Question

COMMERCIAL LAW in NAMIBIA, AFRICA.

Question 1

a) Explain what you understand by a credit agreement and why credit agreements remain so vital in commercial transactions.

b) Giving examples draw distinctions between stop orders and debit orders as negotiable instruments. 

c) Discuss the relevance of insurance law in Namibia. (3 marks) d) Refereeing to case law, discuss the doctrine of subrogation.

e) List any 5 (five) obligations of the lessee in a contract of lease over heavy duty construction machinery.

Answer 1

a.) A credit agreement is a legally-binding contract documenting the terms of a loan agreement; it is made between a person or party borrowing money and a lender. The credit agreement outlines all of the terms associated with the loan. Credits agreements are created for both retail and institutional loans. Credit agreements are often required before the lender can use the funds provided by the borrower.

• A credit agreement is a legally-binding contract documenting the terms of a loan agreement; it is made between a person or party borrowing money and a lender.
• A credit agreement is part of the process for securing many different types of loans, including mortgages, credit cards, auto loans, and others.
• Credit agreements are often required before the borrower can use the funds provided by the lender.

b.)

A stop order or scheduled payment is a regular payment that you can set up from your own account to pay other people, organisations or transfer to other bank accounts. You can amend or cancel the stop order when you like. This type of transaction comes from you as the payee directly. A debit order can only be set up by the organisation to which you're making the payment.

In simpler terms a stop order or scheduled payment is an instruction that you issue to your bank to make a series of future dated recurring payments, whereas a debit order is an instruction that you provide to a third party to pull the funds from your bank account.

c.)

The 'Governance, Risk and Compliance - The Namibian Insurance Industry' report is the result of extensive research into the insurance regulatory framework in Namibia.

It provides detailed analysis of the insurance regulations for life, property, motor, liability, personal accident and health, and marine, aviation and transit insurance. The report specifies various requirements for the establishment and operation of insurance and reinsurance companies and intermediaries.

The report brings together research, modeling and analysis expertise, giving insurers access to information on prevailing insurance regulations, and recent and upcoming changes in the regulatory framework, taxation and legal system in the country. The report also includes the scope of non-admitted insurance in the country.

The Namibian insurance industry is regulated and supervised by the NAMFISA.

- Employee's compensation, motor third-party liability and social security insurance are compulsory classes of insurance in Namibia.

- 100% foreign direct investment is permitted in the Namibian insurance industry.

- Composite insurance is not permitted in the Namibian insurance industry.

d.)

The doctrine of subrogation provides that if an insurer pays a loss to its insured due to the wrongful act of another, the insurer is subrogated to the rights of the insured and may prosecute a suit against the wrongdoer for recovery of its outlay. The right of an insurer to be subrogated to the rights of its insured is typically based upon:

1. the terms of the policy of insurance; or,
2. the right of equitable subrogation, i.e., by operation of law

Sometimes a property is insured with more than one company. The insured cannot claim more than total loss from all the insurance companies put together. He cannot claim the same loss from different insurance companies. If one insurer pays full compensation then that insurer can claim proportionate claim from the other insurers. A person cannot be restored to a better position than before the loss occurred. The total loss suffered by the insured will be contributed by different companies in proportion to the value of policies issued by them.

Principle of Contribution is a corollary of the principle of indemnity. It applies to all contracts of indemnity, if the insured has taken out more than one policy on the same subject matter. According to this principle, the insured can claim the compensation only to the extent of actual loss either from all insurers or from any one insurer. If one insurer pays full compensation then that insurer can claim proportionate claim from the other insurers.

e.) 1. Taxes.:- Lessee shall pay all sales, use, excise, personal property or other taxes (excepting state and federal income taxes and other taxes upon the “net income” of the University) that may be imposed on either Party as a result of this transaction. Lessee shall indemnify, defend and hold the University, its regents, employees, and agents harmless from all liabilities, suits, judgments, obligations, fines, penalties, claims, costs, and expenses (including reasonable attorneys’ fees) arising out of the imposition of, or attempt to impose, any such tax on the University.

2. Maintenance:- Throughout the Term, Lessee shall provide for the service, repair and maintenance of the Equipment, at Lessee’s sole expense, so as to keep the Equipment in as good condition, repair, appearance and working order as when delivered to Lessee hereunder, ordinary wear and tear excepted. Lessee shall, at Lessee’s sole expense, replace any and all parts and devices which may from time to time become worn out, lost, stolen, destroyed, damaged beyond repair, or rendered unfit for use for any reason whatsoever. All such replacement parts, mechanisms, and devices shall be free and clear of liens, encumbrances, and rights of others and shall become the property of the University and shall be covered by this Agreement to the same extent as the Equipment originally covered by this Agreement.

3. Use of Equipment:- Lessee shall exercise due care in its operation, use and maintenance of the Equipment. Lessee shall not use, and shall not permit others to use, the Equipment in any manner that would contravene applicable laws, rules, regulations and other governmental directives, would violate the terms of any manufacturer’s or like warranty, or would contravene the manufacturer’s reasonable operational standards for the Equipment. If the University notifies Lessee of any additional operational standards, Lessee shall adhere, and shall cause others using the Equipment under this Agreement to adhere, to such standards in the operation of the Equipment. Lessee shall not alter or modify the Equipment without the prior written consent of the University. Lessee agrees that only qualified employees of Licensee shall operate the Equipment.

4. Permits:- Lessee shall obtain all permits and licenses necessary for the installation, operation, possession and use of the Equipment. Lessee shall comply with all laws, rules, regulations and other governmental directives applicable to the installation, use, and operation of the Equipment and, if compliance with such law, rule, regulation or other governmental directive requires changes or additions to be made to the Equipment, such changes or additions shall be made by Lessee at Lessee’s sole cost and expense upon the University’s written approval of the same.

5. Utility Charges:-. Lessee shall pay all charges for gas, water, steam, electricity, light, heat, power, telephone or other utility service to be used on or in connection with the Equipment, including charges for installation of such services. There shall be no abatement or diminution of rent due to the interruption of any such services.