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Summary Mercantile 312 (Insolvency) -- exam pass package (4-7) R150,00
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  5. Mercantile Law 312 - Law Of Insolvency

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Summary Mercantile 312 (Insolvency) -- exam pass package (4-7)
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The beginning of each chapter shows the slides, class notes, textbook additions and self-study material. This includes full case summaries. At the end of each chapter there is a SUMMARY of all the work in the chapter (revision/lists) with a list of ALL the prescribed and non-prescribed cases an...

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  • June 11, 2022
  • 306
  • 2021/2022
  • Summary

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The legal position of the
insolvent

1. Introduction
Presumed from here out - a sequestration order has been granted
(voluntarily or compulsory doesn't matter)

Assumed that all requirements have been met

Sequestration of estate curtails certain things

1. Contract-making

2. Earning a livelihood

3. Legal proceedings

4. Holding office

⏬
2. Contracting
2.1. Prohibited contracts
General

Contractual capacity is restricted to a certain degree — s23(2) of IA

Generally - IA doesn't deprive a debtor of their contractual capacity,
generally speaking

Therefore, general competency to make binding agreements

But, there are restrictions in terms of s23(2) to provide a safeguard to
creditors

**WL Carroll & Co v Ray Hall Motors 1975

Facts:


The legal position of the insolvent 1

, Appellant, chartered accountant, instituted an action for
payment of R1000 due in respect of services rendered by the
respondent

LQ:

(dealt with later)

Courts:

Confirms the position of S23(2)

Section 23(2) of Insolvency Act

Section 23(2)




So s23(2) says that the fact that a person enters into any contract
with the insolvent won’t be affected by the validity provided it wasn’t
done to dispose property from the insolvent estate AND provided
there is no contract regarding any contribution towards the estate
which they are obliged or is likely to be adversely effected

Subject to subsection 1 of s24

NB

Generally an insolvent can enter into a contract

But there are certain contracts that they are not allowed to enter
into

3 prohibited contracts

Falls within the provisos of s23(2)

Contracts

Illustration




The legal position of the insolvent 2

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