Answers

Applied Skills, LW – BWA

Corporate and Business Law – Botswana (LW – BWA) June 2020 Answers

Section A

1 84 days’ maternity leave

The length of maternity leave is statutorily provided for as 12 weeks. Sick leave and vacation leave are significantly less and family
responsibility leave is not legislated.

2 Unlawfulness
Unlawfulness is incorrect, since what is required is wrongfulness. Wrongful conduct may be conduct that is also unlawful but often
may simply be negligent but not unlawful.

3 The contract was concluded when Azaria dispatched the letter

The question tests whether expedition/dispatch of a letter of acceptance concludes a contract. The position of the common law is
that expedition suffices to conclude the contract.

4 Calling the first annual general meeting

The duties of promoters of a company are limited to pre-incorporation activities. Therefore, calling the first AGM would typically be
done by the Board of Directors and not the promoters.

5 1, 2 and 3 only
A liquidator will typically not carry out the business of the company. Their role in liquidating the company is to collate company
assets, pay off debts and distribute any surplus to contributors. The business of the company is brought to an end once a liquidation
commences.

6 It has no board of directors

Close companies are simple in form and requirements. They do not have shareholders but instead have up to five members, they
have limited liability because they remain companies and they have no limitation on capital that can be raised or contributed.

7 To act as custodian of the company seal

The duty to prepare financial statements lies with the Board. The preparation and filing of a company constitution is a task carried
out by the promoters of a company. The company secretary is the custodian of the company seal.

8 Damages for non-patrimonial loss

Remedies for unlawful dismissal are limited to possible reinstatement and recovery for loss of earnings where a dismissal is unlawful.
The remedies do not extend to damages for non-patrimonial loss.

9 1 only
Although debt exceeding capital is undesirable, it is not prohibited and there is no requirement for a company to distribute capital to
its shareholders.

10 1, 2 and 4
There is no requirement for judicial management as a prerequisite to liquidation.

11 An ordinary resolution is a general meeting resolution with a 51% majority

An ordinary resolution is a resolution of the general meeting adopted by a simple majority of the votes. Special resolutions are
adopted with a three fourths majority.

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12 Dumisani should declare his interest in Laundromat (Pty) Ltd and seek the consent of the board of Laundry Services (Pty) Ltd to
deal with Laundromat (Pty) Ltd
The law required declaration of interest as well as consent of company where a director has an interest in the transaction.

13 The High Court

The Land tribunal is a court of special jurisdiction whose appeals are heard by the High Court.

14 The Industrial Court

The Industrial Court is one of several courts of special jurisdiction in Botswana including the land tribunal and courts martial.

15 There is a presumption against Cathy having a legal obligation to care for Yolisa’s dog
There is a rebuttable presumption against an intention to enter into a contract between friends and social relations.

16 Separate legal personality entitles a company to enter into contracts in its own name
Separate legal responsibility is distinguishable from limited liability. Separate legal personality is not absolute and the veil of
incorporation can be lifted. One consequence of separate legal personality is the capacity of the company to enter into contracts in
the company’s own name.

17 Terms which denote the class of the contract

Terms implied by law into a contract are known as naturalia. Essentialia are terms that denote the class of contract. These terms can
be written or oral.

18 Amalgamation
The three recognised steps in the offence of money laundering are placement, layering and integration.

19 Bame alone is liable for Zack’s claim

This question is concerned with the doctrine of privity of contract. No contract exist between parties who have not gone through the
process of offer and acceptance either acting on their own behalf or through an agent.

20 The right to freedom of assembly

Botswana’s Constitution contains no second generation or social economic rights.

21 An offer is revoked by a counter offer

A counter offer has the effect of rejecting the initial offer and replacing it with another offer. Offers can be revoked at any time before
acceptance, but cannot be revoked after acceptance. However, it is possible to make an offer to the public at large. It is not necessary
that an offer be directed to a specific person.

22 The thin skull rule

The skull rule is rule providing that the wrongdoer must take their victim as they find them. Therefore it is not a defence that a less
fragile victim would not have suffered a similar extent of damages.

23 Kassim is retrenched the day after the business he works for is sold to a third party
An unlawful dismissal is one backed by no valid reasons. Independent contractors are not employees and therefore cannot be
dismissed. Dismissal on medical grounds and failure to meet conditions for employment are lawful grounds. However, dismissal
following acquisition of a business by third party is not lawful.

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24 Acceptance must be unequivocal
In some circumstances, it is possible for an offer to be accepted by an offeree different from the intended or specific person who
received the offer. Acceptance of an offer can also be revoked however, acceptance of an offer must be unequivocal. An equivocal
acceptance amounts to a counter offer.

25 The constitution is a contract between the company and its shareholders

Company constitutions need not have an objects clause. A Company may also rely on the Companies Act as its constitution and not
file a separate document as its constitution. The constitution is a contract between the company and its shareholders or members.

26 Notice must be given to the Commissioner of Labour

Notice of redundancy is given to employees likely to be affected. The employer is required to apply the first-in-last-out principle
hereby preserving jobs of longer serving employees. Under the Employment Act, notice of the proposed redundancy must be given
to the Commissioner of Labour under the Employment Act.

27 A representation gives rise to rights and duties

Representations in themselves are merely statements made by the seller the extolling the product. They do not give rise to rights and
obligations between the parties to the contract.

28 Selling school furniture to reduce the school’s debts

The role of the liquidator is to consolidate company assets and pay of company debts before distributing any surplus to members
or contributors. Sale of company assets would be within the remit of the liquidator. However, liquidation brings an end to all legal
processes against the company. Therefore the sale in execution would not be possible. Sale of shares for a company in liquidation
is also not possible as is the continuation of the business of the company.

29 An exclusion clause
Exclusion clauses limit the liability of a party to a stated amount. A warranty is a promise of what the contract will deliver to the
offeree. Conditional clauses and penalty clauses do not fit the description provided.

30 Contributory negligence
This question tests understanding of the concept of contributory negligence. Forgetting to wear a helmet contributed to the severity
of Dimpho’s illness injury. This must be taken into account in accounting for damages.

31 The parties must be ad idem

Under the law of obligations, consensus between contracting parties is an essential element of the agreement. However, contracts
may be oral and may be concluded between multiple parties. Under Common Law there is no requirement for a fixed price to
conclude a valid contract.

32 Third parties dealing with a partner must rely on express authority

Third parties may rely in implied or ostensible authority of partners and still validly conclude contracts with a partnership.

33 Customary law may be ascertained from reported cases, textbooks and oral or written evidence
Customary law in Botswana must be ascertained before application by the courts. Customary law is unwritten hence the need for
ascertainment. Botswana Common Law consists of Roma Dutch Law and English Common Law. The doctrine of judicial precedent
applies for all lower courts. Superior courts can depart from precedent in certain limited instances. Legal commentary from jurists
is a secondary course of law.

34 Statements of fact or law which do not form the basis of the court’s decision
Obiter dicta are statements made in passing by the court that do not form the basis of the court’s decision. The principle of law upon
which a court reaches a decision is known as the ratio decidendi. Oral opinions given to courts by expert witness and legal writing
admitted as evidence are not obiter dicta.

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35 According to the golden rule of statutory interpretation, the judge must consider the intention of the legislature when applying
the legal provision.
The presumptions provided are correct. The golden rule requires that words be given their ordinary meaning unless to do so would
result in an absurd outcome.

36 Repudiation by the debtor

Defective performance amounts to a repudiation of the contract by the debtor which entitles the creditor to sue for cancellation of
the contract. Mora debitoris and mora creditoris describe failure to perform altogether by creditor or debtor.

37 Dominant impression text

The dominant impression test considers the employment relationship as a whole to arrive at a multipronged assessment of whether
a person is an employee or an independent contractor.

38 Deregistration
Deregistration does not terminate a partnership because under Botswana law partnerships are not registered under any government
agency but are created through partnership agreements. The death of a partner or the inclusion of a new partner will change the
nature of the partnership.

39 Equity relies on moral principles and has regard to the particular circumstances of individuals
In a conflict between law and equity, equity will prevail. Principles of equity apply in civil cases but not in criminal cases.

40 To maintain utmost efficiency

An employee has a duty to enter and remain in service, to further the employer’s business interests and to refrain from misconduct.
With respect to efficiency, an employee is required to maintain reasonable efficiency.

41 Pactum de contrahendo
An option contract is also referred to as a pactum de contrahendo. It is a contract aimed at concluding another contract which
restricts the offeror’s right to revoke their offer.

42 Wages must be fixed or ascertainable

In a contract of employment is not necessary that all duties be specified. The employer does not have an unqualified right to
command the employee. The employer must give lawful and reasonable orders. However, an employee’s wages must be fixed or
ascertainable.

43 He should refrain from purchasing the shares

In order to avoid the offence of insider dealing there should be no purchase of shares.

44 Allotted capital
Nominal capital issued to shareholders is called allotted capital. Paid up capital is the portion of allotted capital that has been paid
for by shareholders. The stated capital of a company is that which which cannot be distributed in dividends. Uncalled capital the
amount of issued capital that shareholders have yet to be called upon to pay for.

45 The claimant may claim non-patrimonial loss

A claim for non-patrimonial loss is not available as damages for breach of contract.

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 Section B

46 (a) This question requires the candidates to identify the requirements of a valid offer.
A valid offer must be definite, complete, clear and certain. The offer must be made with the intention to create a contractual
relationship. Further, the declaration of intention must contain the essential and material terms of the proposed contract so that
mere acceptance alone will result in a valid contract being formed. The offer should in usual circumstances be brought to the
attention of an offeree.

(b) This question requires the candidates to explain the legal consequences of an invitation to treat which is met with a valid
offer.
Hannah’s advertisement is not an offer. It is in fact an invitation to treat or an invitation to do business. Hannah’s advertisement
was not made to a specific offeree with the intention to enable the offeree to establish, enter into or conclude a contract with
Hannah by accepting the offer. Hannah’s advertisement is an invitation to the public in general to do business with her.
When Gape responds to the invitation, Gape becomes the offeror. Gape’s offer indicates an intention to create an obligatory
relationship with the offeree, Hannah. Hannah is now at liberty to enter into a contract with Gape by accepting his offer or to
decline the offer.
Hannah’s advertisement can only amount to an invitation to do business or an invitation to treat. Crawley v Rex (1909). Gape’s
allegation that Hannah is obliged to sell the vehicle to him is therefore incorrect. Gape’s positive response was the offer which
Hannah may accept or decline.

47 (a) This question requires candidates to discuss principles of implied authority of partners.
In order to render the partnership liable on the transaction, Orefile must prove three things: first, that Joanne, the partner who
hired her, was a member of the partnership; second, that Joanne had implied authority to bind the partnership, and third, that
Joanne concluded the contract in the name of the partnership.
With respect to the first requirement, Orefile can establish that Joanne was a member of the partnership. This is clear as Joanne
was acting as a member of the partnership when she hired Orefile.
With regard to the second requirement, Orefile must establish that Joanne was exercising powers that were reasonably
incidental to the proper conduct of the business. In Braker and Company v Deiner (1934) the court held that each partner is
the agent of the other and of the partnership for the purpose of carrying on the business of the partnership in the usual way.
Hiring staff is a routine activity in the business.
With regard to the third requirement, Orefile must establish that Joanne concluded the contract in the name of the partnership.
It is discernible from the facts that Joanne concluded the contract on behalf of the partnership. Orefile is advised that she can
successfully sue the partnership.

(b) This question requires candidates to state how partners may be liable for partnership debt.
Since the partnership is still in existence, Orefile will be required to sue the partnership. The judgment will be given against
the partnership and not against any of the partners individually – Standard Bank of SA Ltd v Pearson (1961). However,
partnerships have no limited liability. Once execution has been effected against partnership assets for the amount due to
Orefile, any unpaid amounts will be levied against the private assets of the partners as if the judgment had been entered against
them personally Matterson Bros v Rolfes, Nebel and Co (1915). Tariq is therefore open to liability for the amount owed to
Orefile.

48 (a) This question requires candidates to discuss the legality of a company giving financial assistance for the purchase of its own
shares.
In terms of the Companies Act, 2003, a company is prohibited from giving a person financial assistance directly or indirectly
for the acquisition of its own shares except in the circumstances provided for in the Act.
Section 76(2) Companies Act 2003 allows a company to give financial assistance for the purchase of its own shares where
the company satisfies three requirements. First, the board of directors must pass a resolution to the effect that the giving of
financial assistance is in the interests of the company. Second, the terms and conditions under which the financial assistance
is given must be fair and reasonable to the company and to any shareholder not receiving the financial assistance. Lastly,
in giving the financial assistance, the company must satisfy the solvency test. The undertaking to provide Bashi with a loan
was made by Telcom Wireless (Pty) Ltd without satisfying the requirements of the Act to ensure that it will remain solvent
after the disbursement. This conduct is unlawful. The proposed arrangement to assist Bashi in the purchase of shares in
Telcom Wireless (Pty) Ltd is illegal as it does not meet the requirements of s.76, Companies Act, 2003.

(b) This question requires candidates to state the rationale for the rules regarding financial assistance in the purchase of shares.
Where a company provides money to a third party for the purchase of its own shares, the shareholders and creditors may
suffer if the loan proves to be partially or wholly unrecoverable. The rule exists to exclude cases where a person may acquire
membership in a company without providing the necessary funds to purchase their acquisition and instead relies on the funds

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 of the company to finance their shares to the detriment of shareholders and creditors who bear the cost of a capital reduction.
This is a rule of capital maintenance meant to secure the capital of the company for the benefit of its creditors and members.

49 (a) This question requires candidates to explain a director’s duty not to usurp the company’s corporate opportunity.
As a fiduciary, a director is prohibited from taking over a contract intended for the company. In Cook v Deeks (1916), the
directors negotiated a contract on behalf of the company; when the negotiations were complete, the defendant directors took
over the contract in their own names. Their co-director sued the defendants complaining that they had taken over company
property in the form of the contract. In order to avoid the complaint, the defendant directors called a shareholders’ meeting
where they used their majority shareholding to pass a resolution purporting to ratify their conduct. The court held that the
directors were acting improperly and not in the best interests of the company when they diverted the contract which belonged
to the company. It further held that the directors had a duty to the company they represented and that they were in breach of
that duty when they took over the contract in their own names. Amo would be successful in his suit against his co-directors
who have usurped company property in the form of the contract with the restaurant.

(b) This question requires candidates to explain if the directors can take over a contract which the company has rejected
bona fide.
Directors are free to take over a corporate opportunity after the company has rejected it after bona fide consideration (Peso
Silver Mines v Cropper (1966)). The directors who take over take over such an opportunity are not bound to account to the
company for the contract since it has been considered and rejected. Accordingly, Amo would not succeed in his action against
Musa and Paul with respect to the takeaway contract.

50 (a) This question requires candidates to identify the elements of the offence of corruption.
The elements of the offence of corruption are found in s.31 (1) of the Corruption and Economic Crime Act, 1994. They are
first, being a member or employee of a public body, second having a direct or indirect interest in any body which proposes to
deal with the public body, or having an immediate family member with such an interest, third, knowingly failing to disclose the
nature of such interest, or voting or participating in the proceedings of such a public body in relation to the proposed dealings.

(b) This question requires candidates to discuss the offence of corruption and the requirements for a lawful defence under the
Corruption and Economic Crime Act, 1994.
Gao has not committed any offence. Gao’s brother, Robert, has a direct interest in BotsConnect (Pty) Ltd’s bid for the tender.
Gao has failed to disclose the nature of his brother’s interest. He goes on to vote and participate in the decision of the tender
committee. As a member of the committee, he is aware or can be deemed to be aware of the need to disclose an interest. Gao
influences the committee to appoint his brother’s company as the supplier of the required equipment. Gao’s conduct is not
corrupt for the following reasons. In terms of s.31 (2) Corruption and Economic Crime Act, 1994, it is a defence to a charge
of corruption to state that the person having an interest has first made in writing to the public body the fullest disclosure of
the exact nature of their interest and has been permitted thereafter to take part in the proceedings relating to such dealing or
decision. In this case a disclosure coupled with permission to take part on proceedings will suffice.

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Applied Skills, LW – BWA
Corporate and Business Law – Botswana (LW – BWA) June 2020 Marking Scheme

Section A

1–45 One or two marks per question, total 70 marks.

Section B

46 (a) This question requires the candidates to identify the requirements of a valid offer.

2 A correct identification of the requirements of a valid offer.

0–1 Inability to clearly identify the requirements of a valid offer.

(b) This question requires the candidates to explain the legal consequences of an invitation to treat which is met with a valid offer.

3–4 A succinct answer clearly distinguishing between an offer and an invitation to treat.
0–2 An inadequate answer showing poor understanding of the description.

47 (a) This question requires candidates to discuss principles of implied authority of partners.

3–4 A concise answer showing clear understanding of principles governing partners’ authority.
0–2 A weak answer with poor understanding of relevant legal principles.

(b) This question requires candidates to state how partners may be liable for partnership debt.

2 An accurate answer citing the relevant legal principles.

0–1 An inaccurate answer showing uncertainty regarding relevant principles.

48 (a) This question requires candidates to discuss the legality of a company giving financial assistance for the purchase of its own
shares.

3–4 A complete answer with adequate understanding of the relevant rules.

0–2 An incomplete answer with inadequate explanation.

(b) This question requires candidates to state the rationale for the rules regarding financial assistance in the purchase of shares.

2 A detailed answer explaining the relevant rules.

0–1 A partial answer.

49 (a) This question requires candidates to explain a director’s duty not to usurp the company’s corporate opportunity.

2–4 A complete answer explaining the most secure option.

0–1 An incomplete answer with inadequate explanation.

(b) This question requires candidates to explain if the directors can take over a contract which the company has rejected bona fide.

2 A detailed answer.
0–1 A partial answer with inadequate explanation.

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50 (a) This question requires candidates to identify the elements of the offence of corruption.

2 A complete answer with identification and adequate identification of the elements of the offence.
0–1 An incomplete answer with inadequate explanation.

(b) This question requires candidates to explain if the offence of corruption has been committed or if the alleged offender has a
suitable defence.

3–4 A detailed answer explaining offence the legal defence.

0–2 An inadequate answer with partial explanation.

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