FAQ

What is the effect of a “voetstoots clause” in a contract of sale?

It is a rare occurrence in a property transaction dealing with the sale of movable or immovable goods, to find a deed of sale that does not contain a clause which stipulates that the property is being sold or bought on a “voetstoots” basis. The parties to such a sale are then often under the impression that, since the property is being bought “as is”, that the Seller cannot be held liable for any defects which later come to the fore. This view is often a misinterpretation of the law.

In the recent decision of Mkhize v Lourens and another, published during March 2003, the legal position was briefly summarized and it was confirmed that this clause does not afford protection to a seller where he was aware of the existence of certain defects at the time of conclusion of the sale, but did not bring these to the attention of the purchaser, or , even worse, deliberately concealed such defects from the purchaser by, for instance, painting over cracks in the walls. In such a case the seller will be held liable for such defects. The entire transaction may also be cancelled and the status quo ante restored by the court where the purchaser can prove that:

• the object sold had a defect that impaired its utility or effectiveness;
• the defect existed at the time of the sale;
• the seller was aware of the defect;
• the defect was latent and not visible upon inspection;
• the purchaser was unaware of its existence;
• the purchaser would not have purchased the object had he known of the defect;
• he is willing and able to make restitution

It is therefore recommended that the seller of a property, as well as the estate agent who markets the property, should make the purchaser aware of all defects relating to the property and not attempt to conceal any defects in order to avoid problems which may arise later.

Rokshana Shearer

What is breach of contract?

This means that one of the parties has in fact broken the agreement in one or more of the following ways: · He has not done or delivered what he promised in terms of the contract. · He has not paid for goods delivered by the other party. · He has refused to carry out the contract. · He has prevented the other party from doing or delivering what the other party must do or deliver according to the contract. · He has delivered or done what he promised to do in terms of the contract but his performance is defective and is completely useless or only of partial use to the other party. · He has, in fact prevented himself from being able to perform in terms of the contract. · Where a party to a contract has breached the agreement, the innocent party should consult an attorney who will institute an action if necessary.

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What is a warranty or guarantee and how does it affect the buyer?

This is usually a statement made about a product by the seller which he promises to make good. For example, the seller may warrant that a particular television set he is selling will not break down in four years. If it does, then the seller will not break down in four years. If it does, then the seller must make good his promise and repair the unit at no extra charge. Purchasers should beware of guarantees that obsolve the seller from liability for hidden defects in the article bought in exchange for relatively little protection for the buyer. Remember that not all or any representations made by a seller are guarantees. Therefore, ask the seller exactly what he means by a certain statement that relates to the product.

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What is a credit agreement?

Credit agreements are contracts in terms of which articles are sold or services rendered in return for money paid over a specific period of time. The most common form is where the buyer has the article bought in his possession, but the seller remains the owner thereof until the purchaser has paid the last installment. These agreements used to be known as “hire purchase agreements” but they are now called “installment sales agreements”. These agreements are specifically regulated by law and the following are a few prescribed formalities: · The agreement must be in writing and signed by both the seller and the buyer. · If the buyer fails to keep up the installments he must be warned in writing and if the buyer persists in not paying, the seller may take him to court and obtain a court order to repossess the article. · It is important to remember that the seller may only repossess the article with the consent of the buyer or after obtaining a court order.

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What is a contract?

A contract is an agreement between two or more people in terms of which one party offers to do, deliver or not do something, and the other part accepts this offer. Usually the part who accepts the offer must remunerate the other party or do something in exchange. For example, A offers to sell his bicycle to B for R100 and B accepts offer.

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What happens if I break a lease?

You may be sued depending upon the provisions of the lease. You may be liable for unpaid rent, advertising expenses, court costs, attorney’s fees, etc. Consult an attorney for help.

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What does the National Credit Act stipulate?

You have probably by now realized that the consequences and the impact of the new National Credit Act are quite severe.  We would like to give you a short summary and framework of precautionary steps that should be taken to ensure that you do not fall into the pitfalls created by this new legislation.  For practical reasons, it might be better to start with the end in mind.  A National Credit Tribunal was established in terms of the National Credit Act.  Should credit providers not comply with one of the multiple provisions stipulated in the Act as well as the regulations of the new Credit Act, this tribunal may declare a contract unlawful and therefore in effect null and void.  The effect of this will be that all payments made by the consumer or credit receiver will have to be refunded together with the prescribed interest of 15.5% per annum.  Credit providers will not have any claim for damages arising from the depreciation of goods sold to the consumer.

Should a credit provider decide to take action on the grounds of enrichment against the consumer, that enrichment, if the credit provider is successful, will fall into the state’s pocket.

The second concept that should be very clear to credit providers, is the powers that have been given to debt counsellors.  Should credit providers not comply with specific provisions contained in the National Credit Act, together with its regulations, a consumer has the right to approach these debt counsellors to establish whether he is over indebted.  Should this debt counsellor indeed find that the consumer is over indebted and that he cannot comply with his obligations under credit agreements, he will have the power to advise a court of law to postpone all obligations under these agreements, or even to restructure the consumer’s liabilities.

The new National Credit Act is without any doubt, the lengthiest act that South Africa has seen in the last ten years, especially if all published regulations are taken into account.  For obvious reasons we shall not even try to attempt to deal with all the relevant provisions and clauses.

In an attempt to give a brief background of all the obligations and precautionary steps that should be taken by credit providers, we shall list compulsory steps in chronicle order:

1. All credit providers should have registered by 28 July 06. All agreements entered into after this date without proper registration with the National Credit Regulator, will be declared unlawful agreements, should the consumer approach the tribunal or a debt counselor, after 1 September 07.
2. Credit providers are obliged to provide all consumers or credit receivers with whom they have existing credit agreements, with a confirmatory letter.  This letter should make reference to the current interest rate as charged, outstanding balance, initial capital, administration fees charged, service fees charged and the date on which the agreement will expire.
3. All credit contracts must be in a language and form which are easily understandable and should be in at least two languages.  Please note that this order is taller than it seems to be bearing in mind that 80 % of South African consumers are illiterate.
4. The Act therefore provides that all credit providers are obliged to do an analysis of the consumer’s profile, to ensure that the provider can afford the credit applied for.  All credit providers, including banks, must ensure that their credit applications comply with the requirements set out in the Act.  Although all South African banks already have mechanisms in place in terms of which a client is rated, such analysis, should be stored in case the consumer refers this matter to the tribunal in future.  There is also an onus on the provider to explain the terms of the contract to the consumer in easy understandable terms and in a language which the consumer understands.  Remember that the Act prohibits any provider to obtain any credit information or credit portfolio of the consumer without his written consent thereto.  The reason being that the Act provides that the credit bureau can be held liable for incorrect information.
5. One of the main purposes of the Act is to prevent discrimination in the credit market and to ensure that credit is available to all South African citizens.  The Act gives a consumer, whose application for credit was refused, the right to written reasons for the decision.  Proper rating mechanisms will obviously assist credit providers herein.
6. A cooling off period will be compulsory for all credit agreements.
7. Consumers under credit agreements have the right to return the purchased goods, at any given time during the contract, to the provider to be resold.  There is a long list of rules that regulate these actions by consumers.
8. Negative marketing options are prohibited and constitute a criminal offence (remember that only a consumer may request for his credit limit to be raised which request must be in writing).
9. Door to door marketing and informal launches of credit contracts are prohibited and also constitute criminal offences.
10. Make sure that you comply with the maximum interest rate prescribed by the National Credit Act.  Different rates apply to different types of contracts.  There is also a limit on service fees and administration fees on all credit agreements.  These fees differ for the various types of contracts.
11. The Act requires a letter of demand to be sent to consumers informing him of any default and of his right to approach a debt counsellor.
12. These letters of demand may only be sent to consumers after they have been in default for at least ten days.  A further twenty days after the prescribed letter of demand was sent, has to lapse before any further actions may be taken.  If the consumer has already approached a debt counsellor, all further actions will be suspended.
13. The Act also amends the In Duplum Rule by providing that the sum of the interest and legal costs in respect of the outstanding debt may not exceed the initial capital amount of the contract.
14. It is impossible to deal with all the relevant clauses and provisions in the National Credit Act in this article.  Remember that all advertising and marketing strategies are also now being regulated by this Act.  Failure to comply with the relevant sections will render the agreement concluded invalid.

WILLEM VAN HEERDEN

What does the Consumer Protection Act provide for?

The Consumer Protection Act (CPA), a 2008 Act, was recently published and will take effect during October 2010.  The CPA is a major step forward and an extremely important development in the field of consumer protection. It will have a material impact on the relationship between consumers and businesses under the banner of consumer interest which is the driving force and overarching motive of the CPA.  (E van Eeden A Guide to the Consumer Protection Act (LexusNexus: Durban 2009) at 24).

The CPA consists of 122 Sections, 7 Chapters and 2 Schedules that deal with various aspects relating to consumer protection transitional provisions and amendments to existing law, which include amendments to the National Credit Act of 2005 (NCA).

My intention with this article is to give an introduction and framework to the CPA, and I would like to highlight the most important sections of the Act.

The purpose of the Act is to promote and advance the social and economical welfare of consumers in South Africa.  This phrase is also found verbatim in Section 3 of the NCA.  The preamble to the CPA stresses the need for both a positive economical environment and an appropriate legal framework that entails the promotion of an environment that supports and strengthens a culture of consumer rights and responsibilities, business innovation and enhanced performance.

Section 1 of the CPA, containing definitions, sets out what is meant by consumer, which inter alia means a person to whom goods or services are marketed in the ordinary course of business, a person who has entered into a transaction with a supplier (a person who markets any goods or services) in the ordinary course of business and someone who is a user, recipient or beneficiary of those particular services.  When dealing with the CPA it is of the utmost importance to constantly refer back to the definitions as various terms used throughout the Act have been specifically defined.  Other important definitions that should be taken note of are the meanings attached to transaction, goods and services.

“Service” includes, inter alia, any work or undertaking performed by one person for the direct or indirect benefit of another, which includes the provisions of education and any banking services or related similar financial services except to the extent that any such service is regulated by the Financial Advisory and Intermediary Service Act 37 of 2002.

In terms of Section 5 of the CPA all transactions which occur within the Republic, unless exempted in terms of subsection 5, are included under the Act.  The application incorporates the promotion of goods or services and is also applied to the supplier of any goods or services unless exempted.

In the subsequent articles I will deal with the following important Sections and give brief descriptions of what the Act provides for in respect of these concepts.  A more comprehensive discussion within the scope of the first article is not possible.  The following concepts will be discussed in the subsequent articles:

• The scope of application and exemptions of the Act;
• The right to select a supplier;
• The right to a cooling off period;
• Unsolicited goods or services;
• Contracts in plain and understandable language;
• Customer loyalty programs;
• Overselling and overbooking;
• Right to safe and good quality goods;
• And several others.

To conclude, it should be mentioned that this Act will affect all businesses within the Republic of South Africa, especially retailers, restaurants, farmers and any contracts in which any items or services are sold to a consumer, except those that are specifically exempted in terms of the Act.  It is therefore of paramount importance that all businessmen and consumers are well equipped with the knowledge needed to comply with the provisions of the CPA.

Willem van Heerden

What are the requirements for a valid contract?

For a valid contract the following must occur: · The parties must agree on all the essential terms thereof. One of the parties must make a firm offer to the other party and acceptance of the offer must in turn be communicated to the party who made the offer. · The parties to the contract must have the legal power to conclude such an agreement. Minors, (persons under 21) or people who are mentally ill, for instance, may not enter into contracts. · Parties may not contract to do something illegal. For example, the sale of uncut diamonds without a license. · Contracts where one party promises to deliver to do something which is impossible, cannot be enforced. For example, where one person sells the moon to another.

http://www.lawinfo.org.za

What are the pitfalls of signing a written contract that has been drawn up by the other party?

The contract could contain terms that were not part of the verbal negotiations and which are included solely for the benefit of the other party. Conversely, the contract might not contain terms or stipulations to your benefit which were agreed upon during the verbal negotiations. Remember: when in doubt, consult an attorney and go through written agreements very carefully. Never sign a contract without reading it merely because you are in a hurry or want to rid yourself of an irritating salesman.

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What are the advantages of reducing a contract to writing, if the law does not require this in the specific instance?

The terms or contents of a contract are easily proved if the contract is reduced properly to writing. Remember that an attorney draws up contracts as part of his daily work and is thus able to express more clearly in writing what the parties intend. A party relying on an oral contract will probably have difficulty in proving the contents in a court of law.

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What about contracts concluded with door to door salesmen?

Credit agreements are very often concluded in this way. The law prescribes however, that the purchaser has a “cooling off” period of five days from when the agreement is concluded to return the article and cancel the agreement. The contract must, however, be concluded at the purchaser’s home or away from the seller’s business for the “cooling off” right to apply. These are only some guidelines relating to contracts. Remember that where a contract may have grave financial or other implications and you are uncertain as to your rights and obligations, you should seek legal advice before signing anything.

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Must all contracts be in writing to be valid?

No. The most common of all misconceptions concerning contracts is that they must be in written form to be valid. If this were so, the majority of all contracts concluded daily would be invalid. Purchasing good, going to movies, using public transport and eating at a restaurant are examples of activities that include the conclusion of valid contracts as no specific legal formalities (such as reducing the contract to writing) are required. There are, however, exceptions and in certain specific instances the law requires that the contract be in written form. If the parties do not comply with this requirement and one of the parties is unhappy with the outcome of the arrangement, then the arrangement cannot be enforced in some of the instances where writing is a requirement. Some important examples of contracts that must be in writing, with or without other formalities, are marriage contracts, donations, sale of land (of which the hire purchase agreement is an example).

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Is an oral agreement of lease valid?

Yes. It is however advisable to rather have a properly drafted contract of lease containing all terms and conditions of the agreement and ensuring that the landlord can enforce his rights should the tenant fail to comply with his obligations in terms of the contract.

How much notice must a landlord give the tenant to move out of the residence?

The period of notice depends on the period stipulated in the lease, or if the contract was not in writing, a reasonable period.

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Are all agreements between two or more parties contracts?

No. The parties must intend legal and not merely moral consequences to arise from their agreement. This means that the parties must understand and intend that should one party not carry out the promise he made in terms of the contract, the other party may sue him in terms of the contract. For example, where A’s girlfriend, B, promises to accompany him to a dance and B changes her mind after A has bought tickets to the dance, A may not sue B for the price of the wasted tickets, because both parties did not intend such legal consequences to arise from their agreement.

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Will the members of a close corporation be personally liable where the it is deregistered?

The general rule is that members of close corporations are not liable for debt incurred by the corporation.

One of the exceptions is, however, provided for in section 26 (1) of the Close Corporations Act 69/1984. This section provides for the members’ personal liability in case of deregistration of the close corporation. The Companies Office can deregister a close corporation if the close corporation ceases to do business and the deregistration process as set out in the Act has been followed. One of the steps of this process is

the sending of a notice by the Registrar of his intention to deregister the corporation and give the members the opportunity to convince him that the close corporation is indeed still in business.

In the matter of Firstrand Bank Limited v Davis and Others 2004 (1) SA 30 (N) the application for a declaratory order was, however, unsuccessful as the notice had not been properly served on the
respondent.

The aforesaid section 26(1) is therefore a method that can be used by creditors to collect outstanding debts due by close corporations which do not own any assets. The approach is, however, cumbersome and entails certain steps that have to be taken by die Registrar. Our experience is that it is quite difficult to get the Registrar’s co-operation in this regard. It is therefore not a very effective solution.

Creditors should therefore also make sure that they obtain personal sureties from members and possible other responsible persons whene credit is granted to close corporations. Such a surety will considerably increase the chances of successful debt collection.

Volker Krüger

When must close corporations or companies lodge annual returns?

All members of close corporations (“CC’s”) and directors of companies should take note of the Corporate Laws Amendment Act which was promulgated on the 22nd January 2002. In terms of this act all CC’s and companies must in future lodge a return with the Registrar of Companies every year:

1. the annual return must be lodged in the prescribed form and with payment of the prescribed fee.
2. a copy of the annual return must be filed at the registered office of the CC or company to enable the public to inspect it and obtain a copy.
3. the annual return must be lodged not later than the end of the month following the month within which the anniversary of the date of incorporation of the CC or company falls.
4. If a CC or company fails, for a period of six months, to lodge an annual return the Registrar may, after written warning, deregister such CC or company. There is a penalty of up to R150.00 payable on late lodgement of the annual return.

In the case of CC’s the provisions of section 26(5) of the Close Corporations Act should be kept in mind. This section stipulates that the members of a CC are personally liable for any outstanding debts of the CC after the deregistration thereof.

The Act provides for the prescribed form and fee and the effective date of the Act to be specified by regulations. Up to date such regulations have, however, not been published, but are expected soon.

Volker Krüger

What is the difference between a close corporation, a company and a trust?

CREATION
CC: Registration of founding statement at the Companies Office
Company: Registration of articles of association and statutes at the Companies Office
Trust: Registration of trust deed at Master of the Supreme Court’s Office

EQUITY
CC: Members hold members interest (maximum ten and only natural persons)
Company: Shareholders hold shares
Trust: Trustees hold trust assets on behalf of trust for the benefit the beneficiaries

MANAGEMENT
CC: Members
Company: Directors
Trust: Trustees

INCOME
CC: Members
Company: Shareholders in the form of dividends
Trust: Benficiaries either stipulated by trust deed or in the discretion of trustees in the case of a discretionary trust

CONTRACTS
CC: Association agreement (optional)
Company: Memorandum
Trust: Trust deed

Volker Krüger

Can a sharholder force the company to provide him with the company’s books of account?

The Promotion of Access to Information Act 2/2000 (the Act) is often enforced to gain access to information held by the State, especially for obtaining reasons for decisions made by organs of the State: vertical application.

In the recent case of Davis v Clutchco (Pty) Ltd 2004 (1) SA 74 (C) the court confirmed that the Act also entails horizontal application.

A shareholder in a private company brought an application to exercise his right to obtain access to the company’s books of account. He was a 30% shareholder in the company and planned to sell his shares. For these purposes he obtained a valuation by the company’s auditors, but for various reasons doubted the correctness thereof. He also suspected mismanagement of the company. He approached the company for access to the books, but his request was refused.

He consequently brought an application to obtain the books in terms of the Act which application was granted by the Court.

The same principles will in our view also apply in the case of a close corporation or a trust.

Volker Krüger

The final BEE codes of good practice

1.  The final BEE Codes of Good Practice were published in the Government Gazette of 9 February 2007.  These Codes now pave the way for the implementation of BEE and will remain firm for a period 10 years as from date of publication.

2. A key principle of the Codes is that substance takes precedence over legal form.  It is also emphasised that any misrepresentation or attempt to misrepresent any enterprise’s BEE status may lead to the disqualification of the entire scorecard of that enterprise.  Initiatives which split, separate or divide enterprises as a means of ensuring eligibility as EME’s, QSE’s or as a start-up enterprise (to which we refer to below), will be regarded as a circumvention of the Act and may also lead to the disqualification of the entire scorecard of those enterprises concerned.

3. The Codes now draw a distinction between so-called EME’s, QSE’s and other larger enterprises.

4. EME’s (exempted micro enterprises) are enterprises with an annual turnover of not more than R5 million.  These entities are automatically regarded as so-called Level Four Contributors to BEE, having a preferential procurement recognition level of 100%.  In terms of the Codes, a Level Four Contributor scores a point of between 65 and 75 on the scorecard.

5. This new provision has far reaching implications for smaller enterprises.  Because they are automatically deemed to be BEE compliant, they can carry on with their business as before without suffering any penalty or prejudice as far as BEE requirements or BEE compliance are concerned.

6. QSE’s (qualifying small enterprises) are enterprises with an annual turnover of between R5 million and R35 million.  A QSE must select any four of the seven elements of BEE in order to be rated for BEE purposes.  Where a QSE should fail to make a selection, its four best element scores will be used for purposes of its measurement.

7. The seven elements of BEE and the weighting attached to each element (expressed in points adding up to an aggregate of 100), are as follows:

ELEMENT

WEIGHTING
Ownership 20
Management Control 10
Employment Equity 15
Skills Development 15
Preferential Procurement 20
Enterprise Development 15
Socio Economic Development Initiatives 5

8. Based on an enterprise’s overall rating, it receives one of the following levels of BEE status:

BEE Status Score BEE Recognition Level
Level One Contributor In excess of 100 points 135%
Level Two Contributor Between 85 and 100 points 125%
Level Three Contributor Between 75 and 85 points 110%
Level Four Contributor Between 65 and 75 points 100%
Level Five Contributor Between 55 and 65 points 80%
Level Six Contributor Between 45 and 55 points 60%
Level Seven Contributor Between 40 and 45 points 50%
Level Eight Contributor Between 30 and 40 points 10%
Non-Compliant Contributor Less than 30 points 0%

1.  The aspects that are measured by the different elements, are as follows:
2. The Ownership element measures the extent to which black people effectively own an enterprise.
3. The Management Control element measures the extent to which black people effectively control an enterprise.
4. The Employment Equity element measures initiatives undertaken by the enterprise aimed at achieving equity in the workplace with regard to black people.
5. The Skills Development element measures the extent to which the enterprise carries out initiatives designed to develop the competencies of black employees of that enterprise.
6. The Preferential Procurement element measures the extent to which that enterprise buys goods and services from suppliers with strong BEE recognition levels.
7. The Enterprise Development element measures the extent to which an enterprise carries out initiatives intended to assist and accelerate the development and sustainability of other enterprises operated by black persons.
8. The Socio-Economic Development element measures the extent to which an enterprise carries out initiatives that contribute towards socio-economic development initiatives that promote access to the economy for black people.
9. Different Codes have been published dealing with the measurement of the extent to which an enterprise complies with the different elements of BEE and setting out how and to what extent points can be scored in regard to the different elements.
10. As far as QSE’s are concerned, a weighting of 25 points is attached to each one of the four elements that the enterprise chooses.
11. It is impractical to endeavour to explain, within the scope of this contribution, exactly how points are computed.  The matter becomes fairly technical and separate formulae are prescribed in each of the different Codes in this regard.
12. All businesses that undertake any business with any Organ of State are liable to be rated in terms of the Codes.  Similarly, any enterprise that undertakes any business, directly or indirectly, with any entity that is subject to measurement or rating in terms of the Code, will also be required to be rated.  This results from the cascading effect, throughout the entire economy, of the element of preferential procurement.
13. Regarding preferential procurement, the target during the first five years of application of the Codes, is that enterprises have to source at least 40% of their goods and services from BEE compliant enterprises.  An enterprise doing business with an Organ of State, can enhance its BEE standing by applying preferential procurement downwards in its supply chain.  Practically speaking, if that enterprise expends R100 on goods or services to a Level Six Contributor having a BEE recognition level of 60%, R60,00 of that spent of R100,00 will be recognised for preferential procurement purposes.  On the other hand, if R100,00 is spent on the acquisition of goods or services with a Level One Contributor having a recognition level of 135%, R135,00 will be recognised, even though in actual fact only R100,00 was spent.
14. A new provision in the Codes is that, for the first year after publication of the Codes, an enterprise may elect to be scored in terms of the so-called transitional scorecard.  A different formula applies in this regard between QSE’s and other enterprises.  This formula basically multiplies the enterprises ownership equity score plus the enterprises management control score by a factor, which means that the enterprise’s score or lack of score with regard to the other elements are, for the transitional period, disregarded.
15. A new provision is also that so-called start up enterprises (in other words newly registered businesses) qualify for the first year of their existence to be treated as EME’s, resulting in that enterprise being a Level Four Contributor with a 100% recognition level for preferential procurement purposes.  Should such start-up enterprise however wish to conduct any business with any Organ of State or any public entity, the enterprise will have to submit a QSE scorecard, and for contracts having a value above R35 million, such newly registered enterprises should submit the generic scorecard applying to larger enterprises.  It would accordingly be impossible for a newly registered business having no BEE compliancy to tender for larger State contracts.
16. Clients should also note that no verification agencies have as yet been appointed.  According to the Department of Trade and Industry, rating agencies will only be appointed towards the second half of this year
17. We are now able to provide detailed guidance to clients as far as their business’ BEE transformation is concerned.

May I intercept your communication?

The RICA-ACT, although promulgated in December 2002, only came into effect as of September 2005 and aims to regulate the interception of communications and the monitoring of signals and radio-frequency spectrums.

In principle this act states that we may not intentionally intercept or authorise somebody else to intercept any communication in the course of its transmission in South-Africa.  “Communication” includes oral communication, eg telephonic discussions or direct discussions and indirect communication, eg music, text, visual images, signals, etc.  The definition is wide enough to include any form of possible communication currently available in the world.

Unlawful interception of communication is subject to a penalty of a maximum of R2 million or imprisonment not exceeding 10 years.

* Of paramount importance to us as your attorneys, or to our clients, is to know that certain interceptions of communications are not prohibited, for example:You may intercept communication when you are a party to the discussion.  The way I understand the act, it is therefore not illegal to put a dictaphone in your briefcase and record your conversation with any other person.
* You may also intercept communication when you are not a party to the communication, but have received prior written consent by a party to the communication.  You can therefore request a friend to tape a discussion in which you are involved.
* Law enforcement officers may also intercept communications in certain situations for example:

* if the authorised person has reasonable grounds to believe that:
o a serious offence has, is being or will be committed;
o public health or safety, or national security or national economic interests are being threatened;
o if communications relate to organised crime, terrorism, or if a party to the communication may cause serious bodily harm to another or himself.
* In some cases the law enforcement officer needs prior written consent to such interception and in some cases it will not be necessary.

* For employers it is important to note that you may intercept indirect communication with the express or implied consent of the employees if the interception is carried out for the purpose of monitoring the indirect communications.  The RICA-ACT is therefore an important tool and gives direction to companies on how to manage employee e-mails.  The crux is that unless the written consent of the employee is obtained, you may only monitor his/her e-mails if all the following conditions are met:

o It must be authorised by the CEO or by the person to whom such authority has been delegated.

* The e-mail must relate to the business of the employer or must be sent/received by an employee in the cause of carrying on the business of the employer.

* The purpose of the monitoring must be to monitor to establish the existence of facts or to investigate or to detect unauthorised use of the e-mail system or to secure the effective operation of the e-mail system.  PLEASE NOTE THAT ALL REASONABLE EFFORTS MUST BE USED TO INFORM YOUR EMPLOYEES IN ADVANCE THAT THEIR E-MAIL MAY BE MONITORED.

* The RICA-ACT provides that a recording of the intercepted communication may be admissible as evidence in criminal or civil proceedings if it contains information regarding the commission of any criminal offence.  Unfortunately this Act does not tell us when the recording will not be admissible in a court of law.

* It is therefore clear that according to this Act, you may make a recording of communications if you are a party to that communication and that you may use this communication as evidence regarding the commission of any criminal offence, not only in the criminal court, but also in a civil court.  Furthermore you must give notice to your employee that you intend monitoring their e-mails to investigate or detect unauthorised use of the e-mail system.

IGNA KLYNSMITH

Can employers arrange HIV-tests for their employees?

HIV (and AIDS) is a pandemic which according to statistics will have devastating consequences not only in South Africa but on the rest of the continent. It is estimated that in South Africa alone approximately 1 500 persons are infected daily with HIV which figure, is to say the least, shocking.

The International Labour Organisation (ILO) estimates that by 2020 the labour force in South Africa will be 17% smaller than it was in 2000. The report also mentions that AIDS-related illnesses and deaths of workers will effect employers by increasing costs and reducing revenues. Employers will be required to spend more on health, burial, training and recruitment or replacement of employees. There will be a reduction in revenues due to absenteeism related to illnesses, attendance at funerals, time spent on caring for the ill and training of replacements. The advent of HIV/AIDS has brought with it a new manifestation of discrimination, namely unfair discrimination on the grounds of HIV/AIDS status of persons including employees.

The impact of HIV/AIDS on the South African economy is a worrying factor and an increasing number of businesses are requiring information on HIV prevalence in their workforce so as to assess the potential impact of HIV/AIDS on the workforce.

In the case of Joy Mining Machinery, A Division of Harnischfeger (SA) (Pty)Ltd v National Union of Metal Workers of SA and Others (2002) 23 IJL391 (SC), Joy Mining Machinery approached the Labour Court to get permission to arrange HIV testing for its employees.

The question obviously arises whether an employer is entitled to arrange HIV testing for its employees and, if so, under what circumstances can such HIV testing be permitted.

The answer to this question can be found in the Employment Equity Act 55 of 1998. Section 7(2) of this Act provides that testing of an employee to determine that employee’s HIV status, is prohibited unless such testing is determined to be justifiable by the Labour Court in terms of Section 50(4) of this Act. This provision means that an employer who wishes to test his employees to determine their HIV status must apply to the Labour Court for permission.

Section 50(4) of the Act provides that if the Labour Court declares that the medical testing of an employee as contemplated in Section 7 is justifiable, the Court may make any Order that it considers is appropriate in the circumstances including imposing conditions relating to:

a) the provision of counselling;
b) the maintenance of confidentiality;
c) the period during which the authorisation for any testing applies; and
d) the category or categories of jobs or employees in respect of which authorisation ….for testing applies.

The facts in the Joy Mining Machinery case were that Joy Mining, which employs 800 employees and carries on business nationally as a manufacturer, supplier and service provider in respect of machinery to the mining industries, wished to test its employees for HIV in order to determine the incidents of the disease amongst its staff so as to be better able to deal with the pandemic. It had the support of the Unions as well as most non-union employees for the HIV test.

In its application Joy Mining pointed out that the need to test for HIV was to establish the exact HIV prevalence existing at its workplace so as to enable them to be in a better position to evaluate its training and awareness programme as well as being able to formulate future plans based on a more accurate prevalence study. It further pointed out that the purpose for the test was that as an employer it needed to know the extent of HIV infection among its workforce in order to be proactive regarding prevention of employees becoming infected with HIV, to treat at least the symptoms of the disease and to plan for contingencies and other eventualities.

Joy Mining made it clear to the employees that participation was voluntary and no one would be forced to participate. Employees were further ensured that confidentiality and anonymity of employees would be safeguarded as the procedure proposed which inter alia made provision that employees would not be asked their names, would ensure that confidentiality and anonymity was safeguarded.

Joy Mining was also instrumental in preparing its employees for HIV testing as various consultations between all relevant stake holders took place. Meetings were held and the benefits associated with knowing the prevalence of HIV within the company in order to face the crises rather than being unprepared, were dealt with.

In view of the fact that the testing was to be confidential, there would be no need for Joy Mining to arrange post-testing counselling for its employees. Employers who wished to know whether they were HIV positive, however, would be required to arrange their own tests and Joy Mining would advise such employees where to obtain assistance should they wish to have a private test.

What the Court had, therefore, to determine was whether the proposed testing for HIV status was justifiable. The Court was of the opinion that in deciding whether a HIV test is justifiable, would be appropriate to take into account considerations relating to unfair discrimination, the need for HIV testing, the purpose of the test, the medical facts, employment conditions, social policy, the fair distribution of employee benefits, the inherent requirements of the job and the category or categories of jobs or employees concerned.

The Court also pointed out that it also wished to be informed about the following criterion which although does it did not relate to justifiability, was relevant to arriving at a proper decision, namely: the attitude of the employees, whether the test was intended to be voluntary/compulsory, the financing of the test, preparation for the test, that is whether the employees were able to give their informed consent, pre-test counselling, the nature of the proposed test and procedure and post-testing counselling.

As it appears from the highlighted parts above, Joy Mining did deal with most of these aspects.

Having regard to all the factors as set out in Joy Mining’s application the provisions of the Act as well as the factors which must be taken into account in order to determine the justifiability, the Court granted the Order sought by Joy Mining which mean that Joy Mining was allowed to proceed with the arrangement of HIV testing for their employees.

Although it could be argued that Joy Mining’s application might have been made easy by the fact that it had the support of its employees who agreed to voluntarily participating in the testing, it is clear from the Court’s judgment that the fact that the employees volunteered, did not play much of a role in convincing the Court to grant the Order in favour of Joy Mining. As a matter of fact in the recent case of Irvin & Johnston Ltd v Trawler and Line Fishing Union 2003 (3) SA 212, the Court held that the individual employees’ attitude to the testing is not stated to be a relevant factor in the Act, and it would not seem to be naturally accommodated within any of the stated criteria of justifiability. The Court held that the employees’ desire and willingness to undergo the testing would not be relevant in assessing the justifiability thereof. One can, therefore, say that the willingness of employees to undergo HIV tests is just one of the factors which the Court may take into account with all the other relevant factors as set out above in assessing the justifiability of HIV tests.

It is important to draw a clear distinction between medical testing as provided for in Section 7(1) of the Employment Equity Act and testing of an employee to determine that employee’s HIV status as provided for in Section 7(2) of the Act.

Medical testing includes any test, question, enquiry or other means designed to ascertain, or which has the effect of enabling an employer to ascertain whether an employee has any medical condition. These tests normally take the form of X-rays, eye tests, lung function etc and which are very commonly used by mines to assess whether employees are fit to work underground. Now, in terms of the Act it is not necessary for employers to apply to the Labour Court for permissions to do medical testing on their employees as an employee may form an opinion as to whether medical testing for conditions other than

HIV infection, is justifiable or not. It is, however, in the case of HIV testing that the issue of justifiability must be determined in advance by the Labour Court.

The question may obviously arise as to what the position is regarding HIV testing in cases where the nature of the employment is such that HIV testing might become an inherent requirement of such a job and there have been arguments that HIV testing might be an inherent requirement for people who work, for example, in a butchery or even domestic workers. Well, the answer to this question lies in Section 7(2) of the Employment Equity Act which basically provides that testing of employees to determine their HIV status is prohibited unless the employer applies to the Labour Court for permission and in each case the Labour Court will have to determine whether such testing is justifiable after taking into account all the relevant factors as set out above.

As stated above, the advent of HIV/AIDS has brought with it a new manifestation of discrimination, namely unfair discrimination on the grounds of HIV/AIDS status of persons, and the stigma and discrimination which normally accompany being HIV positive, might be the reason why the consent of the Labour Court has generally been set as a pre-condition for testing. As a matter of fact in Hoffmann v South African Airways 2001 (1)SA 1 (CC)(2000 (11) BCLR 1211) the Constitutional Court described people living with HIV/AIDS as one of the most vulnerable groups in our society, and the Legislature’s concern for this group is reflected, inter alia in the more stringent requirement for HIV testing imposed by Section 7(2) of the Employment Equity Act 55 of 1998.

Fred Paul

Can a creditor or his attorney be forced to accept a pay-off agreement in respect of an outstanding

No. As soon as the debt is due and payable the creditor is entitled to claim the full balance, including the capital, interest and costs.

The creditor will however often be prepared to accept a reasonable monthly down payment. Various conditions will normally be laid down by the creditor, such as:

  1. That the debtor will pay costs on an attorney and client scale.
  2. That the debtor will pay interest at a higher rate than the prescribed interest rate of 15.5%.
  3. That the debtor consents to judgment and an emoluments attachment order.
  4. That the monthly payment will be reviewable after a certain period of time.
  5. That the agreement doesn’t constitute a novation of the existing cause of action.

Should the debtor however have sufficient assets that can be attached and sold in execution, the creditor will normally not accept a pay-off arrangement.

Volker Krüger

How soon after an arrest must a person appear before a magistrate?

If you are arrested and placed in jail, on “initial appearance” before a magistrate must occur within 48 hours of your arrest. At an initial appearance, you will be informed of the charges against you. It will be determined whether you should remain in custody until the next appearance, or be warned or whether you should remain in custody until the next appearance, or be warned or whether bail should be granted.

http://www.lawinfo.org.za

Can tenants residing in a sectional title property vote at an AGM?

No, unless they are given a proxy from the owner of the property.

Q: We are in a sectional title unit. There is conflict regarding “improvements” in certain units and we need to know if they are legal in the “conveyancing sense”. a) a Jacuzzi on their varanda which is classified as common property b) Built a carport on common property section adjacent to his unit This breaks the conformity of the outside of the units though it may have been authorized by the trustees at that time (we do not know) c) built a roof on comprising of louvres which open and close making this area waterproof. One unit has an opening to the elements as well to the house and the other enterance only goes into the house These issues have come about due to another unit being built as an extra unit and the trustees are taking the matter up with them. They have brought up these issues. Are they valid.

A: The trustees or the developer may reserve the right to extend the sectional title to common areas at a later date. This may be contained in the draft sectional plan approved by the Surveyor General. You may request that the trustees to show you the sectional plan approved by the Surveyor General if it provided for these developments in your sectional titles. If not so then you may refer the matter for arbitration as disputes between the unit owners and trustees should be resolved through arbitration.

Q: I want to sell my 50% share in a CC. Do I need the other 50% members’ permission? Do I need to sell to her? I can get more from an external party?

A: As far as I am aware most CCs have association agreements – check this.

Is there a member’s agreement? If not, then you could sell to anyone else.

If you have another buyer then sell to him! If she can’t or doesn’t want to match the price so be it! There will be nothing that she can do if there is nothing restricting you from selling to another person!

Cancellation of Lease Agreement

Q: I would like to cancel my current lease agreement, I would like to find out if the landlord has infact breached the agreement and if so, how much would it cost to write up a cancellation letter and get my full deposit back without paying the penalties for breaking the lease stipulated in the contract.

A: We would need to peruse the lease agreement and possibly consult with client before being in a position to draft the notice.

Family Law

Question About Home Ownership

When my mom passed away in 2000, my brother and I became owners of a house because my parents were divorced. Well, he thinks that he can kick me out just because I want to have my boyfriend over. My brother no longer lives here. My dad told me that my brother pays bills for this house, but I’m not sure what he is talking about because I pay the bills for the household (i.e phone, internet, cable, water and electricity) The house was put in succession after my mom passed away, and has not been completed. There is no will. My brother claims that he is the executor of the estate because he was an adult (20) when my mom passed away. Does that give him the right to kick me out or the right to determine who stays at my house? I don’t pay rent.

struggling caregiver

a friend was recently incarcerated. she has a 5 year old daughter which i am caring for until her return. i need financial help and legal forms stating that the parent has given permision so that i may make any decisions reguarding the childs education and health

Legal rights

I need information on Ohio foreclosure laws and rights.

Labour Law

looking for an employment lawyer regarding unemployment benefits washington dc