lpl4801 exam prep
CONTRACT OF LEASE
Roman law recognised three types of letting and hiring, namely the hiring of services which
are conducted under supervision, the hiring of a person's services in order to obtain the
results of the labour such as the building of a house and lastly, the letting...
,CONTRACT OF LEASE
Roman law recognised three types of letting and hiring, namely the hiring of services which
are conducted under supervision, the hiring of a person's services in order to obtain the
results of the labour such as the building of a house and lastly, the letting and hiring of a
thing which can be either movable or immovable. It is the letting and hiring of a thing
which forms the subject of this study guide.
DEFINITION OF A CONTRACT OF LEASE
A contract of lease of a thing (a contract of letting and hiring) is a reciprocal agreement
between one party, namely the lessor, and another party, namely the lessee, whereby the
lessor binds himself or herself to give to the lessee the temporary use and enjoyment of the
thing, in return for the payment of the rent.
3.1 Requirements for a valid contract
There are a number of requirements which must be complied with for a contract to be valid.
If they are not complied with, the contract is said to be invalid or void. The requirements in
question are stated hereunder.
The following are the six absolute requirements for a valid contract: While there can be no
contract in the absence of an actual agreement to create obligations or a reasonable reliance
in the existence of such an agreement, it is also true that not every agreement to create
obligations gives rise to a valid contract.
(1) Concensus or apparent consensus
(2) The parties must have contractual capacity.
(3) Prescribed formalities must be complied with.
(4) The obligations created by the contract must be possible of performance.
(5) The contractual agreement must be legal.
(6) Performances must be determined or determinable.
3.2 Essential elements of a contract of lease
Apart from the absolute requirements for the validity of contracts in general, the essential
elements of a contract of lease on which the lessor and lessee must reach agreement in
order to conclude a contract of lease are that
(1) the lessor must deliver and the lessee must receive a thing or property for the temporary
use and enjoyment of this thing or the property
(2) there must be a thing or property which is being let
(3) an amount of rent must be paid for the use and enjoyment of the leased thing
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,An agreement which does not embody all three of these terms may still be a valid contract
but it cannot be a contract of lease. So, for instance, a contract which provides that the one
party is to deliver a thing to the other and that the other is to pay a sum of money in return,
but which does not also provide that it is only the temporary use and enjoyment of the thing
which is being parted with by the one in favour of the other, will be a contract of sale and
not a lease. However, a contract which does provide that it is the temporary use and
enjoyment of the thing which is being parted with but which does not contain a provision to
the effect that the intended recipient of the thing is to pay a sum of money for its use and
enjoyment will be a contract of loan and not a lease.
3.3 The requirement that the parties must agree to deliver and receive a specific thing
The requirement to deliver the leased object is an expression of the general requirement
that performance must be possible. Where performance becomes impossible the normal
principles of supervening impossibility of performance and prevention of performance take
effect.
Supervening impossibility takes place where performance becomes impossible through no
fault of the lessor. The effect it has on the contract is that the obligations are terminated.
Prevention of performance by one of the parties can take two forms, namely absolute or
objective impossibility of performance, where performance is prevented permanently and as
regards everyone; and relative or subjective prevention of performance where it is only
performance by the debtor (lessor or lessee as the case may be) which is rendered
impossible Ð this last mentioned form constitutes breach of contract in the form of
repudiation. The first mentioned form constitutes breach of contract in the form of
prevention of performance.
3.4 The letting and hiring of the leased thing must be temporary and not in perpetuity
If the lease is to continue for a definite period or until the occurrence of a future event or is
at the will of either the lessor or lessee or if the period is indefinite but the rent is payable
periodically, the lease is considered to be temporary. A lease cannot be for ever; only a
contract in which the temporary use and enjoyment of a thing is granted to one of the
parties can be a lease. That is the view of most Roman Dutch and South African writers on
the law of lease. This does not mean, however, that a contract in which the use and
enjoyment of a thing is granted to a party in perpetuity is for that reason invalid; it only
means that such a contract cannot be one of letting or hiring. It may be a valid emphyteusis.
The requirement that a contract of lease must be of limited duration is complied with in
the following cases:
(1) if the lease is to run for a definite period see Steyn v Fourie 1956 (4) SA 458 (A)
(2) if the lease is to run until the occurrence of an event which is sure to occur although the
date of its occurrence may be uncertain see Davy v Walker & Sons 1902 TH 114; Cohen v Van
der Westhuizen 1912 AD 519; De Kock v De Kock 1966 (1) SA 37 (O)
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, (3) if the lease is at the will of either lessor or lessee see Hart v Hart 1902 TH 247; Thomas v
Guirguis 1953 (2) SA 36 (W); Maharaj v Sing 1 955 (1) SA 41 (N); Ebrahim v Pretoria
Stadsraad 1980 (4) SA 10 (T); Evangelical Lutheran Church v Sepeng 1988 (3) SA 958; Van der
Vijver v Milford 1912 EDL 384; Friedman v Friedman 1917 DPD 268
(4) if the lease is for an indefinite time with the rent payable periodically (in such a case, the
lease may be terminated by either party by reasonable notice given to the other) see Fulton
v Nunn 1904 TS 123; Ntsobi v Berlin Mission Society 1924 TPD 378; Union Government v
Foxon 1925 NPD 47; Begbie & Co v Hartmann 1925 TPD 446; Tshabalala v Van der Merwe
1926 NPD 75; Pinetown Town Council v Tshabalala 1953 (1) SA 427
(N); Wasmuth v Jacobs 1987 (3) SA 629 (SWA)
3.5 The thing subject to the lease can be either corporeal or incorporeal or an object still
to come into existence
As in the case of contracts of sale, we find that the concept ``thing'' includes incorporeal
things too, with the result that rights may also be leased. For example, it is contended that a
usufructuary can hire out his or her usufruct, and in Young v Smith and Another 1961 (3) SA
793 it was argued, on the strength of Graham v Local and Overseas Investments (Pty) Ltd,
1942 AD 95 that there is no doubt that an incorporeal thing can form the subject of a lease.
In this case the matter arose from granting the tenant the power to conduct a business on a
particular piece of land. In this context the court said: ``What was let is not corporeal
property but the incorporeal right to trade.'' In contrast to this case, the view had been
taken in a series of previous decisions that the granting of an exclusive right to do business
on certain premises is not the lease of a thing, but an innominate contract for the granting of
something similar to a personal servitude.
Unisa's opinion The view that incorporeal things, that is rights, can be let and hired, is
unconvincing. In all the abovementioned cases it is obvious that corporeal things were being
let, even though the lessee's powers of use and enjoyment may be very much restricted by
the contract. In the case of a usufructuary, it is clearly the thing which is the object of the
usufruct which is being let.
The fact that the lessor is the usufructuary of the thing merely means that the lessor is able,
by virtue of his or her legally valid title, to protect the lessee in his or her possession of the
thing. Likewise where the lessor empowers the lessee to do business on certain premises,
the premises are let with the understanding that the tenant will only have a certain
proportion of the use and enjoyment thereof. That the lessee's powers may be very limited
in a particular case, indicates that the contract is a lease rather than anything else. It is, after
all, one of the essentialia of a lease that the lessee will not enjoy all the powers of the
ownership.
As long as the performances of the parties are ascertainable, there can be no objection to
the landlord's agreeing to deliver only a portion of an existing thing. Such a contract would
undoubtedly qualify as a lease, for example where A let a flat to B (the flat is clearly not an
independent entity, but forms part of the ground on which it is built).
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