COMMERCIAL LAW 621

Case Study

Derrick Obama graduated from Richfields, a private college in Umhlanga, Durban with a Bcom degree. Derrick obtained employment at Dilane properties Ltd, in Pretoria as an assistant Chief Financial Officer. The existing Chief Financial officer has informed the company that he intends emigrating. On the 6^th of January 2020 he, Derrick commenced employment for the very first time. Since Derrick Obama was a new recruit, it was compulsory that he attends the company's recruitment and training conference held at Midrand.

On his way to the training centre Derrick noticed a "For Sale" sign in front of a residential property with contact details of the Estate agent. He contacted the agent and after viewing the property decided to purchase the property.

Derrick Obama approached Led Bank for a home loan to finance his property. The condition for his bond approval was that Derrick Obama obtain a suitable surety since he was employed for only one month. Derrick approached his father Mr Obama to stand as surety and co-principal debtor for his indebtedness to Led Bank. Mr B. Obama is a wealthy businessman and has valuable assets as well as an excellent income. The bank accepted the surety and finalized the loan facility for the immoveable property.

Derrick Obama paid his first installment at the end of February 2020.In March 2020 Dilane properties suffered serious financial impediments due to COVID 19. During the subsequent "LOCKDOWN" the company terminated trading activities, for five months and no salaries were paid to the staff. Derrick Obama had no income and was unable to service his bond with Led Bank. Derrick approached the legal department of Led Bank to make arrangements to repay his debt. Led bank requires a written response from Derrick mitigating his default.

Answer the questions that follow with an intention to build a viable defense for Derrick Obama. A few legal principles applicable to the response by Derrick is indicated below. In the event you wish to raise further legal issues you are entitled to discuss them supported by South African legislation and case law.

Question:

1.1.Discuss the impact of statute on Derrick Obama's failure to pay his installments, or

honour his installment obligations when they were due.(20)