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Dear Paul,

Welcome to the Restitution Discussion Group. The RDG has always been used to foster academic discussion and to disseminate news, but not to solicit advice on pending matters.

Best wishes,

Lionel

On Wednesday, September 17, 2003, at 04:57 PM, Paul Tredoux wrote:

G'day all

Is anyone aware of any decided cases which provide authority for the decision of the following problem:

A and B enter into an agreement of sale in terms of which A sells and B purchases a mine for $7,000,000.00. The entire purchase price is payable on signature of the contract.

The contract is signed on 1 September 1999, and a cheque for $2,000,000.00 is issued by B and delivered to A as part-payment of the purchase price. A banked the cheque but same was dishonoured and returned marked "Refer to Drawer" that same day.

The relevant legislation provides that there is a three year limitation period in respect of the obligations arising out of the agreement of sale, but a six-year period in respect of the claim based on the cheque.

A took no steps to enforce the agreement, or to claim payment on the cheque for a period of three years. After the expiry of the three year period he institutes action on the cheque.

(Accept that A and B are immediate parties on the cheque, and that there are accordingly no special rules relating to negotiable instruments which prevent B from raising defences which are relevant to the underlying equities)

Is A entitled to enforce payment on the cheque (notwithstanding that he is no longer able to enforce the agreement of Sale)?