Professional Documents
Culture Documents
Contracts of sale
Definition A reciprocal agreement: seller transfers a thing and all his rights in that thing to purchaser, who pays money in return. All rights in the merx?
Not a requirement that seller be the owner of the merx, need only transfer undisturbed possession.
Seller must intend to transfer all his rights in the merx to the buyer.
Essentialia
Essentialia distinguish a particular type of contract. Essentialia of a contract of sale:
Price Subject matter
The other requirements for a valid contract must also be present. Certain contracts of sale may be subject to formalities, eg. sale of immovable property.
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Essentialia contd
The object (merx)
Merx must be determined/ determinable at time when sale concluded
If merx destroyed before contract entered into: no sale possible If merx destroyed after contract entered into but before delivery: party bearing risk loses
Merx contd
Merx must be merchantable: must belong to someone and be capable of being sold commercially. Merx may be movable, immovable, incorporeal. The sale of a non-existent merx is void.
One may, however, sell a non-existent thing which may come into existence. Eg. sale of a fishing boats catch before it goes to sea.
Price
Price must be determined or determinable.
Either a specific price or a method by which price can be determined without reference to parties.
Passing of ownership
Only the owner of a merx may transfer ownership
Nemo plus iuris rule
Therefore a mala fide seller misrepresents a material aspect of the contract and the contract is voidable. If seller is bona fide the contract cant be set aside.
The buyer is protected in these circumstances by the implied warranty against eviction.
Eriksen Motors (Welkom) v Protea Motors, Warrenton 1973 (3) SA 685 (A)
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If buyer is in mora, seller only liable for gross negligence, intentional harm.
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Therefore: seller warrants that buyer will not be evicted by a 3rd party with stronger title to the merx.
This warranty is a naturale of a contract of sale (residual term). It may, however, be excluded by agreement.
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(b) Buyer must conduct a proper defence Referred to as a virilis defensio Even if seller does not assist buyer, he must put up a proper defence to 3rd party.
Otherwise may lose right of recourse against seller.
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Requirements contd
Reason for this requirement: claim of 3rd party may be refutable and could be resisted.
If buyer proves claim is irrefutable, he may have recourse against seller without having made a proper defence.
Requirements contd
In the event of eviction contd
If buyer has made improvements, may resist claim of 3rd party until 3rd party has compensated him for these. But: enrichment may be hard to prove, thus buyer may claim value of improvements from seller if he fails to assist in the defence.
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If the buyer knew of the defect at the time of sale, he will have no action against the seller.
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Requirements contd
(b) The defect must impair the utility of the merx A defect is an abnormal quality which impairs the effectiveness of the merx for the purpose for which it has been sold. Sarembock v Medical Leasing Services (Pty) Ltd 1991 (1) SA 344 (A) Defect must be abnormal
ie. One would not expect to find such a defect in a merx of that type, age and price.
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Requirements contd
If the problem is not abnormal in this sense, then its not a defect, even though it impairs functionality of merx. Curtaincrafts (Pty) Ltd v Wilson 1969 (4) SA 221 (E)
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1. Actio redhibitoria
Available where defect is so material that buyer would not have purchased had she known about it. Remedy aims to put parties in position they were before contract was concluded:
Buyer may claim purchase price, seller may claim merx.
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2.
Where defect is not material, buyer can only claim price reduction.
Price reduction = purchase price - true value in defective state.
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Consequential losses?
Usually there is no claim available for consequential losses under the aedilitian remedies, but in certain circumstances it does exist:
Seller is aware of defect in goods and fraudulently fails to disclose it. Seller is the manufacturer of the goods Seller professes expert knowledge of the goods
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