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Commercial LawFifth Edition
,
, Commercial Law
Fifth Edition
CJ NAGEL
BA LLB LLD (Pret)
Professor University of Pretoria
J BARNARD SM PAPADOPOULOS
LLB (Pret) LLM (Unisa) LLD (Pret) BLC LLB LLM (Pret)
Senior Lecturer University of Pretoria Senior Lecturer University of Pretoria
A BORAINE
BIur LLB (Pret) LLM (Wits) LLD (Pret) B PROZESKY-KUSCHKE
Former Professor and Head of Department BLC LLB (Pret) LLD (Unisa)
of Procedural Law Associate Professor University of Pretoria
Dean of the Faculty of Law
University of Pretoria
PA DELPORT M ROESTOFF
BLC LLB LLD (Pret)
BA LLB LLD (Pret) HDip (Tax) (Wits)
Professor University of Pretoria
Professor University of Pretoria
KM KERN
LLB LLM (RAU) BPS VAN ECK
Senior Lecturer University of Johannesburg BLC LLB LLD (Pret)
Partner Bowman Gilfillan Inc Professor and Head of the Department
of Mercantile Law
DJ LÖTZ University of Pretoria
BIur LLB (Pret) LLM (Wits) LLD (Pret)
Professor University of Pretoria
SR VAN JAARSVELD
JM OTTO BA LLB LLD (Pret)
BA LLB LLD (Pret) Professor and Former Head of Department
Professor and Former Dean of the Faculty of Law of Mercantile Law
University of Johannesburg University of Pretoria
,Members of the LexisNexis Group worldwide
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© 2015
ISBN 978 0 409 12394 4
eBook ISBN 978 0 409 12395 1
First edition 1995 Reprinted 2007
Second edition 2000 Fourth edition 2011
Reprinted 2001, 2002, 2003, 2004, 2005 Fifth edition 2015
Third edition 2006
Copyright subsists in this work. No part of this work may be reproduced in any form or by any means without the
publisher’s written permission. Any unauthorised reproduction of this work will constitute a copyright infringement and
render the doer liable under both civil and criminal law.
Whilst every effort has been made to ensure that the information published in this work is accurate, the editors, authors,
writers, contributors, publishers and printers take no responsibility for any loss or damage suffered by any person as a
result of the reliance upon the information contained therein.
Editor: Marjorie Guy
Technical Editor: Salome Govender
Printed in South Africa by Interpak Books Pietermaritzburg
, Preface
Since the publication of the fourth edition of Commercial Law in 2011, changes in several areas
of the law have necessitated the publication of this fifth edition. New legislation and case law
were updated as far as possible up to the end of August 2015.
Commercial Law aims at dealing comprehensively with the most important principles of both the
law of contract in general and of those nominate contracts most often encountered in the
commercial sphere, such as credit agreements and contracts of sale, lease, carriage, suretyship,
pledge, mortgage, employment, arbitration, letting and hiring of work , and insurance. This work
contains a useful introductory discussion of the origin and creation of legal rules and the legal
system, followed by a discussion of the sources of legal obligations, such as contract, delict and
unjust enrichment, which is necessary for a better understanding of the discussion of the law of
contract by which it is followed. Because agents often play a role in the conclusion of contracts,
this book contains a concise discussion of the law of agency. The law in respect of instruments
of payment and of credit, such as the bill of exchange, cheque and promissory note and elec-
tronic payment mechanisms, is also addressed. The most important principles of the law of
insolvency, including the winding up of companies and close corporations, are discussed. In
addition, the essential principles of individual and collective labour law are incorporated in the
book . There are also sections on alternative dispute resolution and the Consumer Protection
Act.
From the beginning, the composition of this book has been such that it is, both in content and
depth of presentation, eminently suitable for non-legal students at universities, universities of
technology and business schools. Combined with a case book, it should also offer a complete
package to undergraduate law students. In this respect a start has been made with Specific
Contracts in Court (LexisNexis 2010). Even legal practitioners requiring a concise overview of
these areas of the law will find this book to be a useful point of departure.
It is also of the utmost importance to note that Commercial Law is the companion of Delport
New Entrepreneurial Law (2014). The latter deals comprehensively with the basic principles of
the law governing the main forms of the business enterprise.
THE AUTHORS
December 2015
v
,
, Contents
Page
Preface ...................................................................................................................................................................................... v
Part One – General Introduction
1 The South African Legal System and its History ................................................................................. 3
2 Creation of Legal Rules and the Administration of Justice ............................................................ 11
Part Two – General Principles of the Law of Contract
3 Introduction to the Law of Contract ......................................................................................................... 21
4 Consensus .................................................................................................................................................................. 47
5 Contractual Capacity ........................................................................................................................................... 75
6 Legality, Possibility of Performance and Certainty .............................................................................. 91
7 Formalities .................................................................................................................................................................. 103
8 Parties to the Contract, Conditions and Related Concepts, Particular Terms and
Interpretation of Contracts .............................................................................................................................. 109
9 Breach of Contract and Termination of Contractual Relationship ........................................... 125
Part Three – Agency
10 Introduction to the Law of Agency ............................................................................................................. 161
11 The Principal ............................................................................................................................................................. 171
12 The Agent................................................................................................................................................................... 179
Part Four – Purchase and Sale
13 General Introduction to the Law of Purchase and Sale .................................................................. 195
14 Duties of the Seller ............................................................................................................................................... 213
15 Duties of the Buyer............................................................................................................................................... 237
Part Five – Letting and Hiring
16 Formation of the Contract of Lease ........................................................................................................... 245
17 Duties of the Lessor and the Lessee .......................................................................................................... 261
18 Miscellaneous Aspects of the Law of Lease ........................................................................................... 279
Part Six – Credit Agreements
19 General Introduction and Historical Background ................................................................................ 289
20 Application of Act and Conclusion of Credit Agreements ........................................................... 295
21 Consumer Credit Institutions and Regulative Matters ..................................................................... 305
22 Rights and Duties of Parties ............................................................................................................................. 313
23 Financial Matters, Dispute Settlement and Debt Enforcement ................................................. 325
Part Seven – Insurance and Carriage
24 Introduction to Insurance Law and Insurance Contracts ............................................................... 337
25 Specific Aspects of Insurance Contracts and Indemnity and
Non-indemnity Insurance .................................................................................................................................. 363
26 Carriage........................................................................................................................................................................ 379
vii
, Contents
Page
Part Eight – Security
27 General Introduction and Suretyship ......................................................................................................... 399
28 Mortgage, Pledge and Cession in Security .............................................................................................. 409
29 Hypothecs and Liens............................................................................................................................................ 423
Part Nine – The Bill of Exchange, Cheque, Promissory Note
and Electronic Payment Methods
30 General Principles of the Law of Negotiable Instruments ............................................................. 431
31 Cheques....................................................................................................................................................................... 455
32 Electronic Payment Methods .......................................................................................................................... 469
Part Ten – Insolvency
33 Introduction and Sequestration ..................................................................................................................... 499
34 Effects of Sequestration ...................................................................................................................................... 525
35 Administration of Insolvent Estates, Composition, Rehabilitation, Offences and
Winding-up of Companies and Close Corporations........................................................................ 567
Part Eleven – Labour Law
36 General Introduction to Labour Law ......................................................................................................... 627
37 Individual Labour Law.......................................................................................................................................... 639
38 Collective Labour Law ....................................................................................................................................... 671
Part Twelve – Construction, Engineering and Services Contracts
39 Construction, Engineering and Services Contracts ............................................................................ 691
Part Thirteen – Alternative Dispute Resolution
40 Alternative Dispute Resolution ...................................................................................................................... 721
Part Fourteen – The Consumer Protection Act
41 The Consumer Protection Act ...................................................................................................................... 737
Table of Cases ..................................................................................................................................................................... 797
Index .......................................................................................................................................................................................... 821
viii
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