QUESTION 3

3.1 Thabo buys a motor vehicle from Mohammed General Motors on hire purchase. In terms of the agreement, Thabo must repay the purchase price and interest in instalments, over a period of 56 months. Thabo obtains a loan from Freedom Bank to finance the transaction. Freedom Bank pays Mohammed General Motors the cash price of the vehicle and Mohammed General Motors transfers their rights in terms of hire purchase agreement to Freedom Bank. Consequently, Thabo must pay the purchase price, and interest, to Freedom Bank. Explain the legal principle that is applicable in this set of facts. (6)

3.2 Explain repudiation as a form of breach of contract. Refer to the definition, the requirements as well as the consequences of repudiation. (10)

3.3 The Blue Baboon is a television character that is extremely popular with young children. Fiona, who owns a toy shop, orders fifty Blue Baboon outfits from Fantasy Clothing at R50 per suit. The parties agree that the suits will be delivered on 15 November. Fiona plans to sell the suits at R120 per suit. At least 100 customers express interest in buying suits for their children for New Year's parties, but Fiona cannot supply the suits to her customers at the agreed date as the suits are only delivered on 15 January. The reason for the late delivery is that Fantasy Clothing took on more orders than they could cope with. By January when Fantasy Clothing could deliver the suits, Edmund the Weasel has replaced the Blue Baboon as television's favourite children's character and the market for Blue Baboon suits has diminished considerably. The majority of Fiona's customers have withdrawn their orders for the Blue Baboon suits.

(a) Explain the type of breach that Fantasy Clothing has committed. (2)

(b) Discuss the remedy available to Fiona. (6)

3.4 Indicate whether the following statement is "valid" or "invalid" and provide a reason for your answer: "A rectification clause provides that a contract may not be varied by an oral agreement. Any alteration in terms of the contract must be made in terms of a written amendment."