LPL4801 SALE AND LEASE
NOTES.
Djube
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THE LAW OF SALE AND LEASE 3541
1. LAW OF SALE
A sale is a reciprocal agreement between the seller and the buyer in terms of which
the seller, with the true intention, undertakes to deliver a determinable thing together
with all his rights in the thing u...
THE LAW OF SALE AND LEASE 3541
1. LAW OF SALE
A sale is a reciprocal agreement between the seller and the buyer in terms of which
the seller, with the true intention, undertakes to deliver a determinable thing together
with all his rights in the thing undisturbed to the buyer who has the true intention to
pay a determinable price for the thing.
*it is clear that there is no requirement for the transfer of ownership in a sale. The
seller’s obligation in a sale is to deliver to the buyer the thing with his rights over the
thing. The obligation of the buyer is to pay the price
Essentialia of a contract of sale
These are the distinctive characteristics of the sale. If any of them is missing, the
contract in question is not a sale. Note well that a contract of sale should meet all the
requirements of a contract, but essentially, the parties must agree to the merx and the
price to be paid.
1. There must be consensus between the parties as to the nature of the contract
i.e. meeting of minds at the conclusion of the contract. One party must be
agreeing to sell and the other to buy. Mistake as to the nature of the contract?
No contract of sale
2. Merx/thing/res vendita
- This is the thing that is being sold or bought
- The thing must be capable of sale i.e. corporeal or incorporeal
- The object of sale must be determined or determinable.
- The merx must not be owned by the buyer (res sua) i.e. one cannot buy one’s own
property.
- The right to an inheritance may also form part of the merx.
The buyer does not become the owner of the thing. The seller agrees just to make the
thing available to the buyer, thus a sale is an agreement to make the thing available.
The thing will be delivered at performance of obligations.
Sale of a non-existent thing
-the sale is valid even if the merx is not yet in existence, if it is yet to be manufactured
or produced in whatever way. This must be described with sufficient certainty in the
contract.
-the thing must be capable of coming into existence. It is called a future thing
- if the parties believe that the merx is still in existence when in fact it has ceased to
exist, the sale is invalid because there is no merx. The parties are just under a mutual
mistake.
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The future thing: two scenarios
1) Emptio rei speratal- parties agree to sale each other something they know will
come into existence. E.g. wine that is still under fermentation and distillation
2) Emptio spei- this is the sale of a hope. “I will buy all the mangoes in your farm
for so much money when they ripen”
Both these sales are perfect sales and enforceable.
*sale of a thing not capable of existing is invalid
Case of non-existent thing: Nuclear Fuels Corp SA V Orda 1996 (4) SA 119
Sale of the merx belonging to a third party (res aliana)
The seller necessarily does not have to own the goods. Hence a contract of sale is
valid notwithstanding ownership of the goods. This is so because a contract of sale is
meant to provide the buyer with undisturbed use and enjoyment of goods i.e. all rights
in the merx.
*in a contract of sale, possession of the goods, lawful or whatever, does not matter.
The agreement is still valid, but the buyer can still claim damages and unilaterally
nullify the contract.
About ownership too, look at the wine sale in which the seller is still to procure the
wine. At this stage the seller neither has possession or ownership of the merx; but the
contract is valid nevertheless.
- Even where property on hire purchase is sold before the possessor has fully paid
the purchase price, the contract of sale is still valid. The true owner can still use
the rei vindicatio to claim it back.
- Where a seller sells property belonging to another without the consent of the other
party, the true owner can claim it using the rei vindicatio, the basis of the law being
that one cannot transfer more rights than he has. The seller can claim the property
back using this remedy even if the buyer obtained it in good faith and has paid for
it.
When is the rei vindicatio not available?
a) Where the true owner represented to the buyer that he is the true owner.
b) The merx was sold in terms of an order of court and the buyer acted in good
faith
c) The buyer has by law a clear/tacit hypothec
d) The real owner instructed the agent who got the price and instead of delivering
it to the owner, retained and used it for his personal benefit.
*the buyer must always be faithful and bona fide. A buyer who knowingly buys
property not belonging to an unauthorised seller has no remedy.
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PRICE
There should generally be a meeting of the minds (consensus) on the purchase price.
If this condition is not met, there is no valid sale.
Specifics on the pricev
1) Parties must agree on the price
2) Price can be a specific sum of money/ascertainable
3) Price must consist of acceptable currency
4) Price may be money or money and goods e.g. trade-in,
5) Parties must agree on the payment of the price, lest the transaction becomes
a donation
*if the agreement is any payment other than money, the transaction is not a sale.
*to determine whether the contract is a sale or exchange, we look at the intention of
the parties. It they intend to make a sale, then let it be so. If they intend otherwise, let
it be so then too.
Disproportion between value of the goods and money paid
- Price does not necessarily have to match the value of the goods due to freedom of
contract. Parties have a right to bargain. The buyer is always looking for the lowest
price and the seller for the highest price.
- Price can be specific/determinable if there is a method of determination. *the
method of determination must be valid and effective so as not to render the sale
void.
- The parties must agree that the buyer will pay the price, of what amount and when.
Well one can say for the sake of fairness, there ought to be a proportionate between
the price and the value of the goods, but always bear in mind freedom of contract.
Methods of determination
- per unit that R100 per unit; so calculate the value of all the units
- percentage
- weighing, counting or whatever way of calculation
- determination by a third party
* A third party may be consulted by the parties to determine the price for them. The
third must make a reasonable determination. There are two problems with this:
a) The third party MAY NOT HAVE BEEN named. The third party must be specified
e.g. an evaluator, a firm of auditors. If the third party is not named or
specified/determinable, there is no price because of lack of consensus as to who shall
determine the price.
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