REVISED SYLLABUS

REPORT 191 (NATED)

MERCANTILE LAW N5

REPUBLIC OF SOUTH AFRICA

CODE NUMBER: 13030105

IMPLEMENTATION DATE: JANUARY 2015

2

CONTENTS

1. Aims 2. Duration of instruction 3. Evaluation 4. Semester mark 5. Examination 6. Pass requirements 7. General information 8. Learning content 9. Literature reference 10. Detailed syllabus

3

INSTRUCTIONAL OFFERING: MERCANTILE LAW N5

1. AIMS

1.1 General aims

1.1.1...To promote the basic principles of law and to impart to students how these principles affect

commercial enterprises in their relations with other businesses in day-to-day transactions.

1.1.2 To assist students in thinking and reasoning logically, analytically and critically in accordance

with legal terminology and customary legal procedure, and helping them to assess the

possible legal implications of situations whenever and wherever they occur.

1.1.3 To offer students insight into the legal environment within which a business enterprise functions, in order to enable them to make informed decisions without any harmful and costly legal implications.

1.1.4 To make students aware of the importance and value of the role the law plays in the world of business and the value of conforming to a certain code of conduct, with the emphasis on the promotion of character-formation and self-confidence in their business interactions, as well as discipline.

1.2 Specific aims

1.2.1 To promote insight into basic legal principles, rules and practices which form the basis for

sound business, in order that they can become responsible future business people, citizens, employees/employers and consumers.

1.2.2 To familiarise students with the legal rules relating to the law of agency, security, insolvency, partnerships, companies and close corporations.

1.2.3 To teach students when to consult a legal advisor, i.e. to teach them what to do and not necessarily how to do it.

2. DURATION OF INSTRUCTIONAL OFFERING

Full-time: A minimum of five hours per week for one semester.

Part-time: A minimum of two hours per week for two semesters (one year).

4

3. EVALUATION

Evaluation takes place on a continuous basis by means of class tests, formal tests, an internal semester test, practice-oriented assignment, practical work, case studies, tasks and an external examination.

3.1 Internal evaluation

3.1.1 Theoretical components

In addition to the normal class tests as a regular form of evaluation, formal tests on completion of each module, as well as an internal semester test are conducted.

These test marks are processed to a mark out of 60 which will be the contribution of the theoretical component towards the semester mark.

3.1.2 Practical components

On completion of each module, a practical mark is awarded for the application thereof. For this purpose, the student’s proven achievement during practical experience, practical work, case studies and assignments are taken into account.

In addition, developed abilities such as industry and punctuality in tasks and assignments, interest, devotion and adaptability should be fostered gradually and developed with a view to entering the job market. The average of these practical marks is processed to a mark out of 40 which will be the contribution of the practical component towards the semester mark. When awarding marks in evaluating the practical work, the measuring instrument applied to assignment and case study analysis is in Appendix A. ??

3.1.3 Semester marks

A semester mark out of 100 is compiled by adding the theoretical and practical marks of the internal evaluation, and is calculated as follows:

The candidate’s achievement in the semester tests is also taken into consideration in the calculation of the semester mark. This can be done as follows:

Theoretical components Practical components Semester mark

Class tests Formal and semester tests

40

100

10 50

60

5

Learning content Class, module, formal and semester tests

Final examination

Theory and

Practical application

The average of the prescribed

theory tests is calculated to a mark out of 60

The average of the practical assignments must be calculated to a mark out of 40

Theory questions form a major part of the final question paper

Practical situations will be

given which will have to be answered theoretically

A semester mark of at least 40% as well as a minimum examination mark of 40% is required

to pass this instructional offering. The semester mark and the external examination mark

will be calculated together in a ratio of 40:60 to derive the final mark (promotion mark).

The semester mark that is obtained remains valid for two years following directly upon the year in which the semester mark has originally been achieved and used. After this period,

the mark is no longer valid and the student has to register for the same subject and obtain

a new semester mark.

3.2.1 Examinations

An external theoretical examination is conducted at the end of the semester.

The paper is set, marked and moderated externally.

3.2.2 Requirements for passing

In order to pass the instructional offering, the candidate must obtain a final mark

of 40% when the semester mark and the examination mark are added together

with a sub-minimum of 40% for the semester – and examination mark respectively.

3.2.3 Question paper

The question paper will consist of two parts:

Part A is compulsory and covers all the modules of the instructional offering.

A combination of practical questions is set with a view to test ready knowledge,

insight and the application abilities of students. The questions can consist of comparison, analysis, synthesis and evaluation of applicable situations and cases.

6

Part B consists of four questions any three of which must be answered. The

questions and its various sub-sections, count a total of 50 marks each.

Every question can consist of sub-divisions. Those questions that are a combination

of short – and long questions, consist inter alia, of application questions and case studies which test the candidates’ insight, comprehension and application of the

theory.

The focus will be placed on the knowledge obtained and the candidates’ ability to

apply and use the knowledge with insight. In more theoretical questions, candidates should also illustrate their answers with examples from practice.

The details of the question paper are as follows:

Nature of paper

Number of papers

Duration of paper

Total marks of paper

Part A: Compulsory question with sub-sections

Part B: Elective questions (4 questions - do any 3)

External

1

3 hours

200

50

150

The performance objectives of the learning content are important in ascertaining a

student’s knowledge and understanding of the learning content of the instructional offering.

The following weights are consequently awarded to each category:

This section should endeavour to address the cognitive challenge (as set out in Bloom’s Taxonomy - higher order thinking levels) to which question papers of a high standard and quality should be subjected.

3.3 Evaluation of practical work

Separate measuring instruments are applied for the evaluation of practical work. Examples of these measuring instruments are to be found in Appendix A. ??

4. GENERAL INFORMATION

An interactive, didactic approach should be followed in order to equip students with the general and particular skills for Mercantile Law in practice/ the job sector. Practical applications must therefore take place continuously.

Recall Comprehension Application Analysis Synthesis Evaluation

5 - 10 30 - 40 30 - 40 15 - 35 10 - 30 10 - 30

7

5. WEIGHTED VALUES OF MODULES

The modules for Mercantile Law N5 are the following:

MODULE Weighting (%) REVISED

LAW OF AGENCY 15

SURETYSHIP 10

LAW OF INSOLVENCY 20

PARTNERSHIPS 15

COMPANY LAW 30

CLOSE CORPORATIONS 10 100 The weighted value per module out of 100 (%) is an indication of the period of time in which

the module should be concluded, as well as the estimated weight that is awarded to a module during the setting of the question paper, although it is not an absolute.

Reason for adjusting weighted values between Close Corporations and Insolvency above: The fact that close corporations have been regulated i.e. no new CCs may be formed and they are encouraged through the new Companies Act to deregister or to convert into a private company. To this effect, so as not to focus undue attention in terms of its weighting on this module nor to create the impression that it is still important, the weighting has been adjusted downward from 20 to 10 percentage points and the value of the module dealing with Insolvency, adjusted upward from 10 to 20 percentage points. Insolvency is and remains an important area of commercial law and this thus justifies the upward adjustment. It is a phenomenon which every student in Mercantile Law must know of - its existence (causes), effect as well as consequences in the world of business.

6. DETAILED SYLLABUS

The detailed syllabus for Mercantile Law N5 is as follows:

8

SYLLABUS: MERCANTILE LAW N5 MODULE 1: LAW OF AGENCY

CONTENT LEARNING OBJECTIVES The student should be able to 1.1 Definition 1.1 describe and correctly use the basic

concepts being referred to throughout

• Representation this module

• Representative

• Principal apply these concepts correctly and

• Agent accurately within the context of any

• Authority given case study or scenario 1.2 Characteristics of representation 1.2 name the various characteristics that accurately describe the act/s of

• One person acts on behalf representation of another

• Juristic (legal) act accurately identify the various charac-

• Authorised conduct teristics from a given case study or

• Creates an obligation any relevant newspaper article 1.3 Establishment of representation 1.3 name and explain the various ways in

by which representative capacity can be effected

1.3.1 Contract of mandate (by agreement) 1.3.1 briefly explain or describe what a

contract of mandate is indicate that no formalities are required, except in certain instances where written authority is required, for example the appointment of an agent to conclude a deed of sale on behalf of the client distinguish accurately between representation under express - and tacit mandate

1.3.2 Estoppel 1.3.2 explain and accurately identify this legal concept use this principle correctly (where

required) in an advisory capacity based on facts presented from any given case study or article

9

CONTENT LEARNING OBJECTIVES

The student should be able to 1.3.3 Operation of law 1.3.3 explain this concept correctly as per

definition or by means of an appropriate example – either based on facts supplied from any given case study or a relevant article

correctly describe the concept of the “negotiorum gestor” either as a stand-

alone term or from the contents of a relevant article or case study

1.3.4 Ratification 1.3.4 explain this concept and name the

requirements with which ratification must comply

1.4 Effect of representation 1.4 discuss the effect of representation 1.5 Specific types of agents 1.5 name, explain and draw comparisons between the characteristics of the

• Brokers specific types of agents

• Auctioneers

• Del credere agents identify any of the four specific types of

• Estate agents agents from a given case study or relevant article with sufficient motivation (by

referring to the distinctive characteristics of each type)

[No- depth knowledge required – only to expand knowledge base and for enrichment purposes.] Range: Name, list, define, describe, distinguish, identify or recommend from any given information any of the above types of agents

1.5.1 Relationship between the principal and

agent

1.5.1.1 Duties of the agent 1.5.1.1 name, explain and/or briefly describe the duties of the agent by means of

• Performance example/s as part of embedded

• Diligence knowledge or from a given case

• Utmost good faith study or relevant article

• Accountability

10

1.5.1.2 Duties of the principal 1.5.1.2 name, explain and/or briefly describe the duties of the principal by means of

• Remuneration for services example/s as part of embedded rendered knowledge or from a given case

• Indemnity against loss study or relevant article

• Reimbursement for expenses

• Accountability

1.6 The doctrine of the undisclosed 1.6 briefly and accurately explain the principal doctrine of the undisclosed principal adequately/correctly justify, on the basis

of a given case study or relevant article, whether the doctrine of the undisclosed principal is relevant or applicable

1.7 Liability of the agent 1.7 discuss, with sufficient justification, the

liability of the agent on the basis of a

• When agent is not liable given case study or relevant article

• Liability as a result of an express guarantee given

• Liability as a result of fraudulent misrepresentation

• Liability as a result of an implied guarantee of authority

1.8 Termination of the relationship 1.8 name, explain and justify the ways in between agent and principal which agency can be terminated

• By performance identify or advise from a given case

• Impossibility of performance study or relevant article, ways to end

• Expiration of time or terminate an agreement of agency

• By agreement

• Termination of the legal relationship

• Change of status of the agent and principal

• Renunciation by the agent

• Revocation by the principal

Range: limited only to the above ways of terminating the relationship between the agent and the principal

DIDACTIC GUIDELINES 1. The learning content must always be presented in a practical manner to enable students to

apply the learning content wherever they come into contact with it, especially in the workplace. 2. Case studies must be used on a continuous basis to enable students to obtain better insight and

understanding of the learning content. Students must learn how to answer practical questions

11

as well as to solve problems or propose possible solutions/alternatives to practical, hands-on questions that they are faced with.

3. To keep the learning content both interesting and up to date, different methods other than only

the textbook content can be used, i.e. group discussions, role-playing, engaging professionals e.g. estate agents, brokers (?) to visit your institution and give talks to the students. The learning material should be presented in such a manner that students can see or recognise possible future career choices. . Any relevant video or similar media clips from internet sites such as YouTube are highly recommended. .

4. Apart from learning the content, it is also necessary that students be taught, given the opportunity to become engaged in a process of analytical thinking in order to develop their ability to apply the theoretical book knowledge to case studies and/or relevant court cases. The discussion of important court cases is only for enrichment purposes and shall not be examined.

12

MODULE 2: SURETYSHIP

CONTENT LEARNING OBJECTIVES The student should be able to 2.1 Personal security 2.1.1 Suretyship 2.1.2 Definition 2.1.2 describe the contract of suretyship 2.1.3 Establishment of the contract of 2.1.3 briefly explain how a contract of

suretyship suretyship is established in practice, taking into account the

• requirements of a contract of suretyship

• position of co-sureties 2.1.4 Liability of the surety 2.1.4 explain the liability of the surety with reference to

• principal debt

• lesser amount

• defects, for example, misrepre- sentation and minority

• extension of time to the principal debtor

2.1.5 Common-law privileges 2.1.5 name and explain the three common-law

privileges of the surety and correctly identify

• Benefit of excussion each from a given case study, providing

• Benefit of division the necessary justification/motivation for

• Benefit of cession of actions the recommended course of action

Recommend these privileges and justify (motivate) their use on the basis of a given case study/theoretical principles

2.1.6 Rights of surety 2.1.6 write short explanatory notes on the surety’s right against

• Principal debtor

• Co-sureties

13

CONTENT LEARNING OBJECTIVES The student should be able to 2.1.7 Termination of the contract of 2.1.7 name and/or explain the various ways in

suretyship which suretyship can be terminated

• Extinguishing the principal debt know that “death” of either surety, debtor

• Expiration of time and/or creditor does not terminate the

• Aggravation of surety’s liability agreement

• Due notice as a right retained by the surety in the agreement

[Range: The above listing of the four ways to terminate suretyship is not complete, but they are the most important and significant ways to end suretyship. We limit ourselves only to these four ways.]

2.2 Real security 2.2.1 Right of pledge (movable security) 2.2.1.1 Definition 2.2.1.1 briefly describe right of pledge 2.2.1.2 Formation of pledges 2.2.1.2 write short explanatory notes on the requirements of delivery with

reference to the formation of a pledge

explain what will happen if the secured

debt is not met (execution steps) (Range: brief treatment – mention only)

2.2.2 Right of mortgage (immovable 2.2.2 briefly name the similarities and security) differences between pledges and mortgages (Range: Name, list, tabulate, differentiate) 2.2.2.1 Definition 2.2.2.1 briefly describe the term mortgage 2.2.2.2 Formation of mortgages 2.2.2.2 indicate that a mortgage arises by agreement; that registration must take

• Express mortgages place; that a further (2nd) mortgage may be

• Judicial mortgages registered on the same property.

explain what can happen if the debtor becomes insolvent (Range: two ways whereby mortgages can be formed i.e. by agreement and by court order. Limited to a brief description, name and/or explanation of each term required

14

and correct identification from information in a given case study or relevant article)

2.2.3 Liens (Right of retention) 2.2.3.1 Definition 2.2.3.1 define the concept of lien 2.2.3.2 Establishment of liens 2.2.3.2 indicate that all liens arise by operation of law and not as a con-

sequence of agreement between the parties

2.2.3.3 Kinds of liens 2.2.3.3 briefly explain the different kinds of liens with the aid of examples to

• Salvage liens distinguish one from the other

• Improvement liens

• Debtor – and creditor liens identify from a given case study or specific kind of lien and justify your choice

indicate that enrichment liens are sub-divided into salvage liens and improvement liens

2.2.4 Possession 2.2.4 briefly discuss the characteristics of possession of liens and explain with

• Judicial possession the aid of an example when

• Uninterrupted possession possession of a lien can be lost

2.2.5 Hypothec

2.2.5.1 Forms of legal hypothec 2.2.5.1 name and briefly describe the two forms of legal hypothec

• Landlord’s tacit hypothec

• Tacit hypothec of credit grantor

2.3 Cession to secure a debt

2.3.1 Definition 2.3.1 briefly describe the term cession to secure a debt with the aid of an example

2.3.2 Forms of cession 2.3.2 name and distinguish between the two forms of cession to secure a debt

• Security

• Pledged

15

DIDACTIC GUIDELINES 1. The learning content must always be presented in a practical manner to enable students to

apply the learning content wherever they come into contact with it, especially in the workplace. 2. Case studies must be used on a continuous basis to enable students to obtain better insight and

understanding of the learning content. Students must learn how to answer practical questions as well as to solve problems or propose possible solutions/alternatives to practical, hands-on questions that they are faced with.

3. To keep the learning content both interesting and up to date, different methods other than only

the textbook content can be used, i.e. group discussions, role-playing, engaging professionals e.g. estate agents, brokers (?) to visit your institution and give talks to the students. .

4. Apart from learning the content, it is also necessary that students be taught, given the opportunity to become engaged in a process of analytical thinking in order to develop their ability to apply the theoretical book knowledge to case studies and/or relevant court cases. The discussion of important court cases is only for enrichment purposes and shall not be examined.

16

MODULE 3: THE LAW OF INSOLVENCY

CONTENT LEARNING OBJECTIVES The student should be able to 3.1 Definition 3.1 describe the term insolvency briefly explain the objects of the law of insolvency 3.2 Acts of insolvency 3.2 briefly name the acts of insolvency 3.2.1 Absence of a debtor from the identify each of the acts of insolvency on Republic or his/her residence the basis of a given case study and with the intent of evading the supply sufficient motivation for it. payment of debt/s 3.2.2 Non-compliance with a (court) sentence (Range: Limited to the eight most important acts of committing a deed of insolvency by 3.2.3 Alienation or an effort to alienate in such means of a brief/short explanation, listing, a way that creditors suffer damage identification from any relevant article) 3.2.4 Alienation of goods with intent to prejudice creditors 3.2.5 Concluding an agreement with any of the creditors, or proposing an agreement with them to write off their debts completely or partiall 3.2.6 Failure to submit insolvency schedules, or submission of an incomplete insolvency schedule, or failure to apply for acceptance of

voluntary surrender of estate, after the publication of a notice of intent to surrender the estate

3.2.7 Notice from the debtor that he/she is unable to repay his/her debts 3.2.8 Notice from a public trader of the alienation of his/her business and the consequent inability to repay his/her debts 3.3 Assets which do not form part of an 3.3 name and/or identify particular assets insolvent’s sequestrated estate that do not form part of an insolvent’s sequestrated estate on the basis of

• Remuneration for work done information from a given case study or any

• Pension monies relevant article

• Clothing and other essential means (Range: No in-depth knowledge required of of livelihood various assets. Limited to name, list any of

• Life policies these assets listed on the left only.)

17

• Trust monies of an attorney, notary or conveyancer

• Shares in accrual

• Property obtained with money received by the insolvent

• Provisional interests of a fidei-commissary heir

3.4 Rights and obligations of the insolvent 3.4 describe the rights and obligations during sequestration of an insolvent during sequestration 3.4.1 Sequestration process 3.4.1 name the advantages of

sequestration of a debtor’s estate for Advantages for insolvent debtor the insolvent debtor and his/her

creditors

• He/she can be rehabilitated

• He/she is not liable for any debts incurred prior to sequestration of

his/her estate Advantages for creditors

• Insolvent loses control over his/her estate and is unable to alienate, squander or

encumber the remaining assets

• With the exception of preferent claims, proceeds of the insolvent estate are

shared pro rata among the creditors

• Creditors may not act in a way which would have the effect of altering or prejudicing the rights of other creditors, such as obtaining judgement individually against the insolvent

Voluntary surrender (of estate)

3.4.2 Application for surrender of estate 3.4.2.1 Persons who may apply 3.4.2.1 name the persons who may apply

for voluntary surrender

• An insolvent debtor

• All the members of a partnership

• The agent of an insolvent debtor who has been specially authorised

thereto

• The person entrusted with the administration of the estate of an

insolvent debtor who is incapable of managing his/her own affairs,

i.e. the curator bonis of, for example,

18

a mentally deficient debtor

• The executor of the estate of a deceased insolvent debtor

3.4.2.2 Procedure 3.4.2.2 briefly explain the procedure to be

(to obtain a sequestration order) followed by a debtor who wishes to obtain a sequestration order of his/her estate

3.4.2.3 Acceptance by court of surrender 3.4.2.3 explain the requirements that must of estate (requirements) be satisfied before a court will sequestrate the estate of a debtor with

• The prescribed formalities have or without the aid of a case study or been complied with relevant article

• The estate must actually be insolvent

• The debtor must be the owner of the property that can be realised and which is of sufficient value to defray all the costs of sequestration that are payable out of the free residue of his/her estate

• The sequestration of the debtor’s estate will be to the advantage of the creditors

Compulsory sequestration (of estate) 3.4.3 Application for sequestration of 3.4.3 name and distinguish between the estate creditors who may apply to court for the sequestration of a debtor’s 3.4.3.1 Creditors who may apply estate

• A creditor who has a liquidated claim for not less than R100 against a debtor

• Two or more creditors who in aggregate have liquidated claims for not less than R200 against a debtor

3.4.4 Provisional sequestration 3.4.4 name the requirements which the applicant must prove before the Requirements court will place a debtor under provisional sequestration

• The creditor has proved a liquidated claim for not less than R100 in the case of one creditor, and R200 in the case of two or more creditors against the debtor

• The debtor has committed an act of insolvency or is insolvent

• There is reason to believe that it will be to the advantage of creditors of the debtor if his/her estate is sequestrated

19

3.4.5 Final sequestration 3.4.5 explain the requirements that the applicant must prove before the Requirements court will issue a final sequestration order

• The creditor has proved a liquidated claim for not less than R100 in the case of one creditor, and R200 in the case of two or more creditors against the debtor (Range: The criteria applicable to the above

• The debtor has committed an act cases in 3.4.3, 3.4.4 and 3.4.5 only limited of insolvency or is insolvent to these stipulations. Be aware that these

• There is reason to believe that it will requirements could be subject to change be to the advantage of creditors of the from time to time and should always reflect debtor if his/her estate is sequestrated the most up to date information).

3.4.6 Differences between voluntary 3.4.6 name the two basic ways whereby surrender and compulsory a person can be declared insolvent, sequestration i.e. voluntary surrender and compulsory sequestration discuss or name the differences between voluntary surrender and compulsory sequestration on the basis of a given case study 3.4.7 Friendly sequestration 3.4.7 describe the term friendly sequestration 3.5 Effect of sequestration 3.5 briefly discuss the effect of sequestration on the insolvent 3.6 Contracts prior to sequestration 3.6 briefly explain the effect of

sequestration on contracts concluded prior to sequestration

• Contract of sale of immovable property (insolvency of buyer and discuss and explain the effect of seller) sequestration or contracts listed in 3.6

• Movable goods purchased by the on the basis of a case study insolvent, but not yet paid

• Contracts of lease (insolvency of Range: Limited only to the five types listed landlord and tenant)

• Contracts of service

• Credit agreements (insolvency of buyer and seller)

3.7 Defeasible (voidable) dispositions 3.7 briefly explain each of the three different defeasible dispositions

• Disposition without value

• Voidable preference to indicate or analyse whether void-

• Undue preferences able preferences are applicable to a

20

given case study or relevant article and be able to justify his/her point of view by means of logical reasoning/analytical thinking

3.8 Consequences of insolvency 3.8 explain the consequences of insolvency by relating the consequences, listed under

• Pecuniary (financial) consequences the CONTENT section, to information in a

• The insolvent, under certain given case study or circumstance, may not be allowed to hold certain offices, e.g. that of recommend (with sufficient motivation) director of a company what the consequences of insolvency would be for an insolvent

• The insolvent may not contract or litigate during the period of his/her sequestration without the permission of his/her curator

• A social stigma clings to him/her which may damage his/her future business career

3.9 Composition 3.9.1 Definition 3.9.1 describe the term composition 3.9.2 Effect of composition 3.9.2 describe the effect of composition and apply it according to the content

• The agreement binds the insolvent of a case study or any relevant article and all concurrent creditors without

exception, irrespective of whether explain the consequences of composition they voted for or against it, or even for the insolvent and the creditors attended the meeting

• The insolvent’s assets may revert to (Range: the effect and consequences of any him/her effect under this module must be clearly and carefully studied with great understanding

• The insolvent is entitled to a certificate and insight as it reveals itself in information signed by the Master, to the effect that either given or hidden within a case study or the offer of accord has been accepted in any relevant article) and if the terms make provision for at least 50c in the Rand, the insolvent may apply for rehabilitation

• Accord does not bind the independent creditors of the insolvent’s spouse

3.10 Rehabilitation 3.10.1 Definition 3.10.1 describe the term rehabilitation 3.10.2 Consequences of a rehabilitation 3.10.2 name the consequences of a

order rehabilitation order

21

• The sequestration process is identify and discuss the specific terminated consequences applicable to a given case study

• The insolvent is absolved from all disqualifications resulting from the

sequestration

• All the insolvent’s debts contracted before the sequestration and which do not result from fraud, are extinguished

DIDACTIC GUIDELINES 1. The learning content must always be presented in a practical manner to enable students to

apply the learning content wherever they come into contact with it, especially in the workplace. 2. Case studies must be used on a continuous basis to enable students to obtain better insight and

understanding of the learning content. Students must learn how to answer practical questions as well as to solve problems or propose possible solutions/alternatives to practical, hands-on questions that they are faced with. Any use of relevant video clips available from internet sites such as YouTube is encouraged/advised.

3. To keep the learning content both interesting and up to date, different methods other than only

the textbook content can be used, i.e. group discussions, role-playing, engaging professionals e.g. estate agents, brokers (?) to visit your institution and give talks to the students. .

4. Apart from learning the content, it is also necessary that students be taught, given the opportunity to become engaged in a process of analytical thinking in order to develop their ability to apply the theoretical book knowledge to case studies and/or relevant court cases. The discussion of important court cases is only for enrichment purposes and shall not be examined.

22

MODULE 4: PARTNERSHIPS

CONTENT LEARNING OBJECTIVES The student should be able to 4.1 Definition 4.1 describe the term partnership 4.2 Characteristics of a partnership 4.2 name and explain the characteristics of partnerships

• Valid contract of partnership

• Number of partners

• Contribution by each partner identify the specific forms of owner-

• Common interest of business ship/partnership/company/close

• Object of making a profit in corporation on the basis of a given which partners will share case study

4.3 Rights and obligations of partners 4.3.1 Rights of partners 4.3.1 name and briefly explain the rights of partners in general or from a given

• Right to share in profits case study

• Right of control

• Right to compensation explain exactly what is meant by the

• Right to division of assets at rights of partners and indicate dissolution that partners must share in profits

• Right to inspection of books

explain that 4.3.1 above is an important foundation for the existence of a

successful partnership and that no partners can be excluded from them (unless otherwise agreed) 4.3.2 Obligations of partners 4.3.2 name and briefly explain the obligations of partners in general or from a given

• Contribution by partners case study

• Sharing of losses

• Promotion of common explain exactly what is meant by the interests obligations of partners and indicate

• Obligation of good faith that partners must share in losses 4.4 Agreements between partners 4.4 explain the way in which partners are and third parties jointly and severally (separately) liable towards third parties for the debts of the

• Express or implied authority partnership

• Transactions within/outside the scope of the partnership business

23

CONTENT LEARNING OBJECTIVES The student should be able to 4.5 Kinds of partnership 4.5 name the different kinds of partnership

• Limited partnerships

• Partnerships en commandité distinguish between the different kinds

• Anonymous partnerships of partnership; correctly identify the various types or kinds of partners with or without the aid of a case study or article [Range: No in-depth knowledge required of each type of partner. For enrichment purposes only.]

4.6 Insolvency (of partnerships) 4.6 briefly explain the effect of insolvency on the estate of a sequestrated partnership 4.7 Dissolution of partnerships 4.7.1 Reasons for dissolution 4.7.1 name and briefly discuss the reasons for the dissolution of partnerships

• By agreement

• Death of a partner recommend or advise dissolution of

• Impossibility of performance a partnership from facts/information in

• Sequestration a case study or relevant article

• Personal circumstances

• Unilateral act of one of the partners (Range: mere writing down of single words will not suffice. Answers of at least the length of one sentence are advisable.)

4.8 Consequences of dissolution 4.8 briefly explain the consequences of dissolution for various parties involved

• For partners in or with a partnership business

• For outsiders DIDACTIC GUIDELINES 1. The learning content must always be presented in a practical manner to enable students to

apply the learning content wherever they come into contact with it, especially in the workplace. 2. Case studies must be used on a continuous basis to enable students to obtain better insight and

understanding of the learning content. Students must learn how to answer practical questions as well as to solve problems or propose possible solutions/alternatives to practical, hands-on questions that they are faced with.

3. To keep the learning content both interesting and up to date, different methods other than only

the textbook content can be used, i.e. group discussions, role-playing, engaging professionals e.g. estate agents, brokers (?) to visit your institution and give talks to the students.

24

. 4. Apart from learning the content, it is also necessary that students be taught, given the

opportunity to become engaged in a process of analytical thinking in order to develop their ability to apply the theoretical book knowledge to case studies and/or relevant court cases. The discussion of important court cases is only for enrichment purposes and shall not be examined.

25

MODULE 5: COMPANY LAW

CONTENT LEARNING OBJECTIVES The student should be able to 5.1 Establishment 5.1 recognise the need for changes to

the Companies Act of 1973 and the (new) South African Companies Act of 2008 that replaces it.

5.1.1 The nature of the company 5.1.1 name the advantages for investors of the company as a form of enterprise 5.1.2 New classification/categories of 5.1.2 distinguish clearly and accurately between

companies the various (new) types of companies the new Act makes provision for

Profit oriented (gain)

• State-owned Indicate/discuss/justify on the basis of

• Not-state-owned a given case study the specific type/s Private Company of companies under discussion Personal Liability Company Public Company correctly identify any type of company

Non-profit oriented (public benefit) provided for under the Act from information supplied by a case study or a relevant

article 5.1.3 Pre-incorporation contracts 5.1.3 name the requirements which must be satisfied before a company will be

bound by a pre-incorporation contract explain the new changes under the Act which will affect such contracts

5.1.4 Notice of Incorporation 5.1.4 indicate the effect of the issuing of the notice of incorporation name the requirements which must be satisfied before the notice will be issued 5.2 Memorandum of Incorporation (MOI) 5.2 define this new concept identify this concept from any given

case study indicate the purpose of this important document briefly explain the content of this

document

26

CONTENT LEARNING OBJECTIVES

The student should be able to 5.3 Capacity 5.3.1 Doctrine of constructive notice 5.3.1 explain the change in the new meaning

to the term ‘doctrine of constructive notice’ under the new Companies Act, No 71 of 2008

5.3.2 Legal personality 5.3.2 describe the meaning of the concept legal personality explain the characteristics of a separate legal personality 5.3.3 Authority 5.3.3 indicate that a representative can obtain actual and or ostensible

authority to act on behalf of the company

5.3.4 Ultra vires doctrine 5.3.4 discuss the new meaning and

application of the ultra vires doctrine as dealt with under the new Companies Amendment Act of 2008 explain how the capacity of a company can be determined

5.3.5 The Turquand rule 5.3.5 write short explanatory notes on the Turquand rule with reference to its

content and effect and the reason for its existence

list the most important new changes to

this rule in the newly amended Companies Act

clearly identify the application or

omission of this rule from any given case study

5.4 Articles of Association 5.4 define this document Indicate the purpose of this document

27

CONTENT LEARNING OBJECTIVES The student should be able to 5.5 Promotors 5.5 define the term promotor

Write short explanatory notes on the fiduciary position of a promotor as well

as the possibility of remuneration for services rendered

5.6 Share capital 5.6.1 Definitions 5.6.1 describe the term capital * Capital distinguish between nominal and * Nominal share capital issued share capital * Issued share capital * Contributed shareholders’ equity distinguish between contributed and * Accumulated shareholders’ equity accumulated shareholders’ equity * Shares briefly explain or define what a share is * Par value shares explain the phasing out of Par value –

* No Par value shares and No Par value shares under the provisions of the new Act

5.6.2 Types or classes of shares 5.6.2 name the different types or classes of shares together with the characteristics of

* Preference shares each class * Ordinary shares * Deferred or founders’ shares briefly name the various rights that each type or class of share confer on a share- holder; name, list and/or briefly distinguish between

the four types of preference shares

5.6.2.1 Issue of shares explain the meaning of the concept of “issue of shares” discuss or state under what circumstances shares may be issued by the board of directors (Range: limited to four circumstances)

5.6.2.2 Right of pre-emption to new share issue briefly explain the meaning of this concept.

28

mention the reason for this provision in the Companies Act

5.6.2.3 Dividends briefly explain the meaning of dividends

name and briefly explain when a shareholder is entitled to receive a

dividend

briefly name what a shareholder must prove when demanding the payment of dividends

5.6.2 4 Debentures describe the term debenture

know that debenture holders also obtain voting rights under the new Act

Distinguishing between shares and distinguish between shares and debentures debentures as sources of long-term capital for the company 5.6.3 Distributions 5.6.3 explain the meaning of this term under the new Companies Act

* Distributable reserves briefly distinguish between distributable - * Non-distributable reserves and non-distributable reserves and the current relevance under the Act 5.6.4 Maintenance of share capital 5.6.4 explain the new amendments for the

maintenance of share capital covered under the new Companies Act , 2008

name and discuss the necessity for these rules 5.7 Shareholders and membership 5.7.1 Obtaining membership 5.7.1 indicate when a person obtains membership with share capital * Subscribing to the MOI * Name entered in the company’s write short notes on the changes to register of members shareholders’ rights under the new Act 5.7.2 Termination of membership 5.7.2 indicate when the membership of a person is terminated

• Transfer of shares

• Sale of shares

• In case of liquidation of company

29

CONTENT LEARNING OBJECTIVES The student should be able to

5.8 Offer of shares and prospectus 5.8.1 * Private placing 5.8.1 give advice as to ways in which * Offer for subscription capital can be obtained by means * Offer for sale of shares * Rights offer * Rights issue 5.8.2 Issuing of debentures 5.8.2 indicate when a company may Issue debentures explain the voting rights of debenture

holders under the new Act 5.8.3 Prospectus 5.8.3 name the characteristics of a prospectus

• Characteristics

• Common law liability as a result explain the common law liability of untrue statements in the which may arise as a result of prospectus untrue statements in the prospectus

5.9 Management 5.9.1 Directors 5.9.1 write short explanatory notes on the new statutory duties of directors as

highlighted by the Companies Act of 2008 explain the reasons and/or requirements for the number of directors under the Companies Act of 2008 discuss the common law duty towards care and skill

Range: this section to be covered thoroughly and as extensively as possible and to highlight and include the newly codified duties of directors; not to abuse their position or information; act in good faith; exercise a certain degree of care, skill and diligence and their liability due to their actions

30

CONTENT LEARNING OBJECTIVES The student should be able to

5.10 Annual financial statements and auditors 5.10.1 Annual financial statements and 5.10.1 write short explanatory notes on the accounting records annual financial statements and the accounting records of a company

• Income statement

• Balance sheet (statement of changes in equity)

• Cash flow statement

• Directors’ report

• Auditors’ report

[await feedback on new terminology for above terms/concepts] 5.10.2 Company auditor 5.10.2 give a short description of the function and duties of the company

• Directors’ report auditor

• Auditors’ report 5.11 Company groupings 5.11 indicate when a company will be the subsidiary company of a holding company 5.12 Protection of minority interest 5.12 briefly discuss the provisions of the Companies Act in the situation where directors have appropriated company

assets for themselves and the company has suffered considerable damage as a result of their negligent conduct

5.13 Liquidation 5.13 name the grounds upon which a court can liquidate a company indicate who may apply to the court to liquidate a company name the consequences of liquidating a company [APPLICATION OF THIS SECTION

NOT TOO BROAD] 5.14 Judicial management 5.14 indicate the purpose of judicial

and the introduction of management for companies;

31

Audit Committees under the explain the establishment, composition, new Act function and duties of an audit committee

name the instances when the court will place a company under judicial management clearly identify the implementation of a judicial management order as a

legal remedy for a financially ailing company.

DIDACTIC GUIDELINES 1. The learning content must always be presented in a practical manner to enable students to

apply the learning content wherever they come into contact with it, especially in the workplace. 2. Case studies must be used on a continuous basis to enable students to obtain better insight and

understanding of the learning content. Students must learn how to answer practical questions as well as to solve problems or proposing possible solutions/alternatives to practical, hands-on questions that they are faced with.

3. To keep the learning content both interesting and up to date, different methods other than only

the textbook content can be used, i.e. group discussions, role-playing, engaging professionals e.g. estate agents, brokers (?) to visit your institution and give talks to the students. .

4. Apart from learning the content, it is also necessary that students be taught, given the opportunity to become engaged in a process of analytical thinking in order to develop their ability to apply the theoretical ”book” knowledge to case studies and/or relevant court cases. The discussion of important court cases is only for enrichment purposes and shall not be examined.

32

MODULE 6: CLOSE CORPORATIONS

CONTENT LEARNING OBJECTIVES The student should be able to Refer to comment made regarding the subject weighting conferred on this module (page 7 - Weighted value of modules) 6.1 Establishment of the CC 6.1 understand the effect of the phasing out

of close corporations under the new Companies Act of 2008

briefly discuss the consequences of the effect of the ‘phasing out’ of CCs

take note of; describe; explain the effect of and meaning of the concept of “deregistration” of close corporations under the new Companies Act

6.2 Characteristics of the close 6.2 name or list the characteristics of a close corporation corporation (within a specific range listed

here)

• CC is a juristic person distinct from its members

• Formation, administration and operation of a CC are subject to the

minimum of formalities

• A single person can form a CC and it need not be an undertaking for gain

• No shares are issued and there is no share capital

• All the members have an equal say in the management of the CC and no provision is made for the appointment of directors

• Every member knows exactly what is expected of him/her and his/her fellow members because the fiduciary duties and duties of care and skill are codified

• Accounting and disclosure provisions are less extensive and the CC enjoys certain tax benefits

6.3 Advantages that existed in the formation 6.3 write short explanatory notes on the

of a close corporation advantages of having formed a close corporation under the Close Corporations Act (now defunct)

• Simpler, less expensive and more flexible

33

• Small enterprise consisting of 1 – 10 members

• Advantages of separate legal personality

6.4 Legal personality 6.4 explain the aspect of legal personality of a close corporation 6.5 Association agreement 6.5 explain the object and functions of the association agreement formation/amend in writing an association agreement for a specific close corporation 6.6 Name of a close corporation 6.6 write short explanatory notes on the name of a close corporation understand the necessity of the name from operation of law 6.7 Membership 6.7 name the number of members and the requirements for membership of a CC

• Number of members describe the full effect that a change in

• Requirements membership of a CC has and the necessary documentary proof that must

be submitted to the Registrar 6.7.1 Fiduciary duties of members 6.7.1 write short explanatory notes on the fiduciary duties of the members of a CC discuss the consequences of a breach of these duties by a member 6.7.2 Termination of membership 6.7.2 name briefly under what circumstances a member’s interest in a CC will be terminated 6.8 Management of a CC 6.8 explain the management function of a CC by means of discussing/analysing * Disqualification from the relevant facts from a given case participating in management study

* Regulation of internal relations * Management by means of an association make a short list of the members who agreement are legally disqualified from participating

in the management of the CC describe from operation of law or

according to the CC Act the regulation of internal relations between members and the CC

34

CONTENT LEARNING OBJECTIVES The student should be able to 6.8.1 Accounting and disclosure 6.8.1 discuss the duties of a close corporation in keeping accounting records and drawing up financial statements discuss the consequences if a CC fails to comply with any foregoing provisions relating to accounting records 6.9 Liability for debts 6.9 name and discuss on the basis of case studies the liability of members in * Authorised act respect of authorised or unauthorised

* Unauthorised act acts as well as those acts which are not * Acts not stated in Founding Statement stated in the Founding Statement

6.10 Conversion to a company 6.10 mention, recommend, advise this course

of action to existing close corporations in Conversion of existing close corporations relation to the new Companies Act into a private company

briefly explain why this recommendation is in place and what this conversion holds for an existing CC that wants to embark on a conversion.

DIDACTIC GUIDELINES 1. The learning content must always be presented in a practical manner to enable students

to apply the learning content wherever they come into contact with it, especially in the workplace.

2. Case studies must be used on a continuous basis to enable students to obtain better insight

and understanding of the learning content. Students must learn how to answer practical questions as well as solving problems or proposing possible solutions/alternatives to practical, hands-on questions that they are faced with.

3. To keep the learning content both interesting and up to date, different methods other than

only the textbook content can be used, i.e. group discussions, role-playing, engaging professionals e.g. estate agents, brokers (?) to visit your institution and give talks to the students. .

4. Apart from learning the content, it is also necessary that students be taught, given the opportunity to become engaged in a process of analytical thinking in order to develop their ability to apply the theoretical book knowledge to case studies and/or relevant court cases. The discussion of important court cases is only for enrichment purposes and shall not be examined.