MRL3701 Study Unit 9 Uncompleted Contracts And Legal Proceedings | Questions And
Answers Latest {2024- 2025} A+ Graded | 100% Verified
CONTRACT COMPLETED BY INSOLVENT BUT NOT BY OTHER PARTY - If insolvent has carried out his side
of the contract and only other party needs to perform, the right to that performance is an asset in the
insolvent estate and vests in the trustee.
If right is one to payment the trustee may enforce it in same manner as other debts owed to the
insolvent estate.
If right is to some the other performance trustee may either sell the right along with the other estate
assets or enforce performance and then sell the subject matter of the performance
Right to performance held by the estate lapses if the other party in good faith, and without knowledge
of the sequestration, performs to the insolvent.
Right to compensation under an insurance policy indemnifying the insolvent against liability to third
parties vests in the third part concerned, who may recover what the insolvent owes him directly from
the insureer in terms of s156.
CONTRACT NOT COMPLETED BY INSOLVENT - CONTINUANCE OF CONTRACT - As general rule,
sequestration does not suspend or put an end to the contract
CONTRACT NOT COMPLETED BY INSOLVENT - THE TRUSTEE'S ELECTION - Trustee (or provisional trustee)
generally has an election to perform in terms of the contract or not.
Only "power" which the trustee's office gives him is to exclude the right of the other party to invoke the
remedy of specific performance. Trustee is given this power so that he may ac tin the interest of the
concursus creditorium.
Trustee must obtain and abide by the instructions of general body of creditors on the matter, and that
he may not completely adopt a course that is prejudicial to the interest of the concursus.
, In each case it must be decided by a process of inference, the conclusion drawn to be consistent with all
the proven facts.
Once trustee has elected to repudiate or continue with the contract he cannot change his mind.
If he fails to reach a decision within a reasonable tie it is assumed that he does not intend to perform in
terms of the contract.
STATUTORY CONTROLS ON THE EXERCISE OF TRUSTEE'S ELECTION - Act lays down when or how trustee
should exercise his election.
CONTRACT TO ACQUIRE IMMOVABLE PROPERTY - When insolvent contracted to acquire immovable
property and property has not been transferred to him, trustee must make his election to uphold or
repudiate the contract within six weeks after receiving written notice form the other party calling upon
him to do so.
If trustee fails to make his election and notify the other party accordingly, latter may apply to court for
the cancellation of the contract and the return of possession of the property.Other party may prove a
concurrent claim against the estate for loss suffered as a result of the non fulfillment of the contract..
If provisional trustee is called upon to adopt or abandon a contract he must ask for directions from
Master but if Master fails to respond, the provisional trustee may use his own discretion. Trustee takes
directions from the creditors.
TANGNEY & OTHERS v ZIVE'S TRUSTEE - Insolvent bought hotel business on installments. The trustee
carried on business for more than six months but did not make any payments i.t.o. the contract or
indicate in any another way the intention to affirm the contract. In response to a letter from the sellers
giving notice of intention to cancel the contract, the trustee simply contended that the sellers were not
entitle to cancel and that the notice was invalid. Court held that as trustee had failed to give due notice
of his intention to abide by the contract, sellers were entitled to assume that he had repudiated it.
KUMING v PATERSON - Court held that contract of sale of hotel comprising land, buildings, furniture and
goodwill fell within terms of s35 even though parties had expressly provided that the sale of the
property was indivisible, De Villiers took the view that the section applies if the contract is, inter alia,
one forthe acquisition of immovable property, irrespective of whether movables are included in the res
vendita as well.
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