Voetstoots: the common law principle

When someone buys goods, South Africa’s common law provides an implied warranty that the goods are sold free from defects. But if goods are sold “voetstoots” it means that the goods are sold “as is” and without any warranty. If it later transpires that there were defects in the goods the purchaser wouldn’t have any recourse against the seller. Except where the defect existed at the time of sale and the seller knew about it, yet failed to disclose the defect to the buyer. A sale contract containing a voetstoots clause wouldn’t protect a seller who knew about a defect but failed to disclose it, knowing that the sale may have fallen through, or the purchaser would have negotiated a reduced price. When the purchaser eventually finds out about the defect, the purchaser would have recourse against the seller to cancel the sale and reclaim the purchase price, alternatively to keep the goods but claim a reduction in the price. Read More.....

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A Members’ Agreement is also commonly referred to as an Association Agreement. It is a contract between the members of a close corporation, intended to set out the members’ roles and responsibilities. Is an Association Agreement a legal requirement? No. Close corporation members are not legally required to sign one. But if a CC has two or more members then a Members’ Agreement is highly recommended. A Members’ Agreement helps the members to define their respective roles in the CC, and sets out dispute resolution processes in the event that there is a dispute between the members. A Members’ Agreement helps to clarify members’ rights and obligations and can serve as an invaluable tool in the running of the business. By setting out expectations in writing the members know what is expected of them, and understand the consequences of breaching their duties as members. This often means that conflict can be avoided altogether, and any disputes can be diffused before they become a major issue. Read More.....

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The innocuous little domicilium clause. We’ve all signed a contract containing one, whether we noticed it or not. The domicilium clause is a standard clause in most written agreements, which effectively specifies how communications, notices, legal processes and the like are to be served on the receiving party.

Typically, the contract provides for a party to identify a physical address that is nominated as the ‘domicilium citandi et executandi’ – or the address at which the party will accept the service or delivery of official documents related to the contract. Often this clause includes a deeming provision, for example the assumption that the letter will be delivered within eight days after being mailed by registered post. That’s all well and good; until the time comes when a person needs to serve something really important on the other party. Like a termination notice, demand letter or summons. That’s when things can fall apart. For example: Read More.....

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A Shareholders’ Agreement and the Company’s MOI (Memorandum of Incorporation) go together like the proverbial horse-and-carriage. Before the new Companies Act, a private company’s Shareholder’s Agreement was king of this carriage, overriding any conflicting provision in the articles of association. But not anymore. In terms of the South African Companies Act, the terms of the company’s Memorandum of Incorporation override any conflicting provisions in the Shareholders’ Agreement. Does this mean that a Shareholder’s Agreement is no longer relevant? Not at all. A Shareholders’ Agreement neither replaces nor alters the MOI. A company’s Shareholders’ Agreement should complement its MOI. What this does mean, however, is that shareholders should pay careful attention to the MOI under which it is incorporated. Read More.....

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