LML4806 Assignment
1 Semester 2 2024
(818236) - DUE 25
August 2024
QUESTIONS AND ANSWERS
, LML4806 Assignment 1 Semester 2 2024 (818236) - DUE
25 August 2024
Question:
1 Jane, John and Jabulani are the directors of Touring Africa by Bicycle (Pty) Ltd
(“the company”), a company that is based in Johannesburg. The memorandum of
incorporation of the company provides that only the board of directors have the
authority to enter into contracts on behalf of the company. James, the branch
manager of the company in Durban, attends an outdoor show in Durban to scout
for useful new products for the company’s cycling excursions. At the outdoor show
one of the exhibitors, Cycle for Life (Pty) Ltd, has a limited special offer on
electric bicycles for the amount of R120 000.00 per bicycle. James contacts the
directors of the company by way of a Zoom call, and while speaking to the
directors of the company on the Zoom call, James keeps his mobile phone on
speakerphone. The directors instruct James to purchase six of the electric bicycles
on behalf of the company. Nancy, the representative of Cycle for Life (Pty) Ltd,
hears the instruction, and because James has previously entered into agreements
with Cycle for Life (Pty) Ltd without any problems, she enters into an agreement
with James for the sale of six electric 4 bicycles to Touring Africa by Bicycle (Pty)
Ltd. The electric bicycles are delivered to the company’s Durban office. When
Cycle for Life (Pty) Ltd sends an invoice for payment of the total amount of R720
000.00 for the six electric bicycles, Touring Africa by Bicycle (Pty) Ltd refuses to
pay, arguing that it is not bound by the contract as James did not have the authority
to act on its behalf. Nancy approaches you for legal advice. With reference to the
relevant authority/principle and the facts, advise Nancy on what Cycle for Life
(Pty) Ltd must allege and prove in order to prevent Touring Africa by Bicycle
(Pty) Ltd from arguing that it is not bound by the contract concluded by Nancy and
James. (5)
In order to advise Nancy from Cycle for Life (Pty) Ltd on how to prevent Touring
Africa by Bicycle (Pty) Ltd from arguing that it is not bound by the contract
concluded by Nancy and James, the following legal principles and relevant facts
need to be considered:
1. Actual Authority: According to the memorandum of incorporation, only the
board of directors has the authority to enter into contracts on behalf of the
company. However, in this case, James received explicit instructions from
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