COMMERCIAL LAW 1
LAWS1000
CHAPTERS 12, 13 & 14 SUMMARIES
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original textbook for the material on which these summaries are based. All information taken directly from:
Pillay, K. and Du Plessis, R. (2023) Commercial law: Fresh perspectives. 4th edn. Cape Town, South Africa, Western Cape: Maskew Miller Learning. .
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,CHAPTER 12: The Passing, Varying, and Ending of Rights
and Duties by Agreement
Introduction
• Contracts are mainly about creating rights and duties
• Contracts are valid and enforceable if all six main requirements have been met
• There are various different ways of changing terms of a contract, thus changing rights and duties of parties involved
• Legal right = a privilege, given and protected by law, which gives one person a claim against another person/persons
• Claim can take form of a reward (eg. money or goods), service/duty, or it can prevent the other person from doing
something
• Personal rights can be transferred from one person to another by a process known as cession
• Cession = the act or process of ceding a right that one party has against another
Co-debtors and Co-creditors
• Usually two parties in a contract
• Where there are multiple parties to a contract, there may be a number of co-debtors or co-creditors to the obligations in
the contract
• Who owes what to whom in terms of debt will depend on a number of factors:
- What intentions of parties were
Divisible contracts are contracts in which each
- Nature of contract entered into party's performances are divided into matching
pairs of duties
- Nature of performance which must be made
• Important to consider divisibility of the performance in determining what parties owe each other
• Divisible performance is one which can be separated between co-debtors and co-creditors
Simple Joint Liability and Joint and Several Liability
• If a number of co-debtors have to perfrom to a creditor and performance is divisible, it is usually presumed that the
liability is a simple joint liability which means that each of the debtors is responsible for paying only their pro rata share
of the debt
• Pro rata = in proportion
• If a creditor decides to release one of the co-debtors from performance, they do NOT automatically release other co-
debtors
• Debtors or creditors to an agreement may agree, either expressly or by implication, that they will be jointly and
severally liable
• Liability jointly and severally is a kind of agreement often applied by way of law
• When a creditor releases one of the co-debtors fro a joint and several debt, liability of remaining co-debtors is reduced
proportionately
Stipulatio Alteri
• Sometimes a contract will be concluded that benefits third parties who are not parties to the contract, called stipulatio
alteri
• An example of such a contract is a life insurance contract whereby the policy will payout to a specified person in the
event of death
• In such a contract there is a stipulans (eg. policy holder) and a promittens (eg. insurer)
, The Transfer of Personal Rights
• Most contracts create rights and duties
• A rights normally has a duty or obligation which goes with it thus this kind of agreement is an obligationary agreement
• Cession is about the transfer or personal rights
• NOT possible to ‘deliver’ or ‘possess’ a personal right because the object of the right is the performance that another
persons owes in terms of a service or payment of money/property
• Object of the right = thing that the right is about, thus a duty that one party owes the other
• Law has created concept of cession, which is the legal way in which rights that belong to one person can be transferred
to another person
• This is an agreement that happens separately from the original agreement
• An agreement to cede is called a ‘transfer agreement’ because the creditor transfers rights to another party
• Parties involved in cession
- A cession will usually happen because the cedent has a duty to the cessionary thus cedent will transfer right to
cessioanary
- This duty is known as the underlying causa or reason for cession
- Cedent will transfer rights to claim from debtor to cessionary and in that way discharge their own debt
• Cession procedure
- For a proper cession to take place, all that is required is an agreement between cedent and cessionary
- Cession of a right normally takes places without the agreement or consent of the debtor
- Cession is complete when cedent and cessionary agree on the cession
- Not a formal requirement that debtor should receive a notice about cession
- Generally requires no formalities to make it valid
• Requirements for cession
- Six requirements involved in cession:
1. Cedent must be entitled to cede the right
2. Right must be capable of being ceded
3. Parties (cedent and cessionary) must intend for cession to take place
4. Any formalities agreed upon by the parties must be complied with
5. Must not be unlawful
6. Must not be prejudice or put the debtor in a worse position
• Restrictions on cession of contractual rights
- There are restrictions on what can and cannot be ceded
- Restrictions arise if cession:
~ Is considered illegal
~ Involves rights that are too personal to the ceded
~ Will prejudice the debtor
- Cession considered illegal
~ Some laws or statues prevent people from ceding certain rights
~ Cession that takes place in these instances is illegal
~ Purpose of these laws is usually to protect people who are poor, from giving away what little they
~ Thus rights that cannot be cede are rights to a pension or retirement annuity or employee’s rights to
compensation for injuries which occurred in the workplace
- Rights that are too personal to be ceded
~ Some rights are so closely related/connected to creditor that is would make duty more difficult/unpleasant for
debtor if a different person were to exercise that right
~ In such cases, creditor cannot cede right
