Claire sells a piece of land to Dianne for R500 000. Both parties agree that the price is to be paid by way of a deposit of R100 000 within seven days of signing the contract, and the balance of R400 000 on registration of transfer of the property into Dianne's name. Dianne is required to lodge a bank guarantee for payment of the balance before Claire can be called upon to give transfer. No date for lodgement of the guarantee or for transfer of the property is agreed upon. Dianne pays the deposit within the stipulated time period and informs Claire that it might take up to one month for the lodgement of the guarantee to take place. To Dianne's delight, the lodgement takes place within a week and the balance is ready to be transferred to Claire. Claire, however, delays the transfer, and later admits that she does not wish to go through with the transfer, withdrawing from the contract.

Q.4.1 Identify the type of formalities required by the above transaction and justify your answer. (3)

Q.4.2 Imagine that, while waiting for the bank guarantee to pay out (before the property has been transferred in the Deeds office), the piece of land, together with the house on it, burns down as a result of a bush fire. Dianne indicates that she no longer wants to sale to continue as she will then bear the loss. Advise Dianne whether the passing of risk has occurred or not, even although the property has not yet been transferred. Justify your answer. (4)

Q.4.3 Identify and explain the type of breach that has occurred. In your answer, discuss the test used to establish whether certain behaviour constitutes this type of breach of contract. Substantiate your answer with reference to the facts. (5)

Q.4.4 Imagine that the bank guarantee for the balance of the purchase price is ready to be paid out to Claire. However, every time the conveyancing attorneys attempt to contact Claire for her to sign the transfer documents, she is uncontactable, although when they do get hold of her, she insists that she wishes to go ahead with the sale. Five months pass and the attorneys have still not managed to arrange with Claire to sign the transfer documents so that the bank guarantee can be paid over and the property transferred as Claire always has an excuse about being out of town or too busy, or is not able to be reached. Dianne is growing very tired of this situation and the bank guarantee will not be valid for much longer. She approaches you for advice. Identify the type of breach that would be applicable in that instance and justify your answer.

Q.4.5 What type of clause in the Agreement of Sale would allow either party to resile from the contract with or without notice as soon as there has been breach by the other party? (2)

Q.4.6 Advise Dianne on the relevant common law remedies that would be available to her in case of the type of breach identified in Q.4.3 above. (6)

Q.4.7 Imagine Dianne is owed an outstanding amount of R500 000 by her ex-husband in terms of a divorce settlement. She would like to have the remaining R500 000 owing to her paid directly to her bank as security for the bank guarantee. Dianne would like to know if it is possible to sign a document to give the bank the right to claim the monies owed to her by her ex-husband directly from him.

Q.4.7.1 Advise Dianne on whether this would be legally possible and explain what this process entails at common law. (4)

Q.4.7.2 In order for the process referred to in

Q.4.7.1 to take place in terms of common law, advise whether it is a formality requirement that a written contract be signed by any of the parties. (3)

Q.4.7.3 Identify the parties in the legal process referred to in Q.4.7.1 above by indicating the legal term that would be used to describe each party in this process.