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Questions and Answers
What is the term for the transfer of rights and duties from one party to another?
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 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 act of fulfilling one's obligations under a contract?
What is the term for the agreement between two parties to end their contractual relationship?
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?
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?
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?
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?
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?
What happens to the old obligation if the novation is void?
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What is the result of a merger of obligations?
What is the result of a merger of obligations?
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What is required for set-off to occur?
What is required for set-off to occur?
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What is the effect of supervening impossibility of performance on a contract?
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?
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?
What is the effect of prevention of performance on a contract?
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What is prescription in the context of contracts?
What is prescription in the context of contracts?
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What is the result of a settlement between parties?
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?
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?
Who is the person who owes an obligation in a personal right?
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What is the result of a valid cession?
What is the result of a valid cession?
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What is required for the validity of a cession?
What is required for the validity of a cession?
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What is the key difference between cession and delegation?
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?
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?
What happens to the old obligation in a delegation?
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What is the role of the third party in a delegation?
What is the role of the third party in a delegation?
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What is the main purpose of prescription?
What is the main purpose of prescription?
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When does prescription start to run in respect of a debt?
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?
What is the prescription period for a debt secured by a mortgage bond?
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What is a bill of exchange?
What is a bill of exchange?
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What type of debt has a prescription period of 15 years?
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?
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.
