WHAT TO LOOK OUT FOR BEFORE BUYING A PROPERTY

You’ve searched far and wide for the perfect home for you and your family, and you’ve finally found it, or so you thought. Buying a home, especially for the first time, is as overwhelming as it is exciting.

You’ve viewed your dream home, but remember, you receive so much information during your viewing, that you could easily become overwhelmed and miss important details. Especially if you have fallen in love with your potential new home. It is important to remember that there are various “red flags” that you need to look out for before purchasing, as missing these “red flags” could have significant financial repercussions. Before signing, make sure to look out for the following:

1.Foundation and structural faults

What do you think is the most important part of a house? The double garage? The interior? How well-lit the rooms are? No. The most important part of the house, and arguably the costliest to repair, is the foundation of the house. Make sure to look out for large cracks in the walls, as this could be a sign of some serious structural problems with the foundation. Make sure to thoroughly investigate the door frames; if door frames don’t appear to be square or if the doors have difficulty closing, it could be a sign of structural problems.

2.Poor drainage/grading

In most cases, water problems in a house are directly related to poor drainage or grading. However, it is often difficult to detect if a house has poor drainage or grading. An obvious sign of the above-mentioned faults is pools of water or a bouncy bathroom floor which could indicate that there is a leaking shower drain. Make sure to also look out for overflowing gutters, water stains and cracks in the foundation.

3.Patches of fresh paint

A coat of fresh paint is an excellent and quick way to spruce up your home, but if there are random patches of fresh paint around the house, it could be cause for concern. Why? Because it is possible that the seller is trying to hide something beneath the coat of paint.

4.Faulty electrical wiring

If you are looking to buy an older home, make sure that the electrical wiring is not faulty, as house fires caused by faulty wiring is not as uncommon as we would hope. This is especially the case in older homes, as these homes don’t always have an ample supply of power and the number of electrical outlets like newer homes have. Also look out for any exposed wires, as this could cause significant harm to either the home or your family.

5.Neighbourhood condition

When looking for your perfect home, always remember that you are not only investing in the property itself, but also in the neighbourhood. Make sure to ask enough questions about the neighbourhood. For example, if you move into a neighbourhood that is deteriorating or crime-ridden, it could have a significant impact on your return on investment.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

WHEN DOES A FOREIGN SYSTEM OF LAW APPLY TO YOUR CONTRACT?

It is a requirement in the South African Law of Contract that, for a contract to come into existence, an offer to contract must be made by one party to the agreement (“the offeror”), which must then be accepted by the other party to the agreement (“the offeree”). It is pivotal to determine when and where such a contract is concluded, as this will give an indication as to which country’s system of law will govern the contract (assuming that all other elements for a valid contract have been satisfied).

The offeree may communicate his decision to accept the offer to contract by posting a letter to the offeror, or by sending the offeror an email. The method of communication utilised by the offeree will affect the place where and moment when the contract comes into existence; and, ultimately, which system of law is applicable to the contract.

The general rule is that a contract comes into being when and where consensus between the parties has been reached. This is typically the place where and moment when the offeror learns that the offeree has accepted the offer. However, there are exceptions to this general rule, which are discussed below.

Postal contracts

The court in Cape Explosive Works v South African Oil and Fat Industries Ltd 1921 CPD 244 explained that, when an offeree posts an acceptance letter to the offeror, the contract comes into being once the letter accepting the offer is posted to the offeror. In other words, the offeree need not follow up and ensure that the offeror has received his acceptance for the contract to be binding and enforceable.

Section 22 and 23 of the Electronic Communications and Transactions Act 25 of 2002 (“ECTA”)

Section 22 of the ECTA provides that “[a]n agreement concluded between parties by means of [electronic communications] is concluded at the time when and place where the acceptance of the offer was received by the offeror”. Further, section 23 reads as follows: “[electronic communications] used in the conclusion […] of an agreement must be regarded as having been sent by the [offeree] when it enters an information system outside the control of the [offeree] or […] when it is capable of being retrieved by the [offeror]”.

Therefore, unlike with a postal contract, the contract only becomes binding and enforceable when the offeree has sent off his electronic communication of acceptance of the offer to contract and the offeror has received or is able to retrieve such communication. In other words, the ECTA holds that a contract will come into existence where an email appears in the offeror’s inbox, but it has not been read; or, where the offeree leaves a message on the offeror’s answering machine, but the offeror has not listened to it yet.

For example, if X, who lives in South Africa, sends an email to Y, who lives in America, informing him that he accepts his offer to contract, the contract will come into existence at the moment that the email has been sent to the offeror and once it is received or capable of being retrieved by the offeror. For that reason, as the email will be received or be capable of being retrieved in America, the system of law applicable in this situation would be American Law (assuming that all other elements for a valid contract have been satisfied).

Agreement by the parties

As South African Contract Law emphasises the freedom of contract, parties to a contract are entitled to agree to terms stipulating when and where a contract comes into existence.

In sum, the system of law applicable to the contract will depend on whether the parties have agreed on a moment when and place where the contract should come into being. If no such agreement is reached, the applicable system will depend on the means chosen by the offeree to communicate his acceptance of the offer to the offeror.

It is, therefore, advised that parties to a contract agree on a moment when and a place where the contract should come into existence in order to avoid confusion as to which system of law will be applicable to the contract.

Reference List:

  • Cape Explosive Works v South African Oil and Fat Industries Ltd 1921 CPD 244.
  • Electronic Communications and Transactions Act 25 of 2002.
  • Van der Merwe et al Contract: General Principles 4 ed.
  • Hutchinson et al The Law of Contract in South Africa 3 ed.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

RETENTION OF COMPANY RECORDS

The Companies Act 71 of 2008 (“Companies Act”) addresses various aspects not adequately dealt with in the old Companies Act 61 of 1973, including the use of:

  • information in electronic form;
  • electronic communications; and
  • technology.

The Companies Act recognises electronic communications as defined in the Electronic Communications and Transactions Act 25 of 2002 (“ECT Act”), to be a “communication by means of data generated, sent, received or stored by electronic means and includes: (a) voice, where the voice is used in an automated transaction; and (b) a stored record.”

The Companies Act provides for electronic compliance. In many ways, it eases the administrative burden by enabling people to use technology and the electronic form of documents and communications.

The Companies Act requires that companies retain certain documents, records or statements. Examples of these include:

  • a copy of its Memorandum of Incorporation, and any amendments or alterations;
  • a record of its directors with certain specified details; and
  • accounting records.

In terms of this section, it is sufficient if any electronic original or reproduction of the document is retained as provided for in section 16 of the ECT Act. In terms of section 16 of the ECT Act, a company will meet the requirement of the Act to retain information if:

  1. the information is accessible “so as to be usable of subsequent reference”;
  2. it is in the format in which it was generated, sent or received, or in a format which can be demonstrated to accurately represent the information generated, sent or received; and
  3. the origin and destination of that data and the date and time it was sent or received can be determined.

Where the Companies Act requires a document to be signed or initialled, the person may sign or initial by using an electronic signature as provided for in the ECT Act. For example, a Memorandum of Incorporation can now be signed electronically as well as resolutions passed by the board of directors and shareholders of a particular company – no more posting resolutions around the country, or printing, signing and scanning them. Once Annual Financial Statements have been approved by the Board, an authorised director may sign the statements with an electronic signature.

In terms of section 63 (2) of the Companies Act, a company can now conduct shareholder meetings by electronic communication, as long as the Memorandum of Incorporation does not prohibit it. The entire meeting can be conducted electronically, alternatively, certain shareholders can participate through electronic means. In case of the latter, all persons must be able to communicate concurrently without an intermediary. Shareholders must also receive notice that electronic participation will be available.

According to section 73(3) and 74(1) of the Companies Act, board meetings can occur by way of electronic means, as long as the Memorandum of Incorporation does not provide otherwise. A decision to be voted on at a board meeting can now also be adopted through written (including “electronic writing”) consent of the majority of directors, provided that all directors have been notified of the matter and the Memorandum of Incorporation does not prohibit it. Therefore, an email vote will suffice.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

KORPORATIEWE BEHEER: BESLOTE KORPORASIES

Die Maatskappywet No 71 van 2008 (“die Maatskappywet”) hou belangrike gevolge vir beslote korporasies in. Daar kan onder andere geen inkorporasie van nuwe beslote korporasies kragtens die Wet op Beslote Korporasies ná die inwerkingtreding van die Maatskappywet (1 Mei 2011) plaasvind nie en geen maatskappy kan ná 1 Mei 2011 in ’n beslote korporasie omskep word nie. Beslote korporasies wat reeds op die datum van inwerkingtreding van die Maatskappywet bestaan het, sal toegelaat word om vir ’n onbepaalde tydperk te bly voortbestaan, maar geen nuwe beslote korporasies mag tot stand gebring word nie.

’n Beslote korporasie het nie aandeelhouers nie, maar wel lede. ’n Beslote korporasie is ’n afsonderlike regspersoon en staan onafhanklik en verwyderd van sy lede. ’n Beslote korporasie kan uit een tot tien lede bestaan. Die beperking op die aantal lede in ’n beslote korporasie beklemtoon die Wetgewer se bedoeling dat beslote korporasies bestem is vir kleiner ondernemings, waar die verhoudings tussen die lede soortgelyk is aan dié van vennote.

Slegs natuurlike persone mag lede van ’n beslote korporasie wees en geen regspersone mag ’n ledebelang in ’n beslote korporasie hou nie. ’n Maatskappy of beslote korporasie kan dus nie ’n lid van ’n beslote korporasie wees nie. ’n Beslote korporasie mag wel ’n lid van ’n maatskappy of vennootskap wees en ’n beslote korporasie kan selfs die beherende aandeelhouer van ’n maatskappy word.

’n Trustee van ’n trust, hetsy ’n inter vivos of testamentêre trust kan in sy hoedanigheid as ’n trustee ’n lid van ’n beslote korporasie wees. Daar bestaan egter sekere beperkings op die toelating van ’n trustee van ’n trust inter vivos om ’n lid te wees, soos die vereiste dat geen regspersoon ’n begunstigde van sodanige trust kan wees nie.

Nuwe lede wat ná die registrasie van ’n beslote korporasie aansluit, moet hul ledebelang óf van ’n bestaande lid verkry, óf deur ’n bydrae, in die vorm van geld of ander bates, aan die korporasie maak. Die Wet maak uitdruklik voorsiening vir die vervreemding van ’n lid se belang in die geval van dood of insolvensie van ’n lid, asook waar daar op ’n ledebelang beslag gelê word en dit dan in eksekusie verkoop word. Elke vervreemding van ’n ledebelang, of deel daarvan, moet bewerkstellig word óf ingevolge die samewerkingsooreenkoms (as daar een is) óf met die instemming van al die ander lede in die vorm van ’n resolusie en die indiening van ’n CK2-dokument by die CIPC (“Companies and Intellectual Property Commision”).

Die Wet op Beslote Korporasies maak veral vir twee wyses van regsverhaal of remedies vir lede onderling teen mekaar voorsiening, naamlik a) die beëindiging van die betrokke lid se lidmaatskap deur ’n hofbevel ingevolge artikel 36; en b) bystand van die hof waar ’n lid of lede skuldig was aan onredelike benadelende optrede ingevolge artikel 49.

Ingevolge die Wet op Beslote Korporasies het lede twee spesifieke pligte teenoor beslote korporasies, naamlik, a) ’n vertrouensplig; en b) ’n sorgsaamheids- en vaardigheidsplig.

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies. (E&OE)