COMMERCIAL LAW

Week 1
Background to Law in South Africa
 What is the law?
• Law = set of rules made by state to order way people in society
must behave.
• Rules that are made by the “state” and enforced by the state
• Law makes it possible for a society to function smoothly.
• Defines your rights and duties (obligations)
• Commercial law = laws that control relationships in
trade and commerce
• Key definitions related to the study of law:
– Legal: related to the law / allowed by the law
• Legal principles: accepted standard of conduct/behaviour that
has support of the law to make it legally binding
– Legally binding: have to obey or can be held responsible in
court
 Types of Rules (Laws vs Morals)

Legal rules:
• Rules that everyone in a society has to obey
• Breaking a law – criminal or civil sanction e.g.,
imprisonment or damages

Moral rules:
• Personal standards of behaviour based on
people’s beliefs
• Immoral conduct – consequences? If any, what
could they be?
 The Role of the State
• The Constitution sets outs and regulates the powers and functions
of the State (government)
• With regards to our Constitutional rights, section 7(2) of the
Constitution states that the State must respect, protect, promote,
and fulfil the human rights in the Bill of Rights (BoR) in chapter
2 of the Constitution.
• Section 8 (1) states that the BoR applies to all law, and binds the
legislature, executive, judiciary and all organs of state.
• State power is divided between three organs or arms:
– Legislature makes legislation
– Executive and administration (including organs of state) enforce the law (put law
into action) through policies
– Judiciary = courts and judges – interpret and apply the law to disputes which
can be resolved by law
• Significance of the concept of separation of powers [trias politica]?
Legal subjects, legal objects and the
nature of rights
• Legal subject: any person to whom the law applies. In law, there are two
types of persons:
1. Natural persons: human beings
2. Juristic persons: entities e.g. the university
Section 8(2) BoR applies to both natural and juristic
Section 8(4)juristic person entitled to rights in the BoR
Both have legal personality. When does this start?
• Legal capacity: arises from one's legal personality and refers to a person's
ability in law to exercise legal rights. E.g minors vs major
• Legal object: an object that has economic value and in which a legal
subject can have legal rights, duties and obligations. E.g.: personality
property, immaterial property, corporeal things and performances.
• Legal rights: from a commercial law perspective, we will often refer to two
types of rights:
1. Personal rights: rights that one person can exercise only against specific
people.
2. Real rights: can be enforced against the whole world. Law recognises right of
ownership and protects it against anyone
 History of South African Law
• History of law is important to understand legal rules and how it
has developed over the years South Africa’s legal system
reflects parts and values of our history.
• For example – the indigenous people of the country had
developed their own law to govern relationships in their society
– known as customary law
• From 1652 onwards, Jan van Riebeeck/Dutch settlers took
over the Cape and Roman-Dutch Law was received as the
official law in the Cape
• Parts of English law which was introduced in the 1800s when
the British settlers came to the Cape
• Roman-Dutch and English law is known as our common law
and forms the basis of modern South African law and has
binding authority whereby courts have adapted them to suit
SA conditions
 Sources of SA law
South Africa has an uncodified legal system, in other words the law is
not entirely written down in a single source/code. South Africa has
different sources of law divided into primary and secondary sources.
Primary sources (can be described as original sources of law which are
legally binding)
1. The Constitution
2. Legislation
3. Common law
4. Customary law
5. Custom (Trade practices)
6. Judicial precedent
7. International law
Secondary sources (subsidiary or subordinate to primary sources and
generally persuasive)
8. International law can also be interpreted as persuasive
9. Foreign law
10. Modern writings (Academic textbooks and journals)
PRIMARY SOURCES OF LAW
 1. Constitution
• Fundamental law that sets out the power of the State.
• Chapter 1 (2):
“This Constitution is the supreme law of the Republic; law or
conduct inconsistent with it is invalid, and the obligations imposed
by it must be fulfilled”
• Previous legal system was based on parliamentary
sovereignty vs current legal system based on
constitutional democracy. What is the difference
between the two?
• Includes Bill of Rights under chapter 2
• Section 8 (2) BoR applies to all law and binds all organs
of state
• How does the Constitution relate to other sources of
law?
 2. Legislation
• Laws embodied in writing are called statutes/legislations
• Most important source of law and is binding
• The Constitution of the Republic of South Africa, 1996 is
a supreme legislation – stands as a separate source of
law on its own
• Parliament is responsible for making and passing laws.
Parliament consists of two Houses called the National
Assembly and National Council of Provinces.
• Provincial and local levels of parliament also have the
power to create legislation
• A law-making body may delegate legislative power
• Legislature must not act ultra vires
• Interpretation of statutes to be dealt with in chapter 3
 3. Common law
• South African common law is a set of laws
derived from other legal systems and that
developed over time (not only restricted to
Roman-Dutch law)
• Primary source of law and is binding
• Not entirely written and may be difficult to
ascertain
– Academic textbooks
– Court decisions
4. Customary law/Trade practices
• Many groups of people follow particular rules that are customary or
traditional in their culture.
• Based upon oral tradition. Develops from the belief systems of a
community and is carried down from generation to generation E.g.
lobola
• Customary law is recognised in terms of section 211(3) of the
Constitution as a primary source of law and is binding
• Living customary law vs official customary law
• Customary Law vs the Constitution
– E.g., principle of male primogeniture rule
• Customs/trade practices other than “customary law” (fishing case)
• When does it become a law?
– Must be reasonable (not causing harm to anyone)
– Must be long established
– Must be recognised and observed by the community
– Clear and certain
 5. Judicial Precedent
• Is a body of law resulting from decisions on points of law made by other courts with
regard to the same circumstances
• Judicial precedent relates to the principle of stare decisis = ‘to stand by previous
decisions. It means that courts should decide similar cases in a similar way for
fairness and consistency
• When one of the higher courts interprets and applies the law in a particular way, that
judgment sets a judicial precedent meaning that the same court or lower courts
dealing with similar cases must decide them in the same way.
• Judgements of higher courts must be reported to be accessible. Law reports provide
efficient system of case reporting that makes precedents easily accessible e.g., SALR
• Judicial precedent implies that
1. You must understand the court structure/hierarchy of courts (lower vs
higher courts) to understand which courts’ decisions are binding on other
courts, as not all courts create judicial precedent
2. You must understand the structure of individual judgments helps us
understand which part of the judgement is binding. Obiter dictum: any
statement that falls outside the ration decidendi or an incidental
remark/remarks made in passing. Ratio decidendi: The reason for the decision.
Ratio decidendi creates a precedent
Understanding case law citation*
• Citations contain vital information to help us find
the case
• Civil case law (starts with names of litigants) vs
Criminal case law (starts with “S v”)
• Consider the following civil case law citation:
– Smith v Jones 2005 (1) SA 412 (SCA)
• Smith and jones are names of the litigants
• 2005 denotes the year of the case
• (1) indicates the first part of the law report in that year (volume number)
• “SA” indicates that the case is reported in the South African Law Report (publication
series)
• 412 reflects the page number on which the case is reported
• SCA means the case was heard in the Supreme Court of Appeal

*N.B read further on page 15 - 16 for purposes of your tutorial

 SECONDARY SOURCES
1. International law
• Section 39 (1) (b)
– Must consider international law
• E.g. Universal Declaration of Human Rights
• Primary source of law and is binding

2. Foreign law
• Section 39 (1) (c) of the Constitution
– May use foreign law
• Courts have discretion to apply foreign law
• Not binding but persuasive
• Impacts on drafting and interpretation of statutory law

3. Academic textbooks and journals

• Academic writing and publication
• Reflects the current law as received from other sources of law
 The Judicial System
• Section 165 (2) of the Constitution: “The courts are independent and subject
only to the Constitution and the law, which they must apply impartially and
without fear, favour or prejudice.”
• Section 166 of the Constitution establishes the courts in the hierarchy.
• hierarchy implies that not every court's decision will be legally binding on
other courts
– Only the decisions of the superior courts legally bind courts lower down in the
hierarchy
– Earlier decisions of courts of equal standing legally bind later courts
– Decisions of courts lower down in the hierarchy do not legally bind courts that are
higher up.
• Jurisdiction is a dual concept:
– Refers to the courts authority to adjudicate or rule on cases based on subject
area or geographical region
– Refers to the limits of the orders, or decisions, that the court can make such as
max fines or prison terms.
The SA Court System*
Superior courts bound
by own decisions or until
overruled by a higher
superior court (unless
previous decision
manifestly wrong)

Lower courts bound by

decisions of Superior
Courts in their
area/jurisdiction

*N.B. read further on page 22 – 26 and create your own summary of notes for
the different courts using the template provided on Moodle
 Legal Positions
• Attorneys and advocates
• Prosecutors (National Director of Public
Prosecutions) – decisions to prosecute or
not
• Registrars and clerks of the court
• Sheriffs/Messenger of the court
• Magistrates
• Judges