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MODULE NAME: MODULE CODE:

METHODS OF PAYMENT LAW MPLA7312

ASSESSMENT TYPE: TAKE–HOME EXAMINATION PAPER

TOTAL MARK ALLOCATION: 120 MARKS
TOTAL TIME: The time given to students to complete this assessment will be
indicated on your module in Learn.
By submitting this assessment, you acknowledge that you have read and understood all the rules
as per the terms in the registration contract, in particular the assignment and assessment rules in
The IIE Assessment Strategy and Policy (IIE009), the intellectual integrity and plagiarism rules in
the Intellectual Integrity Policy (IIE023), as well as any rules and regulations published in the
student portal.

INSTRUCTIONS:
1. Please adhere to all instructions. These instructions are different from what is normally
present, so take time to go through these carefully.
2. Independent work is required. Students are not allowed to work together on this
assessment. Any contraventions of this will be handled as per disciplinary procedures in The
IIE policy.
3. No material may be copied from original sources, even if referenced correctly, unless it is
a direct quote indicated with quotation marks.
4. All work must be adequately and correctly referenced and this must be done using the IIE
Legal Referencing Guidelines.
5. You should paraphrase the concepts (use your own words) that you are referencing, rather
than quoting directly.
6. Marks will be awarded for the quality of your paraphrasing.
7. This is an open-book assessment.
8. Your assessment may be handwritten or typed.
9. Answer all questions.
10. For typed assessments: ensure that you save a copy of your responses.
a. Complete your responses in an MS Word document.
b. The document name must be your Name.Student number.Module Code.
c. Once you have completed the assessment, upload your document under the
submission link in the correct module in Learn.
11. If you are completing a hardcopy in your own handwriting:
 You need to complete your questions in your own handwriting on paper.
 Ensure that all your pages are numbered on the top right-hand side of the page – e.g.
1 of 12.
 Please work neatly, write clearly and ensure that your questions are clearly numbered
in a coherent order so that you do not lose marks because your lecturer cannot read
your handwriting or cannot follow the orderly flow of your questions in the paper.

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 Either (i) Scan your pages OR (ii) photograph your pages. Ensure that the pages are in
the correct order.
 Label your photographs or scanned paper as follows: Name.Student
Number.Module Code and Page 1; (for each page in the event that you are
scanning photographs or separate scanned pages. Where you scan the whole paper
all at once, you need only use this label once). It is also suggested that you write
your name, student number and module code at the top or bottom of your pages.
 Once you have completed the assessment, upload your document under the
submission link in the correct module in Learn.
 When referencing according to the IIE Legal Referencing Guidelines in your own
handwriting, keep some space at the bottom of each page to write in your footnotes
as if you were inserting them using MS Word and remember to include a written
bibliography at the end of your paper.
Additional instructions:
 Dictionaries and calculators are allowed.
 For multiple-choice questions, give only one (1) response per question. The marker will
ignore any question with more than one answer, unless otherwise stated. You should,
therefore, be sure of your answer before committing it to paper.
 Show all calculations, where applicable (marks may be awarded for this).

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Referencing Rubric
Providing evidence based on valid and referenced academic sources Markers are required to provide feedback to students by indicating
is a fundamental educational principle and the cornerstone of high- (circling/underlining) the information that best describes the
quality academic work. Hence, The IIE considers it essential to student’s work.
develop the referencing skills of our students in our commitment to
achieve high academic standards. Part of achieving these high Minor technical referencing errors: 5% deduction from the
standards is referencing in a way that is consistent, technically overall percentage – the student’s work contains five or more
correct and congruent. This is not plagiarism, which is handled errors listed in the minor errors column in the table below.
differently.

Poor quality formatting in your referencing will result in a penalty of Major technical referencing errors: 10% deduction from the
a maximum of ten percent being deducted from the percentage overall percentage – the student’s work contains five or more
awarded, according to the following guidelines. Please note, errors listed in the major errors column in the table below.
however, that evidence of plagiarism in the form of copied or
uncited work (not referenced), absent reference lists, or
exceptionally poor referencing, may result in action being taken in If both minor and major errors are indicated, then 10% only (and
accordance with The IIE’s Intellectual Integrity Policy (0023). not 5% or 15%) is deducted from the overall percentage. The
examples provided below are not exhaustive but are provided to
illustrate the error.
Required: Minor errors in technical correctness of Major errors in technical correctness of referencing
Technically correct referencing referencing style style
style Deduct 5% from percentage awarded Deduct 10% from percentage awarded
Consistency Minor inconsistencies. Major inconsistencies.
 The referencing style is generally  Poor and inconsistent referencing style used in-
 The same referencing format consistent, but there are one or two text and/or in the bibliography/ reference list.
has been used for all in-text changes in the format of in-text  Multiple formats for the same type of referencing
references and in the referencing and/or in the bibliography. have been used.
bibliography/reference list.  For example, page numbers for direct  For example, the format for direct quotes (in-text)
quotes (in-text) have been provided for and/or book chapters (bibliography/ reference
one source, but not in another instance. list) is different across multiple instances.
Two book chapters (bibliography) have
been referenced in the bibliography in
two different formats.
Technical correctness Generally, technically correct with some Technically incorrect.
minor errors.  The referencing format is incorrect.
 Referencing format is  The correct referencing format has been  Concepts and ideas are typically referenced, but a
technically correct throughout consistently used, but there are one or reference is missing from small sections of the
the submission. two errors. work.
 Concepts and ideas are typically  Position of the references: references are only
 Position of the reference: a referenced, but a reference is missing given at the beginning or end of large sections of
reference is directly associated from one small section of the work. work.
with every concept or idea.  Position of the references: references  For example, incorrect author information is
are only given at the beginning or end of provided, no year of publication is provided,
 For example, quotation marks, every paragraph. quotation marks and/or page numbers for direct
page numbers, years, etc. are  For example, the student has incorrectly quotes missing, page numbers are provided for
applied correctly, sources in presented direct quotes (in-text) and/or paraphrased material, the incorrect punctuation is
the bibliography/reference list book chapters (bibliography/reference used (in-text); the bibliography/reference list is
are correctly presented. list). not in alphabetical order, the incorrect format for
a book chapter/journal article is used, information
is missing e.g. no place of publication had been
provided (bibliography); repeated sources on the
reference list.
Congruence between in-text Generally, congruence between the in- A lack of congruence between the in-text
referencing and bibliography/ text referencing and the bibliography/ referencing and the bibliography.
reference list reference list with one or two errors.  No relationship/several incongruencies between
 There is largely a match between the the in-text referencing and the
 All sources are accurately sources presented in-text and the bibliography/reference list.
reflected and are all accurately bibliography.  For example, sources are included in-text, but not
included in the bibliography/  For example, a source appears in the in the bibliography and vice versa, a link, rather
reference list. text, but not in the bibliography/ than the actual reference is provided in the
reference list or vice versa. bibliography.
In summary: the recording of In summary, at least 80% of the sources In summary, at least 60% of the sources are
references is accurate and are correctly reflected and included in a incorrectly reflected and/or not included in
complete. reference list. reference list.

Overall Feedback about the consistency, technical correctness and congruence between in-text referencing and bibliography:
........................................................................................................................................................................................................................................................................................

........................................................................................................................................................................................................................................................................................

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Question 1 (Marks: 20)

Q.1.1 The relationship between a bank and its client has often been called a ‘contract sui (10)
generis’. Briefly discuss this statement, taking into account the “fundamental
phenomena in South African banking law.”

Q.1.2 The bank has a duty to exercise reasonable care and skill. A dissatisfied customer (10)
will have a right of recourse against the bank as a consequence of the bank’s breach
of duty. Answer the following questions:
 Under which causes of action will a bank, which acts in breach of its duty, be
held liable and on what basis?
 Apart from the common law, on what other basis will the customer’s right of
recourse against the bank arise?

Note: In order to answer this question, research beyond the prescribed textbook
may be required. Make sure that the additional sources – articles, case law and
legislation – are properly referenced.

Question 2 (Marks: 20)

Q.2.1 Princess has a student loan with United Bank. The terms and conditions of the student (10)
loan state that she needs to start repaying the loan as soon as she is gainfully employed.
She completes her BCom Law degree and, because her grandmother is so proud of her,
she (the grandmother) decides to pay off Princess’ student loan.
Q.2.1.1 Assume that United Bank refuses to accept payment from anyone (7)
other than Princess. Explain the legal position and whether such a
refusal by United Bank is valid in law.
Q.2.1.2 Assume for this question that Princess insisted that her grandmother (3)
should not pay the debt. Shortly after the loan is paid by the
grandmother, Princess marries a young man of whom her family
does not approve. The grandmother decides that as an expression of
her disapproval, she will sue Princess for the R25 000 she paid in
settlement of Princess’ study loan. Explain the legal position.

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Q.2.2 Assume for this question that Princess decides to pay off the student loan when she (10)
lands a job as a compliance officer. When United Bank provides Princess with the final
amount of the student loan, she disputes the amount and denies that she owes R43
000, as stated by the bank. Princess avers that she only owes R25 000 and does an
electronic funds transfer (EFT) for the amount of R25 000 followed by an email to the
bank with the following words:
“I deny that I owe United Bank the sum of R43 000 and hereby make payment of R25
000 in full and final settlement of my debt to United Bank”.

United Bank keeps the R25 000 payment and sues Princess for the balance. Apply the
concept of compromise to the facts and indicate, in your own words, whether or not
United bank has acted correctly in suing Princess.

Note: No marks will be allocated for reproducing the content of the prescribed
textbook. You may use an example or elaborate on the facts to illustrate the meaning
and consequences of compromise.

Question 3 (Marks: 30)

Lemon Tree Media does an online advertising campaign for Trifecta Estates (Pty) Ltd to boost their
profile in the commercial property market. Lemon Tree Media sends an invoice of R375 000 to
Trifecta but the email is intercepted by John Harris and the banking details in Lemon Tree Media’s
email are changed to his (John’s) personal account details. Trifecta Estates, unaware of the email
interception, request their bank, MPLA Bank, to pay the full amount of R375 000 into John’s bank
account at NDB Bank. Only after Lemon Tree Media’s accounts department contacts Trifecta
Estates does the fraud come to light.

Q.3.1 In Gilbey’s Distillers and Vintners (Pty Ltd v ABSA Bank, the legal issue before the (12)
court was whether the beneficiary bank owed a duty of care to the originator of a
payment instruction for an electronic funds transfer. In light of this decision, advise
Nitsa, the managing director of Lemon Tree Media, whether or not its claim against
the beneficiary bank is likely to succeed.

Q.3.2 Did MPLA Bank comply with its mandate in effecting the payments? Briefly explain. (4)

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Q.3.3 Identify the parties involved in this banking transaction. (6)

Q.3.4 Categorise the above payment as either a debit transfer or a credit transfer. Provide (4)
a definition for your choice.

Q.3.5 Explain when payment made by means of an electronic funds transfer (EFT) is (3)
considered to be completed.

Q.3.6 If John Harris refuses to refund the money, on what basis would Lemon Tree Media (1)
be able to claim from him?

Question 4 (Marks: 25)

Q.4.1 During the early stages of lockdown, Kiasha was too nervous to leave the house and (9)
so decided to dust off her cheque book and pay some accounts by way of cheque.
She pays her June Cellucom cellphone bill of R3 500 by cheque, which her husband
then posts to Cellucom for her. Two weeks later, her cellphone service is cut off
and, when she phones Cellucom to make enquiries, she is informed that her
account is in arrears because they did not receive any payment from her. She
checks her bank statement and sees that the amount of the cheque went off her
account.

In your own words, explain the legal position with regard to cheques sent by mail
and advise Kiasha as to whether she may consider her Cellucom account to be paid.

Q.4.2 How would your answer to Q.4.1 above differ if payment for June was not received (10)
by Cellucom but Kiasha had a debit order in place?

Q.4.3 Distinguish credit cards from an ‘electronic purse’. (6)

Question 5 (Marks: 25)

Wami is in the leather industry and sells handbags made from the hides of Nguni cows. She has
been approached by Gunter, a designer, via social media, who wants to sell her handbags in his
boutique in Berlin, Germany. Wami has not been involved in any international trade before and is
a bit nervous about entering this new territory.

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Q.5.1 There are a number of risks involved in international sale transactions. Consider the (6)
following risks. Indicate whether it is a risk to the buyer or seller and in what ways
the risk may cause disadvantage to either the buyer or the seller.
Q.5.1.1 There is a coup d’etat in Germany and the army takes control of the state. (2)
Q.5.1.2 There is a foot and mouth disease outbreak in KwaZulu-Natal. Wami (2)
sources the hides from Nongoma, KZN.
Q.5.1.3 When Gunter first discovered Wami’s bags online, the Rand was worth 18 (2)
Euros. Shortly thereafter, oil is discovered off the coast of Robben Island
and several new gold deposit seams are found in the Rustenburg gold
mines. In addition, Adv Shamila Batoyi has reorganised the NPA and Adv
Thuli Madonsela is appointed Minister of Police. Increased productivity in
the SAPS and NPA result in a record number of arrests and successful
prosecutions. The discoveries as well as the political portfolio changes
cause South Africa’s economic rating to improve and R1 is now worth 5
Euros.

Q.5.2 Explain why Gunter would be highly unlikely to agree to use ‘payment in advance’ (5)
as a method of payment. Outline only the disadvantages for Gunter.

Q.5.3 After much negotiation, Gunter and Wami agree that payment will be affected by (10)
means of a documentary credit. Summarise the procedure involved in such a
transaction.

Q.5.4 Assume for this question that Gunter lives in Cape Town. Wami sends Gunter her (4)
banking details and he agrees to pay a 50% deposit by 18 May 2020. They both hold
accounts at New Union Bank – Gunter at the Adderly Street branch in Cape Town
and Wami at the Anton Lembede Street branch in Durban. On 25 May, Wami
informs Gunter that the payment does not reflect in her banking account. Upon
investigation, Gunter discovers that the amount was indeed transferred to Wami’s
account but the bank reversed the transaction due to Gunter owing money to the
South African Revenue Services (SARS).

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Having being served with a section 99 notice by SARS earlier on 18 May 2020, New
Union Bank promptly reversed the payment made to Wami so that it could comply
with the s99 notice.

With the above facts in mind, briefly discuss Schulze’s criticism of the decision in
Pestana v Nedbank Ltd (2008 (3) SA 466 (W), the ‘Pestana appeal.’

END OF PAPER

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