n South African Journal of Economic and Management Sciences - Making sense of the disclosure of latent defects in financial statements and company acquisition contracts : law and economics
|Article Title||Making sense of the disclosure of latent defects in financial statements and company acquisition contracts : law and economics|
|© Publisher:||University of Pretoria|
|Journal||South African Journal of Economic and Management Sciences|
|Publication Date||Mar 2010|
|Pages||76 - 84|
|Keyword(s)||G34 and K20|
ISI Social Science
This paper analyses the statement made by the South African Appeal Court Judge Holmes in the Phame v Paizes (1973) case and, using economic and unique South African legal principles, it examines the true legal nature of a contract to regulate company acquisitions.1 Two solutions are offered for financial managers in South Africa: (1) the contract to regulate company acquisitions is a forward contract and (2) the difficulty in identifying latent defects should not be grounds for reducing the price paid for a company or enterprise in the South African legal system.
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