Demand Guarantees in the Construction Industry: Recent Developments in the Law Relating to the Fraud Exception to the Independence Principle

by | Jan 19, 2021 | SAMLJ, SAMLJ V31 I3

Demand Guarantees in the Construction Industry: Recent Developments in the Law Relating to the Fraud Exception to the Independence Principle

Author Cayle Lupton

ISSN: 1996-2185 Affiliations: Assistant lecturer in Mercantile Law, University of Johannesburg. Source: South African Mercantile Law Journal, Volume 31 Issue 3, 2019, p. 399 – 416

Abstract

Over the last decade or so, South African courts have had to decide many cases relating to demand guarantees. This article is, however, concerned with recent case law that dealt with fraudulent calls on demand guarantees in construction disputes. In dealing with this development, the article explores, in the first instance, the construction context and the main legal features of demand guarantees (documentary compliance and independence). It then deals with the fraud exception to the independence principle. Against this background, recent South African case law (Phenix Construction and Group Five) that explored the parameters and standard of proof of this exception, is evaluated. Then the principle of documentary compliance and bad or good faith on the part of the beneficiary is evaluated with regard to their respective relations to the fraud exception. In this respect, attention is paid to the judgments of the High Court and the Supreme Court of Appeal in Raubex Construction v Bryte Insurance. The article concludes with a brief reflection on the principles analysed in the case law, and confirms that the recent developments in the law relating to fraud are in alignment with international trends.

Constitutionalisation and Transformation of Credit Law Practices such as Set-Off: An Analysis of National Credit Regulator v Standard Bank Ltd of South Africa Ltd

by | Jan 19, 2021 | SAMLJ, SAMLJ V31 I3

Constitutionalisation and Transformation of Credit Law Practices such as Set-Off: An Analysis of National Credit Regulator v Standard Bank Ltd of South Africa Ltd

Author Brighton Mupangavanhu

ISSN: 1996-2185 Affiliations: Senior lecturer in Mercantile and Labour Law, University of the Western Cape. Source: South African Mercantile Law Journal, Volume 31 Issue 3, 2019, p. 417 – 434

Abstract

Often there is a gap between the black letter of the law, or the aspirations for law reform enunciated by a statute, and how the law actually transforms practices in relevant industries. This was the case in the credit industry, specifically with respect to the practice of set-off by banks who are in a credit agreement with a customer. Sections 90(2)(n) and 124 were inserted into the National Credit Act 34 of 2005 to introduce a new system of set-off that represents a complete break from set-off at common law. The common-law set-off practices resulted in injustices to consumers and favoured credit providers who could apply it without consultation with, or notice to, customers. The relevant purpose of the NCA in this regard was to address and to correct imbalances in negotiating power between consumers and credit providers. A relevant way of achieving this is through protecting consumers from deception and unfair conduct by credit providers. To address such deception and unfair conduct, the Act, through sections 90(2)(n) and 124 intended to exclude the common law from applying to credit agreements governed by the Act. Yet despite the existence of the new set-off provisions in the NCA, banks in South Africa, between 2007 and 2019, continued to apply the common-law rules even to credit agreements governed by the Act, contrary to the spirit, purposes, and objects of the Act. This all changed after the National Credit Regulator approached the court to seek a declaration by the court that the bank’s right to apply common-law set-off was ousted by the NCA. The court issued such a declaration in 2019. This article analyses National Credit Regulator v Standard Bank of South Africa Ltd 2019 (5) SA 512 (GJ). It looks at the facts, the legal question(s) answered by the court, the judgment, reasons for the judgment and the impact of the judgment on the development of credit law jurisprudence. Under impact, the note looks at the important role of contextual interpretation and the teleological interpretation of statutes in the transformation and constitutionalisation of credit law, and how the effective enforcement of the NCA can bring to life the aspirations of statutes and contribute towards transforming unconstitutional practices to align them with the spirit, purport and objects of the Bill of Rights. The case note also argues for improved clarity of some provisions of the NCA, and for the provision of an express ouster of the common law in section 124.

The franchise agreement as the cause of tensions between the franchisor and franchisee: has the consumer protection act resolved the tensions?

by | Jul 22, 2020 | SAMLJ, SAMLJ V31 I2

The franchise agreement as the cause of tensions between the franchisor and franchisee: has the consumer protection act resolved the tensions?

Author Lynn Biggs

ISSN: 1996-2185
Affiliations: Senior Lecturer, Mercantile Law Department, Nelson Mandela University,  BCom LLB (UPE) LLM (NMMU) LLD (NMMU).
Source: South African Mercantile Law Journal, Volume 31 Issue 2, 2019, p. 163 – 200

Abstract

The franchisor and franchisee generally use a franchise agreement to regulate their relationship. Franchise agreements set out the rights and obligations of the franchisor and franchisee. The franchise relationship is, therefore, governed through negotiated contract terms. The terms or clauses contained in franchise agreements may differ depending on the franchise network and the field of commerce within which they operate, but franchise agreements have certain core elements in common and usually contain generic terms or clauses. However, the franchise agreement itself can lead to conflict between the parties, such as that arising from poorly drafted clauses relating to territorial rights, renewal, payment, termination, restraint of trade or confidentiality. The franchise agreement itself is, therefore, limited in its ability to resolve the tensions and smooth the relationship between the parties, and is generally the cause of the tensions. The CPA and the Regulations require franchisors to include certain minimum information in the franchise agreements. This begs the question whether the CPA and the Regulations have made inroads into alleviating the tensions and areas of conflict resulting from the typical clauses contained in franchise agreements.

Employer liability when sex pests treat the workplace as a lonely hearts club: lessons to be learnt from liberty group limited v m (2017) 38 ILJ 1318 (LAC)

by | Jul 22, 2020 | SAMLJ, SAMLJ V31 I2

Employer liability when sex pests treat the workplace as a lonely hearts club: lessons to be learnt from liberty group limited v m (2017) 38 ILJ 1318 (LAC)

Author Karmini Pillay

ISSN: 1996-2185
Affiliations: Senior lecturer, University of Witwatersrand, B Soc Sci LLB (UNP) LLM (UKZN)
Source: South African Mercantile Law Journal, Volume 31 Issue 2, 2019, p. 201 – 238

Abstract

In this contribution, I examine the scope of the employer’s role and liability in cases of sexual harassment. This is done in the context of the Liberty case, using this LAC judgment to flag fundamental lessons for other employers. These are lessons that employers must heed or, as recent events show, suffer substantial damage to their brand and business. First, I state the facts of the case and the legal issues that were dealt with by the LAC. Second, I briefly set out the statement of the case. Third, I examine the issue of credibility of the complainant in proving sexual harassment. Fourth, I analyse the legal approach to a complainant who does not report the alleged sexual harassment immediately, and whether any adverse inferences on the credibility of her version can be drawn from this delay. Fifth, I consider the LAC’s approach to determining the scope of the employer’s liability in terms of section 60 of the Employment Equity Act 55 of 1998. Lastly, I consider the general approach adopted by the LAC in its judgment.

Meeting minimum international and regional standards: an analysis of maternity cash benefits

by | Jul 22, 2020 | SAMLJ, SAMLJ V31 I2

Meeting minimum international and regional standards: an analysis of maternity cash benefits

Author Asheelia Behari

ISSN: 1996-2185
Affiliations: LLB LLM PHD (UKZN), Postdoctoral Fellow, School of Law, University of KwaZulu-Natal
Source: South African Mercantile Law Journal, Volume 31 Issue 2, 2019, p. 239 – 260

Abstract

This article considers and critiques the right to maternity cash benefits offered by the UIA through a comparative analysis of the minimum international standards of the International Labour Organisation (ILO) and the regional standards set by the Southern African Development Community (the SADC). Drawing on this comparative analysis, the article identifies the strengths and shortcomings of the statutory mechanisms providing for maternity cash benefits for employees in South Africa.