YOUR SALE AGREEMENT: THERE’S MANY A SLIP…..

“There's many a slip 'twixt the cup and the lip” (old proverb)

In other words, even when things seem certain, they can still go horribly wrong. And that’s particularly true of immovable property sale agreements, because of our law’s formal requirements relating to them.

Yet another warning to have your sale documents professionally checked before you sign them comes from a recent High Court case where an agreement of sale for a sectional title unit was held to be invalid for two technical reasons –
1. There was no evidence that the person who signed the sale agreement for the seller (a Close Corporation) had the necessary authority in writing from the CC to do so, and

2. The buyer was married in community of property, but had signed the agreement without the required written consent of his spouse. Interestingly, a seller has some protection in this regard to the extent that consent will be deemed to have been given if the seller “does not know and cannot reasonably know” of the non-compliance. In this case however the seller’s employee had known of the marriage prior to the sale and the defect was held to be fatal.

The message here is clear – fail to comply strictly with our law’s formal requirements and you will sink your sale.

PAYING IN ADVANCE: THE PERILS

Be very careful indeed when a supplier requires you to make an advance payment, in part or full, for goods or services yet to be supplied.

Firstly, you damage your negotiating position should disputes arise. The old adage “Possession is nine-tenths of the law” may not be literally true in the legal sense, but in practical terms having actual possession of disputed money or assets is a great bargaining chip!

Secondly, if your supplier is in financial trouble, you face two significant legal risks –
1. If the supplier spends “your” money and is liquidated before supplying the product or service, you are left with a concurrent claim in the estate. And a concurrent claim is likely to be worthless (if you get even 5 cents in the Rand, count yourself lucky).

2. If on the other hand “your” money is paid into the supplier’s bank account, the bank can appropriate it to cover its own claims. Leaving you again with your worthless claim against the supplier.
This second risk is neatly illustrated in a recent Supreme Court of Appeal case, where a buyer of product made an advance payment into the supplier’s bank account, only to have the bank appropriate the credit against the supplier’s overdraft.

Holding that the bank had acted lawfully, the Court pointed out that (as a general rule) as soon as monies are paid into an account holder’s bank account, the bank immediately acquires ownership of the funds. The account holder now has only a claim against the bank for payment of the credit.

And whilst the bank doesn’t always have “an absolute or unqualified right on it to treat the funds as its own or the credit as the property of its customer”, it was in this case entitled to set the credit off against the overdraft. The bank didn’t have to “subordinate its interests to [the customer] in the absence of agreement between them” – so presumably the product buyer could have avoided its loss if it had insisted up front on the bank agreeing to refund the purchase price if the supplier failed to deliver.

The end result – the buyer is down R710,111. Don’t let that happen to you!

DEBT COLLECTION ALERT! NEW NOTICE DELIVERY REQUIREMENTS

Credit Providers: Before you can sue on any credit agreement, you must “deliver” to the consumer a National Credit Act notice of default. There are several ways to accomplish “delivery”, and registered post is often chosen for its convenience and low cost.

Until now, a registered slip from the Post Office has generally been enough to prove delivery. But all the slip proves is despatch of the notice, not “delivery” - so now (per a recent Constitutional Court case in which a notice had been diverted to the wrong Post Office) you also have to show that you have taken “reasonable measures” to bring the notice to the consumer’s attention. And that, held the Court, would ordinarily mean proving that the notice was delivered to the correct post office by way of a “track and trace” print-out from the Post Office’s website. Such proof of arrival in the correct post office is enough to prove delivery “in the absence of contrary indication”.

Consumers: Where you have signed credit agreements (home loans, instalment sale agreements, etc) you will almost certainly have chosen a “domicilium citandi et executandi” service address, at which you will probably have elected also to receive legal documents by registered post. Keep your creditors advised (in writing) of any changes of address. If you don’t, you risk a default judgment against you even if, as happened in a recent High Court matter, an NCA notice had been “returned to sender” – i.e. it had presumably never actually reached the debtor. In other words, when you choose a domicilium address, it’s up to you to ensure that you receive notices sent to it.

PREGNANT, UNMARRIED - AND DISMISSED

“There are 368 000 women between the ages of 15 and 21 with a baby under the age of two. 88% of them are single. (AMPS 2011)” - Eighty20’s Fact-a-Day at http://www.eighty20.co.za/blog/.

Dismissal of an employee for any reason relating to her pregnancy is automatically unfair, and exposes the employer to a potential compensation award of up to 24 months’ remuneration (double the normal maximum).

A recent Labour Court judgment shows just how wide this protection is (in particular that it extends to all women, married or not), and just how dangerous it is for employers to lose sight of it.

The facts
The employer’s business was carried on at the premises of its landlord, a church mission, whose code of conduct prohibited any unmarried woman from falling pregnant.

An unmarried employee fell pregnant. She had received a copy of the code of conduct and had been told that she would have to leave the premises if she contravened it.
She was accordingly denied access to her place of work by the landlord’s security guards.
Her employer refused to intervene with the mission on her behalf and her employment was terminated.
The outcome

The employee had to prove two things –
1. That she had been dismissed. Finding that an employer must “receive an employee into service” (i.e. accept a tender of services), the Court held that in this case the employer could not hide behind the mission’s rules, and that its refusal to intervene on her behalf with its landlord amounted to a dismissal.

2. That her dismissal was related to her pregnancy. Our law requires only that the employee produces evidence “sufficient to raise a credible possibility that an automatically unfair dismissal has taken place” – the onus then shifts to the employer to show that there was in fact another, lawful, reason for dismissal. Commenting that: “Protection from dismissal by reason relating to pregnancy is not a preserve of married women”, the Court had no difficulty in finding for the employee in this regard.
Employers – don’t get caught between a rock and a hard place!

If anything in your lease threatens your employee’s rights, it’s you that will carry the can - not your landlord, and not your employees. Take advice in doubt!

PROPERTY OWNERS: ARE “OWN RISK” DISCLAIMERS STILL VALID?

Property owners: If you own a property – particularly one “designed for use by the public” (think guest houses, B&Bs, hotels, shopping malls, etc) make sure that you have in place proper disclaimer notices and exemption clauses.

Without them, visitors and guests could hold you liable for any loss or injury caused by your negligence. You are “obliged to take reasonable steps to ensure that the public is safe” as the High Court recently put it in deciding a damages claim against a hotel. “Property-owners”, held the Court, “are liable to ensure that their property does not present undue hazards for the public who enter and use the premises”. Fail to live up to that standard and you could face a claim of millions.
But are disclaimers valid?

Claimants have recently acquired two new lines of attack against exclusion of liability clauses and notices –

1. Where the Consumer Protection Act applies, the strict and extensive duties it imposes on suppliers could well trump most forms of disclaimer.

2. A recent High Court decision suggests that constitutional considerations may in any event sway our courts to remove your protection altogether.

The hotel, the guest, and the damages claim

The case involved a hotel guest who sued a hotel for damages after he sustained back and leg injuries when a heavy gate came off its rails and fell onto him. This, held the High Court, resulted from the hotel’s negligence. The hotel relied on disclaimer notices posted around the premises, and on an exclusion of liability clause on the hotel registration card.
In finding against the hotel, the Court held that –
Exemption clauses “will not pass constitutional muster” when they exclude liability for negligently causing bodily injuries or death. Our courts may or may not in future expand this concept beyond claims for injury or death – the Court in this case was dealing specifically with an injury claim.
Moreover exemption clauses will not be enforced if they limit a person’s “right to a judicial remedy” if – in a particular case such as this one – that would result in an injustice.
The bottom line – disclaimers and exclusion clauses offer a lot less protection than they used to. Certainly you must have them in place (and take advice on how best to display them and have visitors agree to them), but also limit your risk by regularly inspecting for safety hazards, reviewing your insurance cover etc.

Guests and Visitors: If you suffer any injury or loss on public premises, take advice on claiming for damages – your rights just got stronger!

Insurers: Your level of risk just increased!