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CML 1000F - The law of purchase and sell notes
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THE LAW OF PURCHASE AND SALEKarin Lehmann
1. GENERAL INTRODUCTION TO SPECIFIC CONTRACTS
In the course so far, you have studied the general principles of contract. These principles
apply to all contracts, unless the contract has its own special rules. Not all contracts have
special rules – if they did, the general principles would not play a meaningful role. However,
some contracts have special rules that are different from the general principles, and when
they do it is extremely important to know and understand their specific rules. The contracts
that have their own specific rules are contracts of sale, lease and agency. There are a few
other contracts that also have special rules, but they are not relevant for this course. These
contracts are sometimes referred to as specific contracts, simply because they have their
own specific rules. However, it is important to bear in mind that if an issue arises under a
specific contract, and the contract does not have a special rule for that issue, then the
general principles of contract will still apply.
2. INTRODUCTION TO CONTRACTS OF SALE
Contracts of sale are one of the oldest types of contracts. It is still the contract that is most
frequently entered into today. Individuals will enter into thousands of contracts of sale during
their lifetime. Most often, individuals enter into these contracts in the capacity of buyers
rather than sellers. Think of the thousands of consumer goods that are sold to consumers by
shops (retailers) each day. However, sometimes both the seller and buyer are a private
person. This is usually the case with immovable property (houses and flats and land); second-
hand cars, which are sold either by dealerships or by private persons selling their own car;
and the many sales of used household goods that are commonly advertised on websites like
gumtree.
The full name of contracts of sale is actually contracts of ‘purchase and sale’, but this is
invariably shortened to ‘contracts of sale’ for convenience. From the early existence of
humankind, people either bartered (traded) or bought and sold goods. The law of contract
in many legal systems has been heavily influenced by the rules of ancient Roman Law. In
South Africa, the main source of law for contracts of sale is Roman-Dutch law (RDL) and
judicial precedent (interpreting and applying RDL), which we usually refer to as the common
law (CL).
However, where the contract is entered into between a supplier (someone selling in the
ordinary course and scope of their business) and a consumer, the contract is also subject to
the Consumer Protection Act (CPA). The CPA changes the common law in certain situations.
It is important to still know and understand the common law (CL) principles because the CPA
applies only to consumer contracts, and there are many contracts of sale that are not
governed by the CPA because they are ‘private’ contracts. There are also many aspects of
the law of sale that are not regulated by the CPA, even when the contract is a consumer
contract. Remember, also, that most provisions of the CPA do not apply when the consumer
is a juristic person with an asset value or annual turnover of more than R2 million at the time
the contract of sale was entered into.
, The notes will focus on the CL principles of sale rather than the CPA principles. When
appropriate, after the CL principle has been explained, the CPA provision will also be
explained if it is different to the CL principle. In these situations you must know both the CL
and CPA principle.
These notes will focus on the following aspects of the law of sale:
- The definition of a contract of sale
- The seller’s duty to deliver the goods, and to take care of the goods prior to delivery
- The passing of risk under contracts of sale
- The passing of ownership under contracts of sale
- The implied warranty against latent defects
- The implied warranty against eviction
In accordance with the law of contract generally, contracts of sale are valid and binding
provided the parties intend to enter into the contract and provided they have agreed on
the essential terms – which are price and subject-matter in a contract of sale. The contract
can be a verbal or written contract or partly verbal and partly written. However, contracts
for the sale of immovable property must be in writing to be valid (more information below).
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