Actual exans on Summary Law of insolvency:
Uncompleted contracts and legal proceedings not yet
finalised grade A
CONTRACT COMPLETED BY INSOLVENT BUT NOT BY OTHER PARTY -
ANSWER>>>If insolvent has carried out his side of the contract and only other party needs to
perform, the right to that performance is an asset in the insolvent estate and vests in the trustee.
If right is one to payment the trustee may enforce it in same manner as other debts owed to the
insolvent estate.
If right is to some the other performance trustee may either sell the right along with the other
estate assets or enforce performance and then sell the subject matter of the performance
Right to performance held by the estate lapses if the other party in good faith, and without
knowledge of the sequestration, performs to the insolvent.
Right to compensation under an insurance policy indemnifying the insolvent against liability to
third parties vests in the third part concerned, who may recover what the insolvent owes him
directly from the insureer in terms of s156.
CONTRACT NOT COMPLETED BY INSOLVENT - CONTINUANCE OF CONTRACT -
ANSWER>>>As general rule, sequestration does not suspend or put an end to the contract
CONTRACT NOT COMPLETED BY INSOLVENT - THE TRUSTEE'S ELECTION -
ANSWER>>>Trustee (or provisional trustee) generally has an election to perform in terms of
the contract or not.
Only "power" which the trustee's office gives him is to exclude the right of the other party to
invoke the remedy of specific performance. Trustee is given this power so that he may ac tin the
interest of the concursus creditorium.
Trustee must obtain and abide by the instructions of general body of creditors on the matter, and
that he may not completely adopt a course that is prejudicial to the interest of the concursus.
, In each case it must be decided by a process of inference, the conclusion drawn to be consistent
with all the proven facts.
Once trustee has elected to repudiate or continue with the contract he cannot change his mind.
If he fails to reach a decision within a reasonable tie it is assumed that he does not intend to
perform in terms of the contract.
STATUTORY CONTROLS ON THE EXERCISE OF TRUSTEE'S ELECTION -
ANSWER>>>Act lays down when or how trustee should exercise his election.
CONTRACT TO ACQUIRE IMMOVABLE PROPERTY - ANSWER>>>When insolvent
contracted to acquire immovable property and property has not been transferred to him, trustee
must make his election to uphold or repudiate the contract within six weeks after receiving
written notice form the other party calling upon him to do so.
If trustee fails to make his election and notify the other party accordingly, latter may apply to
court for the cancellation of the contract and the return of possession of the property.Other party
may prove a concurrent claim against the estate for loss suffered as a result of the non fulfillment
of the contract..
If provisional trustee is called upon to adopt or abandon a contract he must ask for directions
from Master but if Master fails to respond, the provisional trustee may use his own discretion.
Trustee takes directions from the creditors.
TANGNEY & OTHERS v ZIVE'S TRUSTEE - ANSWER>>>Insolvent bought hotel business
on installments. The trustee carried on business for more than six months but did not make any
payments i.t.o. the contract or indicate in any another way the intention to affirm the contract. In
response to a letter from the sellers giving notice of intention to cancel the contract, the trustee
simply contended that the sellers were not entitle to cancel and that the notice was invalid. Court
held that as trustee had failed to give due notice of his intention to abide by the contract, sellers
were entitled to assume that he had repudiated it.
Uncompleted contracts and legal proceedings not yet
finalised grade A
CONTRACT COMPLETED BY INSOLVENT BUT NOT BY OTHER PARTY -
ANSWER>>>If insolvent has carried out his side of the contract and only other party needs to
perform, the right to that performance is an asset in the insolvent estate and vests in the trustee.
If right is one to payment the trustee may enforce it in same manner as other debts owed to the
insolvent estate.
If right is to some the other performance trustee may either sell the right along with the other
estate assets or enforce performance and then sell the subject matter of the performance
Right to performance held by the estate lapses if the other party in good faith, and without
knowledge of the sequestration, performs to the insolvent.
Right to compensation under an insurance policy indemnifying the insolvent against liability to
third parties vests in the third part concerned, who may recover what the insolvent owes him
directly from the insureer in terms of s156.
CONTRACT NOT COMPLETED BY INSOLVENT - CONTINUANCE OF CONTRACT -
ANSWER>>>As general rule, sequestration does not suspend or put an end to the contract
CONTRACT NOT COMPLETED BY INSOLVENT - THE TRUSTEE'S ELECTION -
ANSWER>>>Trustee (or provisional trustee) generally has an election to perform in terms of
the contract or not.
Only "power" which the trustee's office gives him is to exclude the right of the other party to
invoke the remedy of specific performance. Trustee is given this power so that he may ac tin the
interest of the concursus creditorium.
Trustee must obtain and abide by the instructions of general body of creditors on the matter, and
that he may not completely adopt a course that is prejudicial to the interest of the concursus.
, In each case it must be decided by a process of inference, the conclusion drawn to be consistent
with all the proven facts.
Once trustee has elected to repudiate or continue with the contract he cannot change his mind.
If he fails to reach a decision within a reasonable tie it is assumed that he does not intend to
perform in terms of the contract.
STATUTORY CONTROLS ON THE EXERCISE OF TRUSTEE'S ELECTION -
ANSWER>>>Act lays down when or how trustee should exercise his election.
CONTRACT TO ACQUIRE IMMOVABLE PROPERTY - ANSWER>>>When insolvent
contracted to acquire immovable property and property has not been transferred to him, trustee
must make his election to uphold or repudiate the contract within six weeks after receiving
written notice form the other party calling upon him to do so.
If trustee fails to make his election and notify the other party accordingly, latter may apply to
court for the cancellation of the contract and the return of possession of the property.Other party
may prove a concurrent claim against the estate for loss suffered as a result of the non fulfillment
of the contract..
If provisional trustee is called upon to adopt or abandon a contract he must ask for directions
from Master but if Master fails to respond, the provisional trustee may use his own discretion.
Trustee takes directions from the creditors.
TANGNEY & OTHERS v ZIVE'S TRUSTEE - ANSWER>>>Insolvent bought hotel business
on installments. The trustee carried on business for more than six months but did not make any
payments i.t.o. the contract or indicate in any another way the intention to affirm the contract. In
response to a letter from the sellers giving notice of intention to cancel the contract, the trustee
simply contended that the sellers were not entitle to cancel and that the notice was invalid. Court
held that as trustee had failed to give due notice of his intention to abide by the contract, sellers
were entitled to assume that he had repudiated it.
