LAWS 130-COMMERCIAL LAW 1 JUNE 2005 Page 1 of 9 UNLESS A QUESTION INDICATES OTHERWISE, YOU ARE REQUIRED TO IDENTIFY THE SINGLE MOST CORRECT ANSWER. NEGATIVE MARKING IS USED. FOUR MARKS ARE AWARDED FOR A CORRECT ANSWER. ZERO IS ALLOCATED IF NO ANSWER IS IDENTIFIED. A MARK IS DEDUCTED IF THE ANSWER IS WRONG. 1. The main aims of criminal law are: 1) 2) 3) 4) 5) To protect society from harmful conduct. To compensate the victim. To punish the wrongdoer. To stop the defendant from doing something. To enforce social policies. Answers a) 1 and 2. b) 1, 2 and 3. c) 1 and 3. d) 1, 3 and 5. e) 3 and 4. 2. The law that governs the relations between individuals and their status is called: a) b) c) d) e) The law of Persons. The law of Obligations. Private Law. The law of Contract. Substantive Law. 3. A summons is served on the defendant by: a) b) c) d) e) The Sheriff. The applicant’s attorney. The registrar of the court. The defendant’s attorney. The applicant. 4. Which of the following statements correctly defines an option? a) A choice given to an offeree whether to accept an offer or not. b) A contract by which one party makes an offer to another party and undertakes to keep the offer open for acceptance for a period of time. c) A type of offer, but which is unenforceable. d) A contract for sale of goods. e) A type of contract by which an offer is made to sell immovable property, the preference being given to a particular party. LAWS 130-COMMERCIAL LAW 1 JUNE 2005 Page 2 of 9 5. Where an offeree is granted an option to purchase goods on credit: a) The offeree can transfer the offer to another person who may accept it. b) A contract of sale is thereby concluded between the offeror and the offeree. c) The offeror is entitled to revoke the offer any time. d) The offeree cannot transfer the offer to another person. e) The offer has thereby lapsed. 6. Mpho sends a letter to Edward offering to sell a car to Edward for R 65000 cash. Edward responds by post and says that he is willing to buy the car at the indicated price. He however adds: “would you be satisfied if I pay for the car in monthly installments of R 10 000 each.” Which of the following statements correctly describes the legal position? a) No contract is formed because Edward’s response amounts to a counter offer. b) A contract is formed because Edward accepted the offer and the additional statement that is contained in his letter is a mere suggestion which does not affect the offer. c) No contract is formed because the postal acceptance rule does not apply to the offer that was made by Mpho. d) No contract is formed because Mpho did not indicate the period during which the offer must be accepted. e) No contract is formed as the offer will have lapsed by the time Edward’s letter is received by Mpho. 7. On 3rd May Rose in Durban writes and faxes a letter to Peter in Johannesburg stating as follows: “I offer to sell my laptop computer for R 6000. If you want to buy the computer, then you must fax a letter of acceptance to me at the number provided.” Peter receives the fax and posts a letter the same day accepting the offer. The letter is received and read by Rose on 7th May when Rose had already sold the computer to Cedric on 6th May. Which of the following statements sets out the correct legal position? a) Rose cannot sell the computer to Cedric because she already made an offer to sell to Peter. b) A contract was formed between Rose and Peter when Peter posted his letter accepting the offer. Rose is therefore in breach of this contract. c) Since Peter did not use the prescribed mode of accepting the offer, no contract was formed when he posted his letter of acceptance thus Rose is free to sell the computer to Cedric. d) The contract between Rose and Cedric is void because the offer had already been accepted by Peter. e) There are two contracts that are formed: the first contract is between Rose and Cedric and the second contract is between Rose and Peter. LAWS 130-COMMERCIAL LAW 1 JUNE 2005 Page 3 of 9 8. Exciting Dreams (Pty) Ltd manufactures a multi vitamin tablet called “memory enhancer”. In advertising the tablet, Exciting Dreams (Pty) Ltd declares as follows: “Memory enhancer gives you 100% success.” Candice buys and takes the tablet before sitting for her University class test. She gets her results and discovers that she did not get a distinction as she expected. Candice asks you for advice regarding the declaration by Exciting Dreams (Pty) Ltd. You should advise her that: a) b) c) d) e) It amounts to a fraudulent misrepresentation. It amounts to a non-causal misrepresentation. It amounts to a puff. It amounts to a vague contractual term. It is a binding contractual term. 9. Which of the following statements is correct? A contract can be set aside on the grounds of uncertainty if: 1) The parties have given to one of themselves an unlimited discretion to determine the amount which should be paid as monthly installments for a loan and when the first installment should be due. 2) It contains an omission that is material. 3) The language used in the contract is so vague that a court cannot determine the intentions of the parties. 4) The language used in the contract is somewhat vague but admissible evidence is available which can help the court to clarify the intention of the parties. 5) The parties have given to one of themselves a choice in respect of objectively ascertainable criteria or facts. Answers a) 1only. b) 1 and 2 only. c) 1, 2 and 3. d) 2 and 4 only. e) 3 and 4 only. 10. Which of the following statements is correct? a) Civil cases cannot be filed in Magistrates’ courts. b) A juristic person cannot institute proceedings against a natural person or a juristic person in the Small Claims Court. c) Litigants are officers of the court. d) Judges are civil servants. e) The seat of the Supreme Court of Appeal is situate in Pretoria. LAWS 130-COMMERCIAL LAW 1 JUNE 2005 Page 4 of 9 11. Which of the following statement(s) is/are correct? An agreement is illegal under common law if: 1) It restricts other agreements with suppliers or customers in contravention of Section 5 of the Competition Act. 2) It threatens public safety. 3) It undermines public order. 4) It undermines administration of justice. 5) It undermines the institution of marriage. Answers a) 1only. b) 1, 2 and 3. c) 1 and 4. d) 1 and 5. e) 2, 3, 4 and 5. 12. Which of the following statement(s) is/are correct? An agreement is unconscionable and illegal if: 1) It subjects one of the parties to servitude. 2) It deprives one of the parties of all rights to remuneration and other benefits arising from his or her employment. 3) It deprives a debtor of an opportunity to defend himself or herself in civil proceedings. 4) It promotes freedom of contract. 5) It contains vague terms, which make it difficult for the court to give effect to the parties’ intention. Answers a) 1, 2 and 3. b) 2, 3 and 4. c) 3, 4 and 5. d) 4 only. e) 4 and 5. 13. Which of the following statements is not correct? a) b) c) d) All contracts induced by misrepresentation are void. A contract induced by duress or undue influence may be voidable. A court will never enforce a void agreement. A voidable contract is binding upon the parties unless it is set a side by the party entitled to do so. e) An agreement which is void creates no contractual rights or duties whatsoever. LAWS 130-COMMERCIAL LAW 1 JUNE 2005 Page 5 of 9 14. Which of the following statements is not correct? The duty to disclose information arises when: a) A party to the contract tells half-truth. b) One of the parties to the contract makes a statement, which changes with circumstances. c) One of the parties to the contract makes a statement, which amounts to a puff. d) The parties intend to enter into a contract of trust & confidence. e) One party is dependent on the other for the disclosure of information lying exclusively within the knowledge of the latter. 15. Fabian was driving along the beach front in Port Elizabeth (PE) in his new Porsche when Yoko skipped a stop street and rammed his Yamaha motorbike into Fabian. Fabian was on his way to Bloemfontein where he lives. Yoko lives in Cape Town and was only visiting relatives in PE. Fabian receives a quote of R175 000 to have his Porsche fixed. He is furious and wants to claim this amount from Yoko. Which court(s) have jurisdiction to hear this matter? 1) 2) 3) 4) 5) The Port Elizabeth Magistrates Court The South Eastern Cape Local Division The Eastern Cape Division The Cape Provincial Division The Orange Free State Provincial Division Answers a) 1 and 2. b) 1, 2 and 3. c) 2, 3 and 4. d) 4 and 5. e) 5 only. 16. Wise and Clever JJ are sitting in the Natal Provincial Division (NPD). They are faced with the following sources all of which are relevant to the question they are being called upon to decide. Which source will they be bound to follow? a) b) c) d) e) A full bench decision of the Transvaal Provincial Division. A full bench decision in the Durban Coastal Local Division. A decision of two judges in the NPD. An obiter dictum of the Supreme Court of Appeal. A decision of a Pietermaritzburg magistrate’s court. LAWS 130-COMMERCIAL LAW 1 JUNE 2005 Page 6 of 9 17. Which of the following statement(s) is/are correct? A minor can be emancipated in one or more of the following ways: By being discharged completely from parental authority. By living alone. By being financially independent. By applying to the High Court for an order declaring that he or she is a major. 5) By being abandoned by his or her parents or guardians. Answers a) 1 and 2. b) 1 and 3. c) 1 and 4. d) 3, 4, 5. e) 2, 4 and 5. 18. According to the law, a minor is not free from legal liability where he or she has entered into a contract unassisted. Which of the following statement(s) is/are correct with regard to the minor’s legal obligation(s) in an unassisted contract? 1) The minor must restore to the other party whatever he or she has received in terms of the contract. 2) The minor must restore whatever he or she still has in his possession at the time when he or she raises his/her minority as a defence. 3) If the minor fraudulently misrepresented that he or she was a major or that he or she was assisted or emancipated, the minor is liable to compensate the other party for any loss suffered as a result of the fraud. 4) The minor is liable for consequential loss that the other party suffers. 5) The minor’s guardian is liable for the loss suffered by the other party. Answers a) 1 and 3. b) 1, 3 and 4. c) 2 and 3. d) 2, 3 and 4. e) 4 and 5. 1) 2) 3) 4) LAWS 130-COMMERCIAL LAW 1 JUNE 2005 Page 7 of 9 19. In which of the circumstances set out below will a contract entered into by a minor be legally enforceable against both parties to the contract? a) A contract is entered into while one party is a minor acting without his/her guardian’s assistance or knowledge. b) A minor enters into a contract without the guardian’s assistance because the guardian has disappeared and cannot be found. c) The minor enters into a contract without the guardian’s assistance or knowledge but subsequently informs the guardian who strongly disapproves of the contract. d) A minor’s guardian has consented to the relative tacit emancipation of the minor in respect of a part-time job as a deliveryman for Nandos. The minor purchases a Gucci watch. e) The minor purchases a motorbike without the guardian’s assistance. After turning 21 the former minor continues to use and enjoy the motorbike for a lengthy period of time 20. Mr and Mrs Penniless got married in church without concluding an antenuptial contract before-hand. Before they were married, Mrs Penniless inherited a large sum of money which she invested off-shore. Mr Penniless owns a business which is now in financial trouble. His creditors are demanding payment of the amounts owed to them. Except for Mrs Penniless’ off-shore funds, the Penniless’ have no other money to pay off their debts. Do Mr Penniless’ creditors have a claim against Mrs Penniless? a) No, because Mrs Penniless inherited the money before they were married b) Yes, because the Penniless’ are married in community of property and therefore all their assets and liabilities were merged into one estate at the commencement of their marriage and therefore they are liable together for each others debts c) Yes, but Mrs Penniless will have a claim against Mr Penniless or his estate upon dissolution of the marriage d) No, because Mr Penniless owns the business which has nothing to do with Mrs Penniless e) Yes, but Mrs Penniless is only liable for half of the amount owed to the debtors because they (Penniless) are jointly and severally liable. 21. Which of the following statements is correct? a) An infans can enter into a valid contract if he or she is assisted by his or her guardian. b) The guardians of an adopted minor are the biological parents of the minor. c) Under South African law, couples do not have to enter into an ante-nuptial contract in order for the accrual system to apply to their marriage. d) A minor can apply to have an assisted contract set aside if the terms of the contract are unduly burdensome on the minor. e) A pupillus has limited contractual capacity because he or she has neither intellectus nor iudicium. LAWS 130-COMMERCIAL LAW 1 JUNE 2005 Page 8 of 9 22. Which of the following statements is correct regarding a contractual term in restraint of trade? a) It is generally enforceable unless it is contrary to public policy. b) It is never enforceable. c) It is unenforceable, unless the party wishing to enforce it can show that it should be enforceable. d) It is always enforceable. e) It is always unlawful. 23. Expedition theory generally applies to the following modes of acceptance: 1) 2) 3) 4) 5) Letters. Telegrams. Faxes. Telexes. Telephone. Answers a) 1 and 2. b) 2 and 3. c) 2 and 4. d) 3, 4 and 5. e) 4 and 5. 24. A group of poachers are escaping from Wonderland Game Reserve after stealing elephant tasks. One of the tasks falls from their track and is picked up by Juvy who is just driving out of the Game Reserve. Juvy decides to sell the task to Johannes for R300 000. Johannes pays a deposit of R100 000 and promises to pay the balance of the purchase price within one month. Both Juvy and Johannes are aware that Wonderland Provincial Nature Conservation legislation prohibits buying or selling of elephant tasks without a licence to do so from the Department of Nature Conservation. After two months, Johannes has not paid the balance of the purchase price. If Juvy decides to sue Johannes, which of the following statements sets out the correct legal position? a) The court will relax the rule against the enforcement of illegal contracts because it is not fair for Johannes to be unjustly enriched at Juvy’s expense. b) The court will refuse to grant the order for the payment of the balance of the purchase price because of the ex turpi causa maxim. c) The court will declare the contract to be voidable. d) The court will grant judgment in Juvy’s favour. e) The court will order Johannes to pay R 200 000 to Juvy. LAWS 130-COMMERCIAL LAW 1 JUNE 2005 Page 9 of 9 25. Which of the following is not a requirement for the formation of a valid contract? a) The offer must be accepted with the intention that a legally enforceable agreement comes about. b) The agreement must be in writing and the parties must sign the contractual documents. c) If the offeror makes it impossible for the offeree to communicate the acceptance, the offeree must at least take reasonable steps to bring his acceptance to the offeror’s attention. d) If the parties do not have actual agreement, it must be shown that one of them led the other, as a reasonable person, to believe that he was agreeing to the contract and the other party then contracted on the strength of that impression. e) The offer must be accepted by the intended offeree, before it lapses or is revoked.