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Mercantile Law N5

MERCANTILE LAW N5Contents

Module 1

The Law of Agency

Page 1

Unit 1.1

Definition

2

Unit 1.1.1

Basic concepts

3

Unit 1.2

Characteristics of representation

7

Unit 1.3

Establishment of representation

8

Unit 1.3.1

Contract of mandate

8

Unit 1.3.2

Estoppel

11

Unit 1.3.3

By operation of law

15

Unit 1.3.4

Ratification

16

Unit 1.4

Effects of representation

18

Unit 1.5

Specific types of representatives

18

Unit 1.5.1

Relationship between the principal and agent

20

Unit 1.5.1.1

Duties of agent

21

Unit 1.5.1.2

Duties of principal

23

Unit 1.6

The doctrine of the undisclosed principal

24

Unit 1.7

Liability of the agent

25

Unit 1.8

Termination of the relationship between the agent and principal

27

     

Module 2

Suretyship

Page 35

Unit 2.1

Personal security

35

Unit 2.1.1

Suretyship

37

Unit 2.1.2

Definition of suretyship

37

Unit 2.1.3

Establishment of the contract of suretyship

38

Unit 2.1.4

Liability of the surety

40

Unit 2.1.5

Common law privileges

42

Unit 2.1.6

Rights of surety

47

Unit 2.1.7

Termination of the contract of suretyship

49

Unit 2.2

Real Security

51

Unit 2.2.1

Right of pledge

51

Unit 2.2.1.1

Definition of pledge

51

Unit 2.2.1.2

Formation of pledges

52

Unit 2.2.2

Right of mortgage

56

Unit 2.2.2.1

Definition

56

Unit 2.2.2.2

Formation of mortgages

56

Unit 2.2.2.3

Termination of pledges and mortgages

56

Unit 2.2.3

Liens (right of retention)

62

Unit 2.2.3.1

Definition

63

Unit 2.2.3.2

Establishment of liens

63

Unit 2.2.3.3 Kinds of liens 67

Unit 2.2.4

Possession

68

Unit 2.2.5

Hypothec

70

Unit 2.2.5.1

Forms of legal hypothec

70

Unit 2.3

Cession to secure a debt

74

Unit 2.3.1

Definition

74

Unit 2.3.2

Form of cession

75

     

Module 3

The Law of Insolvency

Page 83

Unit 3.1

Definition

84

Unit 3.2

Acts of insolvency

85

Unit 3.3

Assets which do not form part of an insolvent’s sequestrated estate

90

Unit 3.4

Rights and obligations of the insolvent during sequestration

92

Unit 3.4.1

Sequestration process

93

Unit 3.4.2

Application for surrender of estate

94

Unit 3.4.2.1

Persons who may apply

94

Unit 3.4.2.2

Procedure to obtain a sequestration order

95

Unit 3.4.2.3

Acceptance by court of surrender of estate (requirements)

95

Unit 3.4.3

Application for sequestration of estate

96

Unit 3.4.3.1

Creditors who may apply

96

Unit 3..4.4

Provisional sequestration

96

Unit 3.4.5

Final sequestration

96

Unit 3.4.6

Differences between voluntary surrender and compulsory surrender

97

Unit 3.4.7

Friendly sequestration

97

Unit 3.5

Effects of sequestration

98

Unit 3.6

Contracts prior to sequestration

99

Unit 3.7

Defeasible (voidable) dispositions

106

Unit 3.8

Consequences of insolvency

107

Unit 3.9

Composition

108

Unit 3.9.1

Definition

108

Unit 3.9.2

Effect of composition

110

Unit 3.10

Rehabilitation

113

Unit 3.10.1

Definition

113

Unit 3.10.2

Consequences of a rehabilitation order

114

     

Module 4

Partnership

Page 121

Unit 4.1

Definition

121

Unit 4.2

Characteristics of a partnership

123

Unit 4.3

Rights and obligations of partners

127

Unit 4.3.1

Rights of partners

127

Unit 4.3.2

Obligations of partners

130

Unit 4.4

Agreements between partners and third parties

133

Unit 4.5

Kinds of partnership

136

Unit 4.6

Insolvency of partnerships

140

Unit 4.7

Dissolution of partnerships

140

Unit 4.7.1

Reasons for dissolution

 

Unit 4.8

Consequences of dissolution

143

     

Module 5

Company Law (New Companies Act 2008)

Page 145

Unit 5.1

Establishment

146

Unit 5.1.1

The nature of the company

150

Unit 5.1.2

New classification of companies

158

Unit 5.1.3

Pre-incorporation contracts

160

Unit 5.1.4

Notice of incorporation

161

Unit 5.2

Memorandum of incorporation

164

Unit 5.3

Capacity

164

Unit 5.3.1

Doctrine of constructive notice

166

Unit 5.3.2

Legal personality

167

Unit 5.3.3

Authority

168

Unit 5.3.4

Ultra vires doctrine

168

Unit 5.3.5

The Turquand rule

168

Unit 5.4

Articles of association

169

Unit 5.5

Promotors

170

Unit 5.6

Share capital

173

Unit 5.6.1

Definitions

173

Unit 5.6.2

Types of shares

176

Unit 5.6.2.1

Issue of shares

179

Unit 5.6.2.2

Right pre-emption to new share issue

180

Unit 5.6.2.3

Dividends

181

Unit 5.6.2.4

Debentures

182

Unit 5.6.3

Distributions

184

Unit 5.6.4

Maintenance of share capital

186

Unit 5.7

Shareholders and membership

188

Unit 5.7.1

Obtaining membership

188

Unit 5.7.2

Termination of membership

188

Unit 5.8

Offer of shares and prospectus

190

Unit 5.8.1

Ways in which capital can be obtained by means of shares

190

Unit 5.8.2

Issuing of debentures

192

Unit 5.8.3

Prospectus

193

Unit 5.9

Management

195

Unit 5.9.1

Directors

195

Unit 5.10

Annual financial statements and auditors

201

Unit 5.10.1

Annual financial statements and accounting records

201

Unit 5.10.2

Company auditor

204

Unit 5.11

Company groupings

205

Unit 5.12

Protection of minority interest

206

Unit 5.13

Liquidation

208

Unit 5.14

Judicial management and the introduction of Audit committees

210

     

Module 6

Close Corporations

Page 219

Unit 6.1

Establishment of CC

220

Unit 6.2

Characteristics of the close corporation

222

Unit 6.3

Advantages that existed in the formation of a close corporation

223

Unit 6.4

Legal personality

223

Unit 6.5

Association agreement

224

Unit 6.6

Name of close corporation

227

Unit 6.7

Membership

228

Unit 6.7.1

Fiduciary duties of members

229

Unit 6.7.2

Termination of membership

230

Unit 6.8

Management of a CC

231

Unit 6.8.1

Accounting and disclosure

232

Unit 6.9

Liability of debts

233

Unit 6.10

Conversion to a company

234

Quotes and Orders