March 2024 Attorneys practice/ethics exam preparation,

Dear fellow candidate legal practitioner,

Here are my full set of notes for Paper 3: Attorneys practice/ethics. I have included past eam
questions from the last seven odd years. Let’s hit this exam out of the ballpark! These notes
are offered free of charge to all Candidate Attorneys with these stipulations:

a) These notes may NOT be used in any course where Candidate Attorneys are charged a
fee.
b) They may NOT be un-Pdf’d and/or altered in any form or manner and produced as
someone else’s work.
c) They may NOT be uploaded on Studocu, Stuvia or similar platforms as they are not your
own work and you do not have my permission to do so.
d) These notes may NOT be offered for sale. Do so at your own peril and I will give you
some wonderful marketing on social media platforms.

I started offering my notes free of charge because I absolutely detest the fact that Candidate
Attorneys, who earn a meagre salary/stipend are being charged for additional training in order
that they may pass Board exams – I personally feel this isn’t right. What this means, in essence
was that Candidate Attorneys with the financial means could get additional assistance at a
charge whilst those who had no means, had little chance of passing the Board exams or really
battled to do so. There is no way this status quo could a) be right and b) continue.

Having said this, I also looked at the final results of the March and August 2023 examinations
for Gauteng. To say I was shocked by the results is an understatement! I decided to take my
32 years’ experience in adult learning and development and assist Candidate Attorneys free
of charge in order to pass these exams.

Ubuntu says, “I am because we are”. Please accept these notes as a gesture of ubuntu. Let’s
take hands and help each other to cross that finishing line and become admitted attorneys of
the High Court of South Africa (wow that sounds good, doesn’t it?) And… it doesn’t end there…
just as these notes are an act of kindness from me to you, my wish is that you will pass that
kindness on to others.

Kind regards, Di Gibson

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Contents
ETHICS NOTES ......................................................................................................................................... 3
PAST EXAM QUESTIONS AND ANSWERS ............................................................................................... 40
February 2015 ....................................................................................................................................... 40
August 2015 .......................................................................................................................................... 44
February 2016 ....................................................................................................................................... 50
August 2016 .......................................................................................................................................... 55
February 2017 ....................................................................................................................................... 61
August 2017 .......................................................................................................................................... 65
February 2018 ....................................................................................................................................... 69
October 2018 ........................................................................................................................................ 76
March 2019 ........................................................................................................................................... 81
August 2019 .......................................................................................................................................... 83
February 2020 ....................................................................................................................................... 87
November 2020 .................................................................................................................................... 91
March 2021 ........................................................................................................................................... 95
October 2021 ...................................................................................................................................... 104
March 2022 ......................................................................................................................................... 110
August 2022 ........................................................................................................................................ 113
March 2023 ......................................................................................................................................... 119
August 2023 ........................................................................................................................................ 126
Tips for drafting ................................................................................................................................... 134

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ETHICS NOTES
• Definition
o Principals governing behaviour/activity
o What’s right/wrong, good/bad
o Different to morals (what your beliefs are)
• LPC Code of Conduct
o Lewis Golden Rule
▪ Lawyers are bound to act with honour & fairness. They
should act with skill. Don’t degrade self for the purpose of
winning.
▪ A practitioner should avoid conduct which damages their
reputation as an honourable lawyer/citizen
o Sources
▪ Legal Practice Act
▪ Public interest
▪ Court judgements
▪ Common law
▪ Foreign law
▪ Rulings of law societies
▪ Council ruling
• Role players
o Attorney
o Commissioner of Oaths
o Client
o Advocate
o LPC
• Attorney admission
o Fit and proper standard
o 21 years of age or older
o RSA citizen
o LLB
o PLT’s
o 1 or 2 years articles
o 4 Board exams written and passed
o Could previously have been an Advocate
• Fit and proper
o Honesty
o Integrity
o Reliability
• Duty to:
o Obey client’s instructions

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 o To be absolutely honest
o To uphold the administration of justice
o Conduct matters
▪ Speedily
▪ Efficiently
o Confidentiality
o Honesty/respect towards colleagues
o Don’t act out of the scope of your mandate/instruction
o Don’t bring reputation of profession into disrepute
• Conflict of interest
o 2 (or more) competing interests
o Cant betray other party
o Affects judgement/loyalty
o Cant represent both parties in litigation
o One persons interests cant be placed over the others
o If there is a conflict, withdraw and terminate the mandate
• Mandate
o Attorneys are not obliged to accept a mandate
o Considerations
▪ Conflict of interest
▪ Illegality/fraud
▪ Own competence
▪ Cant agree on fees
▪ Not sufficient time to handle the matter
• In terms of the Code of Conduct:
o Don’t accept a mandate:
▪ When there is an existing mandate
▪ A contingency fee agreement where there are no grounds
to terminate

ATTORNEYS LIEN

• Means that you cannot release certain documents which you drafted on
behalf of the client to the client until your fees are paid.
• Defence against re vindicatio (in that you hold the documents until you
are paid)
• This is not all documents – only those the attorney drafted/sent on the
client’s behalf.

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 ATTORNEYS
• Billing
o As per fee agreement
o Contingency Fee Agreement (“CFA”)
• CFA
o Based on outcome of the matter
o No fee, no win
o Increased fee
▪ Double the attorneys normal fee or
▪ 25% of the award (whichever amount is the lessor)
o Must be in writing
o In terms of the Contingency Fee Act
• Billing depends on:
o Complexity of matter
o Skill, knowledge, experience, expertise, labour of attorney
o Time spent of the matter
o Quantity/complexity of matter
o Amount involved
o Importance
• Correspondent
o Must have instructing attorney
o Instructed attorney cant communicated with the client directly
o Keep instructing attorney informed
o Instructing attorney may get 1/3 allowance
• Sharing fees
o Candidate Attorneys – in old Act could earn commission but no
more
o Can only share with other attorneys
• Cost estimate
o Must provide a cost estimate to clients
o Includes
▪ Fees, disbursements, charges
▪ Advocate/Attorney hourly fee
▪ Outline of work
• Overreaching:
o Taking advantage of another’s ignorance
o Unreasonably high fees
o Disputes referred to LPC
o More than over charging
• Other business
o Attorneys may engage in another business as long as
▪ There is no conflict of interest

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 ▪ The attorney avoids doing business with a client (get client
to seek separate legal advice)
▪ The attorney never borrows money from a client unless the
client is a money lender
• Duties
o Only an attorney can:
▪ Appear in court
▪ Draft/execute instructions
o No-one can:
▪ Say they are an attorney when they aren’t
▪ Practice as an attorney when they have been struck from
the roll
• Misconduct
o This is when an attorney breaches the Code of Conduct
o Any misconduct
• Legal advice
o Only an attorney can give legal advice
o Attorney takes ultimate responsibility
o Attorney brief counsel
o Attorney attends court

ADVOCATES
• Types
o One type cant see clients directly
▪ Attorney/Advocate agree on fees
▪ Attorney liable for Advocates fees
▪ Consulting an Advocate:
• Must be done in Advocate chambers
• Permission must be obtained if meeting not in
chambers
▪ If there is a disagreement about fees:
• Meet and discuss
• Refer Ombudsman at Bar
• Lodge a legal complaint with the Secretary of Bar
Council
o Other type can see clients directly
▪ Must hold a Fidelity Fund Certificate (“FFC”)
▪ Must notify council
▪ Practices:
• For own account
• Law clinic

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 • Leg Aid
• State Advocate

COMMISSIONER OF OATHS
• Role:
o Assist community
o Oath/Affirmation
o Certify documents
o Identify deponent
o No fee may be charged for commissioning
o Attorney automatically a Commissioner of Oaths
• Limitations:
o May not administer oath/certify documents in matters where an
attorney has an interest
• Exceptions
o Deeds office transactions
o Certified documents submitted to the Minister of Justice
o Where the Commissioner of Oaths is not an attorney and
commissions in the course of their employment/course of duty
• Oath
o Do you know and understand the contents of this
affidavit/declaration?
o Do you object to taking the prescribed oath?
o Do you consider the oath binding on your conscience?
o “I swear the contents are true and correct… so help me God”
• Affirmation
o “I truly affirm that the contents of this declaration are true and
correct”
o Sign in front of the Commissioner of Oaths
o Commissioner of Oaths:
▪ Certifies the documents
▪ Signs in from of the Commissioner of Oaths
▪ Commissioner:
• Full name
• Name of business
• Business address
• Designation
LPC

• Code of Conduct - Part 1

o Definitions
• Code of Conduct - Part 2

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 o General provisions
• Code of Conduct - Part 3
o Attorney’s conduct
• Code of Conduct - Part 4 and 5
o Advocates conduct
• Code of Conduct - Part 6
o Conduct of legal practitioners
o Includes Candidate Attorneys
• Code of Conduct - Part 7
o Legal practitioners not in private practice
• Conflict of interest
o Refrain from doing anything against the LPC Code of Conduct
o Places attorney in conflict:
▪ With their own clients
▪ With other clients
o When dealing with two (2) of more clients be careful of conflict of
interest
▪ Withdraw if a conflict of interest occurs
• Taxing (non-litigious matters)
o Clients may request LPC to tax their attorney’s bill
o Most disputes to LPC are about overreaching
o Attorneys fail to give a description of fees charged to their clients
• FFC
o Purpose:
▪ Reimburse clients in cases of theft of trust funds
o Validity:
▪ 01/01/20xx – 31/12/20xx
o Obtained:
▪ On the website and after payment received
o VIP:
▪ An attorney cant take money from a client if they don’t hold
a FFC
▪ Consequences: The attorney could be suspended

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 CLIENT
• Relationship with attorney:
o Mandate relationship
o Attorney gives professional services and the
o Client pays
o An attorney can’t terminate a mandate without a valid reason
o An attorney can’t receive a fee until the mandate is completed
o An attorney must give the client a financial statement
• Cross-examination
o The client may not consult the attorney during cross-examination.
o The client cannot receive coaching
o Even if there is a break in the client’s testimony, the client is still
under oath so therefore can’t speak to the legal representative
during the break
• Guilty plea
o It is not unethical for an attorney to represent you if you told him
you are guilty
o A Judge, not an attorney determines guilty
o Attorneys must be cognizant of the fact that they are officers of
the court
▪ Can’t mislead the court
▪ Cant be untruthful
o If the client admits guilt to the attorney:
▪ Attorneys are not the ones to judge – the Judge is
▪ Attorney will not change the plea – after all, the State must
prove guilt
• Conflict
o If there is conflict between the attorney’s advice and the client’s
instructions:
▪ Attorney needs to ensure that they have covered
themselves, so put your views in writing to the client
▪ The Attorney needs to ensure that the client is not abusing
the court process
• Attorneys fees:
o If there is no fee agreement – attorney needs to charge at
Magistrates Court tariffs

ETHICS IN LITIGATION
• Court
o An attorney has a duty to the court for the administration of justice
o Case law:
▪ An attorney must cite case law to assist the court even if
this case law is against your argument
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 o Code of Conduct
▪ In terms of the LPC Code of Conduct, the attorney may not
mislead the court.
• Colleagues
o Always play the ball and not the player.
o Be respectful and courteous to your colleagues
• An attorney testifying in court
o Normally an attorney wont testify
o If an attorney needs to testify, he must:
▪ Withdraw from the matter
▪ Arrange for another legal practitioner to consult with the
client
o Remember: Confidentiality
▪ In terms of the LPC Code of Contact
▪ Attorney must not comment publicly on any matter (may
comment on “general” issue)
• Interviewing witnesses:
o Civil matters:
▪ May interview subpoenaed witnesses
▪ It is common courtesy to let the opposition attorney know
that you are interviewing the witness
o Criminal:
▪ Attorneys should avoid interviewing State witnesses and
only do so if the Public Prosecutor agrees to this.
• Correct forum:
o Attorneys should know the correct forums available to clients e.g.
▪ Small Claims Court
▪ Magistrates Court (District) – up to R200K
▪ Magistrates Court (Regional) – claims from R200K to
R400K
▪ High Court – claims over R400K
▪ CCMA for labour matters

ATTORNEYS STRUCK FROM THE ROLL

• The test:
o Are you fit and proper?
▪ Honest
▪ Reliable
▪ Integrity
▪ Lawful
o This doesn’t apply to minor indiscretions like traffic fines
• Application for readmission
o Attorneys struck from the role must:
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 ▪ Show genuine and complete transformation
▪ Show that the original defect in their character is no longer
there
▪ Show that if readmitted, their conduct will meet the
standard required
▪ Show that no public would be prejudice by the readmittal

THEFT OF TRUST FUNDS

• Attorneys must:
o Open a trust account
o Keep proper accounting records of amounts:
▪ Deposited
▪ Withdrawn
▪ And the interest earned
• Theft of trust funds
o Must be reported immediately to the law society
o Must be reported to the Fidelity Fund (“FF”)
o Attorney must reimburse the clients trust account and any
shortfall must be claimed from the FF

CONTEMPT OF COURT
• Meaning:
o Non-adherence to:
▪ Authority
▪ Dignity
▪ Justice of court
• Types:
o Civil
o Criminal
o Direct
o Indirect
• Civil contempt
o Failure to perform act ordered by the court
o Examples:
▪ Failure to comply with a certified CCMA Award
▪ Failure to comply with a maintenance order
• Criminal contempt
o An act which impairs dignity of the court
o Applies to both criminal and civil matters
o Example:
▪ Insulting the judge
• Direct contempt

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 o Occurs in the court
o Known as facie curiae
o Examples:
▪ Threatening court officials
▪ Failure to appear in court
▪ Destroying documents
▪ Breaking court orders
• Indirect contempt
o Occurs outside court
o Examples:
▪ Threats to court officials
▪ Destroying documents
▪ Not adhering to court orders

TERMINOLOGY
• Pro amico
o Acting for friends/family
o Can charge for disbursements
• Pro bono
o Acting voluntarily for members of the public
• Contingency fee
o The attorney will only charge if he wins the matter
o Attorney can charge double their normal fee OR 25% of the
award – whichever is the lessor
o A CFA must be in writing
• Costs
o Costs de bonis proprils
▪ These are costs awarded by the Court against an attorney
▪ Can also be awarded against:
• An executor
• A trustee
▪ These costs are on an attorney – client scale
▪ Example
• Wasting of courts time
• Bringing a vexatious and frivolous matter
• Where an attorney is negligent or dishonest
o Party and party costs
▪ The unsuccessful litigant needs to pay these costs
▪ The are costs incurred during the case
▪ These costs don’t include costs before summons/notice of
motion
o Attorney – client costs

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 ▪ These are calculated the same as party-to-party costs
▪ Includes costs before litigation
o Attorney own client costs
▪ These are costs the attorney would ordinarily have charged
their client
o Cost in cause
▪ These are costs awarded in preliminary (interim,
interlocutory) proceedings
▪ They are paid by the unsuccessful litigant
▪ If the Plaintiff wins costs:
• The interlocutory costs and the costs in case will be
awarded to the Plaintiff

CONTINGENCY FEE
• Example:
• Let’s say you are representing a party for a 3rd party claim
• The client is awarded R200K by the court
• The attorney’s normal fee would have been R30K for the work done
• In a CFA, an attorney may charge double their normal fee (which in this
case would be R60K) or 25% of the claim (which in this case would be
R50K) whichever is the lessor amount. Therefore, the attorney would
charge R50K in this example.

DAMAGES CLAIMS
• Normal damages
o Example 1:
▪ The client agrees to 16% of the claim. The claim is R80K
Therefore, to calculate the normal damages you would
multiply the 16% by the R80K and the answer is R12,800.00
o Example 2:
▪ Mr Cook and Mr Tshabalala are involved in a motor vehicle
accident. The court determines that Mr Cook was 30%
negligent and Mr Tshabalala was 70% negligent. Mr Cooks
damages amount to R80K and Mr Tshabalala’s claim is
R30K. You are required to work out the amount owing and
determine who owes who.
To calculate this:
Cook: 30% * R30K = R9,000.00
Tshabalala: 70% * R80K = R56,000.00
Instead of Mr Cook paying Mr Tshabalala and then Mr
Tshabalala paying Mr Cook, we can deduct the lower
amount from the higher amount and determine the

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 difference – R56K minus R9K = R47,000.00 which Mr
Tshabalala will need to pay Mr Cook.
• Contingency fee
o Example:
▪ Client awarded R146K. The attorneys normal fee would
have been 15% of this amount. Calculate how much the
attorney may charge if there was a written contingency fee
agreement signed between client and attorney.

The normal attorneys fee would be 15% * R146K =

R21,900.00 and the attorney may charge double this
amount so R43,800.00

25% of R146K is R36,500.00

The attorney may only charge the lessor amount so the
attorney would charge R36,500.00
• Multiple wrongdoers:
o The award is 165K but the court determines the following
percentages of negligence:
“A” was 30% negligent
“B” was 45% negligent and
“C” was 25% negligent.
You are required to calculate how much (in Rands) the various
wrongdoers are responsible for.
“A” 30% * R165K = 49,500.00
“B” 45% * R165K = 74,250.00
“C” 25% * R165K = 41,250.00

WITHOUT PREJUDICE
• Any written correspondence between attorneys marked without prejudice
can’t be referred to in court proceedings
• Exclusions to rule:
o Without prejudice letter had to be to enter into negotiations to settle
the matter OR
o to disclose information that would contribute to settling the matter.
o Without prejudice postpones prescription.
• Must be a settlement agreement (attempt to settle)
• After settlement by the parties the correspondence can be
mentioned/shown in court proceedings

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• Where without prejudice is incorrectly used:
o If a letter is marked “without prejudice” but has nothing to do with
settlement negotiations and merely attempts to attack the legal
practitioner’s character, it may be shown in legal proceedings.
• Where a settlement letter omits the words “without prejudice”:
o Although the words are omitted, the letter will be treated as
without prejudice and remains privileged as long as it’s a genuine
attempt to settle.

FAMILY LAW
IN COMMUNITY OF PROPERTY

• Types of marriages
o In community of property
o Out of community of property – antenuptial agreement
▪ With accrual
▪ Without accrual
• In community of property
o This is the default marital regime in RSA
o The estates of both parties are combined – joint estate
o When the marriage is dissolved, either by death or divorce:
▪ All liabilities must be paid
▪ The residue is split 50/50
▪ Both parties are responsible for the debt
o Spousal consent is required:
▪ When buying and selling immoveable property
▪ Buying and selling shares, debentures, fixed deposits,
pledges
▪ When withdrawing funds from a bank account
▪ When signing credit agreements
▪ When signing surety agreements
▪ When selling investment assets
• Examples:
o Jewellery
o Paintings etc.
o After marriage:
▪ A party will still be held liable for debts which took place
during the marriage as long as the spouse knew about the
debt and consented to it.
o Calculating how much is due to each party at dissolution of
marriage:
▪ Date of divorce:
• Assets = 1,2million
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 • Liabilities = R114K
• Assets – liabilities = R108K
• Divided by 2 to give each party = R54,300.00 each

OUT OF COMMUNITY OF PROPERTY – ANC WITHOUT ACCRUAL

• Basically what this says is “what’s yours is yours, and what’s mine is
mine”
• Both parties responsible for own debt
• Anc contract drawn up by a notary public
• If executed in RSA – it must be registered at the Deeds office within 3
months
• If executed outside RSA – it must be registered at the Deeds office
within 6 months
• Example:
o Assets at time of divorce:
▪ Mr R320K
▪ Mrs R880K
o Liabilities at time of divorce
▪ Mr 89K
▪ Mrs 25K
o These figures remain as is – the spouses leave the marriage with
their assets and liabilities
o Both parties responsible for their own debt

OUT OF COMMUNITY OF PROPERTY – ANC WITH ACCRUAL

• Exclusions:
o Inheritance
o Funds from personal accident claims
o Donations
o Legacies
• Example:
o At time of marriage:
▪ Work out Assets – Liabilities for each and get net assets
▪ Assets
• Mr 320K
• Mrs 650K
o At time of divorce
▪ Assets
• Mr 880K
• Mrs 1,125million

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 o Work out the difference:
▪ Mr assets increased by R330K
▪ Mrs assets increased by R245K
• Difference = R85K
o Divide the difference by 2
▪ R42,500.00 which is what Mrs must pay to Mr.

CHANGING MARITAL REGIMES – INCOP TO ANC

• This is done by an application to the High Court
• Section 21 Marriage Property Act
• DON’T advise client to divorce because:
o This is unethical
o Grounds for divorce are irretrievable breakdown of the marriage
(which isn’t the case)
• Creditors need to be notified and consent
• There must be no prejudice suffered
• The anc must be drawn up by a notary public and registered with the
Deeds office

FAMILY COURT
• New court established 18/07/2022
• Deals with family matters
MAINTENANCE
• Parental duty
o To maintain a child
o Whether parents are married or not
• Parental duty to maintain ends:
o With the death of the child
o When the child reaches maturity (18) or becomes self sufficient
o When the child is emancipated
o When the child is adopted
o When the parent dies (child still has claim against estate)
• Maintenance and visitation
o These are separate issues – one cant withhold visitation because
a party never paid maintenance
• Spouse refuses to pay maintenance:
o Lay a complaint with the Maintenance Manager at the
Maintenance Court
o Attest to an Affidavit
o Hand the Affidavit to the Maintenance Manager
o The non-paying spouse is charged in terms of the Maintenance
Act

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 o If successful, the non-paying spouse is ordered to pay arrear
maintenance
▪ May be arrested/imprisoned
▪ May have garnishing order on salary
• Court jurisdiction
o Where applicant or children reside
• Determining the maintenance amount
o The ideal is to maintain the child as they were before divorce but
this isn’t always possible
o Court looks at:
▪ Standard of living of the child before the divorce
▪ Financial means of the parents
▪ Financial needs of the child
• Variation of maintenance order:
o Apply at Maintenance court
o Can be done at the High Court but this is more expensive and
you run the risk of having a costs order against you
o If the order was granted in the High Court it can be varied in the
Maintenance Court

AGREEMENT OF SALE
• Estate Agent
o Sells property – commission based
o Isn’t really necessary – you can have a private sale
o Has expertise in buying and selling property
o The seller pays the estate agent commission
o Duties
▪ “marry” buyer to seller
▪ Concludes a binding contract between the parties
▪ Estate Agent is the “cause” of the transaction
▪ If a potential purchaser approaches the seller directly:
• May need to draft a clause into the agreement that
this happened
• Estate Agent commission either done away with or
reduced greatly
• The purchase price is adjusted because the seller no
longer pays Estate Agent commission or pays less
• The purchaser indemnifies the seller against any
claim for the Estate Agents commission
• Cancellation due to breach:
o Purpose of a contract – is to reach consensus

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 o A breach is when:
▪ Either Purchaser or Seller commits an act or omission and
fails to fulfil obligation
▪ One side fails to perform
▪ All contracts should have a cancellation clause:
• If a party is in breach, the contract can be cancelled
o What happens if there is no clause?
▪ The aggrieved party gives notice of other party being “in
mora” (meaning default/delay)
▪ Gives the other party time to fix default failing which
contract will be cancelled
• Conditions
o Two (2) types
▪ Suspensive
▪ Resolutive
o Suspensive conditions
▪ Also called condition precedent
▪ Most common in contracts
▪ Involves material conditions of agreement (those which
must be met)
▪ Example:
• Purchaser will buy the house on condition they are
granted a bond by the bank
• Effects
o Suspends the agreement until the condition is
met
o When the condition is met – contract stands
o If contract not met – contract ends
o Resolutive:
▪ Also called condition subsequent
▪ Not that common
▪ A contract becomes immediately binding on parties
▪ If a future event doesn’t happen – contract terminated
▪ Example:
• In the event that Mrs Jones doesn’t provide proof that
she has resigned as a director of XYZ company by
14 January 2023, the contract will be terminated
▪ Effects:
• Terminates agreement when condition is met
• If condition not met, contract continues

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 OPTIONS
• Options
o Often found with leases
o Example:
▪ Options for purchasing
▪ Within a certain period
o Deals with:
▪ Selling/buying property
▪ Binding contract
▪ Allows person who is made an offer to exercise a right
▪ Subsidiary contract
▪ Deals with a specific price
▪ When the time is right, the offer falls away
▪ If the seller offers to someone else, the seller is in breach
▪ The offer must be accepted – either expressly or tacitly

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 OPTIONS VERSUS RIGHT OF REFUSAL
• These are not the same concepts
• Example:
o An attorney is thinking about immigrating. A Candidate Attorney
asks the attorney for the right of first refusal to purchase the
attorney’s robe.
o A right of first refusal is always dependent on a condition (in this
case the condition is if the attorney immigrates).
o If the attorney immigrates, the Candidate may buy the robe
o If the attorney does not immigrate, the right of refusal ends.

SHARES
• Lets assume a company owns property. The Shareholders own shares
in the company and the directors are able to sell their shares. In such
cases, an attorney is able to act for both parties – the buyer and the
seller.
• Type of contract
o Sale and transfer
• Transactions involved:
o Sale of shares
o Directors loan accounts
• Section 38
o Company may not provide financial assistance when it comes to
purchasing shares
o This doesn’t apply to Close Corporations
o A Close Corporation can register a bond over property

COOLING OFF PERIOD

• Introduced on 27/12/1998
• It is for consumers who purchase goods in haste
• It allows consumers a certain amount of time in which to cancel
• In terms of immoveable property:
o Alienation of Land Act is applicable
o 5 day cooling off period
o This begins on the day the Offer to Purchase is signed and
excludes Saturdays, Sundays and Public holidays
o Property value
▪ The value of the property must be less than R250K
o Type of property:
▪ Must be a residential property

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 AGREEMENT OF SALE
• Must contain the following:
o Full names of buyer and seller
o Registration number of the company
o Status of the purchaser
o ID Numbers
o Property description
o Purchase price amount
o Method of payment
o If a bond is required
o Suspensive/resolutive conditions
o Estate Agent commission payable
o Date of occupation
o Occupational rent (where stipulated)
o Costs

LEASES
• Leases are contract agreements
• One person (Landlord/Lessor) conveys occupation of property and the
other (Tenant/Lessee) pays for the usage
• Limited period
• Limited price
• Types:
o Short term lease
o Long term lease
o Known as “fixed term” leases – they are for a specific period
• The three (3) “P’s”
o Price
o Period
o Property/place
• Price
o Lessor rents for:
▪ Specific price
▪ Specific period
▪ Both of which are stipulated in the contract
o Escalation (increase) clause
▪ In the absence of an escalation clause, there can be no
increase in the rental payable
o Payment must be in money
• Period
o After the period end, the lessee can continue to lease the
property either:

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 ▪ On a month-to-month basis or
▪ By signing a new lease
▪ Maximum period for a lease is 24 months although this
doesn’t apply to companies who are leasing
• Place
o Lessor must have the property in a liveable state for the lessee to
enjoy for a limited period
o Lessee becomes the occupier of the property
• Periodical lease
o This is a lease with no fixed end date. The lessee leases the
property on a month-to-month basis.
o Either lessor or lessee can give notice to the other

TERMINATION OF LEASE
• Ways
o End of lease period
o Lessor gives lessee notice to vacate (periodic lease)
▪ Notice
• Reasonable notice is 1 month
o Cancellation of lease due to breach
o Termination of lease by mutual agreement
• Breach
o Failure to pay rent
o Written notice of breach
▪ Give the other party 7 days to remedy the breach
o Other types of breach:
▪ 14 days notice to remedy the breach
o Where lessor terminates but lessee doesn’t move out of property
▪ Tenant/Lessee must continue to pay rent
▪ The Lessor accepting the rental doesn’t in any way affect
his right to terminate

CESSION OF LEASE
• When the lessee transfers the right of occupation to a 3rd party
• No new lease is concluded
• Case law
o University of Johannesburg v Auckland Park Theological
Seminary (ATS)
o Facts:
▪ ATS leased from UJ.

23
 ▪ ATS ceded to Wamjay, UJ was unaware of this cession of
lease
▪ UJ issued an eviction order
▪ The High Court agreed with the eviction order
▪ The Supreme Court of Appeal (“SCA”) stated that ATS
could cede in the absence of a clause preventing this
▪ The Constitutional Court (“CC”) agreed with the High Court
and stated that the right in contract law was specific to ATS

CITING OF PARTIES
• The Lessor is xxx (reg no) represented by (name of person) a duly
authorised director by resolution of the directors. A copy annexed hereto
as “Annexure A”.
• The Lessee is xxx (reg no) represented by (name of person) a duly
authorised director by resolution of the directors. A copy annexed hereto
as “Annexure B”.

DOMICILUM
• Address at which notices will be served.
• Cant be a postal address
o Because you can't do personal service in a postal box

IMPROVEMENTS
• Types;
o Necessary
o Useful
o Lavish
• Lessor:
o Duty to maintain property
o If Landlord fails to maintain the property the lessee can withhold
rent
o Responsible for:
▪ Leaking roof
▪ Stove
▪ Geyser
▪ Maintaining the structure
• Lessee
o Obligation to pay for any damage caused by himself/friend/family

RETURN OF PROPERTY
• At expiry of lease:
o Lessee to vacate

24
 o Lessee to hand all keys to lessor
o Lessee to leave the premises in the same condition as he
received them
o Lessee responsible for any loss/damage

CANCELLATION OF LEASE
• Prior to the start date of the contract:
o The lessee gives 1 months’ notice
o The lessee agrees to pay 1 months rental
o The cancellation penalty is payable immediately
o The Landlord/lessor is entitled to claim any upfront payment he
paid to the Estate Agent on a pro-rata basis.

CONTRACTS
• Need to be in writing to be valid – called parole evidence
• Prevents parties from redefining terms of the contract
• Types:
o Deed of suretyship
o Alienation of land
o Long leases (land)
o Credit transactions
o Anc agreements
o Franchise agreements
o Learnerships
o Donations
o Apprenticeship agreements
o Sale of time-share
• Whole agreement clause
o Contract constitutes the entire agreement between the parties
o No agents other than those stipulated in writing are binding on the
parties
• Referral to previous contract(s):
o Cant refer to previous contracts in a dispute once the new
agreement is in writing.

ACKNOWLEDGEMENT OF DEBT
• Is a document signed by the debtor acknowledging that he owes the
creditor money
• Contains:
o Details of the debtor
o Details of the creditor
o The amount owed

25
 o Any interest which has accrued
• Summons:
o Can either be combined or
o Provisional sentence summons

ALTERNATE DISPUTE RESOLUTION (“ADR”)

• Purpose:
o A method of resolving issues before litigation
o Its cheaper and quicker than litigation
• Parties:
o The parties to the dispute
o The independent arbitrator
• Where held:
o In a neutral venue
• When held:
o Prior to litigation
• How is it conducted?
o Negotiation
o Conciliation
o Mediation
o Arbitration

ARBITRATION
• Aim:
o To find consensus
o To settle the dispute
• Written arbitration agreement
o Details:
▪ The nature of the dispute
▪ The name of the arbitrator
▪ The arbitrators duties
▪ Where the arbitration will be held
▪ What the costs are
▪ Rules/procedures of proceedings
▪ The appeal process
• Organisations:
o Arbitration of Arbitrators
o Association of Arbitrators
• Breach:
o This occurs by an act or omission of one of the parties
o Parties fail to reach consensus

26
 o Any party may cancel the arbitration
▪ Two options:
• Cancel
• Continue
• Advantages of arbitration:
o Fairness
o Costs
o Time
• Characteristics of arbitration:
o Consensual
o Parties choose the arbitrator
o The arbitrator is a neutral person
o Arbitration is confidential
o The Arbitrators decision is final
• Arbitration versus mediation
o Both deal with dispute resolution
o Mediation is non-binding
o During mediation the arbitrator can meet with the parties
individually
o Mediation is collaborative
o Arbitration is adversarial
o The arbitrator makes the final decision and its binding
o Both methods are consensual

EMPLOYMENT CONTRACTS
• Most employment contracts contain a confidentiality clause
• Prevents the employee from disclosing confidential information
• A confidentiality clause is in existence during the contract of
employment but also in force for three (3) years thereafter.

SELLING MOVEABLE PROPERTY

• Ownership remains with the seller until the amount is paid by the
purchaser in full
• If the Purchaser defaults, the seller can cancel the contract
• The purchaser must insure the vehicle and submit proof thereof to the
seller

CONSUMER RIGHTS
• When goods are purchased/imported/produced:-
o Seller offers a warranty that the goods comply with certain
standards
o Consumer may return goods within 6 months from purchase

27
 o The supplier must:
▪ Repair/replace goods or
▪ Refund (reimburse)
o If the repair is still deficient:
▪ Seller must refund/replace the goods within 3 months

VOOSTOETS CLAUSE
• Means “as it stands”
• No longer applicable in our law unless certain conditions are present:
o I tell you that the motor vehicle I am selling you should be looked
at by the Automobile Association (“AA”) beforehand and you
choose to ignore that advice.

SEVERABILITY (SEPARATION) OF PROVISIONS

• This is a clause in the contract stating that if parts of the provisions are
illegal/against public policy, the remainder of the contract applies.

VARIATION
• This is a variation in the contract.
• Parties are free to vary a contract orally unless a variation clause
prevents this. This prevention must be in writing. A binding contract
does not require formalities.

VAT
• Section 7 of the VAT Act.
• VAT is payable by a registered vendor on all goods and services
supplied/imported.

SURETY
• A party offers to pay the debt of another party if that debt is not paid.
• The surety is also known as the guarantor.
• The parties to a suretyship agreement:
o The debtor
o The creditor
o The surety
• Example:
o Surety on a mortgage bond. If debtor fails to pay, surety will.
• Exceptions:
o There are three (3) exceptions on any suretyship agreement. The
banks normally like to cancel these exceptions so that the surety
cant rely on these as a defence.

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 ▪ Exception: De duobus vei puribus reis dependi
▪ Exception: Beneficium ordinis seu excessionis
▪ Exception: Beneficium divisionis
o De duobus vei puribus reis dependi
▪ This is where there are two (2) debtors. Each debtor would
be responsible for their own debt.
▪ Exception:
• The exception here is that each debtor is jointly and
severally responsible for the debt. What this means
is that the creditor can go after one debtor for the
entire debt.
▪ When the creditor repudiates this exception:
• This makes both the surety and the debtor jointly and
severally liable. This means that the creditor can go
after the surety for the entire debt.
o Beneficium ordinis seu execusionis
▪ Exception:
• This means that the creditor should first go after the
debtor and then sue the surety.
▪ When the creditor repudiates the exception:
• This means that the creditor can sue (go after) the
surety if the debtor doesn’t pay.
o Beneficium divisonis
▪ Exception:
• The liability is apportioned to all sureties equally
▪ When the creditor repudiates the exception:
• This means that the sureties are held jointly and
severally liable meaning that one surety can be held
liable for the entire debt.
• When drafting a suretyship agreement:
o Pay attention to how parties are married:
▪ If in community of property – you need spousal consent
(assistance from the spouse)
o Pay attention to the fact that it must be signed correctly
o Ensure the ID numbers of the parties are correct
o Ensure the document is stamped.
• Important:
o The surety would have recourse against the debtor in order to try
and recover his money/any loss suffered as a result of the debtor
not paying.
o Requirements:
▪ The principal debt must have been paid by the surety

29
 ▪ The debtor therefore must be released from his obligation
▪ The surety must not have negligently failed to raise a
defence which the debtor could have raised
▪ The surety must not have failed to notify the debtor that his
debt has been paid
▪ In the case where there is more than one surety and the
one surety has had to pay the entire debt due to the jointly
and severally clause, he may sue the other surety’s in the
form of 1/3 of the amount plus costs.

CESSIONS
▪ A cession is the transfer of a right from one person to another. This can
be either a partial transfer or and out-and-out transfer (called a
complete transfer) of rights as security (called a pledge).
o Parties
▪ The person who transfers the rights = the cedent
▪ The person receiving the rights = cessionary
o Example:
“A” wants a loan from the bank. The bank needs some form of
security so askes “A” to cede his book debts. In other words, any
person who owes “A” money in his company. The bank takes hold
of the debtors (book debts) and grants “A” an overdraft. If “A”
pays his loan off to the bank, he gets his book debts back. If “A”
doesn’t pay his loan off, the bank “owns” the amounts the debtors
of “A’s” company owe him.
o How is this done?
Its called a cession of book debts.
o What’s a permanent cession?
This would be when “A” sells his book debts and therefore is a
permanent transfer of his rights.

COMPANIES
▪ Types:
o Profit
o Non-profit
▪ Registration of company:
o 3 or more natural persons (or organ of State) may register
o Done through CIPRO
o Need:
▪ Certified copies of Director’s ID documents
▪ A certified copy of the applicants ID
▪ A Power of Attorney (where necessary)
▪ Notice of Incorporation

30
▪ Non-profit company
o Without share capital
o Used to be called Section 21 companies
o Registered for public benefit
o When dissolved, the assets must be transferred to a like-minded
non profit organisation
▪ Profit companies
o Types:
▪ Private companies
▪ Public (Pty) Ltd companies
▪ State-owned enterprises
▪ Personal liability companies
o Purpose:
▪ In business to make money – financial gain
o Formed:
▪ By one (1) or more parties
o Shareholders:
▪ May have shareholders
o Registration:
▪ Notice of Incorporation – Section 13(1) of the Companies
Act
▪ CIPRO forms
• Application for name of company
• Notice of Incorporation (Form COR14.1)
• Directors full names
• Memorandum of Incorporation (COR 15)
• Power of Attorney (optional)

SPECIAL POWER OF ATTORNEY

▪ Also called a “limited” Power of Attorney
▪ It limits the agents ability to act
▪ It is for a specific function only
▪ It has a timeframe
▪ Examples:
o Principle doesn’t want to act as a trustee and requests you to sign
the form on his behalf
o You act as an agent and purchase property on someone else’s
behalf
o You are going out the country and want someone to handle your
affairs whilst you are out the country

PRE-INCORPORATION AGREEMENT
▪ Section 21 of the Companies Act
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▪ This is a written agreement which the directors sign before a company
has been registered (incorporated). If a person acts on behalf of the
company, the company is bound by this.
▪ The Directors must ratify (accept or reject) the agreement no less than 3
months after the company has been incorporated
o Can be complete ratification
o Can be a partial ratification
o Can be a conditional ratification
▪ If directors do not ratify agreement:
o After 3 months of the company being incorporated, the pre-
incorporation agreement is said to have been ratified (accepted)
▪ Liability:
o Anyone entering into a pre-incorporation agreement can be held
liable for any debts incurred by the business before it is
registered. The directors are held jointly and severally liable.

OPENING A BUSINESS
▪ Factors to consider:
o Capital
o Own business or with others
o Risk assessment
o Industry regulations
o Costs

SOLE PROPRIETORSHIP
▪ Sole means “one” therefore one owner
▪ Small businesses
▪ Sole proprietor (owner) normally provides capital and also runs
business
▪ Cheaper
▪ If the business cant pay its debts the sole proprietor pays them out his
own pocket
▪ No continuity of business

PARTNERSHIP
▪ 2 – 20 partners
▪ Each partner contributes something, either:
o Capital
o Property
o Service
▪ Profits are shared
▪ Cheap
▪ Easy to manage

32
▪ Partners carry the risk jointly and severally
▪ Aim:
o To make a profit
▪ Benefits
o Cheap
o Two heads are better than one
o Simple to arrange
o More capital available
o Quick to establish
o Greater borrowing capacity
o Less future expenses
▪ Disadvantages
o Liability of partners
▪ Jointly and severally liable
▪ One partner can be sued for the entire debt
▪ Risk of disagreement
▪ When partners leave or join the entire partnership needs to
be evaluated
▪ Characteristics
o All partners bring something into the partnership
o The partnership is to the benefit of all
o The object/aim is to make a profit
o The contract must be legitimate

CLOSE CORPORATIONS
▪ No new Close Corporations can be registered however you can buy a
shelf company
▪ Small businesses
▪ Limited to 10 members
▪ Relaxed legislation
o Books don’t need to be audited
▪ Cheap to set up
▪ Members not personally liable for debts of Close Corporation
▪ Benefits:
o Cheaper
o Easy to manage
o Membership restricted
o No share capital
o No personal liability
o Continued existence after the death of a member
o More flexible
▪ No books audited

33
▪ Can hold the member personally liable in terms of Section 65 of the
Close Corporations Act to lift the limited liability provision but it’s a high
burden to use. You would need to get a court order stating that the
liability has been lifted.

COMPANIES
▪ Medium to large companies
▪ Acquires legal personality
▪ Shareholders – share capital
▪ Shareholders not liable for company debt
▪ The risk to shareholders is the amount they put into the company
▪ Continuity of business

BUSINESS TRUSTS
▪ Object:
o Trust beneficiaries
▪ Can be set up with administrators administering or trustees owning the
trust with beneficiaries having a personal right
▪ Perpetual succession
▪ Parties:
o Founder (donor)
o Trustee
o Beneficiaries (all not personally liable for debt)
▪ Registration:
o Must be registered with the Master of the High Court
▪ Allows for:
o Transfer of wealth from one generation to another
o Flexible estate planning
o Separation of ownership assets
o A tool for protection of minors/mentally disabled/beneficiaries
▪ Types:
o Testamentary
o Living
▪ Vested
▪ Discretionary
• Often called irrevocable
• Gives the trustee control of:
o Income beneficiaries
o Capital beneficiaries
o Bewind
▪ Documents:
o 2 x copies of the trust deed
o A letter from the auditor

34
 o 3 trustees (preferably one a professional person)
o Certified copies of the trustees ID documents
o Name of trust bank account
o Name and address of person maintaining records.
o Mandate dispensing with security

SELLING PROPERTY WITH IMMOVEABLE PROPERTY

▪ Not governed by any law in terms of form (context)
▪ Governed by legislation where:
o Trader transfers property:
▪ Notice must appear in the Government Gazette (S34 of
Insolvency Act)
▪ Notice must appear in 4 newspapers
• 2 (two) English
• 2 (two) Afrikaans
▪ If the seller is sequestrated:
• The sale is void
• Up to 6 months
▪ Repercussions for the buyer:
• Won’t become owner
• May have to pay and never receive property
▪ Sale concluded by:
o Business purchase agreement
o Parties
▪ Seller
▪ Purchaser
▪ Must be included in the contract/agreement
o Purchase price
o Other clauses

BUYING A BUSINESS AS A GOING CONCERN - SECURITY

▪ Security
o Buyer puts down security
o Intends paying the debt off monthly
▪ What is needed for security:
o Notarial bond
o Cession of book debts
o Surety by a 3rd party
o Insurance (on the life of the Purchaser)
o Acceleration clause

VAT
▪ Zero-rated
35
 Payable, not exempt
o
Payable at rate of 0%
o
Falls within the tax net
o
Purchaser can still claim input VAT
o
Example:
o
▪ Seller and Purchaser both VAT vendors
▪ Company is a going concern
▪ Sale of company is zero-rated
▪ Exempt:
o Falls outside of tax net

INSOLVENTS
▪ Insolvents have diminished legal capacity
▪ Insolvency is imposed by the courts on the person unable to pay his
debts
▪ The court grants the debtor:
o Relief from debt
▪ The court grants potential creditors:
o Protection
▪ Couple married out of community of property:
o Where one spouse is declared insolvent
o Check whether solvent spouse ever signed surety?
o Spouse who is solvent will have to prove that assets are his/hers
(may have these assets seized)
o Assets are vested with the Master/trustee
▪ Couple married in community of property:
o Joint estate sequestrated

PRESCRIPTION
• Periods
o 30 years
▪ Mortgage bond debt
▪ Judgement debt
▪ Tax debt
o 15 years
▪ Debt owed by the State (lease of land)
o 6 years
▪ Debt in terms of negotiable instruments (e.g. cheque)
▪ Notarial bonds
o 3 years
▪ All other debt
• Prescription interrupted:
o When the debtor acknowledges the debt

36
 o Judicially
• Delayed:
o S13(1) of the Prescription Act
o Where the creditor is a minor/under curatorship
o Where the debtor is outside RSA
o Where the creditor and debtor are married
o Where the debt arose from a partnership
o Where debt was the reason for arbitration
o Where the executor is not yet appointed
o Where the debt is part of a deceased estate
• Can I issues summons after prescription?
o Yes however your claim wont be successful and you may very
well land up with a cost order against you should the debtor raise
prescription as his defence

FICA
• FICA stands for the Financial Intelligence Centre Act
• It came into effect on 30/06/2003
• FICA trumps client confidentiality!s
• Aim:
o To identify and verify clients
o To reduce risk
o To prevent/reduce money laundering
• Purpose:
o To combat money-laundering
o To impose restrictions on financial institutions
o To conduct customer due diligence
o To implement risk management
o To register/implement reporting measures
• Attorneys:
o Establish if their client can act on behalf of someone else
o Determine the nature of the client’s business
o Determine the intended purpose and source of the client’s funds
o Example:
▪ A client brings you R50K in cash
▪ This needs to be reported as suspicious so that further
investigation can take place

37
 MONEY LAUNDERING
• Money laundering disguises unlawful activity
• Purpose:
o Making money/concealing funds/turning “dirty money” into “clean
money”
• Generally, money laundering is conducted by crime syndicates
• Money laundering is run through accountable institutions
• Proceeds of crime moves from bank to bank, business to business

38
39
PAST EXAM QUESTIONS AND ANSWERS
In August 2023 exam.

February 2015

SECTION A

A large bank opens a regional office in the town where you practice. The bank appoints a few firms to
its panel of attorneys but your firm is the main attorney. You receive a great deal of work from the
bank and get to know the regional manager and some staff quite well. How do you deal with the
following situations which arise from these relationships?

QUESTION 1 (14)

You become too busy to handle collection matters personally and appoint an experienced person
who is not an attorney to deal with debt collections. Is it professionally in order for such person:
1.1 To be appointed on that basis? (3)
1.2 To interview clients and accept new mandates? (2)
1.3 To negotiate with debtors and arrange the payment of debts in instalments (2)
1.4 To give legal advice generally? (2)
1.5 To handle elementary high court matters and to brief counsel (3)
1.6 To sign trust cheques (2)
Motivate your answers briefly.

Answer

1.1 An appointment such as this is normal practice. However, the legal practitioner must supervise
the work and remains ultimately responsible/accountable for it.
1.2 The non professional may see clients and accept mandates in their field of expertise only.
1.3 These are the normal duties of a collection assistant but the legal practitioner must provide
guidance and supervision.
1.4 Only a legal practitioner may provide legal advice, not support staff.
1.5 Only professionals may deal with HC matters which are normally specialised in nature,
1.6 Such a person cannot sign trust cheques. This would mean that the legal practitioner is
abandoning control over his/her trust fund. At the very most, this person could be a co-
signatory.

QUESTION 2 (6)

Your financial transactions increase and you appoint an experienced bookkeeper who recommends a
computer program of which you have no knowledge. Discuss your responsibilities.

40
Answer

It is perfectly normal for an attorney to not be familiar with computer systems however the attorney
needs to find out if the system complies with the LP Act and LPC Rules and must be able to check
that the system adheres to same. We are living in a technological age and there is no need to hand
write financial records anymore. It is incumbent on the attorney to do the necessary research and
ensure the system will be compliant.

QUESTION 3 (12)

In order to increase business for the bank and generate work for you the manager makes certain
proposals. Discuss in each case the professionality of the proposal:
3.1 To attract bond applications the bank offers to pay your conveyancing fees provided you
charge only half the tariff in the guidelines if all bonds are referred to you. (3)
3.2 To attract such applications from bond originators the bank offers to refer all the registrations
to you provided you pay the originators:
a) 10% of your fee; or
b) a handling fee of R200 each (3)
3.3 The bank arranges a golf day and asks you to sponsor the prizes at some of the holes with
attendant publicity (3)
3.4 The bank offers you 20% of the executor’s fee for each estate you refer to them to be
administered by the trust company in their group (3)

Answer

3.1 It is perfectly normal for a legal practitioner to adjust fees based on the volume of work being
provided to them however the fee still needs to be reasonable.
3.2 It is not allowed that legal practitioners share fees with non-professionals. Paying for a
mandate could be considered touting.
3.3 This would be allowed however the prizes may not be excessive/extravagant and this needs to
be done in good faith.
3.4 This would be unprofessional and amount to touting. It is against common law rules to accept
secret commissions.

QUESTION 4 (8)

The bank refers a large client of theirs to you with a fairly straightforward legal problem that requires
immediate action (an illegal repossession by the seller of a tractor sold on instalments for
R100,000.00). You have never done such a matter and do not know the law and practice involved.
Will you nevertheless accept the mandate and if so how will you qualify yourself? Will you rather
refer the potential client to a more experienced colleague?

Answer

If it is a straight-forward matter there is no reason why the legal practitioner needs to decline the
mandate. The legal practitioner, by accepting the matter, will gain experience in this particular field of
law. However, the legal practitioner may need to refer to a legal colleague for advise/precedents. The

41
legal practitioner should inform the client that s/he doesn’t have the requisite expertise and will
conduct research/consult with colleagues. Research could include studying textbooks and recent
judgements, practice guides etc. Do be careful of negligence and ensure that you do thorough research
and that your documents are drafted correctly.

QUESTION 5 (8)

The bank has a potential client who wishes to deposit a very large amount with them in hard cash.
They are worried about FICA (Financial Intelligence Centre Act) and suggest he pays the amount to
you so that you can give the bank a trust cheque. What duties does FICA place on you? Can you
claim that client affairs are confidential? Discuss

Answer

Split this answer up as follows:

1) What duties does FICA place on you?
The attorney has a duty to establish/verify the identity of clients and their authority. As such,
the attorney is required to keep detailed records of clients, transactions and business
relationships. In addition:
a. The attorney must make these records available to FIC on an issue of a warrant
b. The attorney must inform FIC on request of the existence of a mandate
c. The attorney must report cash transactions over a prescribed amount
2) Can you claim the client’s affairs are confidential?
No. In this case FIC requirements will take precedence.

QUESTION 6 (15)

The bank asks you to draft a short memorandum for their new clients, who wish to start business
enterprises and need guidance on why and when to use a private company rather than a partnership
as a vehicle for such new enterprises. Draft the memorandum.

Answer

a) Benefits of a company
- separate legal personality which may mean:
possible non-liability
continued existence after the death of a member/director
a more flexible tax option
- Companies Act provides guidance re administration
- directors have a duty in cases where they see the company is not solvent to take immediate
steps and place the company in receivership, administration or liquidation.
- directors run/manage the day-to-day activities but report to shareholders who make
decisions on how the company is run

b) Benefits of a partnership
- The partners share profits
- The partners all make an initial contribution whether this be cash, furniture or services

42
 - Expense – a partnership is fairly cheap to initiate
- Simple – a partnership is simple to formulate
- Quick
- Administration – fairly easy to administer

QUESTION 7 (12)

The bank manager does not quite appreciate that you maintain confidentiality and that the client is
entitled to legal professional privilege in respect of communication between you and the client even
when the bank referred the client to you. Write a letter to the bank manager and explain when
confidentiality applies and to what it does not apply.

Answer

Legal privilege and confidentiality are applicable to communications between attorney and client
where this communication:
1) Relates to the professional services offered
2) Relates to providing legal advice
3) Is either written or verbal
4) Even includes a client confessing to the commission of a crime

QUESTION 9

This question was asked previously and has therefore not been repeated here.

43
August 2015
SECTION A

Mr Merchant hands you a large number of debts to collect. All the claims fall within the jurisdiction
of the district court. Mr Merchant does not think that any debtor will defend the claims.

QUESTION 1 (55)

1.1 What arrangements can you make with the creditor regarding fees? Is there an applicable tariff?
May you work on a contingency basis in terms of the applicable legislation and if so, what are
the requirements? (8)
1.2 What fees and disbursements may you recover from debtors if you get default judgement? (4)
1.3 A specific debtor is known to be unable to pay but you are given a deed of suretyship signed
by the debtor’s one brother. The deed provides for two brothers to sign jointly and severally as
sureties. Against whom:
a) may you proceed
b) would you proceed? Explain (6)
1.4 In several cases the debtor’s present address is unknown. How is this problem normally dealt
with and how would you recover the costs involved? (4)
1.5 Debtor X was a partnership. After the debt arose partner A sold his interest to partner B. Can
you act against A for recovery of the debt? (2)
1.6 It appears that debtor “Abe’s Motors” originally belonged to Abe who sold the business to Ben
three months ago and has since been sequestrated. In what circumstances could the assets of
the business still be looked to for recovery of the claim against Abe’s insolvent estate? How
could Ben have protected himself? (6)
1.7 Debtor D has already signed an acknowledgement of debt which provides for payment of
R50,000.00 and interest in instalments of R5,000.00 each and that on failure to pay any
instalment, “the creditor shall give fourteen (14) days’ notice in writing demanding payment.
Should D fail to pay he shall be entitled to claim the full outstanding balance. No instalment
was ever paid. Draft the required letter of demand. (5)
1.8 You obtain default judgement against Debtor O. O earns a good salary, owns a fully paid motor
vehicle and has a claim against his brother for money lent and advanced. What possible
methods of recovery of the judgement debt apply in respect of O? (5)
1.9 ABC (Pty) Ltd (in liquidation) owes Mr Merchant an amount of R100,000 in respect of goods
sold and delivered. Your client has no security for payment of the amount. You are shown a
letter that your client received from the liquidator stating that the liabilities of the company in
liquidation exceed its assets by far.
1.9.1 Advise your client as to the desirability of proving a claim against the liquidated
company (5)
1.9.2 If your client decides to prove a claim, name the documents you will have to prepare for
this purpose. (4)
1.9.3 Write a letter to your client explaining the procedure that will follow from completing
the claim forms to the point when your client receives a dividend. (6)

44
Answer

1.1 Split your answer as follows:

a) What arrangements can you make with the creditor regarding fees?
There are rules regarding debt collecting fees. You could also take the matter on a contingency
fee basis. If doing the matter on contingency, a written agreement must be entered into and
signed by both parties. This agreement will set out the terms and conditions as well as the
amount (and/or percentage) the legal practitioner will charge bearing in mind that it may not
exceed 25% of the amount recovered (or double the attorney’s normal fee) – whichever is the
lessor amount.
b) Is there an applicable tariff?
Yes, the LPC does have rules with regarding amounts and the fees one can charge on collection
fees. Currently I believe you are able to charge up to a maximum of R1,500.00 per collection.
c) May you work on a contingency basis?
Yes, you may work on a contingency fee basis.
d) if so, what are the requirements?
You would be able to charge double your normal fee or 25% of the amount recovered –
whichever amount is the lessor.
1.2 There are tariffs as may be found in the Magistrates Court for undefended matters. If the
debtor consented in writing, you may also be able to recover attorney-client fees.
1.3 a) you may proceed against both brothers jointly and severally. Even though the deed of
suretyship has only been signed by the one brother, there was a clear intention that both
would be bound by the suretyship agreement. However, in terms of the General Law
Amendment Act, 1956, a suretyship must be in writing and must be signed by or on behalf of
the surety. So, although you may proceed against both, I believe you will have little hope in
your action against the brother who didn’t sign.
b) I therefore would proceed against the brother who has signed the suretyship agreement.
1.4 Break this question up, namely:
How is this problem normally dealt with?
Employ a tracing agent on a “no trace, no fee” basis. In your claim, add the fees for the tracing
agent.
How would you recover the costs involved?
Substituted service although this is not cost effective.
1.5 Yes. Due to the fact that A was a partner at the time the debt occurred and he therefore
remains liable.
1.6 You may claim against his insolvent estate. You could even require the trustee to set aside the
sale of the business in terms of S34 of the Insolvency Act. The sale of the business should have
been advertised in terms of S34.
1.7 Draft the required letter of demand.
(Date)

PER REGISTERED POST

Mr Debtor
(Address)

Dear Sir,

45
 We act on behalf of xxx (“our client”). With reference to the Acknowledgement of Debt signed
by you on (date), in terms of which you acknowledged indebtedness to our client as will more
fully appear from the Acknowledgement of Debt.

The Acknowledgement of Debt provided that in the event of your failure to pay any instalment
by due date, our client would be obliged to give you 14 (fourteen) days’ notice in writing by
registered post requiring you to effect payment and, in the event that payment is not made
within such period, our client has the right to claim the full outstanding balance.

The current balance outstanding is the sum of R50,000 (fifty thousand rand) together with
interest thereon at the rate of 9% per annum.

The instalment of R5000,00 was due by you on (date) and was not paid. In accordance with
the provisions contained within the Acknowledgement of Debt we hereby give you 14 days
notice from date of receipt of this letter. This notice is in accordance with S129 of the National
Credit Act.
1.8 What possible methods of recovery of the judgement debt apply in respect of O?
I may, in addition to S65 remedies also:
a) Obtain an emolument attachment order to recover part of his salary directly from his
employer
b) Attach his vehicle and sell it in execution
c) Attach a claim against his brother by means of a garnishee order.
1.9 1.9.1 Often when an insolvents assets are sold to pay its debts, there is often not enough
money left to pay the administration costs. The creditors therefore become liable for this (in
law this is called a contribution). It is always advisable to find out from the liquidator whether
there is a contribution which will be required before submitting your claim as a creditor.
1.9.2 If your client decides to prove a claim, name the documents you will have to prepare for
this purpose.
a) Resolution by the directors of the company
b) Special power of attorney
c) Affidavit
d) Statement of account and/or other documentary proof of the claim
1.9.3 Letter to the client

We confirm that the claim forms have now been submitted to the Liquidator who will see to it
that, at the next meeting of creditors, the claim will be approved.

After the second meeting, the Liquidator will draw his account and submit same to the Master
of the High Court. The Master will then inspect this account and either approve the account or
prepare a list of queries. If the Master approves the account, the Liquidator will advertise the
fact that the account will be confirmed and thereafter will make a distribution and pay
dividends to the approved creditors.

QUESTION 2 (10)

Under what circumstances may an attorney refuse to undertake a mandate? When is the attorney
obliged to refuse a mandate and is he ever obliged to accept a mandate?

46
Answer

2.1 An attorney may refuse to undertake a mandate:

a) there is a conflict of interest
b) where there is any form of illegality
c) based on the attorneys competence to handle the matter
d) Where client and attorney cant agree on fees
e) Where the attorney doesn’t have time to handle the matter.
2.2 An attorney is obliged to refuse a mandate:
a) When there is an existing mandate
b) When a contingency fee agreement is already in place and there is no grounds for
termination.
2.3 An attorney is obliged to accept a mandate:
a) When its an existing client and they have an urgent matter.

QUESTION 3 (15)

Write short answers to the following questions.

3.1 If you are not sure whether a step you propose taking is ethically permissible, how would you
go about getting an answer? (3)
3.2 Will it be in order to agree with counsel in advance on a fee for the latter’s appearance in
court? (2)
3.3 What documents in terms of the Attorney’s Act may only be prepared by an Attorney with the
expectation of a fee, gain or reward? (5)
3.4 You have arranged a consultation between your client and an advocate and subsequently
discover that you are unable to attend the consultation. May the consultation take place
without you? (5)
3.5 What will happen if you fail to pay your membership fees to the Law Society of which you are a
member? (2)
3.6 What is the purpose for which the Attorney’s Fidelity Fund was established? (2)
3.7 Why would you advise your client that he should draw up a Will? (2)
3.8 May a practitioner:
a) share fees earned with his/her Candidate Attorney? (1)
b) pay the Candidate Attorney a commission based on the fees that the candidate attorney
generates? (1)
c) share fees with counsel? (1)
3.9 What will happen if you fail to pay your membership fees to the LPC? (2)

Answer

3.1 I would do research and perhaps read Lewis’ book. I would also look at the LPC rules and code
of conduct or LSSA and approach colleagues and ask them.
3.2 Yes, it is both advisable and correct for an attorney to agree with counsel on fees beforehand.
This eliminates issues down the line. Besides this, the client needs to agree to the costs of
counsel and therefore important that the legal practitioner keep the client informed.
3.3 Only an attorney can complete the following in reward for a fee:
a) An agreement/deed with respect to immoveable property

47
 b) Conditions of sale
c) A Will or testamentary writing
d) Memorandum of association (company)
e) Documents pertaining to a creation/dissolution of a partnership
f) any document required for use in civil proceedings.
3.4 Yes. I could send a correspondent attorney, a candidate legal practitioner in my place however
if neither could attend, I would need to postpone the meeting.
3.5 I could end up being sued and/or being suspended from practicing and my name struck from
the roll.
3.6 To assist members of the public when monies are stolen out of the attorneys trust account.
3.7 It is far better to die testate as opposed to intestate in that it allows for a less stressful
settlement of the deceased estate. You also decide who shall inherit and what they shall
inherit.
3.8 a) No.
b) No.
c) No.
3.9 I could end up being sued and/or being suspended from practicing and my name struck from
the roll.

QUESTION 4 (20)

Mr Adam Smith sells his bottle store to John Brown. You act on behalf of the seller. The business
which is operated from premises leased from ABC (Pty) Ltd is sold “lock, stock and barrel” for the
sum of R500,000.
4.1 Advise the seller on the issue of payment and what security can be provided for payment if the
purchaser pays a deposit of R100,000 and undertakes to pay the balance of the purchase price
at the rate of R10,000 per month. (5)
4.2 What are the suspensive conditions that should be included in the deed of sale? (2)
4.3 Draft the acceleration clause that you would include in the agreement to protect the seller.
(3)
4.4 Draft the clause that would be included in the agreement to restrain the seller from operating
a similar business within the Gauteng area, where the business was operated, which restraint
is to be for a period of five years. (5)
4.5 Draft the notice which must be published in a newspaper in terms of Section 34 of the
Insolvency Act in regard to the sale of the business. (5)

Answer

4.1 a) Issue of payment

Notarial bond – this is for the equipment sold and is executed in favour of the seller.
Suretyship – a surety by a 3rd party standing surety for the purchaser
b) Security
Cession of book debts
An insurance policy in the name of the purchaser and ceded to the seller
Ensure the agreement has an acceleration clause

48
4.2 Suspensive conditions
Securing a liquor license
Concluding a lease agreement with the Landlord
4.3 Acceleration clause:
Should the purchaser not make the agreed payment on the stipulated date, the entire amount
will become due and payable.
4.4 Restraint of trade clause
The seller shall not, within a period of five years from date of signature of the agreement,
operate a business or have an interest, whether directly or indirectly in any bottle store
business in the area of Gauteng. The seller agrees that this restriction is fair and reasonable.
4.5 Notice in newspaper (S34 of the Insolvency Act)
Notice is hereby given of Section 34(1) of the Insolvency Act 24 of 1936 that Adam Smith
intends to sell his business trading as ….. carried on at ….. to John Brown after the period of 30
days from the date of the last publication of this notice.
DATED AT _________ On this the ___________ day of ____________ 20____.
_____________
ABD Attorneys

49
February 2016
QUESTION 1

Draft the clause(s) in an agreement for the sale of a business suspending the entire sale agreement
until such time as suitable arrangements have been made with the landlord of the premises from
which the business is conducted to secure the tenure of the business in the premises. The clause(s)
should allow for either:
1.1 Cession and delegation of the rights and obligations in terms of the existing lease from the
tenant to the purchaser with the consent of the landlord; or (5)
1.2 The conclusion of a new lease agreement between the purchaser and the landlord together with
the cancellation of the previous lease. (5)

Answer

This agreement shall be of no force or effect unless, within 30 days from the effective date of this
agreement or by a mutually agreed to extension in writing:
1.1 CESSION AND DELEGATION:
the Seller’s rights and obligations in terms of the existing lease agreement concluded between
the landlord and the seller as tenant in respect of the premises ceded and assigned from the
seller to the purchaser with effect from the effective date of this agreement, or
1.2 CONCLUSION OF NEW LEASE/CANCELLATION OF PREVIOUS LEASE
The existing lease between the Landlord and the Seller is cancelled and a new lease agreement
is concluded between the Purchaser and the Landlord on terms and conditions substantially
similar and mutually agreed to between the parties.

QUESTION 2

Mr A (who is shortly going overseas) wishes to incorporate a private company (B) with a specific
name which company is to take transfer of a business stand which is currently registered in his own
name. He consults you to assist him.
2.1 List the documents he must sign to enable you to effect the incorporation of the private
company, with CIPC (3)
2.2 List the forms of profit companies that can be formed and incorporated in terms of the
Companies Act. (4)
2.3 You explained to Mr A that he could now sign the deed of sale relating to the stand
a) as seller
b) as trustee for a company B
c) to be incorporated as purchase
What steps would thereafter be required to arrive at a valid deed of sale? (3)
2.4 Assume that Mr A is prepared to wait and requests you to sign as seller on his behalf once the
company B is incorporated. Draw the document you will require as authority to sign the deed
of sale as seller? (10)

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Answer

2.1 Application to Reserve a Name (COR 9.1)

Notice of Incorporation (COR 14)
Memorandum of Incorporation (COR 15)
Power of Attorney (Optional)
2.2 State-owned company
Private company
Public company
Personal liability company
2.3 Within three months after the date the company was incorporated, the directors will need to
ratify the pre-incorporation agreement. Should they fail to do so, it will automatically be
deemed that they did ratify the company.
2.4 SPECIAL POWER OF ATTORNEY
I, the undersigned, (name, identity number, married in/out of community of property)

do hereby appoint

(name, identity number, married in/out of community of property)

(herein called “the agent”)

with power of substitution to be my lawful agent with full power and authority for and in my
name to sign a Deed of Sale and any documents as may be necessary to effect the sale of the
hereinafter mentioned property, registered in my name, into the name of the Company once
said company has been incorporated at a price of (insert amount).

(Description of property)

AS HELD under Deed of Transfer (insert number)

1. I hereby agree to indemnify the AGENT against all costs, charges, losses and expenses which
the agent may incur in the lawful execution of the powers conferred upon them.

SIGNED AT ____________ on this the ______ day of ____________ 202_.

WITNESS:
____________
WITNESS:
____________

____________
Name of person granting PoA

51
QUESTION 3

In a civil trial involving a motor collision the Court finds that your client A suffered damage of R150,000
but was 40% negligent. The defendant B was 60% negligent and his damage was R160,000 What is the
net effect? You contracted with A that your fee would be 20% of what he recovers. What is your fee?
Show all calculations. (4)

Answer

A’s damages:
R150,000 * 60% = R90,000
B’s damages:
R160,000 * 40% = R64,000
Difference: R26,000 which B must pay to A
Our fee:
R26,000 * 20% = R5,200.00

SECTION B

You are consulted by Mr A who runs a profitable but risky business, and Mrs B, his fiancé, a divorced
lady. She is quite wealthy but her former husband (to whom she was married out of community of
property) used to manage most of her assets and ventures. Mr A and Mrs B intend getting married and
need your advice on aspects of the personal and business affairs. Mrs B is inter alia concerned that Mr
A may land in financial difficulties. Indicate how, as their attorney, you would deal with the following
issues:

QUESTION 4 (28)

4.1 They wish to know all possible regimes that can apply to their proposed marriage, how one goes
about achieving the various marital regimes and which one your recommend. What do you
advise? (10)
4.2 They enquire what the effect on Mrs B’s assets would be if Mr A were to be sequestrated after
marriage. Write her a letter to advise her of the potential risks and what she would have to do
to protect her interests and to enforce her rights in such an event. (10)
4.3 In order to avoid possible risks Mrs B considers creating an inter vivos trust for her minor
children. With whom would such a trust be registered, what documents must be lodged and
what further information must be submitted to the authorities to obtain registration? (8)

Answer

4.1 There are two marital regimes in South Africa – In community of property which is the default
system and out of community of property. Out of community of property can further be sub-
divided into without accrual and with accrual.
a) Marriages are automatically in community of property if no antenuptial contract has been
drawn up before the date of the marriage. With in community of property the estates of both
parties are joined. In principal either spouse can act on behalf of the joint estate however there
are exceptions which are stated in the Matrimonial Property Act.

52
 b) As mentioned earlier, should a couple wish to get married out of community of property the
parties will need to enter into an anc which is drawn up by a notary public (or notarised by a
notary public). The marriage is subject to the accrual system unless this is specifically excluded
in the contract. The anc is registered with the Deeds Office. In the accrual system the spouses
retain their assets throughout the marriage. A marriage with accrual means that any growth
that takes place in the duration of the marriage is calculated and shared equally.
c) In this particular case I would recommend a standard anc without accrual.
4.2 If the parties marry in community of property, the whole joint estate will be sequestrated if an
action for sequestration is brought against one of the parties. If the parties are married in anc
and one of the parties estates is sequestrated, the assets of the other party may be seized. In
such a case the solvent spouse would need to provide proof that the assets which have been
attached belong to the solvent spouse. It is therefore important that the spouses retain records
of their assets/transactions.
4.3 Split this question into the following three questions.
a) With whom would such a trust be registered?
The trust would be registered with the Master of the High Court.
b) What documents must be lodged?
Two copies of the deed of trust
Letter from the auditor to act
The trustee’s acceptance of the trust
c) What further information must be submitted?
The name of the bank where the trust account is opened/held
The name and address of the person who will keep/maintain the records
The occupation of the trustee(s)
Whether or not the trustees have prior experience in being a trustee.
The Master may have further requirements if the trustee is provided to be released from
providing security.

QUESTION 5

An old school friend who is getting married asks you what the position is relating to the rights of
spouses married in community of property to deal with the assets of the joint estate.
5.1 Explain the general principles (4)
5.2 Name at least six exceptions (6)

Answer

5.1 Explain the general principles

The assets and liabilities are combined and form part of a joint estate. Both spouses may
dispose of assets, incur debts and manage the joint estate. However, there are exceptions
which are listed in the Matrimonial Property Act where one spouse will require the consent of
the other when incurring debts. Upon dissolution of the marriage whether by death or
divorce, the liabilities are subtracted from the assets and the residue divided equally by the
spouses. Both spouses are equally responsible for debts incurred during the subsistence of the
marriage.

53
5.2 A number of transactions can only take place with the written consent of the other spouse, for
example:
a) Alienation of land
b) Withdrawal of money held at a bank in the name of the other spouse
c) When one spouse wants to stand surety for a debtor
d) Alienation, pledge or cession of shares or other similar assets
e) Alienation of any jewellery, coins, stamps or other assets held as investments
f) Any credit agreement

QUESTION 6

Explain and discuss briefly the following:

6.1 Acting pro amico (2)
6.2 Acting pro bono (2)
6.3 Acting on a contingency basis (5)
6.4 Costs de bonis proprils (3)
6.5 An order that the costs should be costs in the cause (2)
6.6 Party and party costs (3)

Answer

6.1 Pro amico means that you, as the legal practitioner may work for friends/family for free. This is
entirely at your discretion. You may charge for disbursements though.
6.2 Pro bono is when you do work for a member of the public at no cost. This is work normally
performed for people who otherwise would not be able to pay for your professional services. A
legal practitioner is required to complete a set number of hours pro bono per year.
6.3 Contingency fee – this is when a legal practitioner take on a matter on a “no win, no fee” basis.
The legal practitioner is entitled to charge double his/her normal rate or up to 25% of the award
made in favour of the client, whichever is the lessor amount.
6.4 Costs de bonis proprils – these are often referred to as “wasted” costs. They are costs awarded
by the court against a legal practitioner (or other person acting in a fiduciary capacity) generally
for bringing a frivolous or vexatious matter or wasting the courts time. This is a punitive cost
order.
6.5 Cost in the cause – normally costs awarded during litigation (interim order). When the matter is
finalised, these costs will follow the costs in the matter.
6.6 Party and party costs – these are the most common costs awarded in our courts and are as per
the tariffs set down by the courts. The successful litigant is awarded these costs which are paid
by the unsuccessful litigant. These costs do not involve the total costs which the successful
litigant has paid and are costs calculated during litigation. Should an attorney fail to discuss
his/her fees with a client or get the client to sign a Mandate and Fee agreement, the attorney
may only charge the client at the party and party tariff.

QUESTION 7

This question was asked in a previous paper and therefore has been excluded.

54
August 2016
QUESTION 1

Mr A has been asked to lend Mr B an amount of R100,000 bearing interest at the rate of 12% per
annum. The loan will be repayable in 12 (twelve) monthly instalments. In the event of any instalment
not being paid on due date, the full outstanding amount must become due and payable. Draft a
suitable acknowledgement of debt, fabricating such additional facts and provisions as you deem
necessary. (14)

Answer

ACKNOWLEDGEMENT OF DEBT

I, the undersigned,

(name)
of (address)
which address I choose as my domicilium citandi et executandi for the purpose of this agreement
(hereinafter “the debtor”) do hereby admit that I am liable and hold myself bound to

(name of creditor)
(hereinafter “the creditor”)
For the due and proper payment of the amount of (amount and amount in words) by reason of
monies loaned to me (hereinafter “the principal debt”) by the creditor and further I am bound to the
following conditions:
1. PREAMBLE:
The principal debt shall bear interest at the rate of 10% per annum which is calculated
monthly in arrears. Such interest is due and payable until such time as the principal debt is
paid in full.
2. INSTALLMENTS:
The principal debt together with interest shall be paid in 10 (ten) monthly installments, the
first of which is to be made on the last working day of the month in which this agreement is
signed and thereafter on the last day of every subsequent month until such time as both the
principal debt and interest has been paid in full.
3. BREACH
Should the debtor fail to make payment of the principal debt on due date the creditor may
regard the balance of the principal debt and interest owning as due and payable immediately
and may issue summons in a competent court without further notice or demand.
4. JURISDICTION
The debtor agrees to the jurisdiction of the Magistrates Court in terms of Section 45 of the
Magistrates Court Act, 32 of 1944 notwithstanding that the claim of the creditor exceeds the
jurisdiction of such court.
5. Should the debtor commit an act of insolvency or if the debtor becomes insolvent, the
principal debt shall immediately become due and payable.

55
6. ADDITIONAL CHARGES
The debtor shall pay the costs hereof on demand. The debtor to pay such costs on an attorney-
client scale together with collection costs calculated at 10% per annum.
7. CESSION/PLEDGE
The creditor shall be allowed to cede or pledge his interests herein without the consent of the
debtor.
8. The creditor may allocate any payment to capital, interest, costs or any other item as the
creditor deems fit.
9. RENOUNCIATION OF BENEFITS
The debtor hereby renounces all benefits from the legal exceptions, and all other legal benefits
and exceptions with the force, meaning and effect of which the debtor declares himself fully
acquainted with.
10. LEGAL COSTS
The debtor will be liable for the legal costs incidental to the negotiation, preparation, and
signing of this acknowledgement of debt. In addition, the debtor will be responsible for all
legal costs arising from a dispute in terms of this acknowledgement of debt.
11. ACCELERATION OF REPAYMENT
9.1 The full outstanding balance shall become due and payable upon the death of the debtor.
9.2 When the debtor fails to make payment in terms of this agreement on due date, the full
outstanding balance shall become due and payable.
9.3 When the debtor is placed in sequestration, either provisionally or finally, whether
voluntary or compulsory, the full outstanding balance will become due and payable.

SIGNED AT ___________ on this the __________ day of ___________ 20__.

SIGNATURE: ________________
WITNESS:__________________
WITNESS: _________________

QUESTION 2

Name six contracts which must be in writing to be valid. (6)

Answer

1) Alienation of land
2) Anc
3) Sale of share-block scheme
4) Credit transactions (NCA)
5) Donation
6) Franchise agreement
7) Apprenticeship
8) Long lease of land

QUESTION 3

Draft the following clauses in a lease agreement of a business premises:

3.1 An option to purchase the leased premises (5)

56
3.2 A prohibition against sub-letting and similar actions (6)
3.3 An option to renew the lease (4)
3.4 A clause regarding estate agents commission where the estate agent did not introduce the buyer
to the seller. (8)

Answer

3.1 OPTION TO PURCHASE

The Lessor grants the Lessee for the duration of the Lease, the option to purchase the
premises on the following terms and conditions:
The purchase price shall be (amount in figures and words) payable against registration of
transfer which shall be delivered to the Lessor or its nominee of a bank guarantee within 14
days of the exercising of this option and further on the standard terms and conditions as set
forth in Annexure “A”.

The Lessee may exercise this option by delivering a written notice to the Lessor to that effect
at the Lessors domicilium citandi et executandi.
The sale arising from the exercise of the option shall further be subject to the terms and
conditions set forth in Annexure A hereunto annexed including the obligation of the
lessee/purchaser to pay all costs of transfer.
3.2 The lessee may not:
3.2.1 Sublet the premises or any part thereof
3.2.2 Allow any other person to occupy the premises or any part thereof
3.2.3 Assign this lease or cede its rights
3.2.4 Alienate the shares or interest in the lease
Without the prior written consent of the Lessor which may not be unreasonably withheld.
3.3 The Lessee shall, provided that the lessee has complied with all the terms and conditions of
the lease, be entitled not later than 3 (three) months before the expiry of the lease, to renew
the lease for a further period of (number of years) on the same terms and conditions save the
right to renew. Written notice must be provided to the Lessor at his chosen domicilium citandi
et executandi.
3.4 ESTATE AGENTS COMMISSION
This clause has been included elsewhere in this document.

QUESTION 4

I have combined the questions here. See exam paper March 2021 Section B Question 2.

QUESTION 5

Attorney Z, acting for Mrs B in litigation has sent her a copy of a letter from the opponent’s attorney
suggesting a settlement and marked “without prejudice”. The letter also contains defamatory
statements relating to Mrs B. Explain to her what the position is with such a letter with specific
reference to its admissibility in the litigation and whether the defamatory statements can serve the
basis for a defamation order. (10)

57
Answer

“Without prejudice” means that any correspondence specifically dealing with settlement of a matter
may not be disclosed to the court without the prior written permission of both parties. The
correspondence must be a bona fide attempt to settle the matter and the statements can be expressly
stated or implied. Therefore if one attorney writes to another regarding settlement, this letter cannot
be disclosed to the court as evidence. This is in the interest of public policy – meaning that any
negotiations to settle a matter cannot be held against them should negotiations breakdown. This does
not mean that the correspondence has to contain the words, “without prejudice”. Even if
correspondence does not contain such words but is clearly and evidently an attempt to settle, such
will be deemed to be without prejudice. Similarly, the reply to such a letter will also be inadmissible as
evidence as it involves a genuine attempt to settle the matter.

Insofar as a statement made which is defamatory is concerned, such statement will be admissible and
as such would mean that the correspondence, particularly the offending statement, can be admissible
as evidence. Similarly, if correspondence is marked “without prejudice” yet does not relate to the
settlement of a matter, it may be admissible as evidence.

QUESTION 6

An attorney allows a claim to prescribe. What steps must be taken to:

a) Protect his client (4)
b) Protect himself (4)

Answer

6a) The attorney should write to the client and advise that the claim has become prescribed.
However, the attorney must not admit to negligence as this may impact his rights under the
professional indemnity policy. Together with this the attorney should advise the client to consult
with another legal practitioner regarding his rights and further actions.
6b) The attorney must immediately advise his insurer and the Attorneys Indemnity Insurance Fund
of a potential claim. If served with a summons, the attorney must once again inform both his
insurance and the Attorneys Indemnity Insurance Fund (“AIIF”).

QUESTION 7

Which of the following would be included in the calculation of the accrual as between spouses?
9.1 Large income earned by the husband while his wife remained at home to manage the household
(1)
9.2 Money earned by the wife by part-time dressmaking for neighbours (1)
9.3 The husband inherits R20,000 out of his father’s estate (1)
9.4 The wife receives R20,000 general damages arising from an accident (1)
9.5 The RAF pays the wife R50,000 for medical expenses (1)

Answer

9.1 Included

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9.2 Included
9.3 Excluded
9.4 Excluded
9.5 Included

QUESTION 8

List the sources where you would find the rules of professional conduct (5)

Answer

• Attorneys Act
• Legal Practice Act
• Rules and regulations of law societies
• Rulings of counsels
• Common law
• Textbooks written in RSA
• Foreign law
• Court judgements

QUESTION 9

An attorney has been struck off the roll for dishonesty. After a lapse of eight years he applies for a re-
admission. What are the requirements that the attorney must satisfy for the court to consider his/her
application? (5)

Answer

1. The attorney bears the onus to prove that s/he has reformed
2. The attorney must show that the original defect in his/her character no longer exists
3. The attorney must show that the public will not be prejudiced should s/he be readmitted
4. The attorney must show, that if readmitted, s/he will be an honourable member of the
profession
5. The attorney must prove that s/he can now be trusted.

QUESTION 10

To what documents and/or information in an attorney’s possession and/or of which he has knowledge
do the issue of privilege not apply? (5)

Answer

Professional privilege does not apply to the following:

• Documents which are not privileged.
• Communications facilitating fraud

59
 • Facts learned by you by your own sense
• The clients name – you may be compelled to disclose it
• Where a statute provides that privilege is not applicable

QUESTION 13

What are the grounds that would entitle an attorney to withdraw as attorney and terminate his client’s
mandate? (5)

Answer

An attorney may withdraw his/her mandate when:

• The client has acted in an improper manner
• The client has committed fraud/other illegality
• When the attorney and client clash in terms of personality
• Illness of the attorney
• Where the client does not accept the attorney’s advice
• Failure to pay the attorney

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February 2017
QUESTION 1

This question has been asked in a previous year, so I have not included it again.

QUESTION 2

Draft any three of the clauses listed below for inclusion in any agreement
2.1 Whole agreement (5)
2.2 Variation (5)
2.3 Jurisdiction of Magistrate’s courts (5)
2.4 Severability of provisions (5)

Answer

2.1 WHOLE AGREEMENT

This document constitutes the whole agreement between the parties. Neither party will have
any right or remedy arising from any undertaking, warranty or representation which has not
been included in this agreement.

2.2 VARIATION
This contract may not be varied, added to or cancelled by agreement otherwise than by a further
written agreement between the parties or their duly appointed agents.

2.3 JURISDICTION OF MAGISTRATE’S COURT

Each party consents to the jurisdiction of the district magistrate’s court in respect to any
proceedings pursuant to this agreement as per Section 45 of the Magistrates Court Act.

2.4 SEVERABILITY
Each clause or part of a clause in this agreement is severable and separate from the rest of the
agreement unless this would render the agreement unlawful. Should any clause or part thereof
be unenforceable it shall not affect the enforceability of the remainder of the agreement unless
such severability would render the agreement unlawful.

QUESTION 3

3.1 Your client Mr A consults you. He recently purchased a second-hand vehicle from a national car
dealer. Four months after he received the car, the gearbox broke. It was established that the
defect existed at the date of purchase and that the vehicle was not in good working order when
he purchased it. With specific reference to legislation that is aimed at assisting the consumer,
advise your client on his rights and remedies. (12)
3.2 Would your advice differ had the agreement between the dealer and your client included a
voetstoots clause? (3)

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Answer

3.1 SECTION 55 AND 56 OF THE CONSUMER PROTECTION ACT

In terms of these sections, there is an implied provision in any transaction/agreement that the
producer/importer/distributor/retailer warrantee that the goods are:
a) reasonably suitable for their intended purpose
b) are of good quality, in working order and free of defects
c) will be durable and reliable for a certain period of time
d) comply with the Standards Act

Should the goods fail to comply with the above-mentioned requirements and are still within
the 6 months after delivery period, the consumer may return the goods to the supplier and
the supplier must:
a) Replace
b) Repair
c) Refund

Should the supplier repair the goods and within a period of 3 months thereafter the defect
arises again, the supplier shall:

a) replace the goods

b) refund the customer

3.2 No the supplier may not exclude the warranty.

QUESTION 4

4.1 A client insists that you issue summons on a claim that has clearly prescribed. How will you
explain the situation to your client? (6)
4.2 Your partner has drawn an affidavit in an affidavit in an urgent High Court application. No other
Commissioner of Oaths is available. May you administer the oath? Would the position be
different if you were a conveyancing matter and if so, why? (4)

Answer

4.1 Nothing prevents you issuing a summons on a claim you believe will not succeed as in the case
of prescription. However, the client must be made aware of the consequences of such action
e.g. that they could have a cost order awarded against them should the claim be unsuccessful.
Always notify the client of your advice in writing in order that you have proof of such advice. In
a case such as this, prescription will be raised as a special plea and therefore it can be withdrawn
before too many costs are incurred. Should the defendant not raise the issue of prescription,
the court may not do so.

4.2 If you have an interest in a matter, you may not commission documents. Therefore in this
instance where it is the law firm where you are working, you will not be able to commission the
documents. Sometimes you are able to commission documents where your firm is involved, for
example conveyancing matters as these are specifically excluded by the Act.

62
QUESTION 5

5.1 What types of companies can be incorporated under the Companies Act? (5)
5.2 What are the essentialia on which parties must agree in order to create a valid partnership?

Answer

5.1 TYPES OF COMPANIES

PROFIT AND NON-PROFIT COMPANIES:
PROFIT COMPANIES:
* State owned company (SOE)
* Private company
* Public company
* Personal liability company

NON-PROFIT COMPANIES:
Incorporated for public benefit (similar to old S21 companies)

5.2 Each partner contributes to the initial start-up and shares in the profits and losses of the
partnership. The purpose of a partnership must be to generate profits and conduct
business.

QUESTION 6

You are consulted by a lady who is married out of community of property. Her husband who is in
possession of most of her assets, is sequestrated. Advise her of the effects under the Insolvency Act
and of possible remedies. (5)

Answer

Once the estate has been sequestrated the assets are vested with the Master and thereafter the
trustee. Once a solvent spouse married out of community of property can prove that the assets belong
to him/her (normally by affidavit) the spouse may have the assets returned to his/her. If necessary, the
spouse may have to bring a High Court application to have the assets released.

QUESTION 7

This question has been asked in a previous year, so I have not included it again.

QUESTION 8

You negligently permit a damages (not personal injuries) claim to prescribe. Your partner who is
overseas requests you to explain to her (your partner) what you did on discovering the problem and
what the client’s and your own rights are if it is assumed that the claim was good for R200,000. Draft

63
a letter to your partner responding to her enquiry dealing with your firm’s position vis a vis the client
and the firm’s potential liability. (10)

Answer

Dear A,

Upon discovering that the claim by B had prescribed due to our negligence, I contacted B and informed
him of the situation. I advised him to contact another legal practitioner and I never admitted to liability.
In addition to this, I informed the Attorney’s Indemnity Insurance Fund (“AIIF”) as well as our own
personal insurers. I anticipate that the client’s new attorneys will send us a Letter of Demand which I
will forward on to the AIIF. We are covered for amounts in excess of R300,000.00 and I anticipate that
we will be out of pocket for no more than R30,000.00. I am led to believe that the AIIF normally instruct
their own attorneys to handle the matter and to either defend or settle the matter once they have
consulted with us.

QUESTION 9

Before the start of a criminal trial in which you will represent the accused, you discover that the
Magistrate is the mother of the complainant. How would you apply the applicable rules of conduct
and what would you do if you are unsuccessful? (5)

Answer

In a situation such as this, the Magistrate must recuse himself/herself. You will inform the Magistrate
in their chambers that you intend applying for his/her recusal and if this is met with a refusal by the
Magistrate, you will then inform him/her in open court. If the Magistrate still refuses, you will begin
the process of review/appeal depending on the outcome of the matter currently being heard – if
your client is acquitted, there is no need to pursue the review/appeal however if your client is
convicted, there is reason to continue with the review/appeal.

64
August 2017
QUESTION 1 (25)

Draft a letter to a young couple who intend shortly to enter into a marriage setting out the marital
property regimes which apply in South Africa. Your letter should deal with the application of each
regime on the parties’ estates during the marriage and at the dissolution either by death or divorce.
(The length of your answer and the detail required is determined by the marks awarded). (25)

Answer

Dear A and C,

Thank you for affording me the opportunity to consult with you. First and foremost it is important to
advise that you both are ultimately the one’s who will choose the correct marital regime for you, my
position is merely to advise you on the various regimes.

There are two marital regimes in South Africa (many will say that there are 3 regimes). You may either
marry in community of property or out of community of property. For marriages out of community of
property, these are further sub-divided into marriages with accrual and marriages without accrual.
This is in terms of the Matrimonial Property Act 88 of 1994.

The default marital regime is in community of property which means that if you were to both decide
to get married today, you would be married in community of property. Herewith is a brief synopsis of
each marital regime:

IN COMMUNITY OF PROPERTY

All property of the spouses acquired before or after the marriage form part of a joint estate unless
specifically excluded, for example, inheritances or gifts. Any debts (liabilities) before or after the
marriage can be claimed from the joint estate. The spouses are co-owners of the joint estate. In certain
instances the one party may not enters into agreements without the specific consent of the other
spouse. A the dissolution of the marriage, either by death or divorce, the liabilities must be paid from
the joint estate and the residue (balance) is divided equally amongst the partners. It is important to
note that one spouse is responsible for the other’s debts. In the case of sequestration, both spouses
would be sequestrated as the joint estate is sequestrated.

MARRIED OUT OF COMMUNITY OF PROPERTY WITHOUT ACCRUAL

Each spouse retains their assets and a liable for their own debts. During the marriage the spouses
may deal with their asssets in any manner and do not require the consent of the other spouse in
terms of their liabilities.

At the end of the marriage, either by death or divorce, the spouses retain their assets and remain
responsible for their individual debts. Unless the accrual is expressly excluded in the antenuptial
contract, accrual will apply.

MARRIED OUT OF COMMUNITY OF PROPERTY WITH ACCRUAL

65
What this means is that at the beginning of the marriage, if fact at the time the antenuptial contract
is drawn up, the couples with stipulate their nett assets as well as any assets to be excluded from the
accrual system, for example, donations, inheritances etc. During the marriage the spouses may deal
with their assets in any manner and do not require the consent of the other spouse in terms of their
liabilities.

Once the marriage dissolves, either by death or divorce, the value of the spouses estates are
calculated. Should one spouses assets have increased in value more than the others, the balance is
divided amongst both spouses equally.

QUESTION 2

Mrs B has a valid option to buy a holiday cottage from Mrs Seller, but the option expires in 2 (two)
days. She (and you) are in Cape Town and the grantor of the option is in Durban. Write Mrs B an urgent
letter advising her how and when the option must be exercised (bearing in mind time and distance
constraints) and attach the document which is required to exercise the option. Use imaginary facts.
(13)

Answer

Whenever a person decides to exercise an option, it would be signed and dated in the presence of two
witnesses. If exercising the option via post, the date when the correspondence is sent will be the date
the option is exercised unless otherwise stated in the option, for example, the option will be deemed
to be sent on the date it reaches the grantor. It is always good practice to ensure that the option
reaches the grantor before the expiry date of the option. Therefore it may be good practice to email
the option to the grantor and then follow this up with sending it via post/courier etc.

EXERCISE OF OPTION
I, the undersigned, (name) (id number) (marital status) do hereby exercise the option granted to me
by Mrs Seller on (date) to purchase stand (description, erf number etc) together with all improvements
subject to the terms and conditions set forth in the option.

Signed at __________ on this the ____ day of _________ 202__.

Signed: ____________
Witness: ___________
Witness: ___________

QUESTION 3

This question has been asked in a previous year, so I have not included it again.

QUESTION 4 (20)

Mr A has negotiated the sale of his business. The intending purchaser is insisting that the sale be
advertised in terms of Section 34 of the Insolvency Act. Explain to Mr A the requirements, the reasons
for and the effects of advertising and not advertising. (20)

66
Answer

a) Requirements of a sale of business

The proposed sale of the business must be published in the Government Gazette as well as
two issues of a local newspaper (one English and one Afrikaans) in the district where the
business is conducted.
This advertisement must be published not less than 30 days and not more than 60 days
before the date of transfer.

b) Reasons for advertising

To give creditors of the business notice/warning that the business will be sold. This means
that creditors will be able to demand immediate payment of any outstanding debt.
c) Effects of not advertising
Should the advertisement not be placed in accordance with these requirements, the sale
with be void for a period of 6 months. What this means in essence is that the purchaser may
have paid the purchase price or part thereof and not take ownership for a period of 6
months. Should the purchaser be sequestrated he would have paid the purchase price of
part thereof and receive nothing.

QUESTION 5

5.1 A suspensive condition has a different effect on a contract than a resolutive condition. Explain
the difference briefly. (5)
5.2 This question has been duplicated in a previous paper and is not repeated here.
5.2.1 This question has been duplicated in a previous paper and is not repeated here.
5.2.2 This question has been duplicated in a previous paper and is not repeated here.

Answer

5.1 Both a suspensive and resolutive condition deal with an uncertain future event. A suspensive
condition will suspend the obligations flowing from the contract until the condition is met, for
example, obtaining a mortgage bond. If the suspensive condition is met, the contract continues
to be in force however, if the suspensive condition is not met, the contract ceases to exist.

With regards to a resolutive condition, the existence of the future event ends the rights and
obligations for the entire contract. There is no suspension of the contract up until the resolutive
condition occurs. For example, A and B conclude an employment contract. The is a clause
contained this contract which states that should B commit a crime, the contract terminates
immediately. Therefore, the contract remains in place until B ever commits a crime. Once B
commits a crime, the contract terminates.

QUESTION 6

This question has been asked in a previous year, so I have not included it again.

67
QUESTION 7

This question has been asked in a previous year, so I have not included it again.

68
February 2018
You are consulted by Mrs Alone whom you recently assisted with the administration of the estate of
her late husband. She is accompanied by Mr Operator a divorced businessman. They intend getting
married soon.

Mrs Alone has two children aged 18 and 12 respectively. Mr Operator also has two children aged 17
and 10 respectively. Mr O is paying maintenance to his former wife and the two children in terms of a
High Court order.

Mrs Alone has substantial assets but has little experience of business and investment. Mr O is
experienced in business and earns a good income but has few assets left after his divorce.

They seek your advice on a range of issues. Keeping in mind the above facts, how would you advise
them and/or deal with the following situations? Advise them on:

QUESTION 1

1.1 The possible marital property regimes (not customary or religious) and the formalities
required to achieve each regime. (3)
1.2 Which you recommend for them and why (2)
1.3 Whether they can later change the marital regime if they find their choice unsatisfactory. If so,
how; if not, why not? (6)

Answer

1.1 The marriage can be:

a) In community of property – no requirements
b) Out of community of property with the accrual system – anc required
c) Out of community of property without the accrual system – anc required with excludes
accrual

1.2 I would advise the couple to marry out of community of property without accrual. This way
both parties retain their assets and liabilities irrespective of the growth of the assets during
their marriage. They are each responsible for their own debts.

1.3 It is possible for a couple to change their marital regime. Normally this is where couples marry
in community of property and then want to change to a marriage out of community of
property. I would not advise my clients to divorce and remarry as there is no grounds for an
irretrievable breakdown of the marriage and in essence they would be lying to the court. I
would advise them that to change their marital regime would involve a High Court application
and as such will be costly. The couple will have to show the court the reasons for their decision
and all creditors need to be given notice of the change in marital regime. There must not be
prejudice to any party. The couple will also need to enter into an anc contract that needs to be
stamped by a notary public and registered with the Deeds Office.

69
QUESTION 2

Mr O informs you that his ex-spouse is constantly complaining that the maintenance awarded is
inadequate. He is hoping that the high cost of a High Court application for an amendment of the
divorce order will deter her from acting. Advise him of the rights of the ex-wife, children and himself.
(4)

Answer

In most cases a lower court cannot overturn the decision of a higher court but this is the exception.
The wife will not need legal representation to take the matter to the Maintenance Court so therefore
her expenses will be minimal. He is also able to apply for a decrease in the maintenance he is paying
although he will have to show good cause to do so. Children are entitled to maintenance until they are
self sufficient and both parents have a duty to maintain the child(ren).

QUESTION 3

The parties are planning an extended honeymoon overseas. Mr O wants a private profit company
registered to acquire a residence for them to occupy when they return. They will both be shareholders
and directors.
3.1 Draft a suitable power of attorney in you favour to enable you to draw, sign and lodge all
documents on their behalf for purposes of registration as soon as you have reserved an
acceptable name. (8)
3.2 Advise whether and how an agreement for the purchase of the residence can be entered into
before the registration of the company. How is such a transaction brought to finality after
registration? (11)

Answer

3.1 SPECIAL POWER OF ATTORNEY

We, the undersigned,
A and B
hereby appoint (name)
with the power of substitution
as our attorney and lawful agent to sign and execute on our behalf all documents necessary to
establish a private company of which we are both directors and equal shareholders.
Specifically this power to include the Notice of Memorandum of Incorporations amd any and
all other documents required by the CIPC in order to effect registration and to uplift the
Certification of Registration. Further, we do hereby agree to:
a) ratify whatever our agent shall lawfully do by virtue hereof and
b) indemnify our agent against any and all costs, expenses, and charges incurred during the
lawful execution of the powers hereby conferred.

Thus done and signed at ______ on this the ____ day of ___ 20__.

3.2 a) How is an agreement for a purchase of a residence entered into before the registration of a
company?

70
 By a pre-incorporation agreement.
b) What is a pre-incorporation agreement?
This is a written agreement entered into by a person acting on behalf of a company which
doesn’t yet exist.
b) How is such transaction brought to finality after registration?
Once the company has been registered and within a period of 3 months thereafter, the
directors must ratify or reject the agreement either completely or partially. Should they fail to
do so, the directors is automatically deemed ratified. The directors will be jointly and severally
liable for liabilities created if:
a) the company is not incorporated or
b) once incorporated, the rejects any part of the agreement
unless the company enters into an agreement on the same terms or in substitution of the
agreement.
Should the company reject the pre-incorporation agreement, the company will still be liable
for any debt incurred during the existence of such agreement.

QUESTION 4

Mrs A is a bit concerned about their financial future and seeks your advice on whether and how she
can create a trust to acquire some of her assets in order to maintain her children as necessary; and
whether she need then still bother about a Will.
4.1 Who would be the parties to such a trust? (3)
4.2 Explain the effect of such a trust being a discretionary trust (2)
4.3 Explain the difference between income beneficiaries and capital beneficiaries (3)
4.4 Explain why it would be advisable to execute a Will in any event (3)
4.5 Explain a beneficiary in a trust (1)
4.6 Is it permissible to be both an income and capital beneficiary in a trust? (1)
4.7 May a person who is a beneficiary in a trust also act as a trustee in that same trust? (1)

Answer

4.1 The parties are:

The donor
The trustee
The beneficiaries
4.2 A discretionary trust is where the trustee can have freedom to make payments to whomever as
well as decide on the amounts of these payments.
4.3 Income beneficiaries receive distributions of the income earned by the trust.
Capital beneficiaries receive a portion of the capital in the trust.
4.4 Having a will avoids a delay in appointing an executor. Having a will also avoids interstate
succession and any uncertainty when it comes to the wishes of the deceased.
4.5 A beneficiary is the person or entity that can benefit from the trust.
4.6 Yes one can be both an income and capital beneficiary.
4.7 Yes

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QUESTION 5

During the extended discussion two ethical questions arise:

5.1 Mrs A discovers that you need to borrow a substantial amount to purchase new computers and
software for your practice. Mr O convinces her to lend you R251,000 How do you handle the
situation? (3)
5.2 Mr O is impressed with your performance and wishes you take over a number of current matters
from a colleague. How do you go about taking over such matters in a professional manner?
(3)
Answer

5.1 Generally it is improper to borrow from a client unless:

a) the client is a registered moneylender
b) the client has sought independent advice
5.2 I will ensure that the colleague's mandate has been terminated and will not act until his/her
fees and disbursements have been paid in full. My colleague will have the right to exercise the
attorney’s lien over certain documents held in his/her possession until his/her account has
been paid.

QUESTION 6

Mrs A informs you that her son intends going to university next year to study law so that he can become
and attorney or advocate. Advise her on:
6.1 The substantive requirements for admission as an attorney under Act 53 of 1979 (7)
6.2 How in principle the position will soon change (or has recently changed) under the Legal Practice
Act

Answer

6.1 SUBSTANTIVE REQUIREMENTS FOR ADMISSION AS AN ATTORNEY

a) Be a fit and proper person
b) be 21 years of age or older
c) be a South African citizen or have permanent residence
d) have obtained an LLB
e) have completed the PVT training (either longer or short version)
f) have served a period of articles (either one or two years depending on the PVT course)
g) passed all four board exams
6.2 LEGAL PRACTICE ACT VS ATTORNEYS ACT
Both advocates and attorneys are known as legal practitioners.
Advocates with trust accounts may now see clients directly.

QUESTION 7 (33)

Mrs A has inherited a business complex in which one shop is let to a liquor store. The lease expires
soon, and she wants you to draw a new lease. How would you phrase the clauses dealing with the
following:

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7.1 Possible breach of contract by the tenant? (12)
7.2 The tenant’s domicilium citandi et executandi and the giving of notices (including by telefax but
not by email). (10)
7.3 A prohibition against sub-letting and similar actions by the tenant (5)
7.4 An option to purchase the leased premises (standard clauses not required, refer to an annexure)
(6)

Answer

7.1 BREACH
7.1.1 Should the lessee/tenant:
a) fail to make payment in terms of this lease on due date and remains in default for a period
of 7 (seven) days from the date of written notice by the Landlord to rectify such breach; and
b) commits any other breach of the terms and conditions contained in this lease and fails to
rectify such breach within a period of 14 (fourteen) days from the date of written notice by the
Landlord
the Landlord shall be entitled to cancel this lease without further notices to the lessee/tenant.

7.1.2 PAYMENT TO A 3RD PERSON

Should the tenant/lessee fail to make any payment to a third person in terms of this lease
agreement and fail to rectify such breach within a period of 14 (fourteen) days from the date
of written notice by the Landlord, the Landlord may exercise his rights and obligations under
this agreement to recovery such amounts. The Landlord shall be entitled to recover costs of
such action from the tenant/lessee.

The Landlords remedies in 7.1.1 and 7.1.2 above are additional to any other remedies s/he
may have.

7.1.3 CANCELLATION OF THE LEASE

Should the Landlord cancel the lease pursuant to 7.1.1 and 7.1.2 above, and should the
tenant/lessee dispute the Landlord’s right to do so and remain in occupation of the premises,
then pending the determination of the dispute:
a) the tenant shall continue paying all payments in terms of this lease on their due dates;
b) the Landlord’s acceptance of such payments will not affect his/her right to cancel the lease
or prevent him/her from exercising any other remedy.
c) Should the dispute between the Landlord and tenant/lessee be determined in favour of the
Landlord, any payments made in terms of 7.1.3(a) will be regarded as amounts paid by the
tenant/lessee of loss sustained by the Landlord as a result of the tenant/lessee failing to
surrender occupation of the premises.

7.2 DOMICILIUM CETANDI ET EXECUTANDI

The parties choose as their domicilium cetandi et executandi
Landlord
(physical address)
(fax number)
Lessee
(physical address)
(fax number)

73
 for the purpose of giving of all notices and the serving of all legal process in terms of this
agreement.

CHANGE OF DOMICILIUM
The parties may, at any time during this agreement, by notice in writing to the other party,
change their/its domicilium to any other address in the Republic of South Africa which is not a
postal address.

SERVICES OF NOTICES
Any notice given in terms of this agreement shall, save where otherwise is stipulated, be:
a) delivered by hand
b) sent by prepaid registered post; or
c) sent by courier; or
d) sent by telegram; or
e) sent by telefax
to the domicilium or address as selected by the lessee/tenant.

Any notice delivered in terms of 7.2 shall be deemed to have been duly received, if:
a) delivered by hand, on the date of delivery; or
b) delivered by prepaid registered post, on the 7 (seventh) day after posting; or
c) delivered by courier, on the date of delivery by the courier; or
d) delivered by telegram, on the day following the day on which the notice is given by the post
office for transmission; or
e) delivered by telefax, on the expiration of 24 hours after the message was transmitted.

7.3 CESSION/PLEDGE
The lessee/tenant may not, without the written prior consent of the Landlord/lessor:
7.3.1 cede any or all of its rights under this lease;
7.3.2 sublet the premises or any part thereof;
7.3.3 give up possession of the premises or any part thereof to any third party provided that if
the lessee is a juristic person the transfer of controlling interest in lessee shall be deemed a
cession and provided further that the lessor shall not withhold its consent unreasonably.

7.4 OPTION TO PURCHASE

The lessor grants to the lessee for the duration of this lease, an option to purchase the
premises on the following terms and conditions:
7.4.1 The purchase price shall be Rxxx.xx (amt in words) payable against registration of transfer
which payment shall secure delivery to lessor or its nominee of a bank guarantee in customary
form within 14 (fourteen) days of exercising the option.
7.4.2 The lessee delivers by written notice to the lessor his intention to exercise such option at
the lessors domicilium
7.4.3 The sale arising from the exercise of this option is subject to further terms and conditions
as set out in Annexure A hereunto annexed which include the obligation of the
lessee/purchaser to pay all costs of transfer.

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QUESTION 8

Mrs A wishes to sell as a going concern to a trader, Mr Z, a trading business she inherited as she does
not want to continue conducting it. She and Mr Z are both registered VAT vendors. Draft the clause
that will seek to ensure that both parties but primarily Mrs A enjoy the most favourable position
relating to value-added tax (VAT). (5)

Answer

VAT CLAUSE
8.1 The purchaser and seller hereby reciprocally warrant to each other that they are at date of
signature hereof, duly registered as VAT vendors;
8.2 It is agreed between them that:
8.2.1 the enterprise is disposed as a going concern;
8.2.2 the purchaser and seller agree that the enterprise will be an income producing activity at
the date of transfer.
8.2.3 that the business is sold as a going concern and is inclusive of VAT at the rate of zero
percent.
8.2.4 all assets required for the conducting of the business are included in the sale.
8.2.5 that if the Minister rules that VAT is payable, the purchaser shall be liable for such VAT

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October 2018
QUESTION 1

A client requires you to collect a debt which on the face of the documents has prescribed. What
questions will you ask the client to be sure that the claim has prescribed? How do you explain to the
client: the effects of prescription; whether you may proceed, the risk involved, the best practical
approach and applicable legislation. (11)

Break this question down as follows:

a) What questions will you ask the client to be sure that the claim has prescribed?
b) Explain to the client the effects of prescription
c) Explain to the client whether you may proceed based on the facts
d) Explain to the client the risks involved
e) Explain to the client the best practical approach
f) Explain to the client the relevant legislation

Answer

a) I will enquire whether the debtor has acknowledged liability, has been abroad or if the creditor
has been in a position that interrupts a stay of prescription
b) Whilst prescription has occurred the creditor may still take action. If the claim proceeds and a
defendant does not raise a special plea, the presiding office may not raise it. If a special plea is
raised, the creditor (plaintiff) may withdraw, and this therefore is will not be such a costly
exercise.
c) It therefore is well worth proceeding with a letter of demand and summons.
d) The worst-case scenario is that if a special plea is raised, the creditor will withdraw the matter but
the costs will be limited.
e) The best practical approach is to give it a try and take the matter to court. Worst case scenario is
that the defendant raises prescription as a special plea but if they don’t, you may succeed.
f) The Prescription Act. In some cases, the National Credit Act may prevent summons being issued.

QUESTION 2

In a civil trial involving a motor collision the court finds that your client A suffered damage of R90,000
but was 40% negligent. The defendant was 60% negligent and his damage was R100,000. What is the
net effect? You contracted to A that your fee would be 20% of what he recovers. What is your fee?
Show all calculations. (4)

Answer

Calculations:
Client A: R100,000 * 40% = R40,000
Client B: R90,000 * 60% = R54,000

a) The net effect: R54,000 – R40,000 = R14,000 which B must pay A

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b) Your fee: R14,000 * 20% = R2,800

QUESTION 3

This question has been combined.

QUESTION 4 (10)

The Companies Act enables a person to enter into a written agreement on behalf an entity that is still
to be incorporated in terms of the Act. What are the formalities and the effect of such an agreement?
(10)

Answer

• A pre-incorporation is a written contract entered into by a person who is acting on behalf of a

company that does not as yet exist. (1)
• The intention is that once the company is registered the company will be bound by the contract
(1)
• Once the company is registered, the directors may, within 3 (three) months of the date of
registration, completely, partially or conditionally ratify or reject the pre-incorporation
agreement. (2)
• If the directors do not ratify or reject the pre-incorporation contract, after the 3 (three) months
have expired, the company will be deemed to have ratified the agreement. (1)
• All persons who entered into the pre-incorporation agreement shall however be bound both
jointly and severally to the pre-incorporation agreement if: (1)
a) the company is not incorporated (1)
b) if the company once incorporated reject any or all of the agreement (1)
• Unless the company enters into an agreement on the same terms in substitution of the pre-
incorporation agreement. (1)
• Should the company not ratify the pre-incorporation agreement, the aggrieved party is
permitted to recover from the company any benefit the company received in terms of the pre-
incorporation agreement. (1)

QUESTION 5

A private company, a VAT vendor, sells its main business (a restaurant in operation) to a business trust,
also a VAT vendor.
Draft suitable clauses in the contract dealing with:
a) VAT (5)
b) Stock-taking (5)
c) Protection of goodwill and aid to purchaser (restraint) (6)
d) Warranties by seller (6)

77
Answer

a) The VAT CLAUSE has been included herein so wont be repeated.

b) STOCKTAKING
5.1.1 The seller and buyer jointly will undertake a stock take at the close of business on the
day before the effective date. Any unmarketable items will be excluded from the sale unless
agreed to by the parties.
5.1.2 The seller’s invoices and statements in respect of the stock will constitute prime facie
proof of the cost price of the items.
5.1.3 Should the seller not be able to provide proof of the cost price, the supplier should be
contacted and the determination by the supplier shall be binding on the parties.
c) PROTECTION OF GOODWILL AND AID TO BUYER/RESTRAINT OF TRADE
5.2.1. The seller shall not, for a period of 3 (three) years commencing on the effective date,
carry on or be interested in, either directly or indirectly, the business of a restaurant in the
magisterial district of ___________ . The seller acknowledges that the restraint is reasonable
as to duration, subject matter and geographical area.
5.2.2 The seller shall during the period prior to the effective date:
5.2.2.1 Instruct the buyer on the sellers business methods and the running of the business
5.2.2.2 Give the buyer access to every aspect of his business and any records dealing with
the company
5.2.2 The seller will be intitled to any remuneration for assistance provided in term of 5.2.1
d) WARRANTIES BY THE SELLER
4. The seller warrants that:
4.1 he is or by the effective date will be, the sole owner of the assets being sold and entitled
to transfer same to the buyer;
4.2 he has duly complied with the provisions of the Liquor Act that the liquor licence in
respect of the premises is valid and free of endorsement. Further, the seller warrants that he
has not been given notice in terms of the Liquor Act to perform remedial or other work on
the premises.
4.3 he will disclose the unaudited financial records to the buyer which were drawn up
according to generally accepted accounting principles and fairly reflect the assets and
liabilities of the business.
4.4 he has disclosed all information in his possession to the buyer which is relevant to the
business.

(Don’t forget to advise the seller to place an advertisement in two local newspapers and the
Government Gazette in terms of Section 34 of the Insolvency Act).

QUESTION 6 (9)

Premises measuring 200 square metres are being let for a period of five years at a rental of R10 per
square metre escalating at 10% per year. The tenant has an option to renew for a further period of
four years. Rental continues to escalate at 10% per annum. Draft clauses dealing with:
6.1 Payment of rental and escalations during the first period (5)
6.2 The option to renew for a further period of four years (4)

78
Answer

6.1 The rental payable by the tenant/lessee to the Landlord/lessor throughout the period of this
lease:
6.1.1. shall be R6,500.00 (six thousand five hundred rand) per monthly for the first year of this
lease.
6.1.2 shall be payable monthly in advance on the last day of each month and shall escalate at
10% (ten) percent annually.
6.1.3 shall be paid by no later than the 7th day of each month.
6.2 The tenant shall be entitled to renew this lease for a further period of 5 (five) years provided
that:
6.2.1 The tenant has complied with the terms and conditions of the lease.
6.2.2 the landlord has been given three (3) months written notice of the tenant’s intention to
renew the lease.
6.2.3 The terms of the lease shall apply during the renewal period.

QUESTION 7

This question has been asked in a previous year, so I have not included it again.

QUESTION 8

List six examples of contempt of court in facie curiae (in the fact of the court) (3)

Answer

• Threatening, disrespecting or insulting a presiding officer

• Interrupting/disturbing court procedures
• Defying court orders
• Failure to appear in court
• Destroying evidence
• Contravening sub judice rule

QUESTION 9

How should a Commissioner of Oaths administer the oath to a deponent making an affidavit before
him/her. (7)

Answer

• Identify deponent
• Do you know and understand the contents of affidavits?
• Do you have any objection to taking the prescribed oath?
• Do you require the oath to be binding on your conscience?
• Deponent may attest to a declaration instead of an oath

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 • Affidavit/declaration signed in the presence of the CoA
• CoA also signs it – and intials every page
• Certificate added at bottom of document confirming that deponent knows and understands
contents and signed in presence of CoA.
• Must contain full names, address (physical) and authority of CoA

QUESTION 10

Are the following credit agreements?

10.1 An acknowledgement of debt? (0.5)
10.2 The charging of interest on:
10.2.1 the late payment of a doctors account (0.5)
10.2.2 the late payment of sectional body corporate levies (0.5)
10.2.3 the late payment of rental in terms of an oral lease agreement of a residential flat
(0.5)
10.2.4 A lease agreement on land (1)
10.3 A suretyship securing the purchase price of goods brought:
10.3.1 for cash (0.5)
10.3.2 in terms of an instalment agreement (0.5)

Answer

10.1 Yes
10.2.1 Yes – an incidental credit agreement as per the National Credit Act
10.2.2No
10.2.3No. The court has decided that a rental in respect of immoveable property is not a credit
agreement.
10.3 No

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March 2019
QUESTION 1

This question has been asked in a previous year, so I have not included it again.

QUESTION 2

This question has been asked in a previous year, so I have not included it again.

QUESTION 3

In a civil trial involving a motor collision the Court finds that your client A suffered damage of R150,000
but was 40% negligent. The defendant B was 60% negligent and his damage was R160,000. What is
the net effect? You contracted with A that your fee would be 20% of what he recovers. What is your
fee? Show all calculations. (4)

Answer

Client A R150,000.00 * 60% = R90,000.00

Client B R160,000.00 * 40% = R64,000.00
Difference = R26,000.00 which B owes to A.
My fee would be R26,000.00 * 20% = R5,200.00

QUESTION 4

This question has been asked in a previous year, so I have not included it again.

QUESTION 5

An old school friend who is getting married asks you what the position is relating to the rights of
spouses married in community of property to deal with the assets of the joint estate.
5.1 Explain the general principles (4)
5.2 Name at least six exceptions (6)

Answer

5.1 GENERAL PRINCIPLES:

- Both spouses have equal powers in management the joint estate (disposing assets,
contracting debt etc.
- Any spouse may perform juristic acts without the consent of the other subject to many
exceptions e.g. alienation of land as per S14 and S15 of the Act.
5.2 EXCEPTIONS
5.2.1 Alienation of land
5.2.2 Alienation, pledge, cession of shares, insurance policies, mortgage bonds, fixed deposits

81
 5.2.3 Alienation of investment assets e.g. painting, jewellery etc.
5.2.4 Withdrawal on monies held in a bank/post office in the name of the other spouse
5.2.5 When entering into a credit agreement
5.2.6 Binding himself/herself as surety

QUESTION 6

Your client is considering purchasing a block of properties in a residential area for the purpose of
demolishing the houses thereon and developing the whole block by constructing offices thereon which
he intends to lease. Before your client can develop the properties as he proposes, he will have to
successfully apply to the local authority for the rezoning thereof.

6.1 Draft the clauses which your client should insist be included in the deeds of sale to protect him
if the application for the rezoning is not successful and/or if he is not successful in purchasing
all the properties in the block. (12)
6.2 The rezoning is completed, the properties are transferred into your client’s name and the
development is completed. Certain of the prospective tenants of the offices are private
companies and your client is worried that they may not pay the rent. Draw the clause in the
lease agreement which will give your client the right to recover outstanding rentals from the
directors of the companies (5)

Answer

6.1 SUSPENSIVE CONDITION

6.1 The sale is subject to the following suspensive condition:
6.1.1 The purchaser will purchasing the properties as listed below within ____ months of the
signature of this deed of sale.
6.1.2 The successful rezoning of all the properties purchased to be rezoned from residential to
business within ___ months of the conclusion of this sale.
6.1.3 If either of these conditions is not fulfilled, the sale shall be null and void and neither
party shall have a claim against the other arising from this agreement.
6.2 By their signatures on this lease the directors bind themselves jointly and severally as sureties
and co-principal debtors and waive the benefits of excussion and division.

QUESTION 7

This question has been asked in a previous year, so I have not included it again.

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August 2019
QUESTION 1

A client consults you about her husband’s proposed actions viz

a) Intention to issue summons for divorce at once
b) Ejecting her and some minor children from the current residence
c) Denying her (a housewife) access to any funds
Advise her on available remedies and the relief she can seek under the Court Rules and the benefits
thereof.

Answer

I would advise her to approach the Maintenance Court in terms of Rule 58 and apply for
• an interim maintenance order
• contribution towards costs
• interim custody
• Access to the children (where necessary)

QUESTION 2

Section 197 of the Labour Relations Act deals with the transfer of a business as a going concern (the
outsourcing of parts of a business) and amends certain common law principles. What, briefly, are the
effects of Section 197? (5)

Answer

2.1 The purchaser is substituted for the seller

2.2 This can be avoided by written mutual agreement
2.3 The employee cannot work for less favourable conditions than they enjoyed with the seller
2.4 Anything done by the seller is said to be done by the purchaser e.g. Disciplinary Hearing
2.5 Dismissal by reason of the transfer is automatically unfair.

QUESTION 3

Your client wishes to obtain an interdict based on what she read in newspapers. Explain briefly what
requirements must be met before courts will grant an interdict. (4)

Answer

• A prime facie right

• Irreparable harm
• Convenience must favour the applicant
• There must be no alternative remedy

83
QUESTION 4

Your client is hesitant to institute actions because the intended defendants are difficult to trace:
a) One’s address is known but it is outside the RSA
b) The others is in the RSA but exact address is unknown
What solutions contained in the Rules can you propose? (4)

Answer

a) Edictal citation (for process served outside RSA)

b) Substituted service (person on RSA but address unknown).

QUESTION 5

Operational requirements are recognised as grounds for dismissal of an employee.

5.1 On what needs of the employer must the requirements be based? (2)
5.2 Such dismissal requires a fair procedure. What are the three requirements for fairness named
in Section 189? (6)
5.3 Name four alternatives to retrenchment that the employer should consider
(4)
Answer

5.1 Operational requirements arising from economic, structural, technological etc. needs are
recognised grounds for dismissal.
5.2 a) An employer must consult with the affected employees timeously
b) The employer should explore alternatives to dismissal
c) The employer must make sure the employee is fully informed of their rights.
5.3 The employer should put in all steps to try and minimise terminations, for example, stop hiring,
stop overtime, offer retirement, offer voluntary retrenchment, reduce working hours etc.

QUESTION 6

This question has been asked in a previous year, so I have not included it again.

QUESTION 7

This question has been asked in a previous year, so I have not included it again.

QUESTION 8

This question has been asked in a previous year, so I have not included it again.

QUESTION 9

Draft an extensive arbitration clause that could be used in any commercial agreement
(20)

84
(Asked in the August 2023 paper, I don’t think it will be asked again).

Answer

9.1 ARBITRATION
Should any dispute arise between the parties with respect to:
9.1.1 the interpretation of this agreement
9.1.2 the carrying into effect of this agreement
9.1.3 the parties rights and obligations
9.1.4 the rectification of this agreement
9.1.5 any question about whether this is a valid contract or of legal force or effect
9.1.6 any other matter emanating from this agreement
The dispute will be settled by means of arbitration.
9.2 Any party to this Agreement may demand that a dispute be settled in terms of arbitration
by giving written notice to the other party.
9.3 This clause does not prevent a party seeking relief on an urgent basis from a competent
court pending the decision of an arbitrator.
9.4 The arbitration shall be held:
9.4.1 In Pretoria at the Advocate’s chambers
9.4.2 With only the parties and their representatives present
9.4.3 In terms of the Arbitration Act
9.5 The arbitrator shall:
9.5.1 Be a practicing counsel or practicing attorney of not less than 7 (seven) years experience
in the event that this is a legal dispute
9.5.2 A practising chartered accountant of not less than 7 (seven) years in the event that this is
a financial matter
9.5.3 An independent person qualified to hear and adjudicate in the event of any other matter.
9.6 Should the parties fail to agree upon an arbitrator withing 14 (fourteen) days after the
demand for arbitration, the arbitrator shall be chosen by the President of the Law Society of
Gauteng.
9.7 The parties agree and undertake that the award may by the arbitrator:
9.7.1 shall be final and binding upon all the parties
9.7.2 will be carried into effect
9.7.3 may be made an order of court.
9.8 The provisions constitute the irrevocable consent of the parties to the arbitration
proceedings and none of the parties are allowed to withdraw therefrom.

QUESTION 10

This question has been asked in a previous year, so I have not included it again.

QUESTION 11

This question has been asked in a previous year, so I have not included it again.

85
QUESTION 12

This question has been asked in a previous year, so I have not included it again.

86
February 2020
QUESTION 1 (10)

1.1 Give reasons why in certain circumstances conducting a business through a legal entity is
preferable to doing so as a sole proprietor or partnership. (5)
1.2 What types of company can be incorporated under the New Companies Act, 71 of 2008? (5)

Answer

1.1 A company exists independently of its directors and shareholders. What this means is that a
company has continuous existence after the death or departure of directors/shareholders.
Sometimes a company offers protection against personal liability. It may have a regulatory
structure and tax flexibility.
1.2 PROFIT COMPANIES:
a) State-owned companies
b) Public companies
c) Private companies
d) Personal liability companies
NON-PROFIT COMPANIES:
Incorporated for public benefit.

QUESTION 2

A borrows from B an amount of R200,000 repayable in 60 equal monthly instalments. Draw a complete
acknowledgement of debt omitting only clauses relating to the rate of interest, early repayment and
domicile.

Answer

2.1 ACKNOWLEDGEMENT OF DEBT

1). I, the undersigned,

JACK SMIT

acknowledge that I owe:

XYZ LOAN SPECIALISTS CC
CK 91/22234/23
(“the creditor”)

R250,000.00 (two hundred and fifty thousand rand)

(“the capital sum”)

in respect of monies lent and advanced to me by the creditor.

2) INSTALLMENTS

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 2.1 I will pay the instalments:
2.1.1 in cash, free of deduction or set-off
2.1.2 on the first day of each month, commencing from the month following that in which this
acknowledgement is signed
2.1.3 to the creditor at the address specified in writing being 11 Smith Street, Johannesburg.
2.1.4 If so required by the creditor, I shall arrange, at my own expense, for payments to be
made via stop order or debit order.

3) ADDITIONAL CHARGES
3.1 The creditor may include in the principal debt or recover all amounts permitted by the
National Credit Act to be included or recovered.

4) DEFAULT
4.1 Should I fail to make payment on due date or should I be sequestrated either provisionally
or finally, or should any of my assets be attached in execution of a court order, the full balance
will become due and payable and the creditor will be entitled to use any remedy available to
proceed immediately for recovery of the balance owed to him.

5) PROOF OF AMOUNT OF INDEBTEDNESS

A certificate signed by the creditor will be proof of the amount owing by me and the due
date(s) for payment unless the contrary is proved.

6) LEGAL COSTS
I will be liable for:
6.1 the legal costs incidental to the negotiation, preparation and signing of this
acknowledgement of debt
6.2 any legal costs including attorney-client costs incurred by the creditor in enforcing any
remedy against me for failure to repay the principal debt and any interest thereon.
6.3 VAT on costs and collection commissions

7) JURISDICATION
7.1 Both parties agree to the Magistrates Court having jurisdiction to hear the matter in the
event of any disputes arising from this acknowledgement of debt.

THUS SIGNED AT ___________ ON THIS THE ______ DAY OF _______ 20__.

QUESTION 3

This question has been asked in a previous year, so I have not included it again.

QUESTION 4

This question has been asked in a previous year, so I have not included it again.

88
QUESTION 5

This question has been asked in a previous year, so I have not included it again.

QUESTION 6

You are consulted by the Seller and the Purchaser of a Café business. They tell you they have agreed
on most of the terms of the sale but they are not certain what provision should be made to determine
the value of the stock in the business on the take-over date or how to provide that the seller will not
conduct a similar business in the area. They ask you to draft clauses for their consideration which are
to be included in the deed of sale covering these two aspects which are fair to both parties. (20)

Answer

This question has been asked in a previous year, so I have not included it again.

QUESTION 7

You negligently allow a claim for damages to prescribe. What is the effect of prescription? What should
you advise your client; and what can you do in regard to your own position?
(9)

Answer

Break this question up as follows:

7.1 EFFECT OF PRESCRIPTION
The claim is extinguished and therefore unenforceable.
Payment may validly be received.

7.2 ADVICE TO CLIENT

I would advise the client to continue with summons even though the claim has prescribed. The
other party may raise prescription in a special plea however if they do not do so, the presiding
officer may not raise it. If it is not raised, my client may be granted default judgement. If it is
raised, I would advise my client to withdraw the special plea. I would also tell my client that
there is a risk that s/he may get a cost order against him/her.

7.3 WHAT CAN BE DONE ITO YOUR OWN POSITION

If I, as the attorney allowed the claim to prescribe, I would:
7.3.1 Advise the client to seek independent legal advice
7.3.2 Not admit liability
7.3.3 Advise the AIIF immediately
7.3.4 Advise my own personal insurers and pay any excess
7.3.5 I don’t need to inform the law society/LPC

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QUESTION 8

This question has been asked in a previous year, so I have not included it again.

QUESTION 9 (5)

The Court finds in a civil trial that in a motor collision your client A suffered damages of R100,000 but
was 50% negligent. The defendant’s damage was R90,000 and negligence also 50%. What is the net
effect and what order for costs will be made?

Answer

Client A = R100,000.00 * 50% = R50,000.00

Client B = R90,000.00 * 50% = R45,000.00
Difference = R5,000.00 which client B will need to pay to client A.
Cost will be awarded to client A (the plaintiff) but probably on a party-to-party basis.

90
November 2020
QUESTION 1

This question has been asked in a previous year, so I have not included it again.

QUESTION 2

This question has been asked in a previous year, so I have not included it again.

QUESTION 3

The Electronic Communications and Transactions Act makes electronic signatures possible in some
cases. Name four common legal documents/transactions/agreements in which an electronic signature
would not suffice. (4)

Answer

The following may not be concluded electronically:

• Agreement for sale of immoveable property
• Leases of land exceeding 20 years
• Wills
• Bills of exchange

QUESTION 4

A wishes to acquire a property which is owned by a private company. He is advised to rather purchase
the shares in the company.
4.1 Draft the warranties that A would reasonably require the seller/s of the shares to give purchaser
4.2 Draft a clause providing for the delivery by the seller to A of the appropriate documents (which
should be described)
Assume that Section 4 and 112 of the Act do not apply.

Answer

4.1 WARRANTIES
4.1.1. The seller warrants and represents that:
4.1.2 he is the beneficial owner of the shares which are fully paid
4.1.3 he is able to deliver to the purchaser all good title in and to the shares
4.1.4 neither the members of the company nor its directors have passed, or agree to pass, any
resolution for the increase of the capital of the company or for the issue of any other shares
and that no such resolution will be passed prior to the transfer of the shares.
4.1.5 any rights of pre-emption will be waived
4.1.6 the books and records of the company accurately reflect its financial affairs.

91
 4.1.7 the company is not involved in any income tax appeals, arbitration or criminal
proceedings, labour disputes or other proceedings for the collection of debts from debtors in
the ordinary course of business.
4.1.8 the seller is not aware of any matter in respect of the shares of the company or the
property which would have any bearing on the acquisition.
4.2 DELIVERY OF DOCUMENTS
4.2.1 The seller shall, on effective date of this agreement, deliver the following documents to
the purchaser:
4.2.1.1 Their share certificates
4.2.1.2 Share transfer forms
4.2.1.3 A written cession ceding the claims to the purchaser
4.2.1.4 A resolution by the board of directors approving the transaction
4.2.1.5 The written resignation of directors, public officers and other officers of the company
whose resignations are required by the purchaser

QUESTION 5 (22)

Chapter 6 and Regulation 6 of the Companies Act deal with a relatively new concept Business Rescue.
Explain briefly the following aspects of this process:
5.1 The purpose and objectives of BR (8)
5.2 How BR proceedings can be initiated (2)
5.3 Who can object to voluntary BR (4)
5.4 On what grounds? (3)
5.5 BR places a moratorium on most legal proceedings. In which circumstances may proceedings
commence or proceed? (5)
(Do not deal with BR practitioners in your answer)

Answer

5.1 PURPOSE/OBJECTIVE OF BUSINESS RESCUE

OBJECTIVE:
Develop and implement a plan to rescue the company by restructuring its affairs, business,
property, debt and other liabilities.
To maximise the continuity of the business.
To ensure solvency.
If the continuance of the business is not possible – to ensure the creditors and shareholders
the best results from the liquidation
PURPOSE
Facilitate the rehabilitation of a financially distressed company. A financially distressed
company is one which is unable to pay its debts and where it is likely the company would
become insolvent.
5.2 Business rescue is initiated:
5.2.1 Voluntarily (resolution of board of directors)
5.2.2 By court order
5.3 Affected persons may object to BR. Affected persons are:
a) Shareholders

92
 b) Creditors
c) Registered trade union
5.4 The affected persons may object to BR on the following grounds:
a) No reasonable basis for believing the company should be placed in BR
b) No prospect of rescuing the company
c) The company hasn’t satisfied the procedural requirements of S29
5.5 During business rescue, any legal proceedings against the company may be commenced
except:
5.5.1 with written consent of the practitioner
5.5.2 with leave of the court
5.5.3 as a set-off against any claim
5.5.4 criminal proceedings against the company
5.5.5 proceedings concerning any property or rights over which the company exercises its
powers of a trustee.

QUESTION 6

Draft a clause which can be used in commercial agreements to deal with services of process and giving
of notices including electronic means. (Assume that neither Credit nor Consumer Protection Act apply)

Answer

This question has been asked in a previous year, so I have not included it again.

QUESTION 7

Is it permissible for a legal practitioner to:

7.1 Act as such in the collection of a debt due to a person of whom he/she is the curator bonis,
defended/not defended (3)
7.2 Defend a claim against a deceased estate in which s/he is the executor (2)
7.3 Act for both parties to an anc contract (2)
7.4 Sue a colleague. If so, how; if not, why (3)
7.5 Start acting for a client who is unhappy with the services of a colleague in a litigious matter, if so
how, if not why (2)
7.6 Divulge confidential information about a client’s executor, curator, trustee
(3)
7.7 Act for both parties in a divorce matter where the parties have separate assets, income, no
children and occupy leased property if they consent in writing being aware of the potential
conflicts. (5)

Answer

7.1 Yes unless a conflict of interest may appear in which case you would refer the party to another
legal practitioner.
7.2 You may but it’s not desirable.

93
7.3 You may unless conflict arises.
7.4 You may but inform your colleague beforehand. This is done in terms of professional courtesy,
7.5 Don’t start before speaking to your colleague regarding the release of the client’s file, payment
to the previous attorney, unless this delay would cause irreparable harm.
7.6 Yes although in the case of the trustee, divulging information may be detrimental.
7.7 Yes but there should be no dispute between the parties. If a dispute arises, withdraw your
mandate and let the couple each find other attorney’s.

QUESTION 8

You successfully handled an interim application for client in the course of a civil matter in the
Magistrate’s Court. May you now tax a bill in respect of the proceedings? (5)

Answer

In terms of Rule 33 cost orders are not taxed until the matter is concluded unless of course, the court
orders otherwise.
A party may present only one bill up to and including judgement.

QUESTION 9

Complete the following allocatur in the Magistrate’s Court. You are not registered for VAT. Explain your
calculation. (4)
FEES DISBURSEMENTS
R10,000.00 R4,500.00
Less taxed off R4,500.00 R2,000.00

Answer

FEES DISBURSEMENTS
R10,000.00 R4,500.00
Less taxed off R4,500.00 R2,000.00
Sub total R5,500.00 R2,500.00
TOTAL R7,500.00

Thus taxed and allowed in the amount of R7,500.00 (seven thousand five hundred rand).

SIGNED AT ________ ON THIS THE _____ DAY OF _______ 20__.

TAXING MASTER
In terms of the Magistrates Court Rule 33 where more than one-fourth of the bill is taxed off, the
party presenting the bill shall not be allowed any costs of taxation.

NOTE: You calculate this by (Fees – taxed off) + (disbursements – taxed off).

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March 2021

SECTION A

Your client, Mrs A is a widow with three minor children. She has inherited substantial assets from her
parents and late husband including a large trading business and a building containing flats and offices
which are let out to tenants. She is finding these business interests demanding and consults you on
various areas of concern. Answer the questions below:

QUESTION 1

1.1 You are asked to prepare a standard lease that can be used for all tenants, Draft suitable clauses
to be included dealing with the following matters:
(17)
a) The rights of tenants to extend/renew their leases after the initial period (5)
b) The usual restriction on subletting (4)
c) Improvements or alterations to the premises by the tenant to protect the owner. (8)

Answer:

a) RENEWAL/OPTION TO EXTEND
The tenant will be entitled to renew the lease for a further period of 1 (one) year from the
end of the period referred to in paragraph 2 provided that:
i) The lessee gives the lessor written notice that the lessee is exercising this option and
that this notice reaches the lessor no later than 3 (three) months before the termination
of the lease period
ii) The rental as prescribed in the lease agreement is increased by 10% per annum starting
on the date when the extended lease comes into operation.
iii) The remaining terms applicable to this lease will continue to operate during the
extended lease period
iv) The lessee must strictly and faithfully comply with the provisions of the contract.
b) SUBLETTING, CESSION AND ASSIGNMENT
The tenant may not, without the prior written consent of the lessor (which shall not be
unreasonably withheld):
i) sublet the premises or any part thereof;
ii) allow any other party to occupy the premises or any part thereof on any conditions or for
any reason;
iii) assign this lease or cede any of its rights under this lease
iv) transfer a controlling interest in the lessee if it is a juristic person
c) IMPROVEMENTS
i) The tenant may not make any structural alternations or additions to the premises without
the landlord’s prior written consent, which shall not be unreasonably withheld
ii) Any alterations or additions made with the landlord’s consent must be carried out by the
tenant:
- at his own cost;
- should the landlord so require, under the supervision of an architect (approved by the

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 landlord) whose fee the tenant must pay; and
- in accordance with any other reasonable conditions and requirements stipulated by the
landlord.
v) The tenant will not be entitled to remove any alternations or additions which it has
made, and on termination of the lease, they will remain the property of the landlord
without compensation.
vi) The tenant shall, if required by the Landlord in writing within 30 (thirty) days after
the expiration of the termination, remove any alterations or additions and reinstate
the lease premises (or part thereof) at the tenants cost to the same condition prior
to the alteration/addition.
vii) The tenant may install in the premises any fixtures and fittings necessary for the
conduct of its business. Any fixtures and fittings not removed on termination of the
lease will become the property of the landlord without compensation.

QUESTION 2

She has negotiated a sale of the trading business to a new company which has been established for
the purpose by a wealthy local businessman, Mr B. Explain to her briefly how the transaction might
be affected by the following legislation (which should therefore be dealt with in the deed of sale).
2.1 The Labour Relations Act (3)
2.2 The Insolvency Act (3)
2.3 The Value Added Tax Act (3)

Answer:

2.1 Section 197 of the Labour Relations Act deals with a business being transferred as a going
concern. The new employer substitutes the previous (former) employer. All the rights and
obligations between employer and employee continue in force. The employees may not be
employed with less favourable conditions than they would have enjoyed with the previous
employer.
2.2 a) If a person sells a business and fails to act in terms of S34 of the Insolvency Act wherein the
seller is required to place an advertisement in the Government Gazette as well as two issues of
an Afrikaans newspaper and two issues of an English newspaper, within a period of 30 days in
advance of the sale. The transfer of the business is void for a period of 6 months after the
transfer and shall be void against the trustee of the sellers estate if his estate is sequestrated at
any time during this period.
b) Once the advertisements have been placed, any creditor can demand payment of his/her
liability. If this cannot be paid the creditor is entitled to interest at 8 (eight) percent per
annum.
c) If any person having a claim against the trader before the transfer was effected and had
instituted legal proceedings and where the seller knew of these proceedings, the transfer will
be void.
2.3 a) Both parties are registered as vendors under the Value Added Tax Act.
b) The business is sold as a going concern. It is therefore zero-rated for VAT.
c) All the assets for conducting the business are included in the sale.
d) The business is capable of earning money separate from other businesses.

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 e) Should the business not be zero-rated for any reason, the buyer is responsible for VAT.

QUESTION 3

You inform Mrs A that while Mr B may be wealthy, the new company has no assets. She instructs you
to draft a short deed of suretyship to be signed by Mr B who is married in community of property.
Also draft any required consent(s). (10)

Answer:

We, the undersigned,

NAME
(Identity Number)
of (address)

and

NAME
(Identity Number)
of (address)

bind ourselves as sureties to

NAME OF COMPANY
Registration number
(“the creditor”)

On the terms and conditions set out below:

1. SURETYSHIP UNDERTAKING
1.1. We, the sureties, bind ourselves to the creditor jointly and severally as co-sureties for and
co-principal debtors with [name of company] (Pty) Ltd (“the debtor”) for the due and
punctual performance by the debtor of all its past, present and future obligations under
an agreement of sale (the “sale”) dated [insert date] in terms of which the debtor
purchased good from the creditor.
1.2. The failure of either of us to sign this deed will not release or affect in any way the liability
of the other of us who does not sign.
1.3. The sureties acknowledge that they are fully aware of the terms of the debtor’s
obligations and acknowledge that all the obligations assumed by the debtor will be
binding on the sureties. The sureties further acknowledge that the terms of the debtor’s
obligations apply to this suretyship.
1.4. This deed of suretyship will be additional and without prejudice to any other suretyship or
security now or in the future held by any creditor in relation to the indebtedness of the
debtor.

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 1.5. The spouse of each surety that is married or in a civil union in community of property
must consent to this suretyship in writing (“witnessed by 2 (two) witnesses) unless it is
concluded in the ordinary course of the surety’s profession or occupation.
1.6. The surety and co-principle renounce the benefits of the exceptions excussionis and
cedendarium actionum for the due and timeous fulfilment by the debtor and creditor and
for the payment of all amounts owing by the debtor to the creditor in terms thereof.

This done and signed at ___________ on this the ______ day of __________ 20___.
CONSENT
I, the undersigned, Mary Soap, ID No: ___________ being married to the surety in community of
property herewith consent that Joe Soap enters the above suretyship. The consent is given in
terms of Section 15(2) of the Matrimonial Property Act.
This done and signed at ___________ on this the ______ day of __________ 20___.

QUESTION 4

Mrs A, and her late husband signed surety for a bank overdraft and she enquires from you the
meaning of the following exceptions which they were required to renounce.
4.1 Beneficium excussionis (benefits of excussion) (2)
4.2 Beneficium divisionis (benefits of division) (2)
4.3 Beneficium cedendarum actionem (benefit of cession of action) (2)
4.4 Exceptio beneficium de bonis vei pluribus reis debendi (2)
Explain these exceptions

Answer:

4.1 If this exception was not inserted it would mean that the surety could insist that the creditor
sue the principal debtor first before coming after the surety. By inserting this exception it
means that the creditor is able to sue the surety (or the principal debtor) first.
4.2 If this exception was not inserted it would mean that the creditor would only be able to sue
the surety for his/her portion of the debt. By inserting this exception it means that the creditor
can go after one surety for the whole amount because s/he is being sued jointly and severally.
4.3 If this exception was not inserted it would mean that the surety paying the debt may refuse to
pay unless the creditor cedes to him all actions which the latter may have against the principle
debtor/other sureties.
4.4 This is where there are two debtors (duo). If this exception was not inserted it would mean
that the creditor would only be able to sue the debtor for his/her portion of the debt. By
inserting this exception it means that the creditor can go after one debtor for the whole
amount because s/he is being sued jointly and severally.

QUESTION 5

Mrs A has been advised by her accountant to create a trust for the benefit of her minor children.
Explain to her the following aspects:
5.1 How is a trust established/created? (2)
5.2 Which parties must be identified as being involved in the trust? (2)
5.3 Where and how is the trust formally registered? Specify the required documents (2)

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Answer

5.1 A trust created by the founder while s/he is still alive. The founder executes the trust deed
before a notary public.
5.2 The parties are: the donor/founder, the trustee and the beneficiaries in respect of income and
capital.
5.3 A trust is registered with the Master of the High Court in the area where the donor/founder
resides. The following documents are necessary:
a) 2 copies of the trust deed
b) A letter of consent from the auditor
c) Certified copies of trustees ID Document
d) Name of trust bank account
e) Name and address of person maintaining records
f) Mandate dispensing with authority
g) The prescribed fee
h) Occupation of the trustee
i) Experience of trustee
j) Security – if required or exemption by the Master

QUESTION 6

Due to her inexperience Mrs A has allowed some claims to become prescribed. Explain to her the
effect of prescription of a claim as regards her right and possible courses of action. (6)

Answer

A claim may be extinguished as per the Prescription Act. Although the claim cannot be enforced, it
remains a natural obligation. The claim can be litigated by means of a special plea. If the debtor pays
on receipt of a demand/summons, the amount may be accepted. If a special plea is not raised the
presiding officer may not raise it mero motu. Practical approach – sue and withdraw if special plea is
raised.

SECTION B
You are an experienced attorney practising in a large country town with a distinct and regional court.
You are regularly consulted by young colleagues practising on their own or with the local Legal Aid
Clinic on ethical and professional issues. Set out advice you would give on the problems mentioned
below.

QUESTION 1

Colleague W wishes to know exactly how to perform his duties when a person deposes to an affidavit
before him in his capacity as Commissioner of Oaths. (9)

Answer

a) Role as Commissioner of Oaths:

• Assist the community

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 • Administer an oath/affirmation
• Certify documents
A Commissioner of Oaths may not charge for commissioning.
An attorney automatically becomes a Commissioner of Oaths.
b) Limitations as Commissioner of Oaths
May not administer oath/certify documents in matters where an attorney has an interest
c) Exceptions to these limitations:
- Deeds office transactions
- Certified documents submitted to the Minister of Justice
- Where the Commissioner of Oaths is not an attorney and commissions in the course of their
employment/course of duty
d) Administering the Oath/Affirmation
- Identify deponent
- Do you know and understand the contents of this affidavit/declaration?
- Do you object to taking the prescribe oath
- Do you consider oath binding on your conscience?
- Oath – swears by God, affirmation – truly affirms
e) Signing of documents
Must be done in the presence of the Commissioner of Oaths
Certificate at bottom – document signed and attested to before CoA
Commissioner must state their full name, name of business, business address and designation

QUESTION 2

Indicate in which forum, tribunal or office one should seek relief in the following instances:
2.1 The return of goods worth R14,000.00 (1)
2.2 Authorising acceptance as valid of a Will which does not comply with formalities of the Wills
Act
2.3 Damages arising from a motor vehicle collision where the injured parties (driver and
passenger) were both acting in the scope of their employment. (2)
2.4 Interim maintenance, contribution to costs, interim custody in a pending divorce matter (2)
2.5 Liquidation of a Close Corporation (1)
2.6 Deregistration of a Close Corporation (1)
2.7 An Administration order for a person unable to pay his/her debts (1)
2.8 A claim for damages of R14,000 (1)
2.9 An order that a provision affecting R250,000 is unconstitutional (2)
2.10 A claim for reinstatement after unfair dismissal (2)
2.11 An unfair calculation of pension benefits by a pension fund (1)
2.12 The interrogation of an insolvent who hides assets (2)
2.13 Amendment or enforcement of a High Court maintenance order (2)
2.14 An excessive fee charged by an attorney in a criminal trial (2)
2.15 Trust money apparently stolen by an attorney (2)
2.16 Loss due to professional negligence of a colleague (2)
2.17 Deregistration of a dormant company (2)
2.18 Appeal against an order by a traditional leader (2)
2.19 A damages claim for R9,000 (1)
2.20 Devolution of family property in terms of customary law (1)

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Answer

2.1 Small claims court

2.2 High Court
2.3 Compensation Commission and RAF
2.4 HC (Rule 43) or Regional Court (Rule 58)
2.5 Magistrates Court
2.6 CIPC
2.7 Magistrates Court
2.8 Small claims court
2.9 High Court
2.10 CCMA
2.11 The Pension Fund Adjudicator
2.12 The Master of the HC who may appoint a Magistrate
2.13 Maintenance Court/Family Court
2.14 Statutory law society
2.15 Attorneys Fidelity Fund and statutory law society
2.16 Sue the attorney in the appropriate court. The attorney may approach his own insurers or
the Attorneys Indemnity Insurance Fund (“AIIF”).
2.17 CIPC
2.18 Magistrates Court
2.19 Small claims court
2.20 The Master of the High Court

QUESTION 3

Where and how does one register a private for-profit company? (5)

Answer:

Break this into two sections namely:

Where:
Documents must be lodged at CIPC
How:
In terms of the Companies Act
By one (or more) persons
Complete and sign Notice of Incorporation (COR 14)
Complete Memorandum of Incorporation (COR 15)

QUESTION 4

Why could it be beneficial to conduct business as a juristic person rather than as sole proprietor or
partnership? (4)

Answer
• Continuity (carries on after death of individual)
• Avoids personal liability

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 • Possible tax benefit
• Sound regulatory and governance

QUESTION 5

How to enforce the rights of a person whose attorney has negligently allowed a damages claim to
prescribe? (6)

Answer

• Terminate the mandate

• Instruct new attorney
• Inform LPC
• Wait for attorneys from LP Insurance Indemnity Fund to offer settlement
• If delay, issue summons against attorney for damages
• Consider any offer of settlement from LPIIF

QUESTION 6

Attorney X has taken offices right next to the Magistrates Court in which he mainly practices. He is
well supported by walk-in clients in the preparation and filing of pleadings and the preparation and
notarisation of documents and contracts. He finds that copying is lucrative as he has a good heavy-
duty photocopier and would welcome much more copying. Would it be permissible to put up a
shingle reading:
“Attorney X specialist in Magistrate’s Court claims, fastest in notarisation, best and cheapest in copier
services”
Discuss briefly.

Answer

• Lawyers may advertise their services

• Lawyers may advertise to obtain clients
• Lawyers may not tout however (transgress the rules)
• Advertising practices and business must adhere to LPC rules and LP Act
• Lawyers can’t conduct another business under the name and style of an attorney firm –
contravention of legislation

QUESTION 7

In which of the following ways may one assist a crucial but unsophisticated and indigent witness you
intend to call in a culpable homicide trial:
7.1 Provide her with money for fare to ensure attendance (0.5)
7.2 Interview her before trial so that she will be more at ease when she testifies (0.5)
7.3 Prepare an affidavit of her testimony, which she will then verify before court (0.5)
7.4 Give her examples of the questions you might ask during the trial (0.5)

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Answer
7.1 Yes
7.2 Yes
7.3 Yes
7.4 Yes

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October 2021
SECTION A

You are the chairperson of the local Attorneys Association in a large town. Colleagues and candidates
regularly consult you regarding professional and practice matters. How will you advise them in the
following situations?

QUESTION 1

A candidate preparing for admission asks you for crisp definitions of the following:
1.1 Fit and proper to be an attorney (2)
1.2 A conflict of interest (2)
1.3 Legal professional privilege (2)
1.4 The circumstances requiring an attorney to decline a mandate (3)
1.5 Overreaching as opposed to overcharging (1)
1.6 The documents subject to an attorney’s lien/hypothec for fees (1)
1.7 The purpose for which the Attorneys Fidelity Fund was established (2)

Answer

1.1 Fit and proper involves:

Long answer:
a) Capacity for hard work
b) A sense of quality/fairness
c) Respect for legal order
d) Dignity
e) Integrity
f) Objectivity
Short answer
Honesty, integrity and reliability.
1.2 A situation where a persons own personal interests could compromise his or her judgement,
decisions or actions.
1.3 Legal professional privilege is the right an attorney’s client enjoys knowing that his/her
communication with the legal practitioner is kept in confidence.
1.4 An attorney may refuse a mandate where:
a) there is a conflict of interest
b) where there is any form of illegality
c) based on the attorneys competence to handle the matter
d) Where client and attorney cant agree on fees
e) Where the attorney doesn’t have time to handle the matter.
1.5 Overreaching is much more than overcharging. Overreaching is taking advantage of another
person’s ignorance. It is about unreasonably high fees.
1.6 Documents drafted by the attorney on behalf of the client. This is not all documents contained
in the client’s file – only those sent on client’s behalf.
1.7 To reimburse clients who may suffer pecuniary loss due to theft of funds/property entrusted to
an attorney in the course of his/her practice.

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QUESTION 2

Colleague A had a client who seems to have a good and substantial claim for damages arising from a
motor collision but cannot afford litigation. What kind of arrangement can you recommend, what are
the requirements and what maximum fee can A charge? (6)

Answer

1) What kind of arrangement can you recommend?

A contingency fee agreement.
2) What are the requirements?
This is governed by the Contingency Fee Act.
3) What maximum fee can A charge?
An attorney may charge either double his/her normal fee or 25% of the clients award whichever
amount is the lessor.

QUESTION 3

A follows your advice and negotiates for the maximum fee. His client’s damage was set by the court
at R500,000 but the defendant’s damage is R600,000. His client was judged to be 20% negligent.
What is the maximum fee A can charge? Show the calculations taking into account apportionment of
damages. (6)

Answer

A’s damage R500,000.00 * 80% = R400,000.00

Defendants damage R600,000.00 * 20% = R120,000.00
Difference R280,000.00
Attorney may charge double his normal fee (unknown) or 25% of award
R280,000.00 *25% = R70,000.00

QUESTION 4

Colleague B’s client informs him that one of his staff Mr Pick Pocket has been charged with
shoplifting. He is aware that B’s firm does not usually involve itself in criminal matters but wonders if
he would be prepared to help as a special favour to him.

4.1 Can B accept the mandate as a favour to him? (4)

4.2 Mr Pick Pocket admits unequivocally his guilt to B during a consultation but refuses to plead
guilty at Court and insists on pleading not guilty when the matter appears in court. Could B continue
to represent him at his trial if he pleads guilty to theft and if so, how should B conduct each part of
the trial until judgement? (7)

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Answer

4.1 Yes B can accept the mandate. If B feels he can (experience/expertise/time) handle the matter.
B will charge a fee for his professional service as this isn’t an offer to handle the matter pro
bono.
4.2 Everyone has a constitutional right to plead not guilty and a right to a fair trial. The accused is
under no obligation to assist the State. The legal practitioner has a duty not to mislead the
court. However, the legal practitioner may still represent the client after all, it is the presiding
officer who has the duty to determine guilt or innocence. The legal practitioner however may
not mislead the court so therefore will need to conduct the trial in a specific manner. The
accused could also not enter a plea explanation (constitutional right to silence). The legal
practitioner when cross examining state witnesses may not put false statements to them
however the LP can test the credibility of the witness. Once the State has closed its case the LP
can apply for a S174 discharge. If this is refused the accused may close his case without leading
evidence. The LP argues that the State failed to prove guilt beyond a reasonable doubt.

QUESTION 5

5.1 Colleague C enquires for what purpose the Legal Practitioner’s Fidelity Fund was established.
(2)
5.2 It appears that the bank which holds Attorney C’s trust monies due to the Trust Creditors in
terms of Section 86(2) is liquidated. What is the client’s rights of recourse against:
a) the Bank (2)
b) the LPFF (Legal Practice Fidelity Fund) (2)
c) Attorney C (2)
5.3 Does attorney C have any rights against the LPFF? (1)

Answer

5.1 Established to reimburse members of the public who suffer financial loss due to theft by an
attorney, employee, candidate etc. of money/property entrusted to the attorney.
5.2 a) The bank – the creditor has no claim against the bank as its not the bank’s customers
b) The LPFF – the creditor has no claim against the LPFF and this loss isn’t covered by the LPFF
c) The creditor may claim against the attorney who is liable for the shortfall. If the bank goes
insolvent, the attorney will be liable for all monies due to the creditor.
5.3 No.

QUESTION 6

Colleague D enquires from you how he should act having just discovered that he has negligently
allowed a good claim for damages of his client to prescribe. Advise him fully. (6)

Answer

• Inform the client at once.

• Withdraw from your mandate, Advise client to seek advice from another legal practitioner.

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• Do not admit liability
• Report full facts to LPFF and private insurance
• Consider settlement of amount not too high. Is there contributory negligence?
• Co-operate with LPFF and private insurance/attorneys for insurers
• If there is a complaint to LPC respond although no need to report it to LPC yourself.

SECTION B

You are consulted by a local businessman Mr X regarding various matters and in particular the sale of
a residence to Mr Y who will require a mortgage loan from a bank. The following situations arise:

QUESTION 1

1.1. The sale is conditional upon the purchaser obtaining a bond for 80% of the purchase price.
Using any additional facts which you consider necessary, draw the clauses which you, acting on
behalf of the seller Mr X, would include in the agreement which:
1.1.1. In the one instance will make the operation of the agreement dependant on the
bond being obtained (include a heading) (5)
1.1.2. In the other instance will terminate the agreement upon the bond being refused
(include a heading) (5)
1.2. You are advised that the purchaser approached the seller directly after seeing that the house
was vacant. The purchaser warrants that he approached the seller directly without being
aware of estate agents.
1.2.1. Draft the clause in the agreement dealing with the agent’s commission (5)
1.3. The parties furthermore agree that the Purchaser has the option of cancelling the agreement
written 5 (five) days of signature of the deed of sale by the purchaser.
1.3.1. Would the purchaser be entitled to cancel the agreement? Motivate your answer.
(2)
1.3.2. Draft the clause, including the heading, that allows for the Purchaser to cancel as per
above. (8)
1.4. Assuming that the purchaser’s bond has been approved but the purchaser despite his
promises to pay the deposit has failed to do so. Draft the letter to be forwarded to the
purchaser alleging the breach and placing him on terms (5)

Answer

1.1.1 SUSPENSIVE CONDITION

This agreement is conditional based on the purchased obtaining a bond of 80% (eighty
percent) of the purchase price from a financial institution within 30 days from the date hereof.
If the bond is not obtained this agreement shall be null and void and neither party shall have
any claim against the other arising here from.
1.1.2 RESOLUTIVE CONDITION
Should the purchaser be advised that his application for a bond of 80% (eighty percent) of the
purchase price has been unsuccessful, or should the purchaser be unsuccessful in obtaining
said bond within 21 days of date of signature hereof, each party shall restore the other party
into the same position as he would have been had the agreement never been concluded.

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1.2.1 INDEMNITY OF THE SELLER BY THE PURCHASER
1.2.1.1 The purchaser confirms that the contract was entered into without the purchaser being
introduced to the seller directly or indirectly by any estate agent and that no agent was the
effective cause for the conclusion of this contract.
1.2.1.2 As a result of the sale by the seller to the purchaser on these grounds, the purchase
price has been reduced by an amount equal to the expected agent’s commission.
1.2.1.3 The purchaser indemnifies the seller against an claim brought by the agent against the
seller in terms of estate agent’s commission arising from the sale. The seller shall call upon the
purchaser to assist in terms of possible litigation against him. The seller may however decide
on the best manner of settlement of any such action. Any costs in terms of this dispute will be
borne by the purchaser.
1.3 1.3.1 Yes. If the amount of the property is R250,000.00 or less and the property is a residential
property, Section 29A would apply and the purchaser would have a cooling-off period wherein
he may cancel the agreement within 5 (five) days.
1.3.2 PURCHASERS RIGHT TO CANCEL
Subject to the provisions of S29A of the Alienation of Land Act, the purchaser is
entitled to cancel this agreement:
a) by written notice
b) delivered to the seller or his agent
c) within 5 (five) days of signature of this agreement provided that such notice:
i) is signed by the purchaser
ii) clearly identifies the agreement
iii) is unconditional

QUESTION 2

Mr X has also verbally granted Mr Grantee a right of pre-emption in respect of Erf 786 Blessed
Township (a different property).
Draft the clauses suitable to give effect to the pre-emption clause. Do not draft standard clauses
which do not relate to the particular transaction. (14)

Answer

1. PROHIBITION ON ALIENATION
1.1 The grantor may not alienate the property for a period of 30 (thirty) days after informing the
grantee of an offer which the grantor is prepared to accept unless:
1.1.1 he has first offered to sell it to the grantee as set out in this Agreement
1.1.2 the grantee has either refused the offer or failed to accept it timeously or in the prescribed
manner as per this agreement
1.1.3 the price payable to the grantor by any other buyer is not less than the market value.
2. OFFER BY GRANTOR
The offer must:
2.1 be open for acceptance for a period of 30 (thirty) days following receipt of the offer by the
grantee.
2.2 stipulate the price which must be the reasonable market value of the property by virtue of

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 two written valuations of estate agents (selected by the grantor) carrying on business in this
Magisterial district. Copies of these valuations must be attached to the offer.
3. ACCEPTANCE BY GRANTEE
a) must be in writing
b) must be unconditional however may be subject to the grantor first obtaining a mortgage loan.

QUESTION 3

During discussions Mr X enquires whether he could sign on behalf of a trust or a company which
does not yet exist.
3.1 Explain at which stage a (proposed) trustee will be able to act on behalf of the trust. (2)
3.2 Draft a clause that would protect the seller if he should agree that the purchaser may sign on
behalf of a private company not yet incorporated. (4)

Answer

3.1 It’s not possible to sign for a trust until it has been established. Once the trust is created, the
trustee must first receive letters of authority/ appointment before acting.
3.2 If, within 3 (three) months from the date of incorporation of the company, the buyer has not
been incorporated, or, having been incorporated has failed to adopt this agreement, then A
will personally be deemed to be the buyer.

QUESTION 4

While you are waiting for deed searches and chatting to Mr X and Mr Y they raise similar issues
4.1 A man is married out of community of property. His wife who is in possession of most of his
assets, is being sequestrated. Advise them of the effects under the Insolvency Act and of
possible remedies. (5)
4.2 Do spouses who are married in community of property remain liable for each other’s liabilities
(incurred during the marriage) after divorce? Discuss briefly (3)

Answer

This question has been asked in a previous year, so I have not included it again.

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March 2022
PART A

QUESTION 1 (84)

Your client Mr A, a local affluent businessman, who is in the grocery business, wants to purchase a
grocery store that is currently a flourishing business in Gauteng from Mr B. The store has been in
operation for ten years and is a registered vendor for VAT purposes.

Mr A has considered various enterprise forms and has been advised by his bookkeeper to set up a
company who will be the purchaser of the grocery store. Mr A and his wife whom he married out of
community of property to, will be the only shareholders and directors in the company to be
incorporated.

1.1 List the companies that can be formed and incorporated in terms of the Companies Act. (5)
1.2 Which company form would you advise? (2)
1.3 Section 76 of the Companies Act addresses the standard of conduct expected from directors
and extends it beyond the common law duty. Name 4 (four) instances in terms of which a
director is compelled to exercise this standard of conduct. Do not give examples. (4)
1.4 Draft the clause in the Sale of Business Agreement between Mr A’s company and the seller of
the grocery store that deals with VAT. Accept that both parties will be VAT vendors and that the
enterprise is sold as a going concern. (5)
1.5 Section 197 of the LRA deals with the transfer of a business as a going concern and amends
certain common law principles. What, briefly, are the effects of S197 of the LRA on the parties
including employees? (5)
1.6 Mr A wants to ensure that he is able to minimise the competition in the market of groceries.
Hence he requests your advice on an appropriate way to address this in the Sale of Business
Agreement that limits the Seller from trading in a similar kind of business in competition to Mr
A. Draft the clause with a heading in order to accommodate Mr A’s concerns. (5)
1.7 Mr A has been informed by a friend of his, that if the sale of the business is not advertised, there
may be legal implications that can affect the validity of the sale. Explain to Mr A:
1.7.1 the requirements of the advertisement (5)
1.7.2 the reasons for the advertisement (4)
1.7.3 what the proviso in 1.7.2 intending to prevent the Seller and Purchaser from doing (2)
1.7.4 the effects of not advertising as far as the purchaser is concerned (2)
1.7.5 the effects of advertising the sale of the business. (3)
1.8 Draft the notice that must be published as per 1.7 above. (3)
1.9 Mr A notices that you have very little furniture in your office and upon enquiry, you inform him
that you have a cash flow problem hence you are unable to buy more furniture currently. Mr A
offers to lend you money for your office furniture. You would like to borrow money from him.
1.9.1 Would you be able to borrow money from him? (1)
1.9.2 Discuss how you would handle the offer. (4)
1.10 Mr A has successfully taken over the business as per your advice above, and a few months
later consults with you. There are some debtors that are not paying for the groceries as
purchased. He brings you a list of monies due and owing to him by various debtors and
instructs you to proceed against them by issuing summons.

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 MATTER 1:
10.1.1 You realise that there is a debt that has prescribed. You explain this to Mr A as you are
of the view that the claim will not succeed but he insists that you proceed and issue summons.
May you issue the summons? How will you explain the situation to your client, Mr A? (3)
MATTER 2:
10.1.2 On one of the other collections, you proceed with an application for summary
judgement. You have drawn up an affidavit in support of your application. No other
Commissioner of Oaths is available expect another partner of your law firm. May s/he
administer the oath? (3)
10.1.3 Would the situation be different if this was a conveyancing matter? (2)
MATTER 3:
10.1.4 You have proceeded to issue summons and the debtors, Mr and Mrs X, who are married
in community of property, offer to pay off their debt of R200,000.00 in equal monthly
payments over a period of 20 months. Mr A accepts the offer and requests you to draft the
complete document in order to protect his interests. Omit the common clauses. (24)

Answer

1.1 This question has been asked in a previous year, so I have not included it again.
1.2 Private company
1.3 The Directors are compelled to act:
a) Honestly and in good faith
b) In the best interests of the company
c) In the benefit of the company
1.4 This question has been asked in a previous year, so I have not included it again. Refer VAT
CLAUSE.
1.5 This question has been asked in a previous year, so I have not included it again. Refer S197.
1.6 This question has been asked in a previous year, so I have not included it again. Refer RESTRAINT
OF TRADE.
1.7 1.7.1 ADVERTISEMENT
The seller must advertise the sale of the business in:
a) The Government Gazette
b) Two issues of a newspapers – one English, one Afrikaans
c) The newspapers must be in the area of where the business was situated
d) This must be done within 30 (thirty) days of the sale of the business
e) The advertisement must be placed within 60 days before the sale.
1.7.2 REPURCUSSIONS OF NOT ADVERTISING
a) The sale will be void for a period of 6 months after it was concluded
b) If the sellers estate is sequestrated within that 6 months, the purchase could land up having
paid but with no business.
1.7.3 This is done to prevent sellers in financial difficulties from disposing of their businesses
whereafter the seller benefits from the proceeds of the sale and the purchase can liquidate
the assets to the detriment of the creditors.
1.7.4 THE EFFECTS OF NOT ADVERTISING
a) The sale will be void
b) The purchaser would have paid yet received nothing
1.7.5 EFFECTS OF ADVERTISING
All liquidated liabilities become due and payable.

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 Creditors can demand immediate payment.
This Creditor payment is subject to any deduction of interest or other amounts.
1.8 NOTICE OF SALE I.T.O S34 OF THE INSOLVENCY ACT (Advertisement)
See page 53.
1.9 This question has been asked in a previous year, so I have not included it again.
1.10 This question has been asked in a previous year, so I have not included it again.

PART B

QUESTION 1 (16)

Mr A and Mrs A are married out of community of property. Mrs A has inherited office furniture from
her late father’s deceased estate. The furniture is currently in her husband’s possession since he is
using at his office. Mr A’s business, a sole proprietorship, has been hard hit by a pandemic and he faces
numerous claims from creditors.

1.1 Mrs A consults you and wants to know what effect it would have on her property if Mr A were
to be sequestrated. Advise her fully of the potential risks and what she would have to do to
protect her interest and to enforce her rights in the event of Mr A being sequestrated. (10)
1.2 It appears that Mr A was unable to meet his payment obligations with his creditors and is later
sequestrated. You, as the attorney of Mrs A, have instructed counsel on her behalf to assist
with proving her claim as per your advice above. You have arranged for a consultation
between your client, Mrs A and counsel but subsequently discover that you are unable to
attend the consultation. May the consultation take place without you? (5)
1.3 May you share your fees with counsel in the circumstances as per 1.2 above? (1)

Answer

1.1 EFFECTS ON MRS A’s ASSETS

The assets of Mrs A would automatically vest with the Master of the High Court and later in
the trustee once appointed (Section 24 of the Insolvency Act).
PROTECTING HER INTERESTS
Mrs A will have to apply (normally on Affidavit) to the Master/Trustee to have her assets
released by proving ownership. The Insolvency Act refers to assets which the solvent spouse
has – both those before and during the marriage. Mrs A should have kept records of her
assets and transactions. Mrs A could make an application to the court to release any of her
assets vested with the Master/Trustee should the Master/Trustee refuse to release the
goods to her.
1.2 An attorney should not arrange a consultation with counsel if he knows he won’t be present.
If circumstances arise where the attorney can’t be present s/he may arrange for one of
his/her partners/candidate attorney in his/her employ or a correspondent to attend in
his/her place. If none of the above can be arranged, the attorney must postpone the
meeting.
1.3 No.

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August 2022

QUESTION 1 (5)

This question has been answered previously and will not be repeated.

QUESTION 2 (8)

Legal ethics combines two separate disciplines, namely law and ethics. Explain the concept. Your
answer should specifically include an understanding of ethics as well as that of legal ethics.

Answer

Ethics – what we should and shouldn’t do. Ethics sets priorities in human behaviour. Ethics is so
much more that what is right and wrong, good or bad, acceptable or unacceptable, its about the best
decision in particular circumstances. Ethics involves working out the principles on which we make
these decisions. Legal ethics looks at the relationship between the law and ethics. It is about the
ethical standards required of a legal practitioner. A practitioner must act in accordance with the code
of conduct as prescribed in the Legal Practice Act and the rules and regulations of the LPC.

QUESTION 3 (12)

Yesterday two employees, Ms Perfect and Ms Smart, were having a brawl after work at the office
gate, as a result of a derogatory remark passed by one of them against the other whilst waiting. Ms
Perfect called Ms Smart an “idiot with fake lips”.

Ms Smart then, in anger, swore at, bit and grabbed the hair of Ms Perfect whilst they were standing
outside the gate to the firm’s premises.

Draft the Notice of Disciplinary Hearing, together with the charges, that your principal has instructed
you to prepare regarding the above incident. (12)

Answer

NOTICE TO ATTEND A DISCIPLINARY HEARING

Date:
To: (employees name)
By hand

DETAILS:
This serves to notify you that you will be required to attend a disciplinary hearing on ______ (date) at
______ (time) in ______ (place).

CHAIRPERSON
The hearing will be chaired by ________ (name), an independent chairperson.

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CHARGES:
The charges against you amount to misconduct in that:
1. On or about _______ (date) you assaulted a fellow employee bringing the company into disrepute
in that the assault took place outside the company premises whilst you will still in company uniform.

POSSIBLE SANCTION:
In terms of the employer’s disciplinary code all of these offences could lead to summary dismissal
depending, inter alia, on the seriousness of the offence.

YOUR RIGHTS:
1. You may be represented by a fellow employee or trade union representative.
2. You are entitled to question any of the employer’s witnesses.
3. You may call your own witnesses.
4. You are entitled to an interpreter. If an interpreter is required kindly give management sufficient
time to make the necessary arrangements.
5. You have the right to be present at the hearing. Should you fail to attend the hearing without
sufficient cause, the hearing will continue in your absence.

SUSPENSION
1. You are hereby placed on immediate suspension on full pay.
2. You are therefore afforded 48 (forty eight) hours to prepare for the hearing.

Yours sincerely,
Employer
I, the undersigned, confirm that I have received the above notification.
Employee Date

QUESTION 4 (30)

Your client Mr Strong informs you that he has negotiated a lease with a tenant Setting Sun (Pty) Ltd,
represented by Mr Cloudy and Mr Sunny, and would like to include a clause wherein the tenant has
the option to purchase the premises during the subsistence of the lease so as to encourage the sale
of the property, during these difficult recessionary times and to help your client to try find a buyer
for the property quicker. He instructs you as follows:
4.1 Draft a clause in the deed of lease wherein there is an option to purchase the property for a
purchase price of R500,000.00, with such option being exercised by the tenant on or within 14
(fourteen) days of having selected this option. (6)
4.2 Mr Strong advises the above lease has been negotiated between the parties themselves. This
means that there was no estate agent involved, although he does have an estate agent who
has advertised other properties in the market for him. Draft the clause that you would likely
insert in order to confirm that there is no other estate agent involved in the transaction in
paragraph 4.1 above. (8)
4.3 Mr Strong requests that Mr Cloudy and Mr Sunny, who are both directors of Setting Sun (Pty)
Ltd will have to sign as sureties for the fulfilment of the obligations as per the lease agreement.
Draft the following clauses that you would insert in the deed of surety.
4.3.1 Draft only the paragraph in the deed of surety making provision for the sureties to stand
as per paragraph 4.3 above. (6)

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 4.3.2 Draft only the waiver clause in the suretyship agreement which specifically includes the
three accepted common law waivers, in three parts (a, b and c) so that it is clear that you
understand the meaning and that the sureties (who are lay persons) understand what they are
waiving (do not simply draft a clause waiving the defences by name and indicating that the
sureties understand them, you must show what they mean. (10)

Answer

4.1 OPTION TO PURCHASE – this has been covered previously in this set of notes.
4.2 ESTATE AGENTS COMMISSION - this has been covered previously in this set of notes.
4,3 4.3.1 SURETY CLAUSE - this has been covered previously in this set of notes.
4.3.2 EXCLUSIONS
The sureties hereby waive the following benefits:
Division – the sureties herein acknowledge that they will each be separately be liable for the
total amount and not liable for their individual shares of the amount in terms of the
suretyship. (3)
Cession – the sureties agree that it is not necessary for the creditor to cede to them their
right to claim from the debtor before proceeding to recover from the sureties. (3)
Excussion - the sureties agree that it is not necessary for the creditor to excuss the debtor
before proceeding against the sureties. (3)
The sureties acknowledge that they know and understand the meaning and full effect and
force of such benefits. (1)

QUESTION 5 (3)

Is a director of a company in normal circumstances personally liable for the debts of the company?
Discuss the general rule and any exceptions thereto. For purposes of answering this question you
may accept that the director has fulfilled all his/her duties in terms of the Act and has not acted
recklessly or fraudulently. (3)

Answer

• A company is a legal persona

• The company exists separate from its directors and shareholders
• The directors are not liable for the obligations of the company
• Personal liability may accrue if:
o It is a personal liability company
o If the director signed surety

QUESTION 6 (14)

Mr Problem who was a former client of ABC Attorneys Inc, terminated his mandate with the said firm.
He has decided to venture in to a partnership with Mr Solution who has indicated that his attorney,
being yourself, will render the necessary services for the partnership. While in law a client/principal
may at any time terminate a mandate given to an attorney/agent the attorneys concerned are subject
to further rules of conduct.

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6.1 Based on the above premise, what must the “new” attorney, in other words, yourself, do in
order to proceed with the matter? You are required to list 3 (three) factors. (3)
6.2 May the former (“old”) attorney retain any documents? Explain. (3)
6.3 Would you, as the “new” attorney speak to the former (“old”) attorney regarding the matter at
a hand? Explain your answer. (2)
6.4 List 6 (six) benefits of a partnership. (6)

Answer

6.1 a) The new attorneys must get a written termination of mandate from the old attorney.
b) The new attorney shouldn’t act until the old attorney has been paid.
c) The new attorneys shouldn’t use any documents until costs are paid/secured.
6.2 Yes its called an attorney’s lien and means the attorney can retain any documents which he
drafted, or exercised his skill/labour on behalf of the client until he has been paid.
6.3 Yes. It is always wise to speak to the old attorney in case the client has failed to disclose
information to the new attorney.
6.4 BENEFITS OF A PARTNERSHIP
a) Cost of partnership is relatively cheap.
b) Simplicity to set up a partnership.
c) Ease of future management/administration
d) Less expense on future administration
e) Easy to make contributions of the partners in kind or in value.

QUESTION 7 (2)

What are the 2 (two) main principles that you as an attorney must comply with when a client seeks
advice in an insolvency matter?

Answer

Honesty and disclosure.

QUESTION 8 (4)

Your client is the only member in a close corporation that operates a liquor store in Sebokeng. He
wants to take over the business of a competitor. The competitor is also a close corporation. Your client
instructs you to draft a deed of sale in terms of which his (your client’s) close corporation buys the
members’ interest in another close corporation. Advise your client.

Answer

• Only individuals and trusts (in certain circumstances) may hold members interests in a CC.
• I therefore cant execute the instruction.
• My advice would be for him to buy and interest in his name or in a trust alternatively to buy
the business from his competitor.

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QUESTION 9 (22)

9.1 Mr Husband and Mrs Wife who are married out of community of property with the accrual,
decide to divorce and reach an agreement to share the same lawyer in order to save money.
They instruct you as their attorney to represent each of them in the divorce matter for the
dissolution of their marriage. You explain to them that there is an obvious conflict of interest
here, but Mr Husband and Mrs Wife insist, and sign informed consent forms waiving the conflict
and their rights to assert any future claims related to the conflict. Mr Husband and Mrs Wife
have no children and have always kept separate bank accounts. Each purchased their own car
from the money in their own bank account and each car’s title is in each person’s own name.
They live in an apartment whose lease is expiring soon, so there is no real property to divide.
Will it be proper for you to represent them both in the divorce? Explain, with specific reference
to addressing the factors that you will consider with regard to their circumstances as well as
your professional ethical principles and due process. (5)
9.2 The parties furthermore require your opinion on the legal status of the following bearing in mind
the matrimonial property regime. Your opinion should include an explanation for whether it
forms part of the accrual or not, as well as possible exceptions, if any.
9.2.1 Mrs Wife is due to inherit from the estate of her deceased father during the next week (3)
9.2.2 Mrs Wife has also signed a settlement with the Road Accident Fund for compensation for
injuries sustained in a motor vehicle accident wherein Mr Husband was the driver. Her claim has
been settled for special and general damages. (5)
9.2.3 A family heirloom that has been passed on for generations and valued at a substantial price
has been donated by Mr Husband to Mrs Wife. (2)
9.2.4 Explain 4 (four) advantages of a marriage out of community of property with the accrual
(4)
9.2.5 Explain 2 (two) disadvantages of a marriage out of community of property with the accrual.
(2)
9.2.6 Mrs Wife has subsequently been diagnosed with cancer, and is due to receive a policy pay-
out for dread disease. Will this form part of the accrual? Simply answer yes or no. (1)

Answer

9.1 a) Will it be proper for you to represent them both in the divorce?
Yes.
b) Explain, with specific reference to addressing the factors that you will consider with regard
to their circumstances as well as your professional ethical principles and due process.
It appears that there are no assets in dispute and therefore the theoretical conflict of interest
appears to have no bearing on their case.
As both parties consented in writing, representing both parties does not violate any legal
principles of law. Further, I, as the attorney, could reasonably believe that I will be able to
provide competent and diligent representation to each party.
9.2 9.2.1 INHERITANCE, LEGACY OR TRUST
Any inheritance, legacy or trust received by a spouse during the marriage from any third party
or any asset acquired by virtue of an inheritance, legacy or trust is excluded unless agreed
otherwise by the parties in their anc agreement or if the donor/testator/testatrix has
stipulated otherwise.
9.2.2 DAMAGES

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Any amount that accrued to a spouse by way of damages other than damages for patrimonial
loss are excluded. The non-patrimonial damage for general damages are excluded. Special
damages are included if they were paid for by the husband and/or communal estate.
9.2.3 DONATION
A donation from one spouse to another is excluded from the calculation of the accrual.
9.2.4 ADVANTAGES OF A MARRIAGE OUT OF COMMUNITY OF PROPERTY WITH ACCRUAL
a) The spouses share in the increase of their assets accumulated during the marriage. The
economically weaker spouse benefits.
b) Assets acquired before the marriage are excluded in the anc. Therefore this regime appeals
to people who have assets before marriage.
c) During the marriage each spouse manages his/her own estate.
d) Spouses are not liable for the other’s debts
9.2.5 DISADVANTAGES OF A MARRIAGE OUT OF COP WITH ACCRUAL
a) The economically stronger spouse has to share the profits that s/he made during the
marriage.
b) One has to draw up an anc for the accrual system to apply.
9.2.6 No

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March 2023

QUESTION 1 (35)

During a consultation with your client Mrs Gold, who is married out of community of property with
the accrual system, you are instructed to lodge a claim for injuries that she sustained as a result of a
motor vehicle accident on Christmas Eve. She was a passenger in the vehicle driven by her sister.

You establish that Mrs Gold has good prospects of success and are willing to lodge the claim. She
indicates that her husband had recently lost his job, and that she is the sole breadwinner of her family.
Hence, she does not have the funds to pay you for your services but is willing to pay you when she gets
paid from the proceeds of the matter.
1.1 What sort of agreement will you conclude with her in order to facilitate the above? Explain what
this agreement entails. (3)
You are successful in the matter. The Court grants apportionment of damages wherein Mrs
Gold’s claim succeeds as follows:

R325,000 for special damages

R250,000 for general damages.

Upon drawing up your bill of costs for Mrs Gold, you note that your fees are R65,000

1.2 What fee will you be entitled to, if you had an agreement in terms of question 1.1 above?
Explain your answer. (3)
1.3 Will the proceeds as received by Mrs Gold, form part of the accrual? Give reasons for your
answer. (4)
1.4 Should the client have terminated the mandate before the finalisation of the matter, would you
have been able to recover your costs? Explain. (2)
1.5 At which forum, tribunal or office would your client seek relief if she was of the view that your
fees were excessive? (1)
1.6 Mention 4 (four) instances under which you as a legal practitioner may refuse to undertake a
mandate. (4)
1.7 Mention 2 (two) instances where you, as a legal practitioner, may be obliged to accept a
mandate. (2)
1.8 If there was no agreement as per question 1.1 above, as concluded between yourself and the
client, and you are of the view that your client may dispute the fees and/or the terms of the
instructions as provided to you, what document would you draw up to avoid this? (1)
1.9 Draft the relevant agreement as per the aforementioned question 1.8. Your answer must include
a detailed explanation of the costs and the right of recourse for default in payment. You are not
required to draft the common terms and the execution clause of the agreement. (12)
1.10 Draft the clause that you would include in the document as drafted in question 1.9 above should
your client be a Close Corporation with regards to liability. (3)

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Answer

1.1 A contingency fee agreement. This is when an attorney takes on a matter on a “no win, no fee”
basis. In a CFA the attorney is able to charge either double his normal fee or 25% of the award
made to the client, whichever is the lessor amount. The contingency fee agreement must be in
writing and must be in accordance with the Contingency Fee Act.
1.2 Either R130,000.00 which is double my normal rate OR 25% of R575,000.00 which is
R143,750.00 whichever is the lessor amount. I would therefore charge my client R130,000.00
1.3 Yes and No. Special damages form part of the accrual. General damages do not form part of an
antenuptial agreement.
1.4 Yes. The attorney will be able to recover their costs till the date of termination. In such a case
the attorney is entitled to costs at a attorney and client basis (full fees and expenses).
1.5 The LPC – fees committee.
1.6 REFUSE TO TAKE A MANDATE:
a) Where you and client have a dispute on fees.
b) Where you don’t have the time.
c) Where you don’t have the expertise
d) Where the clients matter involves illegality.
1.7 OBLIGED TO ACCEPT A MANDATE
a) A previous client has an urgent matter
b) There are no other legal practitioners available.
c) It is a referral from the LPC.
1.8 Fee and Mandate Agreement
1.9 FEE AND MANDATE AGREEMENT

I, _____________________, the undersigned)

FULL NAME:
IDENTITY NUMBER:
RESIDENTIAL ADDRESS:
POSTAL ADDRESS:
E-MAIL ADDRESS:
EMPLOYER NAME:
EMPLOYER ADDRESS:
HOME TEL NO:
WORK TEL NO:
CELL:

Do in my personal capacity in any and all matters, hereby nominate and appoint the
directors/partners and their nominees of the attorney firm

(name of attorney firm) (hereinafter name “the attorney”).

With power of substitution to render professional legal services to me, which shall include the
right to prosecute or defend proceedings in any competent court and on behalf take all the
necessary steps in connection with all my matters or instructions by me, albeit for me
personally or a registered company or a close corporation or a trust, so instructed or to be
instructed.

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 1.

I confirm that:
1.1 The attorney is entitled to charge fees and an attorney own client scale for professional
services rendered.
1.2. I undertake to pay the attorney fees as set out in this agreement.
1.3 The fees on an attorney-client scale are calculated on a time basis and/or per service
rendered.
1.4 The fees in respect of the attorneys fees will be set at an initial hourly tariff of R930.00
(nine hundred and thirty rand) for the first consultation and R1425.00 (one thousand four
hundred and twenty five rand) per hour thereafter.
1.5 The first consultation may be in person or electronically.
1.6 All other fees are calculated as per Annexure “A” hereto.

2.
I confirm that:
2.1 Disbursement such as sheriffs fees, stamps, correspondent fees, advocates, cost
consultants, tracers, couriers or others will reasonably have to be incurred and that I accept
responsibility to pay such disbursements to the attorney on demand.
2.2 The attorney has provided me with an estimate of fees which will be charged in terms of
the Legal Practice Act and I have budgeted accordingly.
2.3 In terms of service providers such as advocates, experts, and assessors shall have sole
discretion to appoint these service providers when he deems necessary.
2.4 Disbursements in respect of travelling costs by motor vehicle will be recovered at the rate
of R7.20 (seven rand twenty cents) per kilometre.
2.5 Further the cost of making photocopies shall be at R3.20 (three rand twenty cents) per
page. Email sent and received will be R5.80 (five rand eighty cents) per email received and
sent.
2.6 Telephone calls will be charged at R80.00 (eighty rand) per 5 minutes.
2.7 All other disbursements will be charged at the actual cost thereof.

3.
3.1 The attorney shall send me a detailed monthly account.
3.2 I agree that should I not be able to pay the account, the attorney is entitled to withhold
any documents and file until such fees and disbursements have been paid and shall be entitled
to charge interest at the current bank interest rate at the time of the default.
4.
4.1 I agree that this is the whole and only agreement between the parties and any
amendments will be reduced to writing and agreed to between the parties.
5.
5.1 I choose my domicilium citandi et executandi meaning the address where I will receive all
notices or service of any documents in terms of this agreement as the address set out in the
preamble on page 1 of this agreement.
6.
6.1 I acknowledge that pursuant to the Financial Intelligence Centre Act (“FICA”) the attorney
is obliged to request from me my South African Identity document or card as well as any
official document proving my residential address.
7.

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 I accept the format in Annexure A hereunder as the forma in which accounting and statements
are to be done from time to time.

ANNEXURE A

PROCEDURE AMOUNT UNIT FEE

THUS DONE AND SIGNED AT _____________ ON THIS THE _______ DAY OF _______ 20__.

_______________
ATTORNEY _________
CLIENT

1.10 CLOSE CORPORATION

The close corporation name

The close corporation registration number
Name of member
How member married

1.10.1 I declare that the aforementioned information is correct. I warrant my authority to bind
the company or close corporation and I accept liability for the payment of the fee agreed upon
for professional services rendered by (attorneys firm).

QUESTION 2 (5)

Legal practitioner, Mr Sunshine, has consistently failed to pay his annual membership fees to the
then Law Society of South Africa and now the LPC for several years. Demand letters have been sent
to him and he has acknowledged receipt of these letters. However, all the efforts of the LSSA and the
LPC have proved futile.

Discuss the consequences of his failure to comply with payments. Your answer should also address
the prospects of legal practitioner Sunshine being able to continue practicing as a legal practitioner.

Answer

• In terms of paragraph 7 of the LPC rules and regulation, the failure to pay could result in legal
proceedings taken against you for the recovery of such fees.

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 • Furthermore, a legal practitioner who does not hold a valid Fidelity Fund certificate may not
accept payment from a client meaning that the legal practitioner may not practice as an
attorney.
• Should the legal practitioner disregard this and continue to see clients and to deposit the
clients monies into their trust account, they could face a strong sanction from the LPC.
• One needs to bear in mind the purpose behind paying the Fidelity Fund. This in essence
protects clients in the event that there is pecuniary loss suffered by the client when trust
monies go missing from the attorney’s trust account. Therefore, if there was a claim and the
attorney had not paid his Fidelity Fund payments, the Fidelity Fund would not be able to
reimburse the client in this eventuality. This could lead to the attorney being sued for the full
amount of the loss.
• Failure to pay your fees could result in you being suspended from practicing as a legal
practitioner and your name removed from the roll of practicing legal practitioners.

QUESTION 3 (18)

The bank refers Will Smith and Adam Sandler to you. They have concluded an agreement for the
purchase and sale of immoveable property described as Erf 888, Neverland. The property is owned
by the Will Smith Family Trust and Will Smith is the trustee authorised to conclude the agreement by
virtue of a resolution signed by the trustees. The purchase price is R1,500,000.00

The sale is conditional upon the purchaser obtaining a mortgage/loan (bond) for R950,000.00
Using any additional facts which you consider necessary, draw the clauses which you will include in
the agreement which:
3.1 In one instance will make the operation of the agreement dependant on the bond being
obtained (5)
3.2 In the other instance will terminate the agreement upon the bond being denied (5)
3.3 Assuming that the purchaser’s bond has been approved but the purchaser despite his promise
to pay the deposit, has failed to do so. Draft the letter to be forwarded to the purchaser
alleging the breach and placing him on terms. (8)

Answer

3.1 SUSPENSIVE CONDITION

This has been shown elsewhere in this document so is not repeated.
3.2 RESOLUTIVE CONDITION
This has been shown elsewhere in this document so is not repeated.
3.3 LETTER OF DEMAND

Dear Purchaser,

1. We record that we act on behalf of Will Smith Family Trust, the seller in the above-
mentioned transaction (“our client”).
2. On 06 February 2023, you and our client entered into an offer to purchase agreement in
that you would purchase the property owned by our client and situated at Erf 888, Neverland
for the amount of R1,500,000.00 (one million five hundred rand).
3. Our instructions are further that in terms of the said agreement the purchase price would

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 be payable in terms of a deposit in the amount of R550,000.00 (five hundred and fifty
thousand) and a bond to be secured for the balance of R900,000.00 (nine hundred thousand
rand).
4. The deposit was due and payable within 7 (seven) days of the signature of the offer to
purchase and was therefore due and payable by 13 February 2023.
5. We confirm that you have secured a bond however to date, you have failed, alternatively
refused, to make payment of the deposit.
6. We are in possession of numerous correspondence where you have undertaken to effect
payment however you have failed to honour your undertakings.
7. As such, we hereby record that you are in breach of the said agreement.
8. Our instructions therefore are to demand as we hereby do, the deposit of R550,000.00 (five
hundred and fifty thousand rand).
9. Should you fail to rectify the breach within 7 (seven) days from the date of this Letter of
Demand, our client reserves the right to cancel the agreement and to institute a claim against
you for any and all damages which our client has and may continue to suffer as a result of your
breach.
10. All our clients rights remain reserved.

QUESTION 4 (4)

This question has been asked in a previous year, so I have not included it again.

QUESTION 5 (4)

Explain the onus of proof in establishing a dismissal in terms of the Labour Relations Act by stating
what the employee and employer must prove respectively.

Answer

Dismissal – the employee must establish the existence of a dismissal. If one is established, the onus
shifts to the employer who must prove that the dismissal was fair. If there was a dismissal based on
a disciplinary hearing for example, the employer will confirm that the employee was dismissed
however the onus now rests on the employer to show that this dismissal was both procedurally and
substantively fair.

Misconduct – the employer bears the onus of proof on a balance of probabilities that the misconduct
occurred.

Constructive dismissal – the onus would lie on the employee to prove the intolerable working
conditions existed and that the employee had exhausted all avenues to resolve the issue.

QUESTION 6 (2)

Generally speaking, it could be said that the nature of the dispute determines the route of the
dispute resolution. Which route would a dismissal dispute of 2 (two) “retrenches” follow? Merely
state the dispute resolution bodies involved in the correct chronology.

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Answer

CCMA – for employees unfairly retrenched.

Labour Court – in instances where more than one employee is retrenched.
A single employee who is retrenched may either refer the matter to the CCMA or the Labour Court.

QUESTION 7 (14)

Draft the following clauses in a Deed of Suretyship:

7.1 The procedure in respect of disputing the claim (10)
7.2 The effect of an amendment or novation in a Deed of Suretyship (4)

Answer

7.1 PROCEDURE FOR A DISPUTED CLAIM

a) When the surety or sureties become aware of a claim they must notify the debtor
immediately.
b) The debtor has 3 (three) days from notice of the claim to give the sureties full details in
writing of any defence of the claim.
c) The sureties may defend the claim at the debtors expense of must give the debtor the
opportunity to defend the claim
d) Should the sureties withdraw their defence by paying the claim in full or defending the
matter on the debtors behalf, the sureties must give written notice to the debtor on their
intention to do so.
e) The debtor may, within 3 (three) days of such notification as in paragraph d) above, take
over the defence.
f) The debtor must furnish the sureties with a bank guarantee for the amount of the claim
together with any costs which the sureties may be liable for,
g) The defence of the debtor/sureties shall include an appeal of review or proceedings.
h) Should the debtor not provide a defence, of if the defence fails in whole or in part, or
should the sureties decide not to defend the claim, the debtor may not contest the
indemnification of the sureties based on the ground that the creditors claim against them was
not enforceable.
i) If the suretyship is amended or novated, the debtor remains bound by this indemnity.

QUESTION 8 (18)

Mr Hogwart agrees to sell his property situated at Kingdom Palace to Mr Potter, for an amount of
R4,500,000.00. They have agreed to the essential terms of the contract. However, Mr Hogwart wants
to ensure that Mr Potter is aware of the condition and the extent of the property, so that he may not
later aver that he was not aware of any defects as such.
8.1 Draft the clause in the sale agreement that indemnifies Mr Hogwart from the above. (10)

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8.2 The parties furthermore agree that the transaction does not fall within the ambit of the
Consumer Protection Act 68 of 2000. Draft the clause that confirms that the CPA is not
applicable to the seller not the purchaser. (8)

Answer

8.1 VOETSTOETS

8.1.1 The property is sold “voetstoots” and subject to the terms and conditions and servitudes
mentioned or referred to in the current and/or prior Title Deeds.
8.1.2 The property stands in the condition as set out on the declaration by the Seller and his
agent that the property is suitable for its intended usage as a residential dwelling.
8.1.3 The purchase is aware that the Title Deed is available for inspection as a public
document.
8.1.4 The seller will not be responsible for any defects, latent or patent if the seller pointed out
the purchase or if the defects were not known to the seller at the time of the sale.
8.1.5 The seller acknowledges that s/he has made the purchaser aware of the quality of the
goods and the purchaser agrees to accept such goods as they stand with all faults that were
pointed out and contained in the declaration.
8.1.6 The purchaser is entitled to receive the property in the same condition as when the
purchaser viewed the property.

8.2 CONSUMER PROTECTION ACT

Insofar as the provisions of this agreement ar inconsistent with the Consumer Protection Act
(“CPA”), the CPA shall apply. The seller warrants that he is an ordinary seller whose ordinary
course of business does not entail the sale of immoveable property. The provisions of the CPA
therefore do not apply to this agreement.

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August 2023
QUESTION 1 (25)

Your firm is on the panel for Share Bank which is a large financial institution. They have appointed your
offices for a number of transactions. They invite your for a consultation in order to clarify certain issues,
among others, fees, timelines, and the reporting of the progress on the various matters pending which
the instructions may be forwarded to your firm.

1.1 The bank provides you with a list of pending bond registrations. The bank manager requests that
you charge a reduced bond registration fee in comparison to what your normal charge will be
because of the volume of work that you will receive. May you do so? Explain your answer. (2)
1.2 A few days later the bank manager contacts you stating that a competing attorney on the panel
of Invest Bank who also wants to obtain the larger portion of Share Bank’s total legal work,
proposed a reduced fee below that of what you have proposed as per 1.1 above. May the
attorney do so? Explain your answer. (3)
1.3 One of the employees of the Share Bank, a Mrs Unhappy, calls you and requests your assistance
in a divorce matter for herself. She informs you that seeing as though you are on the panel of
the bank, it will be much easier instructing your firm to assist her with her divorce.

This is a family law matter (divorce and enforcement of a maintenance order) but it is not
complicated. The issue however is that you have never dealt with such a matter, and you do not
know the law and practice involved.

1.3.1 Can you act for a staff member of Share Bank on a personal matter and accept the
mandate? Explain your answer.
Your answer must include the factors you will consider with regard to the option and exercising
of the mandate. (9)

1.3.2 Mrs Unhappy informs you that she is financially strained, and that her house has been
advertised by an estate agent for sale. Thus, she is not in a position to pay your fees currently.
May you act pro amico for the staff of Share Bank? Explain your answer. (3)

1.3.3 After the divorce is finalised, the estate agent for Mrs Unhappy has secured a buyer and
the instruction for the transfer is forwarded to yourself. However, the estate agent requests that
she be paid her commission as due prior to the transfer of the property. May you pay her
commission as such? Explain your answer. (4)

1.3.4 Mrs Unhappy has also informed you that she has applied for maintenance for her two
minor children born of the marriage. She enquired from yourself as to what factors will a court
take into account in determining the amount of maintenance to be paid by the ex-husband who
does not have actual daily care of the minor children (non custodial parent). (4)

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Answer

1.1 Yes. There is no problem legitimately negotiating attorney’s fees with clients just as long as this
does not amount to touting or overreaching. If there is a huge amount of work a reduction in
fees may be both justified and appropriate.
1.2 No. This is clearly touting in that the new attorney is reducing his fees to attract work. This
conduct is deemed to be improper.
1.3 1.3.1 Yes you can act for a staff member as there is no conflict of interest. I can therefore
accept the mandate. I would consider the following factors:
a) Do I have the necessary expertise/experience to handle a divorce/maintenance matter?
b) Is the matter complex, or not?
c) Do I have the time available to handle the matter?
d) Is there a conflict or interest or a potential conflict of interest?
e) Does the client agree to my fee structure?
f) Can the client afford to pay my fees?
1.3.2 No. Acting pro amico is generally reserved for family/friends and is at the sole discretion
of the attorney. An attorney is however allowed to claim for disbursements. There must be a
genuine friendship/family relationship to avoid a suspicion of touting.

Acting pro amico for a staff member who is unknown to the attorney would not be permitted.
This may be viewed as indirect touting.
1.3.3 No. Estate agent commission is only payable upon registration of the property and as
such I am not allowed to pay it earlier. Paying the estate agent commission earlier could very
well be seen as touting. If the attorney does decide to pay the estate agent commission before
registration/transfer this is done at his own risk and out of his own pocket.
1.3.4 The court will take the following into account:
* the financial means of both parents
* the financial needs of the child
* the parties ages
* the parties earning capacities
* the duration of the marriage
* any other factor which the court deems appropriate to consider.

QUESTION 2 (20)

This question has been asked in a previous year, so I have not included it again. See Arbitration clause.

QUESTION 3 (10)

At which tribunal would your client seek relief with respect to the following:

3.1 An order that a provision affecting R100,000.00 is unconstitutional (1)

3.2 The interrogation of an insolvent who hides assets (1)
3.3 Indicate which of the following are examples of credit facilities as per the NCA
a) Credit cards

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 b) Clothing store facility cards
c) Bank overdraft account facility
3.4 What agreement will not qualify as a credit facility as per the above. (1)
3.5 List 4 (four) agreements that constitute a credit transaction in terms of the NCA (4)

Answer

3.1 High Court

3.2 The Master of the High Court who may appoint a Magistrate
3.3 a) Yes
b) Yes
c) Yes
3.4 b) Clothing store facility cards

QUESTION 4 (9)

X and Y engage your services in obtaining assistance and advice on the formation of a partnership.
They understand the provisions bur are uncertain about the termination of the partnership and what
would happen in the various instances related thereto.

They request you to draft the termination clause of a partnership agreement so that they can read it
at their peril, whereafter they will consult with you and obtain further advice and clarification thereon.

Draft the termination clause of a standard partnership agreement. Your clauses must include how the
termination options may be exercised.

Answer

1. TERMINATION
Should a partner (“the retiring partner”) wish to end the partnership, the other partners
(“remaining partners”) must purchase the retiring partners share pro rate to their respective
percentage interests.

This purchase is subject to the following terms and conditions:

1.1 No member may alienate, sell or otherwise dispose of or transfer any member’s interest.
1.2 The retiring partner must give the other partners 3 (three) months written notice of his
intention to end the partnership.
1.3 The purchase price of the retiring partners interest shall be the amount of the retiring
partners capital account including his share of the profit and loss for the period ending at the
termination of his interest in the partnership.
1.4 The final amount of the retiring partners interest shall be determined by the auditors
whose decision is final and binding on all parties.
1.5 The remaining partners may elect to pay the retiring partner in a single amount on the
date the auditors determine the amount payable or in equal monthly instalments starting on
the first day of the month following the month in which the auditors determined the amount

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 payable. Such repayment shall attract interest at the current bank interest rate as set out in
this agreement. Such interest is paid monthly in arrears.

Should any partner die during the existence of the partnership, the remaining partners must
buy the deceased partners interests on the same terms and conditions as set out in clause 1 of
this agreement.

2. DISSOLUTION OF THE PARTNERSHIP

When the partnership dissolves and subject to the above, or a written contract to the contrary,
the business and assets of the partnership will be liquidated as follows:

2.1 The liquidator is to be a registered accountant and auditor agreed upon by the partners.
2.2 Failing an agreement between partners as stipulated in clause 2.1 above, the partners
agree that (name and capacity of person) shall be nominated as the liquidator.
2.3 The liquidator must:
2.3.1 Demand from each partner an account of the assets of the partnership which are
currently in the possession of the partner together with an account of any profits earned from
the use of these assets since the dissolution of the partnership.
2.3.2 Compile an account of all assets and liabilities of the partnership.
2.3.3 Collect all debts owing to the partnership.
2.3.4 Only realise the assets of the partnership if the realisation of such assets is needed to
discharge any liabilities of the partnership.
2.3.5 Return to the partners any assets belonging to them which were let to the partnership or
made available to the partnership.
2.3.6 In the event that there is a shortfall in discharging the liabilities of the partnership,
demand from the partners in accordance with their share interest, payment for the shortfall.
2.3.7 Settle all outstanding liabilities of the partnership.
2.3.8 Distribute all assets to the partners according to their share interest.
2.3.9 Deduct any costs associated with the liquidation.
2.3.10 Distribute the balance of the partnership assets or proceeds

The partners grant the liquidator authority and power which he may require to give effect to
the provisions of this clause.

Any costs in dissolving the partnership are to be borne by the partners in accordance with
their interest share.

QUESTION 5 (2)

What information obtained by an attorney is not subject to attorney-client privilege? List 4 (four)
instances.

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Answer

1. The name of your client

2. Facts you learnt with your own senses
3. Communications made for the purposes of unlawfulness/illegality
4. Documents not otherwise privileged.

QUESTION 6 (16)

6.1 Your client is ABC Bank which finances the purchase of motor vehicles by means of instalment
sale agreements in terms of the National Credit Act. The manager of your client tells you that
one of its customers who purchased a motor vehicle on an instalment sale for R80,000.00 has
recently been declared insolvent. The balance owing in terms of the instalment sale
agreement was R70,000.00.

Advise your client of its rights in terms of the Insolvency Act with regards to taking possession
of the vehicle and recovering the outstanding balance owing under the instalment sale. What
are the steps which your client must take in the circumstances? (10)

6.2 You are approached by Tim Blank who advises you that six months ago he was offered a job in
Durban with a yacht manufacturing company, on the strength of which he relocated from
Nelspruit to Durban at a cost of R15,000.00 to take up his new job. (The company had
undertaken to pay his reasonable relocation expenses). His employment contract was for three
years.

Five years later the company was liquidated. Tim Blank was not paid his salary of R10,000.00
per month for the two months prior to the liquidation of the company. Advise him of his rights
in the circumstances. (6)

Answer

6.1 The Insolvency Act in Section 84 confers on the bank a hypothec over the motor vehicle. It
needs to be borne in mind that the bank remains the rightful owner of the motor vehicle until
such time as it is paid in full. The trustee of the debtor’s insolvent estate is therefore under an
obligation to return the motor vehicle to the bank. Once the bank has the motor vehicle in its
possession, it must inform the Master and the Trustee in writing that it has possession of the
vehicle and is holding same as security for its claim under the instalment sale. This notice must
be done prior to the second meeting of creditors. The Trustee will have 7 (seven) days to take
over the motor vehicle from the bank at an agreed upon price or at the full amount of the
bank’s claim. Should the trustee not take over the motor vehicle, the bank is entitled to sale
same to realise its security by selling the vehicle on public auction. Once the vehicle has been
sold, the bank must pay the proceeds over to the Trustee and then prove its secured claim.
6.2 As per S98A of the Insolvency Act, provides that employees are treated as preferential
creditors when it comes to insolvency. What this means in essence is that the employees will
be paid out before the ordinary creditor. This will include any salary not exceeding 3 (three)
months due to an employee; any leave accrued and due to the employee (this is restricted to

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 the year in which the insolvency occurred or the previous year only); any other payment due
to the employee which does not exceed 3 (three) months; any severance or retrenchment due
to the employee and any contributions which were payable by the employee.

Therefore, looking at the current facts, Mr Blank would be a preferential creditor. The question
is somewhat ambiguous however in that it speaks of “six months” ago and then five years later
however be that as it may, in terms of the 2 (two) months salary he is owed however he would
have no hope of recuperating his relocation costs as this was done more than 3 (three) months
ago.

QUESTION 7 (11)

This question has been asked in a previous year, so I have not included it again.

QUESTION 8 (7)

Sally works at your client, Bling Hairdressers. She is still within a probationary period of three months
effective from 1 April 2023. Your client is very unhappy with her and wants to give her the “usual” 24-
hour notice. It is evident that she is not performing in terms of her job description, despite training
and counselling. Management had addressed her about her poor performance informally already. The
contract of employment is silent on the notice period should the employer decide to terminate the
agreement.

Bling Hairdressers wants to terminate Sally’s employment. Advise your client whether the employer
may terminate within the probation period, what the basic requirements are to ensure a fair dismissal
in these circumstances and what notice should be given.

Answer

A person on probation may be dismissed for reasons less compelling than someone who has
completed their probationary period. If a person has stated that they have the necessary skills for the
job and it is found during the probation period that these skills are lacking, the employer is under no
obligation to provide further training , guidance, mentoring , coaching etc before dismissing them. It
is clear in this scenario that the employer has gone above and beyond in terms of addressing the poor
performance and offering training and counselling.

The period of probation could be extended but only for a specific purpose and for a time period
proportionate to that purpose. The probationary period can be extended only after the employee (or
trade union representative) have made representations for such extension.

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The employer, in this case is well able to dismiss the employee in terms of the BCEA as long as this
dismissal is both procedurally and substantively fair. During the first six months, a notice period of one
week is required.

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Tips for drafting

Most contracts contain two types of clauses namely,

• General clauses
• Contract specific clauses

O–A–A–C–C–L

Every contract has the following (“essentialia”):

• Offer
• Acceptance
• Awareness
• Consideration
• Capacity
• Legality

General clauses:

• Names of parties
• Breach
• Domicilium

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