Browsed by
Author: MHI Law

Shareholders’ agreements 101

Shareholders’ agreements 101

A shareholders’ agreement sets out how a private company should be operated and regulates the various shareholders’ rights and obligations. It is therefore important that a shareholders’ agreement be concluded at the beginning of the relationship to prevent disputes later on.

The Companies Act No. 71 of 2008 (“the Act”) expressly recognises shareholders’ agreements. Section 15(7) of the Act states that shareholders of a company may enter into any agreement with one another in respect to any matter relating to the company. It is, therefore, possible that a shareholders’ agreement may contain a vast array of provisions, but there are certain general provisions that should be considered.

  1. Duties and obligations of the shareholders: It may be that certain or all of the shareholders are not part of the day-to-day business of the company, in an employee capacity or even as a director, but may have other responsibilities towards the company and/or the other shareholders.
  2. Decision-making: It is important to determine how decisions will be made on a shareholder level – this may be regarding anything from how directors will be appointed to dividends that may be declared.
  3. Funding of the company: In a new start-up company, it is highly unlikely that there will be no funding from shareholders. A shareholders’ agreement may address existing shareholder funding as well as future funding by shareholders, whether there is a duty to provide funding, and also how shareholders may reclaim the funding from the company.
  4. Exiting of shareholders: When the time comes where a shareholder wishes to exit, there should be no uncertainty as to the process to be followed by the parties. A shareholders’ agreement may regulate the notice that should be given to other shareholders, the pre-emptive rights, the protection of minority shareholders should the exiting shareholder sell his or her shares to a third party, and also how the shareholding will be valued.
  5. Dispute resolution: It is inevitable that disputes will arise in any business relationship. A shareholders’ agreement may set out the procedure that the parties can turn to in times of dispute.

The advantage of a shareholders’ agreement is that the document constitutes a private document between the parties, which is not open for inspection by the public, as it is not filed with the Companies and Intellectual Property Commission (“CIPC”). Secondly, the shareholders’ agreement creates a binding and enforceable agreement between the parties.

On the other hand, the shareholders’ agreement only binds the shareholders that are parties to the agreement unless the new shareholders’ consent to be bound to the shareholders’ agreement. The shareholders’ agreement may also only be amended with the consent of the shareholders.

Section 15(7) of the Act furthermore states that a shareholders’agreement must be consistent with the Act as well the company’s memorandum of incorporation. Any provision in a shareholders’ agreement that is inconsistent with the Act and/or the company’s memorandum of incorporation will be void.

A shareholders’ agreement can be a vital tool to plan and operate your business, but it is important that a shareholders’ agreement be tailored to the needs of your business.

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)

What is a Living Will?

What is a Living Will?

A Living Will is a document regarding healthcare at the end of your life. It states that any treatment that would otherwise lengthen your life should be withheld in specific circumstances, such as being in a permanent vegetative state, irreversibly unconscious or terminally ill. Through a Living Will, you express the desire to die a natural death, free from having your life extended artificially in any form such as a life support machine, tube feeding, or medication. In other words, by way of a Living Will you tell your family and your doctor that you do not consent to being kept alive artificially.

A Living Will would typically read as follows: “Should I no longer be capable of making decisions and should my physical and/or mental condition deteriorate to such an extent that there is no reasonable prospect of my recovery from physical illness or impairment which is expected to cause me severe distress or to render me incapable of rational existence, I request that I be allowed to die. I further request that no systems be used in order to keep me alive in circumstances where, but for the use of such systems, I would have died”.

A Living Will usually does not withhold any necessary and adequate pain management, even if the moment of death is hastened. A typical clause in a Living Will regarding medication would read as follows: “I request that I be given whatever quantity of drugs and/or medicine and/or intravenous fluids as may be required to keep me comfortable and free from pain or distress even if the moment of death is hastened”.

A Living Will provides peace of mind as it enables you to express your choice of medical care should you be unable to communicate. A Living Will can also assist in settling disagreements amongst family members and medical professionals regarding appropriate treatment. A Living Will can also assist in containing the cost of dying. Most people would prefer to pass away rather than live on life support which can lead to astronomical medical bills which may jeopardise the financial security of their family. It is very difficult for a family member to request the withdrawal of medical treatment based on affordability.

Many people think that a Living Will is not something they need unless they have reached an advanced age. Young adults are however far more likely than the elderly to be involved in fatal or near-fatal accidents, and they must ensure that they have a Living Will to cover such a situation. Many people are under the mistaken impression that a general power of attorney will suffice if they are mentally incapacitated or in a coma following an accident. Unfortunately, a power of attorney becomes invalid the moment the person that gave the power of attorney can no longer exercise his or her judgement.

Drawing up a Living Will need not be expensive or time-consuming and, while you can do it yourself, it is better to have an attorney assist you with preparing a Living Will. The Living Will should be accessible, so it is advisable to inform your family of the location of the Living Will and to provide your medical practitioner with a copy. A Living Will should be a separate document from your Last Will and Testament because it serves a different purpose. A Last Will and Testament takes effect after your death, whereas a Living Will comes in to play while you are still alive but in an incapacitated state.

It is all about peace of mind and knowing that your loved ones aren’t put in a position to make difficult decisions. Together with a Last Will and Testament, having a Living Will in place might be one of the final acts of love you show your family.

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)

Who is liable for injuries in a Sectional Title Scheme?

Who is liable for injuries in a Sectional Title Scheme?

The case of Du Plooy and The Cascades Body Corporate and Another deals with a slip-and-fall incident by one of the owners in the scheme and member of the body corporate who was subsequently entrusted by the owners with the duty of the cleaning and gardening services.

Mr. Du Plooy, as Plaintiff, slipped and fell in the common area of the scheme and initiated action against the managing agent and the body corporate for damages, in that both the managing agent and the body corporate failed in keeping the property in a safe condition for ordinary use, and as a result of this failure he suffered damages.

The functions of the body corporate are contained in Sections 3 of the Sectional Titles Scheme Act, 2011 (hereinafter “the Act”) and reads as follows: A body corporate must perform the functions entrusted to it by or under this Act or the rules. Such functions include establishing and maintaining an administrative fund that is sufficient to cover the estimated annual operating costs regarding the repair, maintenance, management and administration of the property (including reasonable provision for the future maintenance and repairs). The court in the Du Plooy matter found that the body corporate is in practically the same position as a landlord, hotel owner or shopkeeper, who by virtue of his or her control over the property, has a legal duty to take reasonable steps in respect of maintenance and supervision to ensure that the property is in a safe condition for ordinary use.

The most important issue between Mr Du Plooy and the body corporate was whether the body corporate negligently failed to discharge the legal duty which it owed to Mr Du Plooy. The body corporate did not delegate its duty to maintain the common property to ensure it is safe and based on this, the body corporate will still be liable to maintain the property, as provided for in the Act. As a legal entity, the body corporate could not in itself discharge the duty and had to take reasonable steps to have the duty discharged.

Mr Du Plooy was a competent and capable person that could ensure that the property was safe for ordinary use and the body corporate trusted that he would report any safety hazards that needs to be addressed. Although this may not have amounted to a delegation of the body corporate’s legal duty to Plaintiff, it meant that Mr Du Plooy was contractually obliged to execute the duty on behalf of the body corporate.

With regards to the duty of the managing agent, the court found that the duties of the managing agents are of an administrative nature and that it would be unusual to burden the managing agents with the positive legal duty to ensure the property remains safe for ordinary use. There is no statutory duty cast upon the managing agent to be responsible for the common property or for the safety of those who may use the property for development. It is the duties of the trustees to run the day to day affairs of the body corporate and instruct the managing agent as needed. By virtue of these duties being performed by a managing agent, there is no need for regular visits to the developments. In these circumstances, it becomes the legal duty of the managing agent to physically monitor the maintenance and repair of work to be done at these developments.

The court found that the incident was caused due to sole negligence. Mr Du Plooy contractually undertook to keep the common property clean. The action instituted by Mr Du Plooy was dismissed.

Reference List:

  • l Sectional Titles Schemes Management Act, 2011
  • l Du Plooy v The Cascades Body Corporate and Another (275/10) (2013) ZAWCHC 62 (12 March 2013)

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)

Keep left to stay on the right

Keep left to stay on the right

Duties of a reasonable driver:

Among the duties of a motorist are: to keep a proper look-out, drive at a reasonable speed, observe the rule of the road (keep to the left), allow for lateral movement, follow another vehicle at a safe distance and maintain his vehicle in a roadworthy condition.[1] These duties may seem obvious to the reader, but the high amount of accidents on the South African roads are an indication that a lot of motorists don’t go to the trouble of adhering to the most basic requirements a motorist is expected to follow.

The rule of the road:

Because the observance of the rule of the road – which requires traffic to keep to the left of the centre of the road – is of such importance, a motorist keeping to his side of the road is entitled to assume that approaching traffic will do likewise. Even when an approaching vehicle is on its incorrect side of the road, a driver on his correct side should assume that the former will return timeously to its correct side of the road. A driver who becomes aware of a dangerous situation must however still do everything in his/her power to avoid an accident, and if it is possible to avoid an accident by swerving to the opposite side of the road, given that there is no traffic coming from the opposite direction, must do it. However, very rarely, will a driver be acting unreasonably by remaining on his correct side of the road.[2]

A large number of accidents do, however, occur due to one vehicle overtaking another when it is not safe to do so. When the driver of a vehicle is about to overtake and pass another vehicle, it is the duty of the driver to keep a proper lookout to establish whether he/she can safely overtake.[3] If a driver overtakes another vehicle when it is not safe to do so, the onus cannot possibly be placed on traffic coming from the opposite direction to avoid an accident. It remains the duty of the overtaking vehicle to ensure that it is safe to do so, and should it come to the driver’s attention that he/she will not be able to overtake without colliding with traffic from the opposite direction, he/she must apply his/her brakes and get back in the lane in which he/she was originally driving as soon as possible.

Duties of a reasonable driver in a sudden emergency:

In deciding what the reasonable driver would have done in the position of a driver who is faced with a sudden emergency, allowance must be made for the inevitable time lag between observation and reaction, as affected by the agony of the moment, the element of surprise, and the likelihood of momentary indecision.[4] The standard of care which a reasonable driver ought to exercise when driving in the ordinary course of events is, therefore, lowered when the driver is faced with a sudden emergency.

Where a Plaintiff is put in jeopardy by the unexpected and patently wrongful conduct of the defendant, it seems to be irrational to examine his/her conduct under a microscope and to try to envision what steps the Plaintiff could have taken to avoid an accident. To do so would be to ignore the penal element in actions on delict and to punish a possible error of judgement as severely as, if not more severely than, the most blatant disregard of the safety of others by the Defendant in overtaking a vehicle when it is not safe to do so.[5]

What constitutes prima facie proof of negligence?

When a motor vehicle drove on the incorrect side of the road and collided with an approaching vehicle, it has been held that negligence can be inferred from the nature of the accident, because the only reasonable inference was that the defendant’s driving on to the incorrect side of the road at the moment of the accident was due to his failure to exercise proper care. Proof that a vehicle was on the incorrect side of the road at the time of the collision is prima facie proof of the driver’s negligence.[6]

Lack of evidence by Defendant with regards to negligence:

If the Defendant fails to produce evidence to negate the inference of negligence, his failure to do so tilts the scale in the claimant’s favour and the latter is entitled to succeed against the Defendant. A driver’s inability to give an explanation because he is suffering from amnesia cannot operate in his favour and to the Plaintiff’s detriment. If there is no evidence to rebut the evidence led by the Plaintiff as to the Defendant’s negligence, the Plaintiff’s version must stand.

Conclusion

A large number of accidents would be avoided if motorists stuck to the rule of the road, and only overtook other vehicles when it was safe to do so. All motorists should be held to a high standard of care when driving. However, such a standard would be lowered if a driver was faced with a sudden emergency, caused by another driver’s negligent driving. A vehicle driving on the wrong side of the road, who causes an accident, can be held to be prima facie negligent. Should a party who was in an accident not be able to remember the accident, the other party to the accident’s version must stand. Hopefully, the dire consequences of causing an accident, will dawn on more people, and encourage them to exercise more patience when driving.

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)

WHAT HAPPENS WHEN ANNUAL RETURNS ARE NOT FILED?

WHAT HAPPENS WHEN ANNUAL RETURNS ARE NOT FILED?

In terms of Section 33 of the Companies Act 71 of 2008 (“the Act”), read with Regulations 28, 29, 30 and 33 of the Companies Regulations of 2011 (“Regulations”), companies and close corporations must submit Annual Financial Statements or a Financial Accountability Supplement (“FAS”) together with their Annual Return with the Companies and Intellectual Property Commission (“CIPC”) annually.

All companies (including external companies) and close corporations are required by law to file their annual returns with the CIPC on an annual basis, within a prescribed time period. The purpose of filing such annual returns is to confirm whether a company or close corporation is still in business/trading, or if it will be in business in the near future.

Therefore, if annual returns are not filed within the prescribed time period, the assumption is that the company or close corporation is inactive, and as such CIPC will start the deregistration process to remove the company or close corporation from its active records. The legal effect of the deregistration process is that the juristic personality is withdrawn, and the company or close corporation ceases to exist.

Companies and close corporations are required to file annual returns once a year within a given time period. Companies must file within 30 (thirty) business days after the anniversary date of its incorporation date while close corporations must file within the anniversary month of its incorporation up until the month thereafter.

A clear distinction must be made between an annual return and a tax return. An annual return is a sort of ‘renewal’ and has the purpose of confirming whether CIPC is in possession of the most up to date information of a company or a close corporation and that the company or close corporation is still conducting business. A tax return focuses on the taxable income of a company or close corporation in order to determine the tax liability of the company or close corporation to the State and is filed with SARS. Compliance with one does not mean that there is automatic compliance with the other.

In determining the appropriate fee for the filing of an annual return, a distinction must be made between a company and close corporation filing, and the date on which the annual return became due, since different fee structures are used for companies and close corporations. If the annual return became due on 1 May 2011 or thereafter, the fee structure under the Act must be used. If it became due before 1 May 2011 the Companies Act, 1973 fee structure must be used. (Please refer to the CIPC website at www.cipc.co.za for the various filing fees applicable based on the company or close corporation’s turnover for a particular filing year.)

During February 2016, CIPC launched a programme to implement eXtensible Business Reporting Language (“XBRL”) as a digital financial reporting standard for qualifying entities in South Africa by mandating submission of annual financial statements to the CIPC together with its Annual Return submission from July 2018.

Regulation 30 of the Act stipulates that a company that is required by the Act or Regulation 28 to have its annual financial statements audited must file a copy of its audited statements:

  1. on the date that it files its annual return, if the company’s board has approved the statements by that date; or
  2. within 20 business days after the board approved the statements, if they had not been approved by the date on which the company filed its annual return.

A company that is not required to have its statements audited, in terms of the Act or Regulations, may, at its option:

  1. file a copy of its audited or reviewed statements together with its annual return; or
  2. undertake to file a copy of its audited or reviewed statements within the time provided.

A company that is not required to file annual financial statements in terms of the regulations, or a company that does not elect to file, or undertake to file, a copy of its audited or reviewed annual financial statements in terms of the regulation, must file an FAS to its annual return in Form CoR 30.2.

Should a company be required to file its annual financial statements in terms of the Regulations with its Annual Return with CIPC, these Annual financial statements need to be submitted in XBRL format. The idea behind XBRL is that instead of treating financial information as a block of text – as in a standard internet page, spreadsheet or printed document – it provides an identifying tag for each individual item of data. For example, company net profit or net current assets have their own unique tags that are understandable to computers. These tags contain information about the item, including its description, e.g. ‘accounts receivable’, its value and currency and whether the amount is a debit or credit.

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)

WHAT ARE THE BENEFITS OF CO-WORKING SPACES?

WHAT ARE THE BENEFITS OF CO-WORKING SPACES?

When walking into a co-working space, the first thing you will notice is that the atmosphere feels completely different from a regular office. You will feel a sense of excitement and collaboration in the air with a mixture of occupants who are deep in focus at their very own private desks, as well as other occupants who are engaged in conversation at the larger shared tables.

In essence, co-working spaces are shared work spaces. They are more affordable alternatives for those who want to escape their isolated home offices and noisy coffee shops.   People who make use of co-working spaces are usually freelancers, entrepreneurs, start-up companies and small teams who want to take advantage of flexible space and hours. Co-working spaces offer these occupants office-like amenities, such as hot-desks, boardrooms and kitchens.

When it comes to co-working spaces, the allure lies in the affordability. You can rent out what you need, instead of renting an entire office, which can be very expensive. Co-working spaces can work on membership-based models, and usually, occupants can decide between paying a daily fee or a monthly fee. It’s important to note that these membership fees can vary depending on whether you work at a shared desk or want a single desk to yourself.

Benefits of co-working spaces:

1. Professional environment

Co-working spaces allow entrepreneurs and freelancers the opportunity to work in a professional environment with flexible terms without having to empty their pockets.

2. Networking

Co-working spaces are open to anyone and attract freelancers and entrepreneurs from all walks of life. This means that you are in close proximity to a wide range of professionals which provides you with the perfect opportunity to build connections and network with other professionals, both inside and outside your field.

We have seen a massive rise in the popularity of co-working spaces. This is mainly due to the increasing numbers of contractors and start-up companies who seek office space that is affordable. Co-working spaces are innovative, and it changes the way that people work. In the future, we will likely see even more people ditching coffee shops and home offices to work in co-working spaces. The need for co-working spaces will always be there, therefore, this could be a very profitable investment.

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)

ARE MUSLIM MARRIAGES RECOGNISED IN SOUTH AFRICA?

ARE MUSLIM MARRIAGES RECOGNISED IN SOUTH AFRICA?

All marriages entered in terms of Islamic law, are currently not recognised as valid marriages.

For a valid marriage to be recognised in South Africa one must get married in terms of civil law which is regulated by the Marriage Act 25 of 1961 or two people can enter into a civil union partnership under the Civil Union Act 17 of 2006.

Everyone has the right to freedom of religion, belief and opinion. The Constitution allows for legislation to recognise marriages that are entered under any tradition or religion and there are certain rights and obligations that arise from a civil marriage.

Couples married in terms of Islamic law will not be able to benefit from these rights and therefore this non-recognition and non-regulation violate the rights of women and children when it comes to divorces as well as the law of succession. Leaving them unprotected and in a vulnerable state.

The law has developed to some extent over the years and a surviving spouse as defined in the Law of Intestate Succession includes a spouse in a Muslim marriage, therefore he or she can inherit a portion of the estate of the deceased spouse.

Dissolution of an Islamic marriage which is not registered under civil law would have the same effect as the dissolution of a marriage out of community of property with no accrual or a civil union without a contract. One party would not have any lawful claim to institute against the estate of the other upon divorce as there was no valid marriage and therefore the Divorce Act 70 of 1979 (“Divorce Act”) will not be applicable.

The Women’s League Centre Trust (“WLCT”) brought an application in the Cape High Court to which a full bench heard the case. The WLCT prayed for a Bill to provide for the recognition of Muslim marriages as a valid marriage for all purposes in South Africa and to make an order that the government failed to fulfil their constitutional obligation to protect, promote and fulfil various constitutional rights. The Judgment was handed down and it makes provision for legislation to be enacted within 24 months of the date of Judgment.

The new legislation will recognise marriages solemnised in accordance with Sharia law as valid marriages and to regulate the consequences of such recognition. It was founded in the Judgment that the President, Cabinet and Parliament failed in their constitutional obligation as set out above.

If legislation is not enacted within 24 months of the date of Judgment, a union validly concluded as a marriage in terms of Sharia law and which is still in force when the order becomes operative, may be dissolved in accordance with the Divorce Act and all the provisions of that Act will be applicable. It will not apply to marriages that were validly terminated in terms of Sharia law prior to the order becoming operative.

It is also ordered that in the case of a husband who is a spouse in more than one Muslim marriage, the court will consider all relevant factors. This includes any contract or agreement and must make any order that it deems just and may order that any person who, in the court’s opinion, has a sufficient interest in the matter, be joined in the proceedings.

This is a major step in family law as women and children will finally have the protection they need.

Reference List:

Women’s Legal Centre Trust v President of the Republic of South Africa and Others, Faro v Bingham N.O. and Others, Esau v Esau and Others (22481/2014, 4466/2013, 13877/2015) [2018] ZAWCHC 109; [2018] 4 All SA 551 (WCC); 2018 (6) SA 598 (WCC) (31 August 2018)

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)

HOW TO PUT TOGETHER AN EXIT STRATEGY

HOW TO PUT TOGETHER AN EXIT STRATEGY

Preparing yourself and your business for your inevitable exit from that business, whether by choice or fate, is one of the most neglected aspects we see in small and medium enterprises.

That being said, we believe an exit strategy is critical not only in ensuring you achieve the best possible sale price on eventual exit, but also ensures that you realise the best possible returns from that business while you’re still around.

But what is an exit strategy? Essentially it is a plan for wrapping up your continued and essential involvement in a business, and can also be called succession planning. Depending on the available capacity in the business or your personal mind space, it is something that could take years to put in place, so best to start with it as soon as possible.

What are the essential aspects of a succession plan?

1. Define your planning window – how soon do you want out?

With a planning window comes urgency and focus. It defines whether you will exit at once or in stages, and also defines how resources should be concentrated in order to formulate the plan and execute on its ideals.

2. Get your accounting and legal frameworks in place

Astute buyers, whether external or internal, will most probably want three years of accounting records in place and will require full disclosure around all business dealings when conducting their due diligence in order to evaluate the commercial potential of the business.

3. Write down how things are done in your business

Standard operating procedures need to be documented, from simple things on how the shop is opened and closed on a daily basis, all the way through to how you can ensure that each and every client has the same service experience when dealing with your business. Templates for repeating tasks and formal job descriptions / detailed role clarifications for employees also form part of this aspect.

4. Remove yourself from the equation

You will realise the best possible sale price on exit from the business if it can thrive without you. If you have staff, give them the training and authority they require and delegate as far as possible.

5. Get a guideline valuation of your business

A professional opinion on the value of your business tends to manage not only your expectation of your eventual proceeds from an exit but also equips you with the requisite knowledge to ensure you can maximise the valuation of the business.

6. Work on your elevator pitch

Present the story of how you became involved in the business, the journey that you had and why you want to exit, as well as the future potential in the business.

Use the numbers as corroborating evidence and incorporate external facts and statistics to support your view on future potential.

The best potential outcome of this succession plan might even be for you to remain involved, but then having a more profitable and efficient business – one where you don’t need to be there every day.

And should you indeed exit, you will be able to realise a better price and increase the chances of your legacy being continued in the form of a successful and sustainable business.

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)

WHAT TO LOOK OUT FOR BEFORE BUYING A PROPERTY

WHAT TO LOOK OUT FOR BEFORE BUYING A PROPERTY

You’ve searched far and wide for the perfect home for you and your family, and you’ve finally found it, or so you thought. Buying a home, especially for the first time, is as overwhelming as it is exciting.

You’ve viewed your dream home, but remember, you receive so much information during your viewing, that you could easily become overwhelmed and miss important details. Especially if you have fallen in love with your potential new home. It is important to remember that there are various “red flags” that you need to look out for before purchasing, as missing these “red flags” could have significant financial repercussions. Before signing, make sure to look out for the following:

1.Foundation and structural faults

What do you think is the most important part of a house? The double garage? The interior? How well-lit the rooms are? No. The most important part of the house, and arguably the costliest to repair, is the foundation of the house. Make sure to look out for large cracks in the walls, as this could be a sign of some serious structural problems with the foundation. Make sure to thoroughly investigate the door frames; if door frames don’t appear to be square or if the doors have difficulty closing, it could be a sign of structural problems.

2.Poor drainage/grading

In most cases, water problems in a house are directly related to poor drainage or grading. However, it is often difficult to detect if a house has poor drainage or grading. An obvious sign of the above-mentioned faults is pools of water or a bouncy bathroom floor which could indicate that there is a leaking shower drain. Make sure to also look out for overflowing gutters, water stains and cracks in the foundation.

3.Patches of fresh paint

A coat of fresh paint is an excellent and quick way to spruce up your home, but if there are random patches of fresh paint around the house, it could be cause for concern. Why? Because it is possible that the seller is trying to hide something beneath the coat of paint.

4.Faulty electrical wiring

If you are looking to buy an older home, make sure that the electrical wiring is not faulty, as house fires caused by faulty wiring is not as uncommon as we would hope. This is especially the case in older homes, as these homes don’t always have an ample supply of power and the number of electrical outlets like newer homes have. Also look out for any exposed wires, as this could cause significant harm to either the home or your family.

5.Neighbourhood condition

When looking for your perfect home, always remember that you are not only investing in the property itself, but also in the neighbourhood. Make sure to ask enough questions about the neighbourhood. For example, if you move into a neighbourhood that is deteriorating or crime-ridden, it could have a significant impact on your return on investment.

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)

EXCLUSIONARY CLAUSES IN HOSPITAL CONTRACTS

EXCLUSIONARY CLAUSES IN HOSPITAL CONTRACTS

The CPA contains certain outright prohibitions on the terms that can appear in contracts, the so-called “blacklist items”. Section 5(1) of the Act provides that a supplier (doctor/hospital) must not make a transaction or agreement subject to any term or condition if it directly or indirectly purports to waive or deprive  a consumer (patient) of a right in terms of the Act or avoid a supplier’s obligation or duty in terms of the Act, that would amount to an attempt to avoid a supplier’s obligation under the Act.

In terms of Section 54(1) of the Act, a hospital is also obliged to provide quality medical services. Upholding an exclusionary clause would shield the hospital from liability in breach of its duty to render quality medical services, which would be contrary to long-standing professional standards of conduct and ethical rules which all care services swear to uphold.

Section 51(3) of the Act also provides that exemption of liability for loss or damage due to gross negligence will no longer be permitted in the South African law of contract and such prohibited terms are void and unenforceable.

The regulations governing the Act also provide a list of contract terms which are presumed not to be fair and reasonable, namely Regulation 44(1) provides that a term in a consumer agreement between a business or professional and a consumer is presumed to be unfair if it has the purpose and effect of “excluding or limiting the liability of the supplier for death or personal injury caused to the consumer through an act or omission of that supplier”.

Sections 54 and 55 of the Act provide for both quality services as well as safe and quality goods for the consumer/patient. Section 56 creates an implied warranty as the supplier (amongst others) warrants that the goods comply with the required quality standards. In addition to the consumer/patient’s common law right to claim damages for breach of contract, the Act also warrants a consumer’s right to quality service “in a manner and quality that persons are generally entitled to expect”.

Only having regards to the above provisions, it is likely that the CPA will entirely abrogate the principles laid down by the SCA in the Afrox case. This will bring South Africa in line with foreign jurisdictions regarding medical liability, specifically in respect of exclusionary clauses in hospital contracts. In short, it can safely be assumed that exclusionary clauses in hospital contracts are no longer valid.

It can therefore be argued that it is likely that any type of exclusionary clause, at least where it appears in a hospital contract, will no longer be valid in light of the CPA, especially when regard is had to comparative case law dealing with what should be regarded as an unfair, unreasonable or unjust term.

The effect that the CPA will have on exclusionary clauses and the law of contract in a wider sense will have to be determined by the courts. Except in a few limited respects, the CPA does not apply retrospectively and, as such, contracts entered into prior to 1 April 2011 cannot be attacked on their exclusionary clauses in terms of the CPA. Case law such as the Afrox case will still be a determining factor in the outcome of these matters.

Reference List:

  • The Consumer Protection Act, 68 of 2008
  • Afrox Healthcare Beperk v Strydom 2002 (6) SA 21 (SCA)

 
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)