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Summary LAW OF PROPERTY LECTURE 7
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DERIVITIVE'ACQUISITION'OF'OWNERSHIP'• In#the#case#of#derivative#transfer#of#ownership,#the#co-operation)of)a)previous)owner)is)required
!
• A"bilateral(juridical(act(is(required(in(terms(of(which(ownership(is(transferred(by(the(previous(owner(to(the(new(owner(and(accepted%by%the%new%owner
• Result'='new'owner'accepts'all'rights'as'well'as'all'obligations'and'limitations'that'exist'with'regards'to'the$thing
• In#simple#terms#derivative#method#of#acquiring#ownership#is#a#way#in#which#ownership#is#acquired#from#a#predecessor#–!in#–!title%by%means%of%delivery%(in%
case%of%movables)%or%registration%(in%terms%of%immovable)
REQUIREMENTS*FOR*TRANSFER*OF*OWNERSHIP*(Concor*Construction*(Cape)*(Pty)Ltd*v*Santambank:
1. The!thing!must!be!negotiable!i.e.!capable!of!being!sold!(res!in!commercio)!–!it!must!be!a!thing!in!respect!of!which!real!rights!can!be!acquired!and!
transferred!
2. Transferor!should!have!the!capacity!to!transfer!ownership!i.e.!must!have!contractual!capacity.!!Capacity!of!the!transferor!determined!by!factors!such!as!age,!
mental!status,!,marital!status!–!so!transferors!with!limited!capacity!must!be!assisted.!
3. The!transferor!(previous!owner)!must!be!owner!or!be!authorized!by!owner.!!In!terms!of!nemo!plus!iuris!rule!no!person!can!transfer!more!rights!than!he!
himself!has!therefore!owner!is!the!only!person!who!can!transfer!ownership!
4. Transferee!must!have!contractual!capacity!to!accept!the!transfer!of!ownership.!!Again!factors!such!as!age,!mental!health,!marital!status!could!affect!
contractual!capacity.!!As!in!case!with!transferor!with!limited!capacity,!a!transferee!with!limited!capacity!must!be!assisted!!
5. Ownership!must!be!accepted!by!the!transferee!or!his!nominee!or!his!agent!
6. Transfer!of!ownership!of!movables!takes!place!through!delivery!–!the!thing!must!be!!delivered!to!the!transferee!in!a!legally!accepted!way!(traditio)!
2 In!the!case!of!immovables,!transfer!of!ownership!takes!place!by!means!of!registration!in!the!deeds!registry!–!this!is!known!as!the!objective!aspect!of!the!
transfer!of!ownership!and!is!a!manifestation!of!the!common-law!requirement!that!publicity!must!be!given!to!transfer!ownership!
7. Parties!should!have!the!intention!to!pass!and!acquire!ownership!i.e.!delivery!and!registration!must!take!place!with!the!intention!of!the!owner!to!transfer!
ownership!and!the!intention!of!the!transferee!to!accept!ownership!
• The!reciprocal!intention!of!the!transferor!and!transferee!embodies!the!subjective!aspect!of!the!transfer!of!ownership!and!this!intention!must!exist!in!the!
minds!of!both!parties!at!the!time!of!transfer!of!ownership!
• The!subjective!intention!of!the!parties!that!transfer!of!ownership!must!take!place!must!be!apparent!from!the!real!agreement!(Dreyer'v'AXZS'
industries'(Pty)'Ltd'2006'(SCA))!
• in!AirEKel'h/a'Merkel'Motors'v'Bodenstein'1980'(A)'the!court!held:!“!mere!agreement!is!insufficient!for!the!transfer!of!ownership!–!traditio!
(delivery)!is!also!required;!and!conversely!mere!delivery!is!also!insufficient!–!it!must!be!accompanied!by!the!agreement!between!transferor!and!
transferee!that!ownership!is!thereby!transferred!and!accepted!–!this!is!know!as!a!‘real!agreement’!“!
• In!Legator'Mckenna'Inc'v'Shea'2010'(SCA)''it!was!held!that!it!is!important!to!distinguish!between!the!preceding!obligation-creating!agreement!(i.e.!
the!contract!of!sale,!donation,!exchange)!and!the!real!agreement.!!!
• In!the!case!of!a!real!agreement!there!must!be!consensus!between!the!parties!in!respect!of!the!transfer!and!receipt!of!ownership!and!the!real!agreement!
must!meet!all!the!common!law!requirements!for!a!valid!contract!i.e.!capacity!to!act,!consensus!regarding!the!thing!etc.)!BUT!it!need!not!meet!all!the!
requirements!for!a!preceding!obligation-creating!!agreement!(contract!of!sale,!exchange!or!donation)!i.e.!in!the!case!of!credit!agreement!or!the!
alienation!of!land!the!real!agreement!need!not!meet!the!formal!statutory!requirements!!-!i.e.!that!it!must!be!in!writing!and!signed!
!!!!!
• In!Legator'case'!it!was!confirmed!that!the!principles!regarding!the!real!agreement!are!also!applicable!to!the!transfer!of!ownership!of!immovable!
property!!
©!Alda!Vorster! !
8. There!should!be!a!legal!ground!or!just!cause!(iusta!causa)!for!the!transfer!of!ownership(sale/donation/exhange)! !
9. If!ownership!is!transferred!on!the!basis!of!a!preceding!contract!of!sale!–!ownership!is!only!transferred!to!the!buyer!if!the!full!purchase!price!has!been!paid!
unless!credit!is!granted!–!this!indicates!that!the!intention!of!the!owner!that!ownership!must!!be!transferred!can!be!made!subject!to!a!suspensive!condition!
!
• Since&the&decision&in&Commissioner)of)Customs)and)Excise)v)Randles)Brothers)and)
ABSTRACT'SYSTEM'OF'
!
Hudson'1941'(A),'the$abstract$system$of$transfer$of$ownership$has$been$followed$in$South$
Africa
TRANSFER(OF( • This%means%that%the!invalidity)of)the)preceding)obligation-creating)agreement)(contract))
does%not%affect%the%validity%of%the%transfer%of%ownership%and%that%ownership%is%transferred%in%
OWNERSHIP spite&of&the&invalidity&of&the&obligation-creating)agreement)if)there)was)a)valid)real)
agreement%coupled%with%delivery%(in%the%case%of%movables)%or%registration%(in%the%case%of%
immovable)
! !
• In#Commissioner)of)Customs)and)Excise)v)Randles,))Brothers)and)Hudson)the$court$held:$“…the$legal$transaction$preceding$the$traditio!may$be$
evidence'of'an'intention'to'pass'and'acquire'ownership.''But'there'may'be'direct'evidence'of'an'intention'to'pass'and'acquire!ownership*and*if*there*is,*
there%is%no%need%to%rely%on%the%preceding%legal%transaction%in%order%to%show%that%ownership%has,"as"a"fact,"passed…!the$question$whether$ownership$has$
passed&depends&on&the&intention&of&the&parties&and&such&intention&can&be&proved&in&various&ways.”!
• This%principle%has%been%confirmed%in%several%decisions:%
1. Trust'Bank'van'Afrika'v'Western'Bank'1978'(A);'
2. AirEKel'h/a'Merkel'Motors'v'Bodenstein'1980'(A);'
3. Cape'Explosive'Works'Ltd'v'Denel'and'
4. Legator'Mckenna'Inc'v'Shea'2010'(SCA)
• NOTE:&this&does¬&mean&that&there&is&no&legal&cause&for&the&transfer&of&ownership.
• Usually'the'cause'will'be'contained'in'a'preceding)obligation-creating)agreement)i.e.)a)contract)of)sale,)exchange,)donation
• A"valid"obligation-creating)agreement,)is)however,)not)required)as)a)legal)cause
• Should'the'obligation'creating'agreement'be'invalid,'the'parties'intention'to'transfer'or'receive%ownership%can%be%deduced%from%other%circumstances%–!in#
these%cases,%the%legal%cause%for%the%transfer%of%ownership%can%be%found%in%the%circumstances%from%which%the%intention%is%deduced$–!it#may,#for#instance,#be#
the$signing$of$the$transfer$documents$or#the#payment#of#the#transfer#costs#or#purchase#price.##!
• In#Quartermark)Investments)(Pty))Ltd)v)Mkhwanazi)2014)(SCA))it#was#held#that#an#invalid#obligatory#
agreement(in(the(case(of(fraud(automatically(results(in(an(invalid(real(agreement.!
• It#is#suggested#that#a#court#must#in#every#instance#of#an#invalid'obligatory'agreement'determine'whether'
the$invalidity$of$the$obligatory$agreement$has$the$consequence$that$the$parties$do$not$have$the$intention$
to#transfer#ownership!
• If#such#intention#is#present,##a#valid#real#agreement#exists##in#spite#of#the#invalid%obligatory%agreement%–!Du#
Plessis&v&Prophitius&2010&(SCA)!
• In!these!circumstances,!the!bona!fide!transferee!(recipient)!is!protected!at!the!expense!of!the!transferor!
(previous!owner)!
• The!previous!owner’s!only!remedy!in!these!circumstances!is!a!personal!action,!usually!in!the!form!of!an!
enrichment!claim,!against!the!bona!fide!recipient!in!the!case!where!the!transferee!was!enriched!as!a!
result!of!the!invalidity!of!the!obligation-creating!agreement!
• The!previous!owner!cannot!institute!a!claim!based!on!a!real!action,!since!ownership!was!transferred!to!
©!Alda!Vorster! ! !
the!bona!fide!recipient!
, !
!!!!!
! ! CASH%AND%CREDIT%SALES
• In#a#cash#sale#ownership#does#not#pass#until#the#cash#price#has#been#paid#in#full!
• In#credit'sale'the'question'of'whether'ownership'passes'depends'on'the'transferor’s'intention!
• If#the#transferor#intended#ownership#to#pass#notwithstanding#the#fact#that#the#purchase#price#was#not#paid#in#full#=#ownership"will"
pass$from$the$transferor$to$the$transferee(on(transfer(of(control(of(the(thing((Grosvenor(Motors((Potchefstroom)(v(Douglas(1956(
(A)$and$Concor$Construction$(Cape)$(Pty)$Ltd$v$Santambank$Ltd$1993$(A)!
• If#there#is#no#explicit#provision#that#credit#is#granted#to#the#buyer#there#is#a#rebuttable#presumption#that#it#is#a#cash#sale!
• The$presumption$can$be$rebutted$by$the$circumstances$that$existed$at$the$time$the$contract$was$concluded$i.e.$if$the$seller$agreed%to%
accept&payment&on&a&date&after&delivery&or&the&thing&or&if&seller&accepted&security&for$the$payment$of$the$purchase$price.(credit$sale$
transaction)!
• In#Eriksen(Motors((Welkom)(v(Protea(Motors(Warrenton(1973((A)"court"held"that"the"rule"does"not"apply"in"all"cases"and"that"the"
circumstances+of+every+case+must+determine+whether+the+parties+intended%cash%or%credit%transaction.!
• In!the!case!of!a!credit!transaction!where!the!parties!agree!that!ownership!will!not!!be!transferred!until!the!purchase!price!is!paid!in!
full!–!here!delivery!is!then!subject!to!a!suspensive!condition!and!ownership!is!transferred!only!once!the!conditions!of!payment!are!
met!
• Some!credit!agreements!subject!to!the!provisions!of!the!National!Credit!Act!also!fall!into!this!category!and!ownership!is!not!
©!Alda!Vorster! ! !
In#the#case#of#the#transfer#of#ownership#of#movables#delivery#of#the#thing#is#
DELIVERY ! required'in'addition'to'the'real'agreement'between'the'transferor'and'
transferee
!!!!!
! • Delivery((traditio)(as(an(element(of(transfer(of(ownership,(is(the(transfer(of(the(physical(
!
control'of'a'movable'to'the'transferee'in'order'to'enable'him'to'exercise'control'of'the'
movable(with(the(intention(to(be(owner"(animus"domini).
DEFINITION:)
• This%has%to%do,%primarily,%with%the%principle%of%publicity%in%that%the%physical%control,%in%the%
context'of'the'transfer'of'ownership,'indicates'that'the'transferee'receives'the'movable'
with%the%intention%of%acquiring%ownership%of%the%movable
Delivery!can!have!2!meanings:!!
!
1. On!the!one!hand,!it!means!the!delivery!of! 2. On!the!other!hand!it!means!the!mere!delivery!
the!physical!control!of!the!thing!with!the! of!physical!control!over!the!thing!without!
intention!that!ownership!in!the!thing!vests! any!intention!that!ownership!is!transferred!
in!the!transferee! to!the!transferee!
! !
• At#common#law,#delivery#has#been#developed#in#such#a#way#that#it#refers#not#only#to#physical)delivery)(traditio)
vera)&but$also$fictional)or)constructive)delivery)i.e.$less$publicity$is$attached$to$the$act$of$transfer$–!delivery(
takes&place#here#when#something#which#enables#the#transferee#to#exercise#physical#control#over#the#thing#with#the#
intention&to&be&owner&–!in#these#circumstances#there#is#a#lack#of#a#real#or#clear#act#of#transfer
©!Alda!Vorster! ! !
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