The Legal Nature of the Duty of Care and Skill

Keywords: Duty of care and skill, executive directors, Non-executive Directors, Contract, Delict, Concurrence of Claims

Abstract

Section 77(2)(b) of the Companies Act 71 of 2008 (“the Act”) provides that a director of a company may be held liable based on the common law principles relating to delict for any losses or damages which the company suffer due to a breach of the duty of care in skill in terms of s76(3)(c), losses due to a breach of a provision of the Act not mentioned in section 77 and losses due to the contravention of any provisions of the memorandum of incorporation (“MoI”) of the company. This article poses the question whether the legislature was correct in formulating the legal nature of the duty of care and skill as well as the liability of directors for losses flowing forth from any breach of the company’s MoI as delictual. The article will attempt to show that basis for liability is not necessarily delictual in nature but it could be argued that the basis could also be contractual.

 

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Published
2017-01-03
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