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November 09, 2019

Why SME’s need contracts

Just like a person avoids drafting a will (because it’s a concession to mortality), some business owners avoid concluding contracts (with employees, suppliers, freelancers, etc.) because they think this is negative and anticipates problems.

Properly drafted contracts do not create problems -- they solve them. Written agreements are essential for a good working relationships with providers, vendors, partners and clients or customers.

Why do contracts make sense?

1. They provide certainty.
A well-drafted contract clearly sets out each party’s expectations. It helps both parties focus on their business relationship and removes any uncertainty about their respective rights and duties.

2. Contracts outline obligations and remedies.
Parties need to know what their obligations to each other are and what the consequences of failing to perform (breach) may be.  E.g. the contract may state that if one party sues the other and wins, the loser pays all the costs.

3. They provide alternative remedies.

The contract should provide for alternative dispute mechanisms, such as an obligation to first meet to attempt to resolve thorny issues, and that failing, to mediate the dispute or go to arbitration. Usually this avoids lengthy and expensive litigation and may even restore the trust relationship between the disputants.

4. Contracts help you end the business relationship.

The contract sets out when and how either party can terminate the contract (e.g. after a material breach, a specific time period, etc). This creates certainty.

5. Contracts anticipate the unforeseen.

A commonly included clause in business contracts is the “force majeure” or the “act of God” provision. This clause in a contract sets out the parties’ obligations and rights in the event of an unforeseeable event, such as a natural disaster, or any other circumstances beyond their control that makes it unreasonably difficult to perform under the contract.

October 26, 2019

Retirement age – when must I retire?

Eventually, everyone needs to stop working. Some people prefer to retire at an early age while others choose to work for as long as possible. Whatever your preference, you need to know what your rights and options are.


The labour legislation does not deal directly with the issue of retirement age. However, it does say that no one may be unfairly discriminated against because of their age. This means that the employer and employee must agree on a retirement age.

There are three possible situations that you could find yourself in:
         Your employment contract requires you to retire at a certain age.
        You have agreed with your employer on a retirement age or there is a company norm.
         There is no mention of retirement in your contract and there is no agreement.

If you sign an employment contract that stipulates a retirement age, then you can legally be required to retire at that age. The organisation won't be required to give you notice.
If the retirement age is not in the contract but is agreed or if there is an organisational norm, then the employer can give you notice requiring you to retire at that age. The notice period will be the same as the notice period for termination of employment set out in your contract of employment.

When would there be deemed to be an organisational norm? There is a general understanding that the "normal" retirement age is 55, 60 or 65 but this understanding is too vague to be useful in specific instances. Indications of the organisation's norm can be found in:
         the rules of a company's provident or pension fund (but this is not definitive)
         company policy.

If there is no mention of a retirement age in your contract and there is no organisational norm, then you can continue to work until you are unable to do your job properly. Your employer can only terminate your contract in accordance with the labour legislation (that is for misconduct, operational requirements or incompetence) and will have to follow the procedures set out in your contract and labour law. The courts have found that it is unfair discrimination for your employer to terminate your employment services just because of your age.


There is no legal certainty regarding the rights of an employee who works beyond retirement age. It is thus advisable for the employer and employee to clearly define the terms of employment after the retirement age, for example how long the employee will continue to work for and what notice is required to terminate the employment.

October 12, 2019

Noise - know your rights as a neighbour

Shakespeare said in The Tempest (2:2), “Misery acquaints a man with strange bedfellows.”

When we live side by side in high density complexes it’s inevitable that you will encounter neighbours that are unpleasant and make your life miserable by barking dogs, loud music, arguing and shouting, swearing, banging doors or drilling.

South African law distinguishes between 'Disturbing Noise’ - which is "objective and is defined as a scientifically measurable noise level," and 'Noise Nuisance' - which is a subjective measure and is defined as “any noise that disturbs or impairs or may disturb or impair the convenience or peace of any person."

What rules apply?
Disturbing Noise in an urban environment is governed by municipal by-laws. An example of this kind of noise would be loud music that is played to all hours of the night. Most municipalities have by-laws in place that focus on the level of decibels reached rather than the actual time frame in which noise is made.

Noise Nuisance is more subjective and usually happens over a longer period. It's defined as noise that "disturbs or impairs or may disturb or impair the convenience or peace of any person”. This could include any of the following:

·         dogs that bark incessantly;
·         playing a musical instrument or operating a television set loudly;
·         operating machinery or power tools;
·         shouting and talking loudly;
·         operating a vehicle that causes a noise;
·         driving a vehicle on a public road in a manner that causes a noise nuisance;
·         the discharge of fireworks in a residential area causing noise nuisance.

Noise Nuisance is always illegal and is enforceable, regardless of when it takes place.

Dealing with the problem:

The most practical and cost-effective way to deal with a noise nuisance would be to approach your neighbour directly and politely and tell them of the problem and, together, find a solution.

If you cannot sort out the problem, you should consider appointing a mediator to facilitate a resolution to the dispute.  If a neighbourly approach doesn’t work:

·         The first option is to lay a complaint with your local authority by way of a written statement. Law enforcement officials will investigate the problem to see how serious the situation is. If necessary, they can instruct the reduction of the noise and if the offenders don't comply, they can issue a fine, and in extreme cases even confiscate the equipment causing the noise nuisance.

·         If the above fails and the offence persists, your lawyer would ask your neighbour to desist and if that too fails, will approach the court for an interdict to stop the noise nuisance. The court considers these factors when determining if the actions are unlawful: the type of noise, the degree of persistence, where the noise occurs, the times when the noise is made, and all efforts made to resolve the matter. You must satisfy the judge that the noise has negatively affected your quality of life, your health, your comfort and your general well-being.

If an interdict is issued and the neighbour persists with the unlawful actions, the neighbour may be found guilty of contempt of court, in which case the court may impose a fine or alternatively imprisonment in serious cases.

A balancing act:

The legal principal is that "a man is allowed to have free use and enjoyment of his property, provided that in doing so, he does not infringe on the rights of his neighbour”. Our judges have adopted the view that "some discomfort, inconvenience or annoyance from the use of neighbouring property needs be endured".

September 25, 2019

Some RICA provisions found to be unconstitutional

In the recent Pretoria High Court case of AMABHUNGANE CENTRE FOR INVESTIGATIVE JOURNALISM NPC Judge Sutherland had to consider two discrete questions:- 

·         The first is a challenge to the constitutionality of several provisions of the Regulation of Interception of Communications and Provision of Communication Related Information Act 70 of 2002 (RICA) which statute permits the interception of communications of any person by authorised state officials subject to prescribed conditions.

·         The second question is a challenge to the admitted practice of the State in conducting 'bulk interceptions' of telecommunications traffic on the basis that no lawful authority exists to do so. The. National Strategic Intelligence Act 30 of 1994 (NSI) and the Intelligence Services Control Act 40 of 1994 (ISO) are implicated in the analysis of this issue.
The challenge to RICA’s constitutionality arose when one of the journalists of the investigative journalist group, the amaBhungane Centre for Investigative Journalism, discovered that he was being spied on during South Africa’s infamous “Zuma Spy Tapes” saga.
It was argued that bulk interception practices were considered to unreasonably and disproportionately encroach upon constitutionally entrenched privacy rights.

The judge agreed and found that the act was inconsistent with the constitution in that RICA:

  • Did not provide a notification procedure for subjects of interception;
  • Did not ensure sufficient judicial independence for authorising authorities;
  • Failed to provide appropriate safeguards when an order was granted without notice to individuals under surveillance;
  • Lacked appropriate procedures to be followed when state officials examine, copy, share, sort through, use, destroy and/store data obtained from interceptions;
  • Failed to prescribe special procedures for cases when the subject of surveillance was either a practicing lawyer or a journalist.
To remedy these issues, the judgment suspended the invalidity of the act for two years to allow for parliament to bring the legislation in line with the constitution, but in the interim, added a number of new sections to the RICA Act to remedy the above issues. These safeguards provided to lawyers and journalists are of particular importance to South Africa’s democratic framework.

September 21, 2019

Product liability and the strange case of a snail in a ginger beer bottle

In England and the US, there is a legal principle called “tort” that derives from the French for ‘wrong’. This is known as “delict’ in South African Law, which describes the circumstances in which one person can claim compensation from another for harm that has been suffered.

Actions under the Consumer Protection Act 68 of 2008 (the “CPA“)

In a 1932 case that changed the law of product liability in England, the House of Lords in Donoghue v Stevenson [1932] AC 562 heard that Mrs Donoghue drank a bottle of ginger beer in a cafĂ©. A dead snail was in the bottle. She fell ill, and she sued the ginger beer manufacturer, Mr Stevenson. The court held that the manufacturer owed a duty of care to her, which was breached, because it was reasonably foreseeable that failure to ensure the product's safety would lead to harm to consumers and awarded her damages.

In South Africa, product liability is regulated by the CPA.

Section 5 of the CPA provides that the CPA shall apply to every transaction, agreement, advertisement, production, distribution, promotion, sale or supply of goods or services.

Section 61 of the CPA renders producers or importers, distributors or retailers of any goods, liable for harm caused by the supply of unsafe goods, product failure, defective or hazardous goods as well as where such harm is as the result of inadequate instructions or warnings being given to the consumer. This liability arises irrespective of whether the producer, importer, distributor or retailer acted negligently. Subject to certain exceptions set out in the Act, liability is therefore strict. One such exception to this general principal is if, at the time the goods were supplied to another person alleged to be liable or at the time the goods were supplied to the consumer, the goods were safe and fully functional and free from the alleged defect or hazard.

Unless a consumer has been expressly informed and expressly accepted goods that are not of a good quality, the consumer has the right to receive goods that are reasonably suitable for the purposes for which they are generally intended, good quality, good working order, free of defects or hazards, useable and durable for a reasonable period having regard to the normal use and the surrounding circumstances of their supply. Thus, producers, importers, distributors or retailers are prohibited from producing and distributing unsafe goods. The CPA imposes strict liability on producers, importers, distributors or retailers for supplying unsafe goods. Strict liability is also imposed in respect of product failure, defective and hazardous goods.

So, if you get sick because you drink a cooldrink that contains a snail, you can claim damages from any or all the producers, importers, distributors or retailers of the beverage.

Product liability that falls outside the CPA

Transactions concluded for the supply of goods or services to a consumer who is a juristic person are excluded from the ambit and application of the CPA where such a consumer has an asset value or annual turnover exceeding R2 000 000 (Two Million Rands).

When is a supplier liable for loss caused to the user by a defect in the product? The court said in Ciba-Geigy (Pty) Ltd v Lushof Farms (Pty) Ltd:

‘[A] manufacturer who distributes a product commercially, which, in the course of its intended use, and as the result of a defect, causes damage to the consumer thereof, acts wrongfully and thus unlawfully . . .’.

There must be a contractual nexus between the parties. Their contract should lay down the ambit of their reciprocal rights and obligations. This would define, expressly or tacitly, the nature and quality of the performance required from each party. While the contract persists, each party has adequate and satisfactory remedies if the other commits a breach.

Damages for product defects that fall outside the ambit of the CPA would not extend to a third party ‘not in contractual privity’. This is illustrated in the case of AB Ventures v Siemens where AB Ventures concluded a written agreement with Lumwana Mining Company Limited under which AB Ventures undertook to construct to completion the Lumwana Copper Mine in northern Zambia. Several parties were involved in the supply chain. Siemens had to supply four specialized electrical units, that turned out to be defective. AB Ventures unsuceesfully sued Siemes for damages, the court concluding that there was no legal nexus  between AB Ventures and Siemens.  

Basically, in damages claims for product liability the first principle of the law of delict is that loss ordinarily lies where it falls.