COMMON LAW MARRIAGE IN SOUTH AFRICA

A4_BIn South African law there is no such thing as a common law marriage. People simply believe that living together with another person for a continuous period of time establishes legal rights and duties between them. This is a common misunderstanding especially with young adults.

The only way to be protected in our law is to enter into a universal partnership agreement. Such an agreement clarifies the rights and duties of the partners. The agreement will determine what would happen to property and assets of the couple if they should decide to separate. The agreement is, however, not enforceable in so far as third parties are concerned. Only a valid marriage is enforceable against third parties. It is important to note that partners can sometimes be jointly and severally liable if they acted within the scope of the partnership. An agreement such as this will be legally binding as long as it contains no provisions that are immoral or illegal. If there is no agreement on the dissolution of a universal partnership agreement, a party would only be entitled to retain those assets which he or she has purchased and owns and further would be entitled to share in the assets proportionately in terms of the contribution which they have made to the partnership.

To prove the existence of such a partnership it must be shown that:

  • The aim of the partnership was to make profit.
  • Both parties must have contributed to the enterprise.
  • The partnership must operate to benefit both parties.
  • The contract between the parties must be legitimate.
  • There must be valid consent.
  • There is an intention to create a legally binding agreement.

Where there is no express agreement, a tacit agreement may be proved if it is found that it is more probable than not that such an agreement had been reached between the parties at the time of cohabitation.

Because the existence of a universal partnership is somewhat difficult to prove, and it may not be a claim that you wish to have to make or defend, it is advisable to consider entering into a contract that spells out how property should be dealt with on termination of the relationship by death or otherwise. Such a contract would provide some certainty for cohabitees regarding the division of assets and settlements of liability on termination of the relationship.

Some of the consequences of the absence of a legal ground between parties in such relationships are:

  • No exemption from donations tax in respect of donations between them.
  • Cohabitees do not benefit from the laws relating to the exemption from estate duty of bequests to spouses.
  • There is no reciprocal obligation of maintenance.
  • Cohabitee is not a recognised claimant if his/her partner dies intestate.
  • There is no right to property or assets that belong to cohabitee.
  • There is no reciprocal duty to contribute to household necessities.

The Domestic Partnerships Bill of 2008 is still in its formulation stage and it remains to be seen how it is to be implemented. In the current constitutional dispensation it is unlikely that a partner will be left in despair, taking into account the Domestic Partnerships Bill.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.Errors and omissions excepted. (E&OE).

SUSPENSIVE CONDITIONS IN A DEED OF SALE: KNOW YOUR OBLIGATIONS

A3_BImagine signing a deed of sale for your dream house and later discovering that the contract lapsed because you obtained bond approval one day too late. The situation could be worsened if the Seller receives a better offer for the house and accepts that better offer.

If a deed of sale is made subject to a suspensive condition it will lapse if such condition is not fulfilled in time. This was confirmed in the case of Marais v Kovacs Investments 724 (Pty) Ltd [2009] 1 All SA 174 (C) (hereinafter referred to as “the Marais case”). There is then no contract for the sale of the property between the two parties and the Seller can sell the property to another purchaser.

Examples of suspensive conditions are obtaining bond approval before a certain date, or the sale of the Purchaser’s current property before a certain date. It is very important for both the Seller and Purchaser to take note of the wording of these conditions and ensure that they understand them.

The following is an example of the wording of a suspensive condition relating to a bond, also sometimes referred to as a “bond condition”:

This Deed of Sale is subject to the Purchaser obtaining bond approval from a financial institution for the amount of R1 500 000 before 2 December 2013, failing which this agreement will lapse.

In the above example, if only R1 400 000 is approved before 2 December 2013, in other words R100 000 less than the required amount, then the condition is not met and the contract will lapse. Similarly, if a bond is approved for R1 500 000 but only on 5 December 2013, then the condition is not met in time and the contract will lapse, as was decided in the case of Meyer v Barnardo and another 1984 (2) SA 580 (N).

The parties can however agree to extend the time during which the suspensive condition must be fulfilled. Such extension must be in writing and signed by both the Seller and Purchaser as per the requirements of the Alienation of Land Act 68 of 1981. It must also be done before the time limit of the suspensive condition expires. In the above “bond condition” clause example, this would mean that the parties would have to sign the extension before 2 December 2013 to prevent the Deed of Sale from lapsing. In the Marais case the court held that even if the suspensive condition had been inserted in the contract for the exclusive benefit of the Purchaser, the Purchaser would have had to communicate his intention to waive the requirement before it lapsed.

In the Marais case the parties entered into a written agreement of sale with a suspensive condition that a bond in the amount of R10 149 072 needed to be obtained by 15 August 2005.  The Purchaser, however, only obtained a mortgage bond in the amount of R9 650 000, which was granted on 2 August 2005. The respondent’s attorneys argued that the suspensive condition had been substantially fulfilled because the shortfall was, in their opinion, only a “minor shortfall” and therefore an insignificant amount compared to the purchase price. The court did not agree with this and found that it could not be said that the parties intended the suspensive condition to be fulfilled in any way other than what was expressly stipulated in the Deed of Sale. The court found that the contract had therefore lapsed.

If a suspensive condition will not be fulfilled in time, rather take the necessary precautions beforehand to avoid a lapsed Deed of Sale. We advise that you contact a professional for advice in this regard.

References:  

Kontraktereg, UNISA 2004

Self Study Conveyancing Course for Attorneys, Gawie le Roux, 2013

Alienation of Land Act 68 of 1981

Marais v Kovacs Investments 724 (Pty) Ltd [2009] 1 All SA 174 (C)

Meyer v Barnardo and another 1984 (2) SA 580 (N)

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.Errors and omissions excepted. (E&OE).

CANCELLATION OF THAT GYMNASIUM CONTRACT

We havA2_Be all made New Year’s Resolutions. This year I will start exercising, eating healthy and spend less time at the office and more with the family. In order to fulfil this resolution, you join the local gymnasium as soon as you return from your December holiday. It does not bother you whether the agreement is for two, three or four years. This year you are going to keep that resolution!

Then winter arrives and you spend more time at the office and at the fireside and less time in the gymnasium. By August you recognise the debit order of the gymnasium on your bank statement, knowing full well that you have not been there for at least two months.

The Consumer Protection Act (“the act”) has limited the effect of fixed-term agreements containing automatic renewal clauses for a further fixed term. As the legislator has given a wide definition to the words “goods” and “services”, most fixed-term agreements will fall within the scope of the act. Section 16 of the act provides that any consumer may cancel a long-term agreement with twenty business days’ notice, which notice must be in writing, unless both parties to the agreement are juristic persons.

The act then provides that the supplier may be entitled to a “reasonable cancellation penalty” payable by the consumer for cancelling the fixed-term agreement. What constitutes a reasonable cancellation penalty will depend on the type and nature of the contract.

Lester Timothy of Deneys Reitz Attorneys uses the example of a mobile phone contract, an analogy most of us will understand. A consumer enters into a two-year contract with a mobile phone service provider and simultaneously purchases a handset to be paid by monthly instalments in the course of the two-year contract. The service provider will thus have incurred expenses regarding the handset. Therefore, in the event of the consumer cancelling the contract, it will be acceptable for the mobile service provider to charge the consumer for the outstanding balance of the handset to recover the expenses incurred.

Where a supplier incurs no significant additional cost as a result of the cancellation of the contract, the supplier will have more difficulty to establish the reasonableness of any cancellation penalty unless a discount is given.

You may therefore approach that gymnasium and notify them in writing of your intention to cancel the agreement after twenty business days. Depending on the remaining period of your contract and the wording of the agreement, you will have to pay a reasonable cancellation penalty. However, as the gymnasium did not incur significant additional costs as a result of your cancellation, you will be entitled to a discount on the remaining balance of the agreement.

Negotiate the cancellation penalty fee with the gymnasium. You may be surprised what the offer of an immediate payment as cancellation penalty can do.

And next year, rather buy running shoes, even expensive ones. They will wait patiently in your wardrobe till the following New Year’s Day …

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.Errors and omissions excepted. (E&OE).

THE INTERPLAY BETWEEN THE CONSUMER PROTECTION ACT AND THE NATIONAL CREDIT ACT, AND THE POSSIBILITY OF PENALTIES WITH EARLY SETTLEMENT OF CREDIT AGREEMENTS

A1_BMr Black buys a BMW car in terms of a hire purchase agreement and the financing is done through BMW Finance. After a few months Mr Black inherits a huge sum of money and decides that he wants to settle the outstanding amount. Mr Black’s concern is whether the credit provider is entitled to charge a penalty fee for early settlement of the outstanding finance amount.

The first step in answering the above mentioned question will be to determine which laws regulate the situation. The legislation that applies here will be the National Credit Act 34 of 2005 and the Consumer Protection Act 68 of 2008.

In the above scenario a distinction should be drawn between the scope of each of these Acts, as the one pertains to the credit agreement itself and the other to the goods, being the BMW car. Section 5 of the Consumer Protection Act lists the situations in which this Act will apply. Section 5(2)(d) is of particular interest to Mr Black as it excludes credit agreements which are regulated by the National Credit Act. However, the goods or services provided in terms of the credit agreement are included and will be regulated by the Consumer Protection Act, whereas credit agreements as contemplated in the National Credit Act, specifically section 8(4)(c), includes hire purchase agreements (instalment agreements) in the ambit of the National Credit Act.

Mr Black’s situation illustrates the position as stated in Article 5(2)(d) of the Consumer Protection Act. The implication of this section is that all credit agreements that are subject to the National Credit Act will be governed by the National Credit Act, but the goods and services in terms of the agreement will fall within the scope of the Consumer Protection Act. It is here that the above acts overlap with each other. The overlap actually lies in that both acts can apply to one agreement. The credit agreement must comply with the National Credit Act, but the goods and services must comply with the Consumer Protection Act. If there is a defect in the quality of the goods or the service the Consumer Protection Act will provide the appropriate remedy, but if it is about the credit agreement itself, then the National Credit Act will apply.

Section 2(9) of the Consumer Protection Act deals with the interpretation of the Act and more specifically on how the law has to be interpreted in cases where there are discrepancies between the Consumer Protection Act and any other law. The Consumer Protection Act should be read in harmony with other legislation as far as possible, but if it is not possible, then the law that offers the most protection to the consumer shall apply.

The two sections in the National Credit Act which deals with the early settlement of credit agreements are sections 122 and 125 of the Act. According to section 122 of the National Credit Act, a consumer may terminate the credit agreement at any time. The consumer can do this by paying the settlement amount as calculated in accordance with section 125 of the National Credit Act.

Section 125 states that a consumer is entitled to cancel a credit agreement at any time with or without prior notice to the credit provider. The settlement amount will be the sum of the following amounts:

  • The outstanding balance of the principal debt / capital amount.
  • All rates and charges up to and including the settlement date. For example, if the outstanding amount can be settled after 3 months, then 3 months’ interest would be charged. The interest will be calculated on the principal amount borrowed.

In the case of a large credit agreement (R250 000.00 or more) the outstanding amount will be calculated as above, but with additional interest, known as an early settlement fee. The fee may not exceed an amount equal to three months’ interest on the capital amount.

Conclusion:

Therefore, if the BMW that Mr Black bought was worth more than R250 000.00 the credit provider will be entitled to charge a penalty fee of not more than 3 months’ interest on the capital amount. In the event that the purchased item’s worth is less than R250 000.00 the credit provider will not be entitled to charge a penalty fee.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.Errors and omissions excepted. (E&OE)