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Citation: 1988 Ann. Surv. S. African L. 105 1988 Content downloaded/printed from HeinOnline (http://heinonline.org) Thu Jun 13 09:47:51 2013 -- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and Conditions of the license agreement available at http://heinonline.org/HOL/License -- The search text of this PDF is generated from uncorrected OCR text. -- To obtain permission to use this article beyond the scope of your HeinOnline license, please use: https://www.copyright.com/ccc/basicSearch.do? &operation=go&searchType=0 &lastSearch=simple&all=on&titleOrStdNo=0376-4605

GENERAL PRINCIPLES OF CONTRACT


LOUISE TAGER*

A LEGISLATION When the Harmful Business Practices Bill was published for comment it drew a barrage of criticism from the business sector. The bill was seen as a reversal of the Government's deregulation programme, as an instrument to curb inflation, as a means to re-introduce price control, and as a cure for a host of other evils. Yet the bill journeyed rapidly through all three Houses of Parliament, was enacted as the Harmful Business Practices Act 71 of 1988, and came into operation on I July 1988. The Act repeals the Trade Practices Act 76 of 1976 except for ss 1, 9, 10, 13 and 19. The repeal of these sections will come into operation on a date fixed by the minister by notice in the Gazette. All notices, except GN R338 of 15 February 1985 published under the Trade Practices Act, remain in force until amended or withdrawn by the minister. The Act is based on similar legislation in jurisdictions such as the United Kingdom, United States, Israel and Australia. The structure of the Act is similar to that of the Maintenance and Promotion of Competition Act 96 of 1979. The Harmful Business Practices Act provides for the establishment of a committee of no fewer than four and no more than seven persons who are appointed by the Minister of Economic Affairs and Technology. The functions of the committee include the making known of information on current policy in relation to harmful business practices to serve as general guidelines, and the receipt and disposal of representations in relation to any matter with which the committee may deal in terms of the Act. The committee may, and on instruction of the minister must, conduct an investigation into any harmful business practice which it has reason to believe exists or may come into existence. It may also investigate any business practice in general or in relation to a particular commodity which is commonly applied for the purposes of or in connection with the creation or maintenance of harmful business practices. It may also investigate any price increase, reduction of discount or method of fixing prices, in relation to any commodity.
*BA LLB H Dip Tax Law (Witwatersrand) LLM (Harvard), Advocate of the Supreme Court of South Africa, Professor of Law in the University of the Witwatersrand, Johannesburg.

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The committee in the performance of its functions may deal only with business practices as defined. The definition appears to be very wide, but the business practice must be a harmful business practice as defined. The practice would be harmful if it directly or indirectly has or is likely to have the effect of harming relations between business and consumers, if it unreasonably prejudices any consumer or if it, deceives any consumer. The committee upon completion of an investigation reports to the minister. If the minister is of the opinion that a harmful business practice exists or may come into existence, and if he is not satisfied that the practice is justified in the public interest, he may declare the business practice to be unlawful or issue such other notices as are set out in s 12(1). The Act makes provision for appeals against the minister's decision to a special court. Heavy penalties are prescribed for contraventions of the Act. B CASE LAW
ESSENTIALS

Tenders in Building Contracts The legal effect of tenders was discussed in G & L Builders CC v McCarthy Contractors (Pty) Ltd 1988 (2) SA 243 (SE). The court pointed out that the seeking of tenders was no more than an invitation to do business. The tender was the offer that could be accepted or rejected. Since a tender was an offer, it was not generally necessary that the lowest or any tender would be accepted, although requests for tenders often drew attention to this fact. A passage from Treitel The Law of Contract6 ed at 12, quoted in the present case (at 248A), drew attention to another important aspect of tenders: 'the preparation of a tender may involve very considerable expense; but the tenderer incurs this at his own risk'. Communication of Acceptance The general rule governing the formation of an agreement is that acceptance must be communicated to the mind of the offeror unless the offeror, expressly or impliedly, dispenses with the requirement of notification and indicates the manner in which acceptance may be manifested. In McKenzie v Farmers' Co-operative Meat Industries Ltd 1922 AD 16 the defendant dispensed with the communication of acceptance as an essential requirement for the conclusion of the contract by requesting the plaintiff to allot certain shares to him upon receiving his application. By allotting the shares to the

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defendant, the court held, the plaintiff had manifested his acceptance of the application, and he had done so in the manner indicated by the defendant. The relevant clause in the draft agreement in Orion Investments (Pvt) Ltd v Ujamaa Investments (Pvt) Ltd & others 1988 (1) SA 583 (ZSC) stated: 'This agreement shall only become of force and effect when executed by the sellers and by the purchaser and shall thereupon be the exclusive memorial of the agreement of sale and purchase...'. A memorandum accompanying the draft agreement said: 'We enclose in duplicate agreement duly signed by all sellers. If it is not acceptable, your early return of the agreements would be appreciated' (see at 5861, 587A). The question for consideration was whether, in terms of the offer, communication of acceptance had been dispensed with and the signing of the contract by the purchaser constituted acceptance, or whether acceptance had to be conveyed to the seller in accordance with the general rule. Although at first blush it appeared that signature would be sufficient to conclude the contract, Dumbutshena CJ held that the sentence 'If it is not acceptable, your early return of the agreements would be appreciated' indicated that the respondents had been desirous of being informed early if the offer were rejected. It envisaged that the offeree would notify the offeror in his own time in the event of his accepting the offer. It did not, in the learned Chief Justice's view, dispense with the need to notify the offeror of the offeree's acceptance. The dictum of Lord Denning MR in Robophone FacilitiesLtd v Blank [1966] 3 All ER 128 (CA) at 132A was in accord with this interpretation. 'Signing without notification is not enough.... The plaintiffs would be able to keep the form in their office unsigned, and then play fast and loose as they pleased.' In the result, the court held that there was no agreement because the offer had not been accepted. Acceptance: Exercise of an Option The appeal against the decision of the Orange Free State Provincial Division in Ficksburg Transport (Edms) Bpk v Rautenbach en 'n ander 1986 (2) SA 88 (0) failed. The decision of the Appellate Division in Ficksburg Transport(Edms) Bpk v Rautenbachen 'n ander 1988 (1) SA 318 (A), by a majority of three to two, was, with respect, overly formalistic. A notarial prospecting contract conferred an option on the appellant to purchase certain properties mentioned in the contract. The option had to be exercised before termination of the contract, in writing, by delivery of a written notice to the owner. On the last day

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for exercising the option the respondent was temporarily absent from his farm and the appellant's attorney fixed the letter exercising the option to the front door of the respondent's residence. It was contended for the appellant that this was adequate delivery of the notice because the respondent had chosen this address as his domicilium citandi et executandi. The notice was read by the respondent on the following day upon his return to his farm. The court a quo held that the option had not been exercised timeously, and gave leave to appeal against this decision. ViviersJA delivered the majority judgment dismissing the appeal. The choice of a domicilium in the contract was relevant only to the service of a process in legal proceedings; it had not been intended for the giving of notices required by the contract. The clause could not be given the dual interpretation contended for by the appellant. Nor did the appellant's claim that it had done everything that could reasonably be expected to deliver the notice to the respondent find favour with the majority of the court. No attempt had been made to ascertain the whereabouts of the respondent or to arrange a meeting with him. An inquiry would have revealed that the respondent was but a four-hour drive from his farm, and had this been done there would still have been sufficient time to deliver the notice to him. There was no room for the application of the doctrine of fictional fulfilment, because no evidence had been led to show that the respondent, by his absence, had deliberately prevented the fulfilment of the condition. The dissenting judgment of Rabie ACJ and Boshoff AJA is to be preferred. It illustrates that an interpretation in favour of the appellant would have been well within recognized legal principles. The learned Acting Chief Justice did not agree with the view of the majority that the appellant should have taken steps to find the respondent. (Indeed, what if the respondent had been out hunting tigers in Bengal!) The meaning of the word 'deliver' had been discussed in A to Z Bazaars (Pty) Ltd v Minister of Agriculture 1975 (3) SA 468 (A). The document had to be delivered to the recipient, and delivery of the notice to a place where the recipient was not himself present was not delivery. This might be the usual interpretation given to 'delivery', opined Rabie ACJ, but that interpretation was not always or in all circumstances necessarily its only meaning. The parties could not have intended that, whatever the circumstances, the option could not be exercised unless the written notice was handed personally to the respondent. An obiter dictum of Ogilvie ThompsonJ in Smeiman v Volkerz 1954 (4) SA 170 (C) at 177C supported this opinion: '[A]nd, though I incline to the view that timeous delivery of a letter of acceptance to

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respondent's correct Wynberg address would have sufficed to create a contract notwithstanding the respondent's temporary absence
from that address ... it is common cause that Gelb's letter of

15 February only reached respondent's Wynberg address subsequent to 15 February.' Although the domicilium citandi et executandi clause usually applied to the place where legal processes were to be served, every contract had to be interpreted to establish whether the parties intended the clause to have this limited meaning, or whether they intended it to be used for other notices which were provided for in the agreement. For instance, the contract under consideration provided that the prospector could cancel by giving written notice to the owner. In another clause all moneys were to be paid directly to the owner at the farm De Villiersdrift, district Fouriesburg. The omission to state the place for delivery of the notice exercising the option or for the notice of cancellation, on the one hand, and the specific mention of the place in the payment clause, on the other, indicated that the intention had been that the domicilium should be used for the contractual notices as well as for service of legal processes.
REALITY OF CONSENT

Mistake The principle of law enunciated by Innes CJ in Burger v Central South African Railways 1903 TS 571 that a man, when he signs a contract, is taken to be bound by the ordinary meaning and effect of the words which appear over his signature, has been consistently applied in numerous cases during this century. It is not, however, an immutable principle, as recent cases have shown. In Kempston Hire (Pty) Ltd v Snyman 1988 (4) SA 465 (T) the plaintiff was a company which leased vehicles from time to time to a certain company where the defendant was employed as a clerk. The contract of lease was usually signed by any employee of the company who happened to receive the car for hire. The defendant signed some of these contracts without reading them. He believed that he was signing a receipt for the delivery of the vehicle when, in fact, according to one of the terms, his signature bound him jointly and severally to the lessor for all the obligations of the company in respect of the vehicle hired. When the company went into liquidation the plaintiff sued the defendant as surety. The magistrate dismissed the claim on the ground that the defendant had had no intention to become a party to the contract and that there had been no consensus.

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On appeal from the magistrate's decision the plaintiff relied on George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A), where Fagan CJ followed the so-called sound principle expressed in Burger's case. But in George's case the learned Chief Justice pointed out that a party would not be bound by a document he had signed if he had been misled either as to the nature of the document or as to its contents. In the present case the court found that the plaintiff had to have known that none of the employees would have studied the contract and searched for the clause rendering him jointly and severally liable. This was a case of misrepresentation by silence, and the situation was similar to that in Curtis v Chemical Cleaning & Dyeing Co Ltd [1951] 1 All ER 631 (CA), where Denning LJ held that a contracting party who did not draw the attention of the other party to the contract to the existence or extent of an exemption clause might convey the impression that there was no exemption clause, or that the exemption clause was not as wide as it in fact was. Kempston Hire (Pty) Ltd, which followed Du Toit v Atkinson's Motors Bpk 1985 (2) SA 893 (A) (see 1985 Annual Survey 101) clearly illustrates that our courts have abandoned the pure objective theory of the early decisions in favour of a more practical, reasonable and subjective theory of contract. Rectification The rectification of a written contract is a form of equitable relief which is allowed when the written document does not reflect the common intention of the parties to the contract. According to Magwaza v Heenan 1979 (2) SA 1019 (A) a written contract cannot, however, be rectified if ex facie the document the contract does not comply with the formalities prescribed by statute or is otherwise unlawful. Seligson AJ in Lazarus v Gorfinkel 1988 (4) SA 123 (C) was not aware of any decided case which dealt with the applicability of rectification to contracts of suretyship, but he saw no reason for applying a different rule to such contracts. The plaintiff, Lazarus, instituted action for rectification of a deed of suretyship by the substitution of his name for that of the creditor named in the deed. Lazarus claimed that it had been the true intention of the parties that he be the creditor and not Norbren Investments CC (a family concern managed and controlled by him), and that he had accepted the deed of suretyship in the bona fide but mistaken belief that it correctly reflected the common intention of the parties to the contract. The deed of suretyship in the present case complied in all respects

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with s 6 of the General Law Amendment Act 50 of 1956. The contract was embodied in a written document and was signed by the surety. Although the contract of suretyship was a bilateral contract, the learned judge pointed out that only the surety's signature and not that of the creditor was prescribed as a necessary formality. Unfortunately the plaintiff was unable to discharge the onus of showing that on a balance of probabilities the deed did not reflect the true intention of the parties. He had had no direct dealings with the defendant, and a third party had arranged for the defendant to sign the deed. It seems that cases involving the rectification of a deed of suretyship are not as rare as the previous case suggested. Ex facie the document the deed of suretyship in Litecor Voltex (Natal) (Pty) Ltd v Jason 1988 (2) SA 78 (D) complied with the formalities prescribed in s 6 of the General Law Amendment Act. Therefore, held Didcott J, it was capable of rectification. The problem, however, was that the defendant had mistakenly been cited in the deed in his capacity as director of the principal debtor company, and the document conveyed the impression that he had been authorized by the company to bind the company as surety and co-principal debtor for payment of its own debt. Rectification of such a document, observed the learned judge, would have transformed a document which, although valid in form, was in substance of no force, into one which would become enforceable. The case of Spiller v Lawrence 1976 (1) SA 307 (N) drew a clear distinction between contracts which were void for want of compliance with essential formalities and those which, although valid in law, were invalid for some other reason. Contracts in the former category were invalid in form and could not be rectified, whereas there was no reason to preclude the possibility of rectification of the latter category, where the contracts were invalid in substance. The relief sought in the present case required the court to substitute a surety who was not identified in the deed for the named surety. On the authority of Weinerlein v Goch Buildings Ltd 1925 AD 282, which permitted rectification by substituting a description of land for the land described in the agreement, the court in Litecor Voltex (Natal) (Pty) Ltd allowed the rectification. Fraud of a Third Party The tripartite agreement in Forsyth v Mounsear-Wilson & another 1988 (4) SA 627 (W) embodied terms relating to the different sets of reciprocal rights and obligations of the buyer of land, the plaintiff, who was the excipient in the present case, the seller of the land, the second defendant, and the first defendant, who was the respondent.

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The terms included the dissolution of certain erstwhile relationships and the substitution of certain new ones; it arranged three sets of bilateral relationships, none of which was wholly independent of the other two. Prior to the conclusion of the tripartite agreement the second defendant had sold, but not delivered, certain land to the first defendant, who had in turn resold it at a profit to the plaintiff. After the plaintiff had taken transfer of the land pursuant to the tripartite agreement, he discovered that the first defendant, in their initial dealings, had fraudulently induced him to buy the land by representing to him that no road development was planned, whereas a highway had been planned to pass diagonally through the land. The plaintiff then sought to cancel the tripartite agreement, claiming damages from the first defendant against retransfer of the land to the second defendant at the expense of the first defendant. The first defendant entered two interlinked special pleas against the plaintiff's claim. The tripartite agreement was the common source of several contracts, and the fraud perpetrated by a party to a cancelled earlier agreement could not be relied on by the plaintiff in a contract in which the plaintiff had bought directly from the second defendant, and in which sale the first defendant had not participated. The plaintiff, who was the excipient to the special pleas, relied on the indivisible nature of the contract. The court chose to avoid the question of the divisibility or otherwise of the contract. The answer to the question, Kriegler J said, was whether there was so close an identity between the particular relationship tainted by the fraud, and the relationships that were not, that one could say that the latter could not stand without the former. The second defendant's sale of the land voetstoots to the excipient was irreconcilable with either of the parties' being entitled to resile from their bargain on the strength of anything that the respondent had done or not done before the contract had been concluded. The relationship was 'uncluttered by any historical impedimenta' (at 638D). The multilateral agreement, which was primarily a sale of land between the excipient and the second defendant, could not be cancelled on the grounds or in the manner alleged.
LEGALITY

Pactum Successorium A pactum successorium is basically a contract which has the effect of usurping the testamentary freedom of one contracting party. A

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contract in which a person promises that he will dispose of his estate in a certain way after his death is a pactum successorium, and as such is invalid and unenforceable. There are, however, certain contracts which fall outside the ambit of a pactum successorium, for example, a contract which vests a right in one party to claim delivery of the property after the other party's death. This contract bestows a ius in personam ad rem acquirendam, and is enforceable. The contract in Jubelius v Griesel NO 1988 (2) SA 610 (C) might have fallen outside the category of a pactum successorium and been enforceable had it not contained a condition that the beneficiary's right to acquire the property depended on the owner's predeceasing him. The effect of this condition was that vesting could not occur until the owner's death. In spite of this, the court, taking into account the relative ages of the two parties and their respective states of health, held that, since it had been unlikely that the deceased had considered that he would outlive the plaintiff, or that the property still formed part of his estate, the contract should be upheld. If there was any doubt as to the correctness of this decision, the learnedjudge said, the maxim ut res magis valeat quam pereat required the court to incline in favour of the validity of the contract. This decision is, to say the least, a very surprising one. It is difficult to understand the relevance of the reference to the ages or state of health of the parties. The rationale for not enforcing a pactum successorium is clear, and this decision, whatever its apparent pragmatism, opens the way to fraud and uncertainty.
CONDITIONS IN CONTRACT

Sole Discretion Vested in One Party The appellant in Kriel v Hochstetter House (Edms) Bpk 1988 (1) SA 220 (T) claimed that a lease was invalid in that it did not provide for a determinable rental. The lease gave the lessor absolute discretion to determine additional levies relating to the use of common space and services such as water and electricity. The levies could vary according to circumstances and expenses incurred. In the court a quo the respondent conceded that certain clauses were invalid. The court severed the clauses in issue and gave judgment against the appellant for the basic rental. On appeal the court held that the clauses giving the respondent the absolute discretion to determine the additional levies rendered the lease vague and invalid. The court then considered whether the invalid clauses could be severed from the valid part of the contract. The fact that the contract

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provided for different contributions for different items could be an indication that the parties intended that the vague terms of the contract could be severed from the rest. If, however, it appeared that neither party would have entered into the contract had the invalid clauses not been included, this would be an indication that the contract was not severable. The invalid terms were an integral part of the contract. It was clear that the respondent would not have let the premises for the basic charges only. Nor was it likely that the respondent would have agreed to permit the appellant to use the common areas free of charge. On the other hand, it was unthinkable that the appellant would have hired an office on the ninth floor of a building unless he had had the use of the common space as well as the electricity and other conveniences. In the circumstances the appeal was upheld by the full bench. McCreath J, who delivered the majority judgment, held that the invalid clauses could not be severed and the entire contract was unenforceable. Stegmann J delivered a separate concurring judgment. Statutory Illegality Shillings CC v Cronje & others 1988 (2) SA 402 (A) reversed the decision of the Transvaal Provincial Division reported in Shillings v Cronje en andere 1986 (3) SA 423 (T). On appeal the court held that the joint and several obligations assumed by five persons (the respondents) in terms of a lease of property situated in a white group area were not necessarily all rendered invalid by virtue of the provisions of the Group Areas Act 36 of 1966. In the present case the second respondent was an Indian person who was, in terms of the Act, a person disqualified from owning or leasing property in a white group area. This fact provided him with a personal defence against an action instituted on the contract against him. The defence, being purely personal in nature, could not be relied on by the other respondents, who were all whites. It was pointed out by the court that, although the release of one of the co-debtors could result in a reduction of the amount of liability of the remaining co-debtors to the creditor, it was not necessary to pursue the point because the appellant's prayer was simply for a declaration that the lease was binding on the first, third, fourth and fifth respondents. The conclusion of the court accorded with the rule expressed in McCullogh v Fernwood Estate Ltd 1920 AD 204 that courts should incline to a construction which renders the contract operative rather than inoperative. This conclusion was also supported by the

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language used in the contract, which clearly indicated that each party had assumed personal liability. The appeal in Essop v Abdullah 1988 (1) SA 424 (A) against the decision of Essop v Abdullah 1986 (4) SA 1 1 (C) was unsuccessful. The contract between the appellant and the respondent sought to achieve what was clearly prohibited by the provisions of the Group Areas Act 36 of 1966, and its predecessor Act 77 of 1957. The appellant was an Indian person who had persuaded a coloured person to acquire property on his behalf in a coloured group area contrary to the provisions of the Act. No permit had been obtained by the Indian person. The parties agreed that, if the Indian wished to have the property transferred to another person or to himself if he obtained a permit, the registered owner would do so upon request. The parties then had a disagreement, and the respondent refused to transfer the property when requested to do so. The court would not consider the agreement between the parties. The contract was illegal in that it continuously contravened the Act, and to uphold it would deprive the relevant section of the Act of its efficacy because there was no limitation on who might apply for and obtain a permit. While the decision may be correct on a strict interpretation of the Act, it is arguable that the case could have been decided differently on the analogous principle applied to gambling contracts involving agents. Although wagers are unenforceable contracts, the rule against unenforceability should not apply to subsidiary or collateral agreements entered into by agents. In Dodd v Hadley 1905 TS 439 the court held that it would be far more immoral to permit an agent to retain the money won on a bet placed on behalf of his principal than to enter into the original bet. It is true that wagering contracts are not in themselves illegal or immoral, whereas the contract in issue was illegal in that it contravened a statute. But the Group Areas Act creates a technical offence, and the contract does not constitute a serious or a commonlaw crime. To permit the registered holder, who was no more than a nominee of the real purchaser, to deal with the property at will and contrary to an agreement, it is submitted, amounts to nothing short of condoning the common-law crime of theft.
CESSION

Delectus Personae The court in G S George Consultants & Investments (Pty) Ltd & others v Datasys (Pty) Ltd 1988 (3) SA 726 (W), in order to decide whether

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to grant an interdict against the respondent restraining it from disposing of the applicants' shares, had to consider the validity of the cession whereby the respondent had acquired the shares in issue. The shares had been pledged by the applicants to the First National Bank Ltd as security for the individual indebtedness of each to the bank. The bank had then ceded all its rights against the applicants to the respondent. These rights included the payment of the amount owing, the bank's rights arising out of the deeds of cession and pledge and out of the pledge of shares made in terms of those deeds. The respondent instituted action against the applicants, claiming payment of the debts that had been ceded to it. Before the actions for the recovery of the debts came to trial, the respondent informed the applicants that the pledged shares would be realized unless the ceded debts were paid within 24 hours. The applicants immediately applied for an interdict restraining the respondent from disposing of the shares. The court considered separately the validity of the cession of the monetary debt, the cession of the bank's rights in respect of the contract of cession and pledge and in respect of the cession of shares delivered pursuant to such contracts. When a banker allows a customer to operate a current account, one of the ordinary incidents of the resulting contractual relationship is to impose upon the banker an obligation to preserve the confidentiality of his knowledge of his customer's business. Such a duty of secrecy has been judicially acknowledged in Abrahams v Bums 1914 CPD 452 at 456 and in Cambanis Buildings (Pty) Ltd v Gal 1983 (2) SA 128 (NC) at 137E. In the present case there was no suggestion of any circumstances which might have relieved the banker of its duty of secrecy to each of the applicants. The element of confidentiality in the contract was so personal in nature, Stegmann J opined, that it rendered the banker a delectus personae and, as such, according to the well-established legal principles of cession, it could not cede its rights against the debtors of customers without the debtors' consent. Cession in Securitatem Debiti A debtor executed two successive deeds of cession in securitatem debiti in favour of two different creditors. When the second creditor, the appellant in Airco Engineering (Pty) Ltd v Ensor NO 1988 (2) SA 367 (N), became aware of the prior cession, it reached an agreement with the first creditor that it would provide a bank guarantee to cover the facilities granted to the debtor by the first creditor, in

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return for which the first creditor would release the debtor from all obligations under the first deed of cession. Shortly after this arrangement was concluded the debtor went into liquidation and the liquidator, the respondent in the present case, contested the validity of the second cession and rights of the second creditor to collect the debts covered by the second cession. The respondent obtained a rule nisi in the court a quo against the appellant on the basis that at the time of the second cession the debtor had already ceded all its claims in the first cession. On appeal the appellant contended that the debtor had ceded to it the right to claim re-cession of its claims from the first creditor upon liquidation of the first creditor's claim against the debtor. It also claimed that the second cession was wide enough to include all rights of action which might subsequently vest in the cedent. The appellants' alternative argument found favour with the court and the appeal succeeded. The terms of the second cession were wide enough to embrace all debts which might become due and payable to the cedent in the future. The words 'all amounts presently and at all times in the future due and payable to us by all our debtors without exception' had been intended to be read without qualification or limitation, and included both present and future debtors. Indeed, there were a number of cases which supported the proposition that future rights or even the spes of such rights could form the basis of a valid cession. The terms of the deed of cession in securitatem debiti in Sasfin (Pry) Ltd v Beukes; Suid-Afrikaanse Vervoerdienste v Sasfin (Pty) Ltd 1988 (1) SA 626 (W) bound the cedent in aeternitatem to the cession of all his future income. The cession was declared ultra vires on the grounds that it was contrary to public policy. The court observed that the doctrine of public policy was invoked only in clear cases in which the harm to the public was substantially incontestable. Public policy had been described as a high horse to mount and a difficult one to ride when it had been mounted. Frequently, it had been said, the high horse attempted to stampede in opposite directions at the same time. Nevertheless, if the occasion called for it, a court had to do its duty and test the contract in question. There was no possibility that the deed of cession could be severed as contended by the plaintiff. A contract could be severed if the several portions were independent of one another, and could be severed without the severence affecting the meaning of the parts that remained. In the present case the intention to afford security to the cessionary in the form of all future income earned by the cedent at all times, notwithstanding any intermediate discharge or settlement of the cedent's obligations to the creditors or the cessation of the

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debtor/creditor relationship between them at any time, went to the very essence of the obligation. The terms sought to be severed were indivisible and formed the main purport and substance of the contract.
TERMINATION OF THE CONTRACT

Performance Payment: Cheque Sent Through the Mail In the performance of his contractual obligations it is the debtor's duty to seek out his creditor. If the debtor performs his obligation to pay by paying by cheque, his payment is conditional and becomes final only when the cheque is honoured. The debtor bears the risk of loss or misappropriation of the cheque in the interim. Thus if the debtor chooses to send the cheque through the post and the cheque is lost or stolen, any loss sustained on the cheque would be his. The risk of loss shifts to the creditor if the creditor requests or stipulates expressly in the agreement or by implication at a later stage that payment may be made through the post. The reason is that the creditor must assume the risks of any inadequacies in the method of performance selected by him. The debtor has, however, to obey any instructions imposed by the creditor. For instance, the creditor may require him to post the cheque to a particular address. The court in Mannesmann Demag (Pty) Ltd v Romatex Ltd 1988 (4) SA 383 (D) considered whether in the absence of an express direction from the creditor it could be said that it was implied that the debtor had an additional obligation to draw the cheque in such a way that no person other than the creditor could obtain payment on it. NienaberJ came to the conclusion that the past practice of the parties concerned had to be taken as a measure of how reasonable businessmen drew their cheques. According to the evidence, neither of the parties had ever indorsed his cheque 'not transferable'; they had marked their cheques 'not negotiable, account payee only', and the learned judge was not persuaded that there was, room for implying a term that the cheques had to be drawn in the manner contended for by the plaintiff. In the circumstances, it was held that the risk of loss of the cheque fell on the plaintiff and that the defendant had performed in accordance with the contract. Payment in Foreign Currency Although Nestadt J, as he was then, in Voest Alpine Intertrading Gesellschaft MBH v Burwill & Co SA (Pty) Ltd 1985 (2) SA 149 (W), held that the court was obliged to give judgment only in rand and

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not in foreign currency, the learned judge said that he was not able to find the source of this rule (see 1985 Annual Survey 119). The source of the rule, it seems, according to LeonJ in Elgin Brown & Hamer (Pty) Ltd v Dampskibsselskabet Torm Ltd 1988 (4) SA 671 (N), is probably 'supposed practical convenience' (at 673F) such as to avert possible problems which may arise on execution. This was a matter which the court would have to bear in mind in the exercise of its discretion, but, the learned judge held, there was no absolute bar to its giving an order in foreign currency. The decision is to be welcomed particularly in the current economic climate of fluctuating exchange rates and weak rand. When a loss is suffered in a foreign currency, the plaintiff might not recover his actual loss if damages are not assessed and quantified in that currency. Repudiation The conduct by one of the contracting parties in the performance of his contractual obligations may appear to the other party to be a repudiation of the contract. If the latter so interprets this conduct incorrectly and cancels the contract, he might find that his act of cancellation amounts to a repudiation which justifies the other party's right to cancel and sue him for breach. This is what occurred in Culverwell v Brown 1988 (2) SA 468 (C). The appellant purchased certain property from the respondent. The appellant failed to pay the full amount of the deposit, and the respondent issued summons against the appellant. The appellant then claimed that the respondent had entered into a new lease of part of the property. This amounted to a material breach of the agreement and constituted a repudiation entitling him to cancel the agreement. The respondent denied that he had breached the agreement and claimed that the appellant had repudiated, which repudiation he had accepted. The court found that, by entering into a new lease which extended beyond the period of the existing lease, the respondent had imposed a greater restriction on the appellant's right to obtain vacant possession and, in this respect, there had been a breach of contract. The breach had not, however, amounted to a repudiation of the contract. The respondent's conduct had not exhibited a deliberate and unequivocal intention no longer to be bound by the contract. The appellant's purported cancellation had not been justified, since the breach complained of had not been a breach of a material term. In the circumstances, the respondent had been entitled to regard the appellant's cancellation as a repudiation which gave him

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an election either to disregard it and continue to seek specific performance or to accept it and terminate the contract. The respondent had exercised his election when he had sold the property to a third party. The fact that the respondent had sold the property before conveying his acceptance of the repudiation to the appellant could not be said to amount to a repudiation of the contract by the respondent. In making the award of damages for breach of contract the court seeks to put the aggrieved party in the position he would have been in had the contract been fully performed. In a contract of sale the market value of the merx has to be established for the purpose of determining the amount of damages. The aggrieved party is usually granted the adverse difference between the purchase price and the market value of the merx. The cases differ as to what is the relevant time for determining the market value. Is it the date of repudiation, or is it the date when the repudiation is accepted? The court was of the opinion that the relevant date was the date of acceptance of the repudiation. The date of repudiation was not an appropriate date to fix the damages. Repudiation per se did not bring the contract to an end, because the other party was not obliged to accept the repudiation immediately or at all. He had an election, and he might take a reasonable time to decide whether to accept the repudiation. Only when the date of cancellation had been crystallized could any question of damages arise. The court included in the award of damages for breach the interest on the purchase price that the party would have received had the contract been performed. Since the agent's commission was no longer payable, the court deducted from the award of damages the commission that the plaintiff would have had to pay had the contract been performed. Prescription In an action for damages in Brand v Williams 1988 (3) SA 908 (C) the defendant claimed that the debt had prescribed. The plaintiff was a minor at the time that the cause of action arose, and, in terms of s 13 of the Prescription Act 68 of 1969, the running of prescription against a minor is not completed until expiry of one year from the date upon which the minor becomes a major. It was argued by the defendant that, by virtue of s 12(3) of the Prescription Act, which provides that a debt will not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises, the knowledge of the creditor's guardian of the

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identity of the debtor and the facts from which the debt arose could be imputed to the creditor (the plaintiff). The court distinguished the case when action is instituted while the creditor is still a minor from that when the action is instituted by a creditor who became a major after his cause of action arose. In the former case s 13 applied, and it would be of no consequence when the guardian of the minor acquired knowledge of the debtor's identity. There were two conflicting decisions governing the latter situation, Jacobs v Kegopotsimang 1937 GWL 43 and Greyling v Administrator, Natal 1966 (2) SA 684 (D). Scott AJ, in the present case, declined to follow Jacobs's case. The assistance of the guardian was necessary to give the minor locus standi, but the claim was that of the minor, and therefore it was the knowledge of the minor and not that of the guardian which was relevant. There was nothing in s 12(3) to justify a construction which necessarily imputed the knowledge acquired by the guardian to the minor. To construe s 12(3) in this way to extend the meaning of creditor to include both the creditor and his guardian when the creditor was a minor would be contrary to the spirit of s 13, which delayed the running of prescription against a minor. Moreover, s 12(3) was aimed at preventing prescription from running against a creditor who, by reason of his lack of knowledge and the inability to acquire it by the exercise of reasonable care, was unable to institute action. Mati v Minister ofJustice, Police and Prisons, Ciskei 1988 (3) SA 750 (Ck) dealt with the period of prescription in terms of s 48(l)(b) of the Police Act 32 of 1983 (Ck). Exceptio Doli Generalis: Obituary Alas! The Appellate Division in Bank of Lisbon and South Africa Ltd v De Ornelas & another 1988 (3) SA 580 (A) has not only sounded the death knell, but has, once and for all, buried the exceptio doli generalis and the replicatio doli generalis as a superfluous, defunct anachronism. Jansen JA was the only dissenting voice in this monumental decision of five Appellate Division judges, comprising Rabie ACJ and Jansen, Joubert, Hefer and GrosskopfJJA. The majority judgment, delivered by Joubert JA, traversed the origin, development, scope and applicability of this ancient Roman exception. The role of the exceptio doli generalis in the ancient Roman formulary procedure was discussed in detail, perhaps for the last time in our law reports. At the end of the third century AD the exceptiones of classical Roman law were superseded by post-

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classical objections (praescriptiones) and the exceptio doli ceased to function as a praetorian procedural remedy, and as a technical term of pleading. The compilers of the Corpus Juris Civilis retained the exceptio, probably because of the extensive use made from the writings of Roman jurists dating from the classical period. The method employed by the compilers had been the cause of confusion which resulted in the belief that the exceptio remained alive. The exceptio doli appeared in the works of medieval jurists because Glossators and Commentators wrote their glosses on texts in the CorpusJuris Civilis which related to the exceptio doli. In fact the medieval jurists introduced very important reforms into the Roman law of contract. The new rule nudo pacto nascitur actio had its origin in canon law, the technical formalities disappeared and only the essential elements such as consent for the validity of the contract remained. The overriding principle that all contracts were regulated by bona fides was enunciated. With these reforms the raison d'tre for the exceptio doli to ameliorate the harshness and inflexibility of contractus stricti iuris disappeared. The learned judge of appeal then turned his attention to a review of the Roman-Dutch jurists on this subject. He concluded that the exceptio doli generalis had never been part of Roman-Dutch law, and pointed out that his conclusion was confirmed by the significant silence of the authoritative Dutch jurists and the total absence of judicial recognition of the exceptio doli generalis by the Hof van Holland en Wes-Friesland and the Hooge Raad. Nor, it appeared, had the Appellate Division in any single case ever fully considered whether the exceptio was part of our law. In Weinerlein v Goch Buildings Ltd 1925 AD 282 the reliance on the exceptio had been based on the Roman law, but the attitude of the Roman-Dutch law had never been canvassed. Similarly, in Zuurbekom Ltd v Union CorporationLtd 1947 (1) SA 514 (A) and Paddock Motors (Pry) Ltd v Igesund 1976 (3) SA 16 (A) the question whether the exceptio formed part of Roman-Dutch law had never been mooted. In both cases all references had been references to the Roman law. The majority judgment of Joubert JA somewhat unusually also contains a reply to the dissenting judgment ofJansenJA.JoubertJA was of the opinion that the reasoning ofJansen JA had been based on certain misconceptions. Joubert JA rejected Jansen JA's explanation as to why the exceptio was not used in Dutch practice. The other criticisms of the dissenting judgment relate to the question of the equitable jurisdiction of the courts. Our courts and the Dutch courts, unlike the English courts, until the Judicature Act of 1873 became operative in 1875, do not and did not administer a system of equity as distinct from a system of law. As

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Joubert JA pointed out, Roman-Dutch law was itself inherently an equitable legal system. Although our courts and the Dutch courts of the 17th and 18th centuries paid due regard to considerations of equity, this was done only where equity was not inconsistent with the principles of law. Equity could not override a clear rule of law. Jansen JA was of the opinion that the exceptio constituted a substantive defence based on the sense ofjustice in the community. There could in some cases be an overlap with public policy or boni mores. Joubert JA rejected the argument that bona fides and boni mores formed part of the substantive rule of law in Roman-Dutch law. Moreover, he said that Jansen JA had overlooked the fact that the Dutch courts had no equitable jurisdiction to introduce into Dutch practice a general substantive defence based on equity where substantive law failed to provide one. Thejudgment of the majority is based on the fact that the exceptio was purely a procedural device and that it had no proper application in the law since the third century AD. The reasoning is without fault but, as Jansen JA pointed out, to deny the exceptio a place in our law would leave a vacuum because the requirement of good faith has not yet absorbed the principle of the exceptio doli, nor has contra bonos mores as yet been specifically applied in this field. It seemed to the learned judge to be of no crucial import whether or not the leges dealing with the exceptio were received in Holland or fell into disuse, because the existence of the exceptio as a defence based on equity was demonstrated by the decisions of the Appellate Division. Indeed, the lower courts had overwhelmingly assumed for many years that such a defence was available. As Jansen JA said, if the exceptio doli generalis cannot be relied on we will have a vacuum in our law. What remedy is there for those at the mercy of standard form contracts where the terms are often reduced to print of a microscopic size? The German principle of de Goede Trouw and the English and American concept of unconscionability have been given statutory form, and it seems that the Appellate Division has now left no choice to our legislature but to enact the necessary protection against unfair contracts.
REMEDIES FOR BREACH OF CONTRACT

Restitutio in Integrum The remedy of restitutio in integrum entitles the aggrieved party to cancel the contract, recover his performance and tender the performance he has received. He would then be entitled to be restored to his prior contractual position. This remedy is not available when a party has accepted the defective performance.

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The plaintiff in Medispa (Pty) Ltd v Kroebel Tools & Products (Pty) Ltd 1988 (4) SA 415 (W) claimed repayment of the purchase price for a certain mould produced by the defendant, on the ground that the mould was defective. The plaintiff did not cancel the contract immediately upon receipt of the alleged defective mould. Some years elapsed between the delivery of the mould and the notice of cancellation, during which time the plaintiff used the mould for its intended use, and, on a few occasions, returned it to the defendant so that the defects could be remedied. After three years the defendant refused to carry out further remedies on the mould unless the plaintiff made an additional payment. An agreement was reached between the parties, and then the defendant refused to carry out the repairs agreed upon. The defendant argued that the plaintiff had accepted the defective mould by using it and by paying the balance of the purchase price, that it had therefore lost its right to repudiate the contract, and that its claim was limited to a claim for damages for breach of the agreement. The onus of proving that the plaintiff had accepted the performance rested with the defendant, and no evidence was led of unequivocal acceptance. The court considered the effect of the plaintiff's delay in relation to its right to cancel the contract. Protracted delay did not deprive the innocent party of the right to cancel, but it was an element to be taken into account in determining whether the conduct of the innocent party amounted to an acceptance of the defective performance. The court noted that in Palmer v Poulter 1983 (4) SA 11 (T) the Transvaal Provincial Division had applied an objective test to determine whether there had been a waiver of a right, whereas the Natal court, in Mahabeer v Sharma NO 1983 (4) SA 421 (D), had been more concerned with what the innocent party might have had in mind. In the present case, following the objective approach, the court might have drawn the inference that the plaintiff had accepted the performance, as in Schwarzer v John Roderick's Motors (Pty) Ltd 1940 OPD 170, had the plaintiff not put a condition on its continued use of the mould. The argument that there had been acceptance had to be rejected. The evidence supported the contention that the mould had been clearly defective from the start. The defendant had shown a willingness to remedy the defects and had entered into an agreement to do so. The defendant's repudiation of that agreement amounted to a repudiation of its duty to remedy the original defects,

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and that amounted to a breach of the original agreement to deliver the article fit for its intended purpose. C LITERATURE Contract and Mercantile Law: A Source Book. By Ellison Kahn. 2 ed. Volume I: GeneralPrinciplesof Contract, Agency and Representation. By Ellison Kahn (General Editor), Carole Lewis & Coenraad Visser. Cape Town: Juta & Co Ltd. 1988. South African Mercantile and Company Law. 6 ed. By J T R Gibson and R G Comrie. Cape Town: Juta & Co Ltd. 1988. Suid-Afrikaanse HandelsregVolume I 3de uitgawe. Redakteur: S R van Jaarsveld. Pretoria: Lex Patria. 1988. 'Don't Test Your Luck in Court.' By J R Midgley. (1988) 105 SALJ 16. 'West Gone West.' By Selwyn Cohen. (1988) 105 SALJ 30. 'Towards a Theory of Extinctive Prescription.' By M M Loubser. (1988) 105 SALJ 34. 'The Enforcement of an Agreement to Grant a Get or Jewish Ecclesiastical Bill of Divorce.' By Nathan Segal. (1988) 105 SALJ 97. 'Mitigation of Loss: Resale After Repudiation but Before Due Date: Unpaid Seller's Financial Needs.' By A J Kerr. (1988) 105 SALJ 202. 'Communicating the Exercise of an Option.' By J S McLennan. (1988) 105 SALJ 210. 'Illegality and Co-debtors.' By Andrew Beck. (1988) 105 SALJ 418. 'Remedies for Breach of an Option.' By Dale Hutchison & B J van Heerden. (1988) 105 SALJ 547. 'The Exceptio Doli Generalis: An Obituary.' By Michael A Lambiris. (1988) 105 SALJ 644. 'Enforcing Restraint-of-trade Agreements in the Magistrates' Courts.' By Mervyn Dendy. (1988) 105 SALJ 664. 'Berekening van Skadevergoeding by Dolus Incidens. Colt Motors (Edms) Bpk v Kenny 1987 (4) SA 378 (T).' ByJ G Lotz. (1988) 51 THRHR 92. 'Die Aanvang van Verjaring Waar die Skuldeiser Oor die Opeisbaarheid van die Skuld Kan Beskik.' By G F Lubbe. (1988) 51 THRHR 135.

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'Is Kontrakbreuk Moontlik by 'n Opsiekontrak?' By J G Lotz. (1988) 51 THRHR 237. 'Afstanddoeningsbedinge in Sekerheidstellings-, Geldleen- en Skulderkenningskontrakte.' By C F C van der Walt. (1988) 51 THRHR 333. 'Spesifieke Nakoming: 'n Regshistoriese Herwaardering.' By J J du Plessis. (1988) 51 THRHR 349. 'Algehele Sekerheidsessies.' By Susan Scott. (1988) 51 THRHR 434. 'Conduct by the Seller which Prevents the Estate Agent from Earning his Commission.' By M E Rivalland. (1988) 51 THRHR 454. 'Breach of State Contracts Concluded with Foreign Private Investors: An Interesting International Chamber of Commerce Court of Arbitration Award.' By Giorgio Radesich. (1988) 51 THRHR 519. 'The Applicability of Legislation through Contract: Soekor and the Mossel Bay Offshore Gas Development Project.' By AndrE Rabie. (1988) 51 THRHR 528. 'Die Kennis van 'n Verteenwoordiger.' By DJJoubert. (1988) 21 De Jure 1. 'The Right to be Born: Surrogacy and the Legal Control of Human Fertility.' By M L Lupton. (1988) 21 DeJure 36. 'Statut~re Kontraksvoorskrifte met Betrekking tot Onroerende Goed in die Suid-Afrikaanse en Duitse Reg (vervolg).' By Gerrit Pienaar. (1988) 21 Dejure 59. 'Die Hantering van Onbillike Kontraksbedinge in die Verenigde State van Amerika.' By C F C van der Walt. (1988) 21 DeJure 96. 'Die Standaardbedingprobleem: Ekonomiese Magsmisbruik, Verbruikersvraagstuk of Probleem in Eie Reg?' By G T S Eiselen. (1988) 21 Dejure 251. 'Airco Engineering v Ensor 1988 (2) SA 367 (W)-Sessie in securitatem debiti.' By Susan Scott. (1988) 21 Dejure 367. 'Aspects of the Contractual and Delictual Liability of Attorneys.' By B Wunsh. 1988 TSAR 1. 'The Bases for the Implication of Contractual Terms.' By J P Vorster. 1988 TSAR 161. 'Regsosiologie: Sentimentele Humanisme of Nugtere Realisme?' By Gerrit Pienaar. 1988 TSAR 184.

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'The Legal Nature of a Certified Cheque.' By J H de V Dijkman. 1988 TSAR 243. 'Die Funksie van die Reels ter Beskerming van die Handelsvryheid.' By L J van der Merwe. 1988 TSAR 252. 'Die Siviele Metode van Tydsberekening (Computatio Civilis).' By M M Loubser. 1988 TSAR 368. 'Die Beheer oor Onbillike Kontraksbedinge in AustraliE.' By C F C van der Walt. 1988 TSAR 396, 496. 'Onbillike Uitsluitingsbedinge in Kontrakte: 'n Pleidooi vir Regshervorming.' By C van Loggerenberg. 1988 TSAR 407. 'Die Sekuriteitswaarde van Notariele Verbande in Mededinging met Sessie in Securitatem Debiti.' By G F Lubbe & C G van der Merwe. 1988 TSAR 554. "n Wisselende Moratore Rentekoers.' ByJ M Otto. 1988 TSAR 560. 'A Perspective on the Elements of Estoppel by Representation.' By Schalk van der Merwe & L F van Huyssteen. 1988 TSAR 568. 'The Effect of a Resolutive Condition on the Formation of a Pactum Successorium-ubelius v Griesel 1988 (2) SA 610 (C).' By Giorgio A M Radesich & Anneliese Roos. 1988 TSAR 572. 'Comfort Letters: Are they Binding under South African Law?' By G Radesich & A Trichardt. 1988 De Rebus 795. 'From Paternalism to Self-determination to Shared Decision Making.' By Dieter Giesen. 1988 ActaJuridica 107. 'Accepting an Offer.' By Carole Lewis. (1988) 17 Businessman's Law 163. 'Agreements in Writing.' By R D Sharrock. (1988) 17 Businessman's Law 181. 'Motor Car Dealers.' By Danie Visser & Dale Hutchison. (1988) 17 Businessman's Law 205. 'Succession Clauses.' By Dale Hutchison. (1988) 18 Businessman's Law 80. 'Die Regsposisie van die Koper van Ongenoteerde Aandele in Geval van Verborge Gebreke en Wanvoorstelling.' By Estelle Hurter. (1988) 10 Modern Business Law 134. 'Interpretasieprobleme by Voorwaardelike Vekopings.' By Anneli Loubser. (1988) 10 Modem Business Law 153. 'Opsie- en Termynkontrakte-'n Nuwe Opsie.' By F H van Zyl. (1988) 10 Modem Business Law 170.

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'Harmful Business Practices/Skadelike Sakepraktyke: I The Harmful Business Practices Act, 1988.' By David Woolfrey. (1988) 10 Modern Business Law 174. 'Die Wet op Skadelike Sakepraktyke: Opmerkings oor die Betekenis daarvan vir Verbruikers en Ondernemers.' By R W Alberts. (1988) 10 Modern Business Law 178. 'Asset-transfer Contracts.' By R L Purves. (1987) 5 Responsa Meridiana 237.

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