Exam_Pack_MRL3701

THE EXAMINATION PAPER OF MAY/JUNE 2014 INSOLVENCY LAW (MERCANTILE LAW 1 MODULE 3701) Duration : 2 Hours 100 Marks QUESTION 1 Fill in the missing words or word: (a) A debtor’s estate is sequestrated, not the debtor himself. (2) (b) The debtor need not have ordinarily resided or carried on business for the entire 12 months preceding the sequestration application: ordinary residence or conduct of business at any time during that period suffices. (2) (c) Free residue’ is defined in s 2 as ‘that portion of the estate which is not subject to any right of preference by reason of any special mortgage, legal hypothec, pledge or right of retention. (2) (d) The insolvency Act does not deprive the debtor of his contractual capacity generally, and, accordingly, he retains a general competency to make binding agreements. However, to protect creditor, the Act imposes certain restrictions on the debtor’s capacity to contract. (2) (e) If an insolvent pursues a vocation without obtaining consent where it is required, he commits a criminal offence. (f) Because of the principle of “huur gaat voor koop”, the trustee cannot, as a rule, repudiate a lease of immovable property concluded by the insolvent as lessor and must realize the property subject to the lease. (2) (g) Where the joint estate of spouses married in community of property is sequestrated, both spouses become insolvents and section 21 of the Act accordingly has no application.(2) (h) In accordance with section 21(2)(a) of the insolvency Act the trustee must release property that was the solvent spouse’s property immediately before her marriage to the insolvent, or before 1 October 1926.(2) (i) If the trustee elects to carry on and complete the contracts, he ‘steps into the shoes’ of the insolvent. He may insist on receiving any performance owed bye the other party, and he is bound to carry out any performance that the contract required of the insolvent.(2) (j) When an employment contract between an employer and employee is suspended in terms of section 38(1) of the insolvency Act, amongst other things, no employment benefit accrues to the employee in terms of the contract