Category: Contracts (page 1 of 2)

COURT INTERFERENCE IN A CONTRACTUAL RELATIONSHIP

When two or more parties enter into a contractual agreement knowingly and free from duress, the terms of the agreement must be upheld by each signatory. However, it must be noted when the contract is entered into under pacta sunt servanda, which means “agreements must be kept”, principles of fairness, good faith and reasonableness don’t play a part when circumstances leading to contract breach arise.

With regards to property law, for example, if a lease agreement states a date on which rental is due, then the party responsible for making this payment should meet this obligation. Failing to do so could enable the lessor to cancel the signed lease without notice and retake the property. Genuinely, because the lessee had agreed to the clause by signing the contract, that would then mean that they agree on the grounds of cancellation.

But if the late payment was due to circumstances beyond the lessee’s control, does the cancellation clause still stand?

If the lessee does not oblige with the lease cancellation, the lessor may approach a court to deliver judgement on the agreement and serve a notice of eviction. The lessee may argue that they acted in good faith and that the matter was beyond their control. The lessee may also argue that the implementation of the pacta sunt servanda principle varies from case to case and should be determined by the circumstances surrounding breach of the lease.

If the court chooses to hand down judgement based on the lessee’s argument, it is incorrect due to the freedom each party had when entering into a contractual agreement. Each party has bargaining power and should have, before signing, ensured that any possible errors were taken into account. Good faith and fairness don’t play a part when it comes to an agreement and a court cannot base that as the reason why the lessor should not have cancelled the lease.

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)

CANCELLING A CONTRACT?

Every person, whether an individual or a juristic person, will find themselves in a situation where they will want to terminate a contract. The aim of this article is to set out the requirements for terminating a contract as well as to give basic guidance when doing so.

When a person wants to cancel a contract, the cancelling party (innocent party) will have a choice to either cancel the contract or to enforce it. This article refers to the innocent party and the party in breach. The reader must however remember that fault it not a requirement for breach of contract.

The law regards breach of a contract as a wrongful act in itself which allows the innocent party to cancel the contract. It is important to remember that cancelling a contract is an extreme remedy that is only available in exceptional circumstances, namely where there is a cancellation clause or where the breach of contract is material or serious. If the contract is however silent on cancellation, the innocent party may still cancel the contract provided that the said breach is material or serious in nature.

The point of departure when cancelling a contract is to determine what the exact terms of the contract are, i.e. if the contract has a cancellation clause or not and whether there is a date of performance or not.

If the contract has a cancellation clause, the innocent party will be able to cancel the contract in the event of a breach of a term thereto. The innocent party must however take care not to cancel the contract incorrectly, otherwise the party in breach may interpret the cancellation as a repudiation of the contract, in which case the party in breach will also have the right to cancel the contract.

In the event where the contract does not have a cancellation clause, the innocent party will only be able to cancel the contract if the breach is material in nature. What constitutes a material breach depends on the terms of the contract. According to South African case law, a material breach is one which goes to the root of the contract and constitutes a breach of a vital term thereto.

Depending on the type of breach, the innocent party might have to give the party in breach notice of same. This will be the case where there is no date of performance specified in the contract. The innocent party must then demand performance by giving the party in breach reasonable notice to perform before he will be able to cancel the contract.

On the flip side, if a date of performance is specified in the contract, and a party does not perform in time and as stipulated, that party will be in breach, otherwise referred to as being in mora. It does however not automatically give rise to the right to cancel the contract. The only instance where there will be an automatic right to cancel a contract is if there is a cancellation clause or a suspensive condition in the contract.

A contract containing a suspensive condition will terminate automatically unless the suspensive condition is fulfilled or waived. If there is not a cancellation clause in the contract and no date of performance, the innocent party must give notice to the party in breach that time is of the essence and give him a reasonable time to perform.

In summary, the requirements for cancelling a contract vary according to the terms thereto, the type of contract and the factual scenario. There are no formalities for cancelling a contract unless the parties otherwise agree and/or a statute (i.e. Alienation of Land Act and the National Credit Act) prescribes same.

Other requirements include that the innocent party must give reasonable notice to the party in breach that they are cancelling the contract, which cancellation becomes effective from the time the cancellation comes to the attention of the party in breach.

The consequences of cancelling a contract are that the obligations to perform terminate and the parties are obligated to return what has been performed. If both parties agree to the cancellation, the preferred route would be to enter into a cancellation agreement, setting out what needs to be returned, claims for damages etcetera.

Considering that each contract and factual scenario differs and will be judged and interpreted accordingly, readers are advised to obtain legal counsel before cancelling a contract.

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)

Reference List:

  • “Contract: General Principles” by Van Der Merwe, Van Huyssteen, Reinecke & Lubbe 2004 (Juta Law)

AM I PREJUDICED BY AN ARBITRATION CLAUSE IN MY BUILDING CONTRACT?

Contracts for the building of a house or providing for substantial alterations to a house commonly contain an arbitration clause. This article looks at the advantages of resolving disputes relating to building contracts by arbitration rather than by litigation in the courts.

I had a written contract with a builder to make substantial alterations to my house. I was very unhappy about how the work was done and I then went to consult my attorney with a view to taking the builder to court. My attorney informed me that the contract contained an arbitration clause which required all disputes relating to the contract to be referred to arbitration. When I signed the contract with the builder, my attention was not drawn to the arbitration clause and I had no idea what the consequences were.

As a general point of departure, before entering into a contract with another party it is important to understand all the contractual terms, including the arbitration clause. An arbitration clause requires the parties to refer their dispute for resolution outside the courts to a private arbitrator appointed by or on behalf of the parties. The arbitrator, who is required to be impartial and independent, must decide the dispute by fairly considering the parties’ evidence and arguments. The decision of the arbitrator, referred to as an award, is final and binding on the parties and can only be reviewed by a court for serious procedural irregularities. There is therefore no right of appeal to the court if a party disagrees with the arbitrator’s decision on the merits. The client could approach the High Court to have the arbitration agreement set aside, but this will be expensive and time-consuming. The client will have to show “compelling reasons” why the arbitration agreement should be set aside. The client must also be aware that arbitration offers certain advantages.

What are the advantages of arbitration instead of litigating in court?

In this context, arguably the most important benefit is the opportunity to appoint an arbitrator with specialised knowledge of building disputes. The right arbitrator will have experience in resolving such disputes. If the parties cannot agree on an arbitrator when the dispute arises, the arbitration clause will typically confer the power on a specified institution to appoint the arbitrator. It is preferable that the appointing body should be a specialist arbitral institution, which will ensure that the appointee has experience in building disputes and has the necessary training as an arbitrator. Non-specialist appointing bodies tend to appoint a person from their own profession, irrespective of that person’s training and experience as an arbitrator.

Another important advantage of arbitration compared to litigation is its flexibility. Because arbitration is based on an agreement, the parties under the direction of the arbitrator can design a process tailor-made for their dispute, instead of being bound by rigid court rules. This should result in the arbitration being considerably quicker and also less expensive than litigation. The relative informality of the process compared to a court means that arbitration is less traumatic for the parties and is less damaging for their relationship. The confidentiality of the process and the award can be another advantage.

The Arbitration Act of 1965 requires an arbitration agreement to be in writing, but it does not need to be signed by the parties. The purpose of this written agreement is to provide a record of its contents rather than to prove consent. At the time the contract is entered into, the home owner must ensure that the building contractor is registered as a home builder under the Housing Consumers Protection Measures Act of 1998. If the builder is not registered, this can affect the validity of the building contract and deprive the homeowner of statutory protections.

The arbitrator will typically convene a preliminary meeting with the parties and their legal representatives as soon as practicable after the arbitrator’s appointment. By that stage, from the client’s request for arbitration and the builder’s response, the arbitrator will have a fair idea regarding what the dispute is about. It is at this stage that the arbitrator can design an appropriate procedure to resolve the dispute, which will differ significantly from that used in court. The arbitrator may even suggest that the parties consider allowing the arbitrator to mediate their dispute.

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)

Reference List:

  • Arbitration Act 42 of 1965 s 1 “arbitration agreement”; s 3(2) regarding the court’s power to set aside the arbitration agreement.
  • The Housing Consumers Protection Measures Act 95 of 1998, s 10(b).
  • Regarding the purpose of the agreement being in writing, see the International Arbitration Act 15 of 2017 schedule 1, article 7(3).
  • Regarding how a court should exercise its discretion under s 3(2) of the Arbitration Act, see De Lange v Methodist Church 2016 2 SA 1(CC); [2015] ZACC 35, paras 34-37.
  • Regarding the need for the contractor to be registered as a home builder, see Cool Ideas 1186 CC v Hubbard 2014 4 SA 474 (CC).

THE POSSIBILITY OF TERMINATING A SURROGATE AGREEMENT

Partial surrogacy agreements allow for the surrogate mother to terminate the agreement within 60 days after giving birth to the child. This article looks at the different outcomes surrogacy agreements may have.  

I entered into a gestational surrogacy agreement with a married couple. I am currently 8 months pregnant and have formed a bond with the baby. Will I be able to terminate the surrogacy agreement after the birth of the baby? 

The Children’s Act 38 of 2005 (“the Act”) makes provision for a valid surrogacy agreement. In terms of the Act, a surrogate agreement is concluded when ‘the commissioning parent(s) are not able to give birth to a child and the condition is permanent or irreversible’.

Prior to the introduction of modern technology, specifically that of reproductive techniques, ‘traditional or partial surrogacy’ was the only method available to women who had no uterus or abnormalities of the uterus to have children. Recently, artificial insemination is used to inseminate surrogate hosts in order for the surrogate mother to carry the child. The Act governs the artificial fertilisation of a surrogate mother.

There are two types of surrogacy agreements, namely partial surrogacy and full (gestational) surrogacy. Partial surrogacy is the method used in the case where the husband’s gamete together with the gamete of the surrogate mother, is inseminated into the internal reproductive organs of the surrogate mother. As a result, the child is genetically linked to the father and surrogate mother. Full surrogacy refers to the instance where the gametes of both the commissioning parents are inseminated into the internal reproductive organs of the surrogate mother. In essence, the surrogate mother has no genetic link to the child.

A surrogate to a partial surrogacy agreement has 60 days during which she can terminate the agreement after the birth of the child. However, in terms of gestational surrogacy agreement, the parties to the agreement are not given the option to terminate the agreement. Additionally, in this case, the surrogate mother cannot refuse to relinquish the child to the commissioning parents.

The law of contract in South Africa revolves around two main principles, namely pacta sunt servanda (Latin for “agreements must be kept”) and the freedom to contract.  These principles imply that the obligations arising out of the agreement must be enforced. The reality of these two principles is that they do not exist in isolation, as they are subject to legislative and judicial decisions. Despite meeting the ordinary requirements of a contract, a surrogacy agreement is a unique contract as there are conflicting human rights and interests involved when a dispute arises out of such an agreement.

Forcing a surrogate mother who is not genetically linked to the child to hand the child over to the commissioning parents when she refuses to do so has been described as a sacrifice of a woman’s reproductive autonomy to the principle of pacta sunt servanda. 

The fundamental rights and values of the Constitution cannot be ignored in surrogacy agreements as Section 12(2)(a) – (b) of the Constitution clearly provides “everyone the right to bodily and psychological integrity, which includes the right to make decisions [regarding] reproduction [and] to security in and the control over the body”.

For a surrogacy agreement to be valid it must meet the requirements set in chapter 19 of the Act. When such a surrogacy agreement is invalid, the common law position will apply insofar as the woman who gave birth to the child would be regarded as the legal mother of the child whether or not such a child has a genetic relation with her.

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)

References:

  • Brisley v Drotsky 2002 (4) SA 1 (SCA).
  • Lewis SV ‘The Constitutional and Contractual Implications of the Application of Chapter 19 of the Children’s Act 38 of 2005’ available at uwc.ac.za/xmlui/bitstream/handle/11394/1828/Lewis_LLM_2011.pdf?sequence=1 (accessed 20 April 2017)
  • http://www.casebriefs.com/blog/law/health-law/health-law-keyed-to furrow/reproduction-and-birth/johnson-v-calvert/2/
  • Children’s Act 38 of 2005
  • Constitution of the Republic of South Africa, 1996.
  • Brinsden PR ‘Gestational Surrogacy’ 2003 (9) 5 European Society of Human Reproduction and Embryology 483 – 491

WHAT IS A TITLE DEED?

My Lawyer_Images-05If you are planning to buy a new property, you will need to get the title deed transferred into your name to prove that you are the owner of the property. You will need the assistance of a lawyer specialising in property transfers (also known as a conveyancer) to help you transfer the title deed into your name.

You will only become the owner of the property when the Registrar of Deeds signs the transfer. After it has been signed, a copy of the title deed is kept at the Deeds Office closest to you.

A Title Deed is documentary proof of ownership in terms of the Deeds Registries Act 47 of 1937. Each property has its own separate Title Deed. It is an important document containing all the details pertaining to a particular property.

These details are:

  • The name of the existing owner as well as the previous owners.
  • A detailed property description which includes size.
  • The purchase price of the property paid by the existing owner.
  • Conditions applicable to the zoning, use and sale of the land.
  • All real rights registered in respect of the property.

The owner will normally have the Title Deed or a copy thereof in his possession. Before signing an offer to purchase carefully scrutinize the Title Deed.

What is The Deeds Office and The Deeds Registry?

 There are numerous Deeds Offices throughout South Africa. Each Deeds Office holds a Deeds Registry, containing filed Title Deeds of all the properties in its particular jurisdiction. All the Deeds Registries are linked to a computer network. Your estate agent can, via a computer-linked facility from his office, examine any Title Deed (registered from 1980) in the country's combined Deeds Registry.

What’s the Difference Between a Property Deed and a Title?

Title is the legal way of saying you own a right to something. For real estate purposes, title refers to ownership of the property, meaning that you have the rights to use that property. It may be a partial interest in the property or it may be the full. However, because you have title, you can access the land and potentially modify it as you see fit. Title also means that you can transfer that interest or portion that you own to others. However, you can never legally transfer more than you own. Deeds, on the other hand, are actually the legal documents that transfer title from one person to another. Sometimes the Deed is referred to as the vehicle of the property interest transfer.

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)

References

https://www.westerncape.gov.za/service/title-deeds-proof-property-ownership

https://www.rocketlawyer.com/article/whats-the-difference-between-a-roperty-deed-and-a-title-ps.rl

http://www.conveyancing24.co.za/

I WANT TO CANCEL MY GYM CONTRACT

A2We have 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 gym 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 gym. By August you recognise the debit order of the gym on your bank statement, knowing full well that you have not been there for at least two months.

What are the penalties?

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. The act says that any consumer may cancel a long-term agreement with twenty business days’ notice, which must be in writing, unless both parties of the agreement are juristic persons.

The Act states 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 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.

What should I do?

You may approach the gym 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 gym. 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)

When does a claim prescribe?

A4_BThe issue of the legal nature of a vindicatory claim and whether it gives rise to a debt that is subject to the three year extinctive prescription period has been decided differently by different divisions of the High Court. On 28 May 2015 the Supreme Court of Appeal came to a final decision in Absa Bank v Keet[1] as to whether claims under the actio rei vindicatio prescribe after 3 years or not.

One of the first questions that your attorney will ask you when you consult him is when your cause of action arose so that they can ascertain whether your claim has prescribed. If your claim is prescribed, it means that you no longer have any legal remedies available to you. Claims arising from a debt prescribe after three years and the rules of prescription are set out in the Prescription Act, 1969.

There is one specific claim where the application of the 3 year prescription period was uncertain and this was in regard to claims under the actio rei vindicatio. This is a legal action by which the plaintiff demands that the defendant return a thing that belongs to the plaintiff, and it may only be used when the plaintiff owns the thing and the defendant is impeding the plaintiff’s possession of the thing.

A rei vindicatio action is often used in disputes surrounding instalment sales where ownership only passes on the payment of a last instalment or where instalments are not duly paid. This is mostly coupled with a claim for cancellation. In other words, the seller cancels the sale agreement and claims return of the thing sold.

In the case of Absa Bank v Keet[2] the seller of a motor vehicle attempted to cancel the sale agreement and to claim the return of the vehicle sold. The purchaser of the vehicle responded to this claim with a special plea stating that the claim for the return of the vehicle had prescribed.

The reason for stating that the claim had prescribed was that the agreement on which the seller sued would have come to an end on the date on which he contended the amount outstanding became due and payable, and that it was more than 3 years since that amount became due.

In the case of Staegemann v Langenhoven[3] it was held that a vindicatory claim does not prescribe after three years. The High Court in the Keet case held that this case was wrongly decided because if Staegemann were correct, ‘the Bank could withhold its demand for the tractor for another decade or even longer, and then demand return of the vehicle so that it could calculate its damages’.

The Supreme Court of Appeal (SCA) in the Keet case had to decide whether the High Court was correct in holding that the seller’s claim for the repossession of its vehicle is a ‘debt’, which for the purposes of the Prescription Act prescribes after three years.

The SCA made an important distinction between extinctive prescription and acquisitive prescription to come to its final decision. Extinctive prescription deals with a creditor’s right of action against a debtor, which is a personal right. On the other hand, acquisitive prescription deals with acquiring real rights to property (in terms of the Prescription Act a person can acquire ownership of property after 30 years of uninterrupted possession). Real rights are primarily concerned with the relationship between a person and a thing and personal rights are concerned with a relationship between two persons.

The person who is entitled to a real right over a thing can, by way of vindicatory action, claim that thing from any individual who interferes with his right. Such a right is the right of ownership. If, however, the right is not an absolute, but a relative right to a thing, so that it can only be enforced against a determined individual or a class of individuals, then it is a personal right.[4]

The Supreme Court of Appeal is therefore of the opinion that to consider a vindicatory action as a ‘debt’ which prescribes after three years is contrary to the scheme of the Act and that this would undermine the significance of the distinction which the Prescription Act draws between extinctive prescription and acquisitive prescription. In other words, what the creditor loses as a result of operation of extinctive prescription is his right of action against the debtor, which is a personal right. The creditor does not lose a right to a thing.

The SCA has therefore made it clear that to equate the vindicatory action with a ‘debt’ has the unintended and absurd consequence in that by way of extinctive prescription the debtor acquires ownership of a creditor’s property after three years instead of 30 years. The vindicatory action therefore does not prescribe after three years.

[1] (817/13) [2015]  ZASCA 81 (28 May 2015)

[2] (817/13) [2015] ZASCA 81 (28 May 2015)

[3] Staegemann v Langenhoven & others 2011 (5) SA 648 (WCC).

[4] Wessels Law of Contract in South Africa 2 ed vol 1 p 3-4.

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)

 

Validity of Antenuptial Contracts

A1_BOne must be careful when drafting and signing an Antenuptial Contract. Aside from ensuring that the contents is all correct, one must also ensure that all the necessary provisions are contained therein to make the contract valid. The consequences of neglecting to do so may result in a marriage in community of property even though the parties had no intention of this at the time of their marriage.

Attorneys are often trusted with the task of drafting an Antenuptial Contract. This is a contract, which one signs to regulate the property regime of a marriage. If a couple does not sign, an Antenuptial Contract then the marital property regime will be that of in community of property. The presence of an Antenuptial Contract means that the marital property regime is that of out of community of property and the parties must specifically stipulate whether they would like the accrual system to apply to their marriage or not.

The importance of ensuring that all the necessary provisions are contained in the Antenuptial Contract to result in a valid contract was discussed in the 2014 Supreme Court of Appeal Case of B v B[1]. In this case, no values were stated in respect of any of the assets listed in the Antenuptial Contract and they were also not properly identified. In B v B the court stated that if the terms of a contract are so vague and incoherent as to be incapable of a sensible construction then the contract must be regarded as void for vagueness.[2]

According to Section 6(1) of the Matrimonial Property Act[3] ,a party to an intended marriage which does not, for the purpose of proof of the value of his or her estate at the time of the commencement of the marriage, declare the value in the contract, then he or she may do so within six months of the marriage in a statement attested to by a notary. If this is not done, according to Section 6(4) of the Marital Property Act, the net value of the estate of a spouse is then deemed to be nil at the time of the marriage. In effect, such a contract is valid but it will effectively render the marriage in community of property since nothing was excluded from the accrual.

However, if a contract is contradictory and incoherent in other respects then it cannot be seen as a valid contract since there is no certainty as to the meaning of the contract and what the parties seek to achieve. This means that the contract would not embody terms that would enable to court to give effect to the intention of the parties at the time the contract was concluded.

The result of such a contract is that the Antenuptial Contract would be void for vagueness and that the marital property regime would be the default position according to the Marital Property Act, which is in community of property.

Therefore, parties are encouraged to read their contracts thoroughly and ensure that they understand the terms thereof and that the contract embodies their intentions without any further explanations or evidence.

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)

[1] (952/12) [2014] ZASCA 14 (24 March 2014).

[2] B v B (952/12) [2014] ZASCA 14 (24 March 2014) par 7.

[3] 88 of 1984.

How important is it to read legal pleadings and/or notices?

A1_BOften people only become aware of judgements reflecting on their credit records when trying to apply for loans, cellphone contracts, etc. However, what many of them do not know, is that it is most likely due to their own negligence that they have these judgements against them.

A summons is a document that informs a defendant that he or she is being sued and asserts the jurisdiction of the court to hear and determine the case. A summons can be served for many reasons which include divorce proceedings, traffic fines, outstanding fees, etc.

A simple summons sets out very briefly the details of the case. A combined summons does not set out the details or reasons as to why the action is being instituted, and such details can be found in the particulars of claim. It is important to take notice of the fine print on the summons. This is where you will find the information regarding when and where you should file your Notice of Intention to Defend, should you wish to defend the matter. An attorney usually drafts the notice and files it at court, however, it is not uncommon for people to defend such actions themselves. If you wish to defend the matter yourself it is important to serve it on the opposing attorneys (these details are on the summons) and file it at court.

With regards to any normal summons the time period to file the Notice of Intention to Defend is 10 (ten) days and 20 (twenty) days to file the opposing papers. If the defendant resides or is located in a 160 km radius outside the court, the defendant then has 21 (twenty one) days to file their Notice of Intention to Defend and 20 (twenty) days to file their opposing papers.

Once the ten or twenty days have passed and no Notice of Intention to Defend has been filed, the attorneys will immediately apply for Default Judgement. This may result in a judgement against your name. Once a Judge/Magistrate has granted Default Judgement, a Warrant of Execution can be issued in order to attach property and/or money for the amount as stated on the summons. If the Sheriff finds that there is no property to attach in order to obtain the money, the attorneys will go ahead with a Section 65A (1) Application. This Application requires the debtor to present their income and expenses to the court and provide an amount which can be paid off monthly in order to settle their debt.

A judgement will only be removed from your record once a rescission order is granted and/or proof is provided that the amount cited on the summons has been paid in full. If the amount has been paid in full, you can contact Transunion directly and get the judgement removed for free once proof of payment has been sent.

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

A2_bWe have 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

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