The Legal Nature of the Duty of Care and Skill: Contract or Delict?

Abstract

This article evaluates the legal nature of the duty of care and skill of directors. In terms of the Companies Act 71 of 2008 this duty is essentially delictual in nature. This article evaluates whether the duty is in fact delictual in nature. Case law, which considered the duty of care and skill and where it had been sought to establish liability for directors, has in fact mainly been in respect of non-executive directors. A clearer distinction should therefore be drawn between executive and nonexecutive directors whose duties would be more of a contractual nature. The article then evaluates whether the legal nature of the duty of care and skill would lead to any practical difference depending on the cause of action.