LML4807 Assignment 1 Semester 2 2024 | Due 9 September 2024.
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Course
Banking Law and Usage (LML4807)
Institution
University Of South Africa (Unisa)
Book
Principles of Banking Law
LML4807 Assignment 1 Semester 2 2024 | Due 9 September 2024. Multiple Answers were provided.
1.Briefly discuss the following prescribed case: Durr v ABSA Bank and Another 1997 SA 448 (SCA) The allocation of marks for the discussion is as follows:
Facts of the case
The legal issues befor...
LML4807 Assignment 1 Full Solutions Semester 2 2024 - DUE 9 September 2024
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commit.
1. Briefly discuss the following prescribed case: Durr v ABSA Bank and Another 1997 SA 448
(SCA) The allocation of marks for the discussion is as follows:
Facts of the case
The legal issues before the court
The decision of the court (meaning the reasons for the decision of the court)
Critical comment (your own opinion on whether the court correctly interpreted the law, or
whether there is room for the law to be amended to some extent)
Essay 1
Introduction
The case of Durr v ABSA Bank Ltd and Another 1997 (3) SA 448 (SCA) is a significant South
African legal precedent dealing with the standard of care required from financial advisors and the
consequent liability of financial institutions for the actions of their representatives. This essay will
outline the facts of the case, identify the legal issues before the court, summarize the court's decision,
and provide a critical commentary on the court's interpretation of the law.
Facts of the Case
The Durr family invested in "secured debentures" and "preference shares" of companies within the
Supreme group, following advice from Stuart, the regional manager of United Bank’s broking
division, which is part of ABSA. The Durrs believed that these investments were secure due to the
endorsement and recommendation of Stuart, a representative of a reputable financial institution.
However, the companies in which they invested were later provisionally liquidated, resulting in
significant financial losses for the Durr family. They subsequently sued ABSA Bank for the losses
incurred, alleging negligence on the part of Stuart in providing investment advice.
Legal Issues Before the Court
The primary legal issue before the court was whether Stuart and, by extension, ABSA Bank were
negligent in their advisory capacity. The court needed to determine the appropriate standard of care
and skill required from Stuart, considering his position and the nature of his advice. This included
evaluating whether Stuart had conducted adequate due diligence on the companies he recommended
for investment.
Decision of the Court
The Supreme Court of Appeal held that Stuart had indeed failed to meet the requisite standard of
care and skill expected of a competent financial advisor. The court found that Stuart had not
sufficiently investigated the creditworthiness and financial stability of the companies within the
Supreme group before recommending them to the Durr family. This lack of due diligence was
deemed a breach of his professional duty, rendering his advice negligent. As a result, ABSA Bank
was found vicariously liable for the losses suffered by the Durr family due to Stuart's negligent
advice.
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