Exam (elaborations)
LML4807 Assignment 1 Semester 2 2023 - DUE 22 August 2023
- Institution
- University Of South Africa (Unisa)
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LML4807 Assignment 1Semester 2 2023
QUESTIONS AND
ELABORATE ANSWERS
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, Carefully read the case below, from your prescribed reading list, and answer the following questions:
Joint Stock v Absa Bank 2008 (4) SA 287 (SCA) The allocation of marks for this case discussion is as
follows:
1. Briefly outline the key facts of the case (3)
2. What were the main arguments by the concerned parties (2)
3. Summarise the decision of the court (meaning the reasons for the decision of the court) (4)
4. Provide your critical comment on this decision, in particular the finding by Cachalia JA in respect of
the knowledge of the bank (your own opinion on whether the court correctly interpreted the law) (1)
Joint Stock v Absa Bank 2008 (4) SA
287 (SCA)
In the case of Joint Stock v Absa Bank 2008 (4) SA 287 (SCA), the key facts and main
arguments by the concerned parties are as follows:
Key Facts:
Joint Stock, the appellant, was a company that had entered into a loan agreement with
Absa Bank, the respondent.
The loan agreement contained a clause that allowed Absa Bank to terminate the
agreement and demand immediate repayment if Joint Stock failed to meet certain
financial ratios.
Joint Stock failed to meet the financial ratios, and Absa Bank terminated the loan
agreement and demanded immediate repayment.
Joint Stock argued that the termination clause was unfair and unreasonable.
Main Arguments:
Joint Stock argued that the termination clause in the loan agreement was unfair and
unreasonable because it allowed Absa Bank to terminate the agreement and demand
immediate repayment without giving Joint Stock an opportunity to remedy the default.
Joint Stock contended that the termination clause was in contravention of the National
Credit Act, which requires credit providers to give consumers a reasonable opportunity
to remedy a default before terminating the agreement.
Absa Bank argued that the termination clause was valid and enforceable as it was a
negotiated term between the parties.
Absa Bank maintained that Joint Stock had failed to meet the financial ratios, and
therefore, it was within its rights to terminate the agreement and demand immediate
repayment.
In summary, the case of Joint Stock v Absa Bank involved a dispute over the validity
and fairness of a termination clause in a loan agreement. Joint Stock argued that the
clause was unfair and contravened the National Credit Act, while Absa Bank maintained
that the clause was valid and enforceable.
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