Summary Commercial Law (KRG) 120 Purchase & Sale Chapters 13-15
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Course
KRG 120 (KRG120)
Institution
University Of Pretoria (UP)
In depth summary of Purchase & Sale (Chapters 13-15) in the commercial law 5th edition nagel et al textbook for KRG 120. Includes graphical explanations, a glossary of latin terms applicable and extensive examples to help understand concepts.
CONTRACT OF SALE DEFINED
Þ Specific, nominated, reciprocal agreement to buy & sell
Þ Where the seller has the true intention to deliver a determined/determinable
thing and their rights to the thing, to a buyer
Þ And the buyer has the true intention of paying a determined/determinable price
for the thing
REQUIREMENTS FOR A VALID CONTRACT
Þ General = consensus, contractual capacity, legality, physical possibility &
formalities
Þ Essentialia to contract of sale:
1. Intention to buy & sell (Nature of the Contract)
• Seller must deliver rights to undisturbed use, enjoyment & disposal of thing sold (i.e.
enable the buyer to obtain ownership)
• If both the buyer & seller know the object does not belong to the seller (e.g. it is
stolen) = contract is null and void
2. Consensus on what is being bought/sold
• Thing must be determined/determinable at the time of conclusion of contract
• Must be physically possible
,• If the description of the thing is too vague = null & void
• Thing can be movable, immovable or immaterial (like debt)
o BUT it has to be merchantable (suitable for sale/sellable)
o Some things are merchantable, but the sale is illegal
1. E.g. Agricultural land cannot be sold without written consent of
Minister of Agriculture
2. E.g. NO land in a township maybe be sold until the it is declared an
approved township
• Things sold in the Future (NB!)
o Only determinable (not determined) @ time of conclusion
o Become determined if certain specifications are met / event occurs
o Where CPA applies:
• Consumer can examine Merx to make sure it is of quality agreed
upon – can decline delivery if not what was agreed upon &
return Merx to supplier (within 10 business days)
• Supplier must pay cost of return fee
o Examples:
1. Emptio Rei Speratae
When Sally sells next season’s crop to Ben for R20 per bag
This only become determinable once the crop has grown and Sally can count the
number of bags, she can fill
2. Emptio Spei
Where Sally sells next seasons crop to Ben for a lump sum (e.g. R100 000) –
irrespective of the number of crops grown or even if the crop doesn’t realize.
Chance determines the object sold
WHAT IS A MERX?
The object sold is fixed at time of conclusion
Articles that are bought and
3. Generic Sale sold;
Thing is indicated in general & only individualized articles of trade.
later
2
, Object sold is determinable & fixed only after individualization
E.g. 20 bags of crop from all of the crops grown
• Res Aliena:
• Deals with when the seller is not the owner
• Seller does NOT have to be the owner of the thing being sold:
Þ ONLY requirement of seller = deliver the undisturbed use & enjoyment of all
their rights to the buyer
Þ Any clause in the contract stating that the buyer will NEVER become the
owner of the thing sold = not a contract of sale – but can still be a valid
contract (e.g. A contract of lease)
• If seller knows he is NOT, the owner and
proceeds with sale – the buyer (acting in Nemo plus iuris rule:
good faith) can hold the seller liable for fraud
or misrepresentation if any occur. person cannot transfer
• In a res aliena situation: the true owner is more rights than they
entitled to claim his property from the buyer themselves have
with vindicatory action (rei vindicatio) – if
the property still exists
Þ Due to nemo plus iuris rule
• If the res aliena property bought (in good faith) was sold for a second time by the
previous buyer – the owner cannot claim money from the previous buyer
• If res aliena property bought (in bad faith) was sold for a second time – the true
owner can claim money to the value of the property from the previous buyer.
• If res aliena property was purchased (in bad faith) and the buyer prevents the true
owner of reclaiming the property – the true owner can claim the value of the
property
Þ In summary: the true owner can always exercise his right to reclaim property
against ALL subsequent buyers if they act in bad faith
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