accordance with the Act. In view of an increase in global trading, a discussion of the international Inco terms of carriage has been incorporated in the chapter on the law of carriage. The chapters on labour law Part XI have been completely revised and restructured. A section on business rescue and a large number of new judgments have been included in Part X on insolvency law. All chapters include the latest developments in constitutional and general consumer protection law. As Commercial Law does not contain chapters on corporate or entrepreneurial law, pertaining to companies, close corporations, other juristic persons and partnerships, it is important to take cognisance of its companion publication New Entrepreneurial Law, by PA Delport, of which an updated edition is forthcoming. BIRGIT KUSCHKE (Ed) AND THE AUTHORS December 2019 v Contents Page Preface ...................................................................................................................................................................................... v Part One – General Introduction 1 The South African Legal System and its History ................................................................................. 3 2 Creation of Legal Rules and the Administration of Justice ............................................................ 11 Part Two – General Principles of the Law of Contract 3 Introduction to the Law of Contract ......................................................................................................... 23 4 Consensus .................................................................................................................................................................. 49 5 Contractual Capacity ........................................................................................................................................... 77 6 Legality, Possibility of Performance and Certainty .............................................................................. 93 7 Formalities .................................................................................................................................................................. 107 8 Parties to the Contract, Conditions and Related Concepts, Particular Terms and Interpretation of Contracts .............................................................................................................................. 113 9 Breach of Contract and Termination of Contractual Relationship ........................................... 129 Part Three – Agency 10 Introduction to the Law of Agency ............................................................................................................. 165 11 Relationship Between Parties to Agency ................................................................................................. 175 12 Special Types of Principals and Agents ..................................................................................................... 183 Part Four – Purchase and Sale 13 General Introduction to the Law of Purchase and Sale .................................................................. 193 14 Duties of the Seller ............................................................................................................................................... 213 15 Duties of the Buyer............................................................................................................................................... 237 Part Five – Letting and Hiring 16 Formation of the Contract of Lease ........................................................................................................... 245 17 Duties of the Lessor and the Lessee .......................................................................................................... 261 18 Miscellaneous Aspects of the Law of Lease ........................................................................................... 279 Part Six – Credit Agreements 19 General Introduction and Historical Background ................................................................................ 289 20 Application of Act and Conclusion of Credit Agreements ........................................................... 295 21 Consumer Credit Institutions and Regulative Matters ..................................................................... 305 22 Rights and Duties of Parties ............................................................................................................................. 313 23 Financial Matters, Dispute Settlement and Debt Enforcement ................................................. 325 Part Seven – Insurance and Carriage 24 Introduction to Insurance Law and Insurance Contracts ............................................................... 335 25 Specific Aspects of Insurance Contracts and None-life and Life Insurance ......................... 371 26 Carriage ........................................................................................................................................................................ 387 vii Contents Page Part Eight – Security 27 General Introduction and Suretyship ......................................................................................................... 411 28 Mortgage, Pledge and Cession in Security .............................................................................................. 421 29 Hypothecs and Liens ............................................................................................................................................ 435 Part Nine – The Bill of Exchange, Cheque, Promissory Note and Electronic Payment Methods 30 General Principles of the Law of Negotiable Instruments ............................................................. 443 31 Cheques ...................................................................................................................................................................... 467 32 Electronic Payment Methods .......................................................................................................................... 481 Part Ten – Insolvency 33 Introduction and Sequestration ..................................................................................................................... 511 34 Effects of Sequestration ...................................................................................................................................... 537 35 Administration of Insolvent Estates, Composition, Rehabilitation, Offences and Winding-up of Companies and Close Corporations ........................................................................ 581 Part Eleven – Labour Law 36 General Introduction to Labour Law ......................................................................................................... 643 37 Individual Labour Law .......................................................................................................................................... 649 38 Collective Labour Law ...................................................................................................................................... 687 Part Twelve – Construction, Engineering and Services Contracts 39 Construction, Engineering and Services Contracts ............................................................................ 703 Part Thirteen – Alternative Dispute Resolution 40 Alternative Dispute Resolution ...................................................................................................................... 733 Part Fourteen – The Consumer Protection Act 41 The Consumer Protection Act ...................................................................................................................... 749 Table of Cases ..................................................................................................................................................................... 807 Index .......................................................................................................................................................................................... 833 viii Part One General Introduction by JM Otto