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What is the term for the transfer of rights and duties from one party to another?
What occurs when a party to a contract withdraws from a contract due to reasons other than breach of contract?
What is the term for the act of fulfilling one's obligations under a contract?
What is the term for the agreement between two parties to end their contractual relationship?
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What is the difference between rescission and cancellation?
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What is the term for the agreement between two parties to release one party from their obligations under a contract?
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What is the term for the act of ending a contractual relationship due to breach of contract?
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What is the term for the agreement between two parties to replace an old obligation with a new one?
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What happens to the old obligation if the novation is void?
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What is the result of a merger of obligations?
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What is required for set-off to occur?
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What is the effect of supervening impossibility of performance on a contract?
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What is the difference between supervening impossibility and initial impossibility?
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What is the effect of prevention of performance on a contract?
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What is prescription in the context of contracts?
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What is the result of a settlement between parties?
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What is the term used to describe the transfer of rights from one person to another?
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Who is the person who owes an obligation in a personal right?
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What is the result of a valid cession?
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What is required for the validity of a cession?
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What is the key difference between cession and delegation?
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What is the term used to describe the agreement between the parties in a cession?
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What happens to the old obligation in a delegation?
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What is the role of the third party in a delegation?
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What is the main purpose of prescription?
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When does prescription start to run in respect of a debt?
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What is the prescription period for a debt secured by a mortgage bond?
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What is a bill of exchange?
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What type of debt has a prescription period of 15 years?
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What is the prescription period for any debt, except where statute provides otherwise?
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Study Notes
Transfer and Termination of Personal Rights
- Personal rights can be terminated in various ways and transferred from one person to another.
- Debtor is the person who needs to perform/owes an obligation, whereas Creditor is the person to whom the obligation is owed.
Cession
- Cession is the transfer of rights from one person to another.
- Cedent is the person who transfers the personal right, whereas Cessionary is the person to whom the right is transferred.
- Cedent cedes his/her right/claim to the Cessionary through an agreement of cession/cession agreement.
- Cession does not terminate or create a new obligation – the debtor must perform to another creditor.
Cession Continued
- Parties can agree that cession may be prohibited in terms of the contract.
- The law can also prohibit cession in certain circumstances (statutory pension or maintenance).
- The validity of cession requires consensus and effectiveness; no formalities are needed.
- Debtor's permission is not required for validity, but they should be informed.
- Once cession is effective, only the Cessionary can claim the debt and not the Cedent.
Delegation
- Delegation is when a debtor delegates their duties towards a creditor to a third party.
- All three parties must be in agreement in delegation.
- Old obligation ends, and a new obligation exists because a new party is introduced.
- Example: Bob is instructed to build a pool for Marsha. Bob asks Keith to take over the job. Bob, Marsha, and Keith now agree to this arrangement. There is now a new debtor (from Bob to Keith), and Bob's obligation is extinguished and replaced by Keith's obligation.
Assignment
- Assignment is where a party to a contract transfers their rights and duties to another.
- All three parties must be in agreement in assignment.
- Example: Commonly used in lease agreements.
Performance/Fulfilment of the Contract (Discharge)
- Performance occurs when there is performance of the obligation or fulfillment of the contract.
- Once there is proper performance in terms of the contract by both parties, the contractual relationship ends.
- Unilateral act – no co-operation by the creditor is necessary (usually debtor must refrain from something).
- Bilateral juristic act – where co-operation of the creditor is needed (contract is only discharged when both have performed).
Rescission and Cancellation
- Rescission is the act of withdrawing from a contract due to reasons other than breach of contract.
- Cancellation is the withdrawal from a contract due to breach of contract.
- Both rescission and cancellation result in the termination of the contract.
Agreement
- Parties can agree between themselves to end their contractual relationship.
- Examples of agreement:
- Release: agreement between the debtor and creditor in which the creditor releases the debtor from their obligations.
- Novation: agreement between the debtor and creditor in which the old debt is extinguished and replaced with a new obligation.
- Settlement: agreement between the parties to settle a dispute between them.
- Merger: person becomes both debtor and creditor of the same obligation.
- Set-off: extinguishing of debts owed reciprocally by two parties.
Agreement Continued
- Set-off requires:
- Debts must be of a similar nature.
- Debts must be liquidated (must be certain).
- Debts must be claimable.
- Debts must be between the same persons.
Impossibility of Performance
- Supervening impossibility of performance: performance becomes objectively impossible due to an external factor (e.g. force of nature) after the conclusion of the contract.
- Initial impossibility: performance is impossible at the conclusion of the contract = no contract comes into being.
- Prevention of performance: performance is made impossible due to the fault of one of the parties (breach of contract).
Prescription
- Prescription is a way to gain or lose a right through the passage of time.
- Acquisitive prescription: acquire rights through the passage of time.
- Extinctive prescription: released from obligations through the passage of time – contractual obligations are terminated.
- Prescription starts running as soon as the debt becomes due/claim becomes enforceable.
Prescription Periods
- Prescription periods vary according to the situation:
- 30 years: debt secured by mortgage bond, judgment debt, a debt in respect of any taxation imposed or levied by or under law.
- 15 years: any debt owed to the State and arising from an advance or loan of money, or a sale or lease of land by the State to the debtor.
- 6 years: debt arising from a bill of exchange or other negotiable instrument or from a notarial contract.
- 3 years: any other debt, except where statute provides otherwise (contracts & delicts).
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Description
Learn about the transfer and termination of personal rights, including cession, and understand the difference between debtors and creditors in commercial law.
