The contract of Sale

Commercial Law

Definition:

The seller (vendor) promises to deliver a thing (merx) to another person known as the buyer(emptor) for payment of a certain price (pretium)

The parties to the contract

Seller (who sells)Purchaser (who buys)

Formalities

Generally no formalities – but:Parties may agree that no sale unless

certain formalities complied with

Some Statutes require formalities

(Some) Statutory Formalities

Sale of land – signed & in writingCredit agreements – in writing &

signed by both buyer & sellerSale of business – sale to be

advertisedLabelling of goods

The essential elements of sale

Agreement to deliver

Agreement on the thing sold

Agreement on the sale pricePrice must be ascertainable & in money

Agreement to deliver

The seller must give control of the merx to the buyer

Generally, deliver immediately, otherwise within a reasonable time

Delivery

Actual deliveryConstructive delivery

Types of constructive delivery

Symbolic delivery – keysLong hand (longa manu) – pointing

outShort hand (brevi manu) – buyer

already hasConstitutum possessorium – seller

keepsAttornment – gallery keeps

The merx

Buyer and seller must agreeCan sell anything unless law

forbidsThing may not yet exist

Hope or spes

Thing sold (object of the sale)

MovablesImmovablesSpecific thingsGeneric thingsCorporeals and IncorporealsThings in existence now or in the

future

Price

Price must be agreed uponMust be in moneyPrice must be fixed or

ascertainable

Sale of 3rd party goods

You can sell something that is not yours!

Sale of 3rd party goods

Seller does not have to own goods

Sale creates a personal right to delivery

Examples

Sale of generic goods you expect to acquire

Sale of specific item you expect to acquire

Fraudulent sale of another's propertySale of goods bought under credit

agreement where ownership reserved

Rei vindicatio

Action available to true owner of goods for recovery

Only needs to proveIs true ownerDefendant in possession

Conditional contracts

Suspensive conditionResolutive condition

Suspensive Condition

The operation of the obligation (performance of rights & duties) is suspended or delayed until the uncertain future event (condition) takes place

Eg: A agrees to buy B’s car if she can get a loan

Resolutive Condition

The obligation comes into operation immediately (performance takes place) but if the uncertain future event (condition) is fulfilled the obligation will immediately terminate

◦ Eg: A agrees that B may use his car until he finds employment. Once B is employed he must hand back the car to A

Rights of the Purchaser

To receive delivery of the merx

Does not mean seller must deliver, but must make available

Preservation of the merx pending delivery

Seller must look after goods until delivery. Risk passes on sale being perfecta but seller liable for negligent loss or damage

Purchaser to be protected against eviction

Sellers warranty against eviction

Purchaser entitled to merx free from latent defects

Duties of the Buyer

To pay the purchase price

General rule – pay in legal tender upon delivery

To pay the seller’s necessary expenses

Costs of caring between sale & delivery, transfer costs

To accept delivery of the merx

The Passing of Risk

General RuleThe risk passes from the

seller to the purchaser as soon as the sale is perfecta.

The parties may agree to change this, for example, for risk to pass on delivery

When is the sale perfecta?

Agreement on priceMerx identifiedAny suspensive conditions

fulfilled

Did you get that?

Examples

OwnershipPassing of ownership

Seller must be owner at delivery

Seller intends to pass ownership

Buyer intends to acquire ownership

Seller must deliver to purchaser

Purchase price paid or credit granted

Transfer of ownership

Immovable property – on registration of transfer

Incorporeal property – on cession

Movable property – on delivery If cash sale – price paid & delivery

If credit sale – on delivery

Cession

Transfer of a personal rightCedent transfers to the

Cessionary

Requirements for cession

Cedent must hold the right being transferred

Must be a personal rightParties must intend to transferObject of cession must be

identifiedMust be lawful

Warranties

May be express or implied

A contract of sale always implies the following warranties: Warranty against eviction

Warranty against latent defects

Latent defects

Defect existing at time of sale but unknown to ordinary buyer even if apparent to an expert

There is an implied warranty that goods are fit for the purpose for which sold

If latent defect - entitled to remedy unless: Voetstoots or “as is” sale (parties agree to exclude)

No defect at time of sale

Buyer aware of defect and accepted

Prescription

Requirements for claim of latent defect

There is or was a material defect in the goods

The defect was present when the sale was concluded

The defect was latent (not easily noticable on inspection)

Purchaser was unaware of the defect at the time of purchase

The Aedilitian Remedies

Actio redhibitoria

Available if latent defect renders goods useless or if purchaser would not have purchased the goods if aware of defect

Purchaser tenders return of merx & claims purchase price plus interest & costs of maintaining merx and cost of any improvement to merx

No compensation

The Aedilitian Remedies

Actio quanti minoris

If defect not so material as to render goods useless or if purchaser would still have purchased goods (but maybe at lesser price)

Buyer sues for reduction in purchase price

No compensation

The Aedilitian Remedies

Actio ex empti

Allows buyer to claim compensation in certain cases:

If seller fraudulent

Seller a manufacturer, expert or professes skill

Seller has given an express warranty

NB

The Consumer Protection Act prohibits the use of a voetstoots clause This only applies to contracts covered by the Act

Other specific legislation relating to certain types of sale Share Blocks

Sectional Title etc