1. Please refer to the examination rules and regulations as found in the examination answer book.
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1 Page 1 of 6 EXAMINATION : BUSINESS LAW (BL) BUSINESS LAW 1 (BL101) DATE : 16 MAY 2014 TIME ALLOWED : 3 HOURS TOTAL MARKS : 100 INSTRUCTIONS TO CANDIDATES 1. Please refer to the examination rules and regulations as found in the examination answer book. 2. Answer ANY FOUR (4) questions. Each question is worth 25 marks. 3. Read each question carefully to determine exactly what is required before attempting the answer. 4. Set your answers out in a systematic way under appropriate headings and subheadings. 5. Number your answers clearly. 6. IMPORTANT: Indicate the questions attempted by drawing a circle around the question number on the front cover of the answer book. NOTE: Examination answer books are the property of the IMM GSM and may not be removed from the examination hall. Answers to examination questions should not include appendices in the form of personal notes to the examining panel.
2 Page 2 of 6 Answer ANY FOUR (4) questions QUESTION 1 [25] 1.1 Name the requirements for a valid contract. (5) 1.2 Name five (5) requirements for a valid offer. (5) 1.3 Identify the type of breach of contract in each of the facts below and discuss the available remedies: On 31 January 2014, Kale offered to buy Abbey s vehicle for R The parties agreed that delivery will take place on 3 February On 3 February 2014, on her way to deliver the vehicle to Kale, a runaway truck collided with Abbey s vehicle. The vehicle was squashed against a wall and Abbey died as a result of the impact of the collision. (4) On 31 January 2014, Kale offered to buy Abbey s vehicle for R The parties agreed that delivery will take place on 3 March Being very excited about the agreement Abbey could not sleep on the night of 31 January As a result, Abbey took a sleeping pill. Due to an allergic reaction to the sleeping pill, Abbey entered into a coma. A trustee (Abbey s brother James) was appointed to administer Abbey s estate while she is comatose. Having realised that Abbey could have bargained for a better price for her vehicle, James cancelled the agreement with Kale on Abbey s behalf and offered the vehicle for sale for R (5) Abbey and Tom (an interior designer) agreed that Tom would make curtains for Abbey s house in antique bronze organza (type of material). Tom could not find antique bronze organza from the suppliers. As a result, Tom made the curtains of antique bronze chiffon. The chiffon is of a lower quality than the organza Abbey wanted. It is also much cheaper than the organza. (3) During a celebrating party at a pub, Abbey met Veronica who fell instantly in love with Abbey. Abbey agreed to meet Veronica the next day (1 March 2014) at the V&A Waterfront for a romantic dinner. On 1 March 2014, Abbey, now sober, realised what she had done and tried to telephone Veronica to cancel the date. Unfortunately, Abbey was too drunk the night before to write down the correct number. Abbey was too scared/shy to face Veronica and decided not attend the dinner. In the meantime poor Veronica waited for Abbey for two hours before realising she had been stood up. (3)
3 Page 3 of 6 QUESTION 2 [25] 2.1 Under what circumstances can it be established that the parties to an agreement have reached consensus? (3) 2.2 Name any six (6) goods or services that are excluded from the application of the consumer s right to cooling off in terms of the Electronic Communications and Transactions Act 25 of (6) 2.3 Name the essential requirements for a valid bill of exchange (cheque). (6) 2.4 What influence do the following facts have on the validity of the relevant contract? Give reasons for your answer Jayden buys a new remote control for his flat screen TV because he is under the impression that the remote control is broken. In fact, his domestic worker replaced the batteries incorrectly. The remote control is in perfect working order. (2) Jayden enters into an agreement with Teljoy under the impression that he is buying a satellite dish and decoder in terms of an installment sale transaction. Teljoy is under the impression that Jayden will rent the satellite dish and decoder from Teljoy. (4) Jayden buys a new vehicle from Jake s Auto. The purchase price is payable by means of a trade-in vehicle and cash. Jayden told Jake that the trade-in vehicle is a 1980 Audi Quattro Sports edition. Based on this information Jake offered Jayden R for the trade-in vehicle. It later transpired that Audi only started manufacturing Quattro models for retail in Jayden s trade-in vehicle, as it transpired, is a standard issue Audi that is not worth more than R (4) QUESTION 3 [25] 3.1 Name the circumstances, in terms of section 48 of the Consumer Protection Act 68 of 2005, under which a transaction, an agreement, a term or condition, or notice is deemed to be unfair, unreasonable or unjust. (4) 3.2 Which five (5) of the following are considered NOT to be inventions and cannot be patented? Only write down the corresponding letter. No marks will be awarded if more than five letters are given. A B C D The recipe for an anti-ageing beauty cream A program for a computer The design for a clock mechanism for a wrist watch that draws power from body heat A new variety of soya bean plants that produces 50% more soya beans than ordinary soya bean plants
4 Page 4 of 6 E The musical work deemed to serve as a trade mark tune F A fuel saving and lubrication system for diesel engines G A business plan for international currency trade H The mathematical method of calculating the number of solar panels required to power typical household appliances I An anti-theft device for ladies handbags (5) 3.3 Name, without discussion, six (6) ways in which a contract can terminate. (6) 3.4 Daphne saw the advertisement below in a newspaper: CUTIES SUPERMARKET SUPER SAVERS 2 LT R5.99 HURRY NOW Limited to 2 per customer Daphne immediately hurried to Cuties Supermarket to benefit from the Super Saver. When she enquired about the Super Saver, the cashier informed her that it is only the 2lt cola bottles with the Party Pack logo (as per the picture in the advertisement) that are on special and that they are out of stock. However, it soon transpired that Cuties Supermarket never intended to sell the cola at the advertised price but merely used the advertisement to lure customers to the store. Briefly explain if Daphne has any rights against Cuties Supermarket in terms of the Consumer Protection Act 68 of (5) 3.5 Name the common law forms of delivery of movable goods. (5) QUESTION 4 [25] 4.1 Name the essentialia of a contract of lease. (3) 4.2 Which five (5) of the following are NOT requirements for a holder in due course? Only write down the corresponding letter. No marks will be awarded if more than five letters are given. A B C D E The holder s name must appear on the cheque The holder must have given value for the bill The cheque must be signed by the holder The holder must have become holder before the cheque became overdue The words not transferable/not negotiable must be written on the cheque
5 Page 5 of 6 F The holder must not have given something in exchange for the cheque G When he/she received the bill he/she must not have been aware of its being previously dishonoured H The holder must have a bank account in order to deposit the cheque I The cheque must have been negotiated to the holder (5) 4.3 Name, without discussion, the essential elements of a valid partnership. (3) 4.4 When does a contract come into being if it is concluded through the post? over the telephone? through the Internet? (3) 4.5 Andrew is the owner of a well-known franchise restaurant in Johannesburg called PIZZAHUT. Andrew has acquired the licence from PIZZAHUT Inc. in the United States of America to use the PIZZAHUT logo as illustrated in Figure 1 below. Andrew becomes aware that Boaz runs a restaurant in Cape Town called PIZZAHOT. Boaz designed the logo for PIZZAHOT as illustrated in Figure 2 below. Many of Andrew s customers go to Cape Town on holiday. Figure 1 Figure 2
6 Page 6 of Advise Andrew on his legal remedies if PIZZAHUT was not registered as a trade mark. (4) Would your answer in be any different if PIZZAHUT was registered as a trade mark? (4) Would your answer in be any different if Boaz used the registered trade mark for a pizza making supply (frozen uncooked pizzas, pizza ovens, and pizza making utensils) enterprise in Cape Town? (3) QUESTION 5 [25] 5.1 Name the essential elements of an insurance contract. (3) 5.2 List the duties of an agent in respect of an agency agreement. (4) 5.3 With reference to the National Credit Act 34 of 2005: Name four (4) factors considered to determine whether a document is in plain language. (4) Name three (3) instances in which the Act will not apply to a credit agreement. (3) Name three (3) unlawful provisions in credit agreements. (3) 5.4 Joe rents a garden flat from Sam for R4 500 pm. According to the agreement between the parties the lease agreement will automatically terminate on 31 March Advise Joe in the following scenarios: Sam was sequestrated on 1 March The trustee for Sam s estate received an offer for the house (including the garden flat) that he could not resist. The house was sold on 1 December 2013 to Lucy. Ownership of the house was transferred on 15 February Lucy wants to demolish the house and garden flat in order to build a new prime business premises. Lucy instructed Joe to vacate the garden flat no later than 28 February (5) On 31 March 2014 the parties agreed to extend the lease agreement for another 12 months. Shortly thereafter Sam lost his job and he faced serious financial difficulty. On the night of 17 April 2014, Sam and his friends celebrated Sam s birthday. Despite the celebration, Sam could no longer face his financial troubles and committed suicide. (3) EXAM TOTAL: 100
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