Bouwer Inc specialises in providing project and construction management services. The

company's registered office is situated in Pretoria, in the Gauteng Province. Riaan, Charles,

Aubrey and William are the directors of Bouwer Inc. To ensure that the company does not

deviate from its core business of providing project and construction management services, the

following clauses were inserted into the Memorandum of Incorporation:

"Capacity

The company may not participate in any trades or transactions other than for

purposes of the provision of project and construction management services.

The company may not enter any transaction for the purchase or sale of any

immovable property outside the borders of the Gauteng Province.

Bouwer Inc has a substantial amount of cash in its bank account which does not yield much

interest as a result of the low interest rate that Bouwer Inc's bank offers. While on holiday in

Port Elizabeth, in the Eastern Cape Province, William spotted a beach house for sale and

thought it would be a great investment for Bouwer Inc. Without the knowledge of the

shareholders and directors, William immediately arranged an appointment with the owner of

the beach house, Mr Pietersen, and concluded a contract for the purchase and sale of the

beach house at a price of R800 000 on behalf of Bouwer Inc. When William arrives back at

the office and informs the other directors about the transaction they are not impressed. Advise

the board of directors of Bouwer Inc whether the company can escape liability for performance

in terms of the contract on the ground that the transaction falls beyond the capacity of the

company.