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Bank Won't Give You A Bond? Try The 'Option' Option
Fidentia, The Broker, And The Clients' Claims
The Foreign Currency Conversion Blues
Terminal Decisions: Living Wills
Whistle(Blowing) While You Work
The August Website: Business (And Other) Intelligence On The Internet!
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| AUGUST 2009 |
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BANK WON'T GIVE YOU A BOND? TRY THE 'OPTION' OPTION
Until property finance is a lot easier to come by, you might consider putting in an offer to rent your dream house (or office) as an interim measure, with the option to purchase it later on.
If that sort of deal suits the seller, beware of two potential pitfalls highlighted in recent Supreme Court of Appeal cases: - - If the landlord goes behind your back and sells the property to another buyer, the new owner will be obliged to honour your lease, so your tenancy is protected. BUT the option to purchase part of it will fall away unless the buyer can be shown to have been aware of the option when buying. So if you get wind of a possible sale, immediately have your attorney give the purchaser notice, drawing attention to the option.
- The option clause should contain all the normal terms and conditions of a property sale (a full deed of sale could be annexed to the lease for this purpose). Make sure that any possible claim for agent's commission is dealt with, to avoid disputes later on.
If the option clause has only the basics, you could end up fighting over its validity. That's what happened in one of the appeal cases, where the option provided for a deed of sale to be drawn up only if and when the tenant exercised the option. The landlord then tried to frustrate the sale by refusing to draw up the deed of sale, and by arguing that the terms of the prospective sale were unclear. Although the Court came to the tenant's rescue (invoking the principle of "fictional fulfilment" of the option clause), and ordered the seller to transfer the property to the tenant, it was a close call - and doubtless also an expensive one for all concerned.
There are pitfalls here - avoid them by having the agreements professionally drafted!
FIDENTIA, THE BROKER, AND THE CLIENTS' CLAIMS
Financial services providers risk liability for any poor investment advice they give, and need to comply strictly with their statutory Code of Conduct. A recent determination by the FAIS Ombud illustrates in particular the danger of not keeping the required "record of advice" given to clients.
A broker who advised his clients to invest monies with Fidentia was ordered to personally cover his clients' losses, even though the clients were found to have been aware that the investment was a high risk one. Critical factors seem to have been the "exorbitant" commissions earned by the broker, and the broker's inability to provide "any record of advice, or for that matter any other documentation as required by the General Code evidencing the fact that the investment was an appropriate one in the circumstances".
As an investor on the other hand, don't be lulled into a false sense of security just because a broker is employed by one of the well-known financial institutions. Sometimes you will be able to recover from the employer (as happened in a similar matter last year involving the same broker), but sometimes not. In this particular case for example the broker was held to have embarked on "a frolic of his own", and as the clients knew there was no connection between the employer and Fidentia, their claim lay against the broker alone.
THE FOREIGN CURRENCY CONVERSION BLUES
When contracting in a foreign currency to be paid locally, specify how the conversion to Rand is to be effected.
Per a recent High Court decision, if you want to be paid at a particular rate, such as the selling rate rather than the buying rate, or at the Reserve Bank's "indicative rate", or at any other rate, you must record that clearly in your agreement. If you don't, the party making payment can choose the conversion exchange rate to its benefit. And that could leave you seriously out of pocket - the difference claimed in the case in question was R426,240!
TERMINAL DECISIONS: LIVING WILLS
If you don't want to be kept artificially alive, possibly in pain and distress, when your medical condition is hopeless and you are no longer able to make your own wishes known, consider executing what is called a "Living Will".
It isn't really a "Will" (which is aimed at regulating your estate only once you are dead), but rather an "advance directive" to doctors, hospitals and your family as to what end-of-life medical treatment you do and do not consent to.
Whilst the validity of a Living Will cannot be guaranteed (there being still-untested legal considerations involved here), it should at the very least make it easier for those caring for you at the end to make hard decisions in need.
WHISTLE(BLOWING) WHILE YOU WORK
The Protected Disclosures Act (more popularly referred to as the "Whistleblower's Act") provides procedures for employees to disclose unlawful or irregular conduct by their employers or fellow employees (in both the public and private sectors), without fear of reprisal.
Any employer action in retaliation for a protected disclosure is deemed to be unfair, entitling the employee to "full protection" from any form of "occupational detriment". Recent cases in the High Court, Labour Court and Labour Appeal Court have highlighted some of the principles involved: -- A disciplinary hearing cannot be held if it is in itself a reprisal for a protected disclosure;
- Any dismissal will be automatically unfair, leading to re-instatement or an award of compensation;
- Compensation will be awarded, not only for the employee's monetary loss, but also for any personal injury suffered (embarrassment, humiliation, loss of dignity and reputation etc, etc). Particularly where there are aggravating factors, the award is likely to be substantial (e.g. R277,000 in the one case);
- On the other hand, employees need to tread with care here. An employee is liable to disciplinary action (in the case in question, demotion for one employee, and unpaid suspension for the other) for any disclosure not made in "good faith", and with a reasonable belief that it is "substantially true". There must be "facts upon which reason to believe could be based" - mere speculation and opinion is insufficient.
It is essential for the disclosure to be a "protected" one, and it can be tricky to determine what is protected, and what isn't. Both employers and employees would be wise to seek proper advice before taking any action under this legislation.
THE AUGUST WEBSITE: BUSINESS (AND OTHER) INTELLIGENCE ON THE INTERNET!
"Business is War", and to win that War, we need information - i.e. business intelligence - and we need a lot of it. Sun Tzu put his finger on it in "The Art of War" (c 500 BC): "Intelligence ……………… is the essence of strategy."
Sun Tzu had to rely for his military intelligence on spies and traitors, but we in 2009 have access to a much more powerful (and hopefully more trustworthy!) resource - the Internet ……………… and it's only a mouse-click away.
Activate "Google Alerts" at www.google.com/alerts. Choose what part/s of the Web to keep an eye on, what topic/s to search for, and whether you want to receive your e-mail alerts "as it happens", daily, or weekly.
Keep an eye on your competitors, on your customers and on your suppliers. Check on developments in your industry, look for new products, follow all the latest trends in your "areas of interest". Perhaps most importantly, keep tabs on what the world out there is saying about YOU - is it good? Bad? Are you as high-profile (or perhaps low-profile) as you want to be?
On the personal side - keep current on sports teams, your hobbies, your famous friends. Learn of breakthroughs in medical conditions that affect you. Monitor a developing news story. Keep an eye on H1N1. Or just keep your finger on the pulse of whatever it is that you are passionate about ...... the world's your oyster!
Note: Copyright in this publication and its contents vests in LawDotNews(law.news)
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