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TRIAL
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- University Of South Africa (Unisa)
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FI Concession LML4806 26-28 February 2020AB Construction Ltd entered into a purchase agreement (‘the agreement’) with Bender
Equipment (Pty) Ltd in terms of which the following was agreed upon: -
1.1 AB Construction Ltd will purchase construction equipment from
Bender Equipment (Pty) Ltd for an amount of R10million.
1.2 The amount of R10million will be paid by AB Construction Ltd
in ten instalments of R1million each.
1.3 Despite the immediate delivery of the construction equipment
to AB Construction Ltd, the ownership of the construction
equipment will only pass from Bender Equipment (Pty) Ltd to
AB Construction Ltd on payment of the final instalment.
After the payment of the first five instalments AB Construction Ltd breached the above
terms of the agreement by its failure to pay the remainder of the instalments.
Subsequent to its failure to honour the agreement, the board of AB Construction Ltd
resolved to voluntarily place the company in business rescue as the company was
experiencing financial distress.
After Bender Equipment (Pty) Ltd received notification that AB Construction Ltd has
been placed in business rescue, Bender Equipment (Pty) Ltd served a letter on AB
Construction Ltd in terms of which the agreement between AB Construction Ltd and
Bender Equipment (Pty) Ltd is cancelled on the basis of AB Construction Ltd’s breach
of the agreement. In response to this letter, the business rescue practitioner of AB
Construction Ltd wrote to Bender Equipment (Pty) Ltd in which he argued that: -
1. Based on LA Sport 4 x 4 Outdoor CC v Broadsword Trading 20 (Pty)
Ltd & Others (A513/2013) [2015] ZAGPPHC 78 (26 February 2015) the
cancellation of an agreement constitute a ‘legal process which falls
under the moratorium placed on legal proceedings against a company’
for purposes of section 133(1) of the Companies Act 71 of 2008.
2. Therefore, the cancellation by Bender Equipment (Pty) Ltd of the
agreement between AB Construction Ltd and Bender Equipment (Pty)
Ltd, is unlawful based on section 133(1) of the Companies Act 71 of
2008.
You are the candidate attorney of Mr Malatji. Mr Malatji will consult with the board of
Bender Equipment (Pty) Ltd in the next few days. In preparation of this consultation,
1
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