SMRL3701 - Study Unit 10 Uncompleted Contracts And Legal Proceedings | Questions
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CONTRACTS WHICH ARE SUSPENDED OR TERMINATE AUTOMATICALLY ON SEQUESTRATION - 1.
Employment contract
2. Mandate
EMPLOYMENT CONTRACT - The sequestration of an employer's estate suspends the employment
contract between him and his employee with immediate effect (S38(1)).
DURING PERIOD OF SUSPENSION - -the employee is not obliged to render services, and is not entitled to
his salary or wage
- no employment benefit accrues to the employee although he may receive unemployment benefits
from the date of suspension.
TRUSTEE MAY TERMINATE CONTRACT PROVIDED - - he has engaged in consultation aimed at reaching
consensus on appropriate measures to rescue the whole or part of the insolvent employer's business
TRUSTEE IS REQUIRED TO CONSULT WHOMEVER THE EMPLOYER WOULD HAVE BEEN OBLIGED TO
CONSULT I.T.O. A COLLECTIVE AGREEMENT, OR - if there is no agreement requiring consultation
*the workplace forum
* registered trade union representing the employee
* the employee personally or his nominated representative
IF ANY OF THESE PARTIES WISHES TO MAKE A PROPOSAL REGARDING WHAT MEASURES SHOULD BE
TAKEN - That party must
1. submit his proposal in writing to trustee
2. within 21 days of his appointment
, unless the trustee and an employee agree otherwise (s38(7))
APPROPRIATE MEASURES CONSIDERED MUS T INCLUDE - 1. the sale of the whole or any part of the
business
IF NO MEASURE IS ADOPTED WHICH RESULTS IN CONTINUATION OF THE CONTRACT AND TRUSTEE
DOES NOT BRING CONTRACT TO AN END - Contract terminates automatically 45 days after date of
appointment of the trustee
ON TERMINATION OF THE CONTRACT - Employee is to recover any resultant loss he has suffered as well
as severance benefits in accordance with S 41 of the BCEA. Employee's claim for the latter is a preferent
claim.
MANDATE - GOODRICKE & SON v AUTO PROTECTION INSURANCE is was held that a contract of
mandate, ie, an agreement to perform some task or render professional services for another, such as
the contract between an attorney and his client comes to an end on the insolvency of the mandator.
Roman Dutch authority to the effect that an agreement of mandate terminates on the insolvency of the
mandatary.
- a mandate to perform a juristic act of some kind logically should not terminate, since any juristic act
performed by a mandatary is deemed to have been concluded between the mandator and the other
person and the mandatary is not party to the resultant legal relationship.
- If the mandate does not call for any special skill or expertise and, therefore, can be satisfactorily
executed by the trustee, there seems to be no cogent reason for denying the trustee the option of
enforcing the contract.
CONTRACTS WHICH TRUSTEE CANNOT REPUDIATE - 1. Lease of immovable property
2. sale of land on installments
3. sale of goods on installments
4. resale of immovable property not yet acquired
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