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LPL4801 EXAM PACK 2023.
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LPL4801 EXAM PACK2023
ADMIN
[COMPANY NAME] [Company address]
, 1
Questions and Answers
SALE LONG QUESTIONS:
1. Does the purchaser in a contract of sale have the same
obligations arising ex lege with regard to the thing used
as a trade in as the seller with regard to the thing sold?
Discuss.
It is one of the naturalia of a contract of sale that the seller is liable
for latent defects in the thing sold. But the question is whether the
same rule applied in the case of a latent defect in a thing used as a
trade-in regarding a contract of sale. In Wastie, the buyer used his
old car to buy a new one from the seller, along with a cash price.
The old traded in car had a latent defect, which cost R120 to fix. The
seller successfully claimed the repair cost from the buyer with the
actio quanti minoris. The court held that, where part of the purchase
price consists in something other than money, the same principle
that applies to the thing sold (liability for latent defects) applies to
the nonmonetary part of the purchase price. The reason being that
in the contract of exchange both parties are protected by the
aedilitian remedies against latent defects in the thing forming the
subject matter of the contract. It would thus be unfair, and illogical
not to afford the same protection to the seller in respect of the thing
traded in. This approach was rejected in Mountbatten, as the court
could not find any authority for this approach, and distinguished the
facts of Wastie from the facts of this case as this case dealt with a
dictum et promissum.
But in Janse van Rensburg, the court approved and followed the
approach in Wastie on the basis that good faith and public policy
require a balance between the rights and duties of parties to such
contracts. It would be unjust and unequitable to have the seller
liable for latent defects and misrepresentations relating to the thing
sold, while no such liability attaches to the buyer regarding the
thing traded in. this extension of the common law was also in line
with the Constitution.
2. X enters into a contract of sale with Y in regard to a TV.
The terms of the contract state that the buyer, Y, may
return the TV to X within one month after the contract if
he no longer wants it. 3 weeks after the contract, Y tells
X that he now wants to exercise this right. But, before Y
is able to return the TV to X, its destroyed by a fire in
his house, caused by lightning. What is Y’s position
now? And would it make a difference if the TV was only
damaged in the fire?
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, 2
In order to establish Y’s legal position, one has to determine which
party bears the risk at the time of the destruction of the television
set. In other words, was the contract of sale already perfecta? The
risk falls on the purchaser as soon as the contract of sale is perfecta.
This means that the purchaser remains obliged to pay the purchase
price even though the seller cannot deliver the thing sold at all, or is
able to deliver it only in a damaged condition. The term perfecta has
a specific juristic meaning which is important for the purposes of
transfer of risk. For the purposes of transfer of risk the sale is
perfects if the following requirements have been complied with:
1) The purchase price must be determined
2) The thing sold must be ascertained
3) The agreement must be unconditional
This problem deals with requirement (3), as it is clear that a pactum
displicentiae is present. According to the pactum displicentiae, the
buyer acquires the right to return the thing to the seller within a
certain time, if he is no longer pleased with it. A pactum
displicentiae can either be interpreted suspensively or resolutively.
The question however remains: who bears the risk if the thing is
destroyed in the meantime? In Fitwell, the appellant delivered goods
to the respondent in terms of a contract of sale. The respondent
refused to face delivery on the ground that the invoiced price was
higher than the agreed price. Hereafter the goods were destroyed
by a fire. In his decision the judge concludes that it is beyond
question that when the goods were destroyed, the appellant was not
prepared to reduce the price and it follows that the appellant must
have known that the respondent’s attitude in the circumstances was
that the goods had to be taken back. Thus, the contract of sale was
not perfecta and because of this the risk remained with the
appellant. It is unclear whether the pactum displicentiae has a
resolutive or suspensive effect because insufficient facts are given.
It has both a suspensive and resolutive effect. Y has already notified
X that he wants to return the goods in terms of the pactum
displicentiae. Thus, just as in the Fitwell case, it is clear that it is Y’s
intention that the television set must be taken back.
X thus bears the risk for the destruction of the television set. Y can
rely on the pactum displicentiae in terms of which he may withdraw
from the contract. When the thing is merely damaged, the seller (X)
bears the risk for such damage. The buyer (Y) may return the thing.
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, 3
3. A squatter comes to an agreement with the owner of a
farm according to which the farmer allows the squatter
to live on the farm in return for certain services. Later,
the farm is sold and transferred to Y, who is aware of
the agreement. Y tells the squatter that he is prepared
to allow him to stay on the farm on condition that he
renders the same services he rendered to the previous
owner. But the squatter refuses to acknowledge Y as
the new owner and indicates that he is only prepared
to render services to the previous owner. And the
squatter claims the right to continue living on the
farm. Discuss Y’s legal position and give reasons for
your answer and refer to case law.
To be able to ascertain the relevant principles of law, one firstly has
to establish whether a contract of lease has been concluded. Thus
the essentialia of a contract of lease are the following:
1) The lessor has to deliver a thing
2) The tenant has to be granted the use and fruits of the thing
3) The use of the thing should be placed at the disposal of the
lessee only temporarily.
4) The lessee has to give the lessor either a fixed or
ascertainable sum of money or a portion of the proceeds from
the thing leased.
However, there seems to be no sign of monetary compensation in
the given facts. Thus the fundamental question is whether the
lessee’s performance can consist in something other than the
payment of a sum of money.
In Rubin v Botha, the court accepted that there was a lease despite
that fact that, in casu, the lessee’s performance did not consist in
the payment of money. In De Jager v Sisana, the court ruled that no
lease exists. Therefore the squatter cannot rely on the ‘huur gaat
voor koop’ rule. The squatter only had a right to occupation in return
for his services. This innominate contract ceases to exist by reason
of the sale of the land by the person entitled to the services. The
squatter has not shown any legal right to occupation.
Y, however, has the right to decide whether he will allow the
squatter to continue with his services, in return for the right to
occupy his land. In spite of various attempts made by Y to prove to
the squatter that he (Y) is truly the new owner of the land, the
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