Business law (BUSL215) Semester Test 1

Date: 13 March 2024

Duration: 90 minutes

Marks: 50

This paper consists of 3 pages

Question 1 (5 marks)

State whether the following statements are true or false. Write only “True” or “False”.

1.1 Mr Ndlovu who resides in Welkom purchases a couch from Amazon online store, which
is located in USA, on credit. The National Credit Act is not applicable to this credit
agreement. FALSE
1.2 Mora interest is interest that is charged to a consumer on overdue payments. TRUE
1.3 Sam and Susan enter into a verbal lease agreement for letting of a flat in Dagbreek.
Verbal lease agreements are invalid. FALSE
1.4 A warranty is a term in the contract in terms of which the insured guarantees that
information provided to the insurer is correct. TRUE
1.5 The offer in the formation of an insurance contract is made by the Insured. TRUE

Question 2 (5 marks)

Choose the correct answer from the following statements below. Write only the letter
of the correct answer.

2.1 According to the Rental housing Act, a dwelling includes:

a) House
b) Outbuilding
c) Hostel
d) All of the above
2.2 Which of the following is NOT the duty of the Lessor:

a) To deliver the property in proper condition and to maintain the property

b) Not to interfere with the lessee’s use of the property and to protect him against
eviction from others.
c) to return the property undamaged at the expiry of the lease
d) to deliver use and occupation or enjoyment of the property let

2.3 Delegation occurs when:

a) the tenant transfers some or all of his duties to a third party
b) the tenant cedes all or some of his rights to a third party, obligations remain with the
tenant
c) all the tenant’s rights & duties are transferred to a third party
d) the original tenant becomes lessor

2.4 The following are examples of a credit transaction:

a) Instalment agreement, mortgage, secured loan, pawn transaction
b) Lease of movables, incidental credit agreement
c) A suretyship
d) A and B

2.5 The insurer will only be obliged to compensate the insured if an uncertain event causes
loss. “Uncertainty” in insurance can occur in the following instance:
a) the timing of the peril is uncertain
b) A & D
c) the monthly premium could be uncertain
d) the event itself could be uncertain

Question 3 (5x2 =10 marks)

Give the correct term(s) for the following statements:

3.1 All the tenant’s rights and duties are transferred to third party and the landlords is
consent is required; new lease created. Assignment
3.2 This body has an adjudicative function and deals with the applications referred to it in
terms of the National Credit Act, as well as complaints relating to prohibited conduct.
National Consumer Tribunal
3.3 A term implied into a lease agreement which assists the landlord to have a hold over the
tenant’s property/goods brought onto the leased premises if the lessee fails to pay rent.
Tacit hypothec
3.4 When the insured cedes his right to sue the wrongdoer to the insurer once the insurer
has paid the insured in full. This prevents insured from being compensated by the insurer
and wrongdoer. Subrogation
3.5 The mechanism introduced by the National Credit Act to assist consumers who have
difficulty in meeting their financial commitments under credit agreements, through a debt
counsellor. Debt review

Question 4 (24 marks)

Answer the following questions.

4.1 Which credit agreements are specifically excluded from the National Credit Act? (2) ·

A lease of immovable property.

A stokvel transaction

4.2 List the six ways in which a lease agreement may be terminated and briefly explain each
one. (12)
 Expiration of a specified period – where the lease has been concluded for a specific
period, the contract is terminated when that period expires.

• By notice- if property is leased for an indefinite period, the contract is terminated by

notice. If there’s no agreement on the notice period, then reasonable notice must be
given.

• By Agreement – the lease is terminated by mutual agreement even if the contract

was concluded for a specific period.

• Cancellation – this is where either party to the contract cancels it due to a breach.

• Supervening impossibility of performance – where performance becomes impossible

due to circumstances beyond the control of the parties.
 • Merger – the lease is terminated where the capacities of lessor and lessee merge
into one person.

4.3 Give the full definition of a contract of lease.

Lease is a contract whereby one of the contracting parties (the lessor/landlord) undertakes
to give to another (the tenant / lessee) (1) the enjoyment and use of a specific thing (1)
partially or in full (1) for a period of time (1) in return for a certain or ascertainable price which
the latter undertakes to pay (1). (5)

4.4 Fill in the missing word:

Littlejohn v Norwhich Union Insurance Society is the leading case on __________
interest. (1) INSURABLE

4.5 Explain the concept “huur gaat voor koop and how it is applied in lease agreements. (4)
- This maxim means “the lease takes precedence over the sale” / “the existing lease
trumps a later sale” / “Hire before purchase”.
- It only applies to lease of land.
- As a GENERAL RULE - if lessee is in possession of property when it is sold, the new
owner may claim it from the lessee by rei vindicatio because he is the rightful owner.
- HOWEVER, huur gaat voor koop is an EXCEPTION to the rule.
- The purchaser / new owner must permit the tenant his use and enjoyment of the
property.
- when does rule apply?
If the tenant is occupying the property at the time of sale, the rule is applicable for a
short-term lease or for the first-ten years of the long-term lease. if the long-term lease
has been registered (at deed’s office), the rule will apply for the duration of the
contract.
- If the tenant is not occupying the property, the rule is applicable only to persons who
have acquired it without giving value in return for it, e.g if the property was inherited
or donated.
- What does this mean – the new owner cannot evict the lessee.
- The new owner acquires rights and obligations of the previous landlord-owner. All
successors in title are bound to the lease.
Question 5 (6 marks)

Read the following scenario and answer the questions below.

Sibusiso is a student on CUT Welkom campus. On a sunny Friday, whilst in between

classes, he notices that sales agents from Volks Wagen are marketing on campus and they
are selling POLO TSI motor vehicles. He approaches one of the sales agents and after a
brief conversation decides to purchase a motor vehicle. He signs the contract on the same
day, pays the required deposit and agrees to pay the rest through equal monthly
instalments. Sibusiso drives away into the sunset. On Monday morning Sibusiso realises
that he made a hasty decision and would like to return the motor vehicle to Volks Wagen.

Can Sibusiso return the car to the dealership? Give detailed reasons for your answer and
indicate under which circumstances will he be able / not able to return the vehicle?

Yes (1)

Cooling-off period (1)

- It is the consumers’ right to unilaterally rescind /set-aside certain credit agreements

(e.g instalment agreement) concluded at a location other than the credit provider’s
registered business premises, for any reason. (1)
- This right is referred to as cooling off as it gives the consumer an opportunity to
reconsider the advisability of having entered into the agreement, and to withdraw
from it with relative ease, if he elects to do so. (1)
- NOTICE to terminate should be in writing and delivered via fax, hand delivery or
registered mail. (1)
- Within 5 business days from date of signature. (1)