PRIVATE LAW 411: SPECIFIC CONTRACTS
Introduction ............................................................................................................................2
Why rules relating to specific contracts? .................................................................................2
Methodology of classification ...................................................................................................2
Sources of specific contracts ...................................................................................................3
Contract of sale ......................................................................................................................3
Definition: .................................................................................................................................3
Distinguish ...............................................................................................................................3
Merx/res vendita ......................................................................................................................6
The price ..................................................................................................................................8
Formalities .............................................................................................................................11
Consequences of a contract of sale ......................................................................................12
Duties of the parties: ..............................................................................................................16
Seller’s duties: warranty against eviction ...............................................................................16
Seller’s liability for attributes of the merx ...............................................................................22
Delictual liability .....................................................................................................................28
Remedies in terms of consumer protection Act .....................................................................28
Exclusion of liability for latent defects/misrepresentations:....................................................30
Lease .....................................................................................................................................31
Nature and conclusion ...........................................................................................................31
Temporary use and enjoyment ..............................................................................................31
Rent .......................................................................................................................................32
Formalities .............................................................................................................................32
Distinction from other types of contracts................................................................................33
Duties of the lessor ................................................................................................................33
Duties of the lessee ...............................................................................................................37
Subletting, cession, and delegation .......................................................................................39
Termination of the lease relationship .....................................................................................41
Rental housing Act 50 of 1999...............................................................................................42
Suretyship ............................................................................................................................46
Introduction ............................................................................................................................46
Definition and general concepts: ...........................................................................................46
Conclusion of suretyship agreement .....................................................................................47
Relationships involved in suretyship: .....................................................................................48
Termination of surety’s liability...............................................................................................52
,Introduction
Why rules relating to specific contracts?
• General contractual principles = underlying framework
o These rules are, however, quite generic
o Sometimes there is a reason to deviate from the general framework
o Overarching principles are not sufficient to deal with specific contracts
o Sometimes general rules are silent on specific problems which are unique to specific
contracts
o There is also specific legislation which is relevant to specific contracts
Methodology of classification
• When dealing with specific contract types, must have a way to classify contract
• 2 broad approaches to classification of contracts in SA law
o NB: not an either/or with these approaches, they are applied in conjunction with one
another
o (a) essentialia-naturalia model
§ Essentialia of contract = those characteristic rights and duties which distinguish one
contract type from another
• Example: contract of sale à parties agree on what will be sold (merx) + the
intention that there will be a permanent transfer of the seller’s rights in that merx.
• What distinguishes, for example, a contract of sale from the contract of lease?
o Sale à intention of permanent transfer of rights
o Lease à intention that transfer of rights is TEMPORARY
§ Benefit of this approach à once parties agree on these characteristic rights and
duties, the law steps in and reads in certain terms automatically. These ex lege terms
= naturalia
• I.e., all that is required of parties is an agreement on essentialia, as law reads in
terms based on policy considerations aimed at balancing interests of the parties
• Easy to apply
• Certainty à when parties know a particular conclusion is certain, this is fair
• Efficiency
§ BUT this is an all or nothing approach
• Example: if we cannot conclude on merx and purchase price, it cannot be a
contract of sale, regardless of parties’ intentions
• This can lead to a formalistic approach
§ Shortcomings
• Does not lend itself to a nuanced approach, hides the need to differentiate
between sub-types of contracts/mixed types of contracts
o Example: trade-in transaction à want new car, trade in old car + money. What
type of contract is this? Is it a contract of sale? Or is it a contract of exchange
as a contract of exchange = thing for a thing?
o Essentialia/naturalia model does not help us to classify a contract as above
because of the mixed element
• Sometimes applying this model is not enough as the essential terms of 2
contracts may be the same
o This can occur when dealing with distinction between employment contract
and a contract for an independent contractor as for both contracts the intention
is for provision of service and remuneration. But the distinction between
employment contracts and contract for independent contractor = NB
o How do we make the distinction? Consider external factors e.g., how are
people paid, how much supervision etc.
o (b) Typological approach
, § Inherited from German law
§ Recognises that concepts (like that of a contract of sale) are valuable, but are
insufficient
• Idea of ‘concept’ is a closed one i.e., it thinks of a contract of sale as a concept
à must be agreement on merx and price for compliance with requirements of the
CONCEPT of sale
§ By contrast, typological approach is more fluid, works with fluid ideas/ ’types’ à i.e.,
sees contract of sale as a type, not concept. Because this notion is more fluid, the
criteria ≠ all or nothing
• Many different factors, not all of which must be present for the existence of a
specific contract
§ Types are used to determine whether dominant impression is that parties concluded
a specific contract
§ Example: employment contract/independent contractor: essentialia look the same,
look beyond what the contract looks like and rather how the parties interact with one
another
Sources of specific contracts
• Common law rules
o Those rules from Roman Law, interpreted by Roman-Dutch authorities, and which have
remained unchanged since 1700s
• Legislation
o Certain acts prescribe formalities e.g., alienation of land Act, suretyships etc.
o CPA
o Formalities in respect of Leases of Land Act 18 of 1969
o Rental Housing Act 50 of 1999
• Constitution
Contract of sale
Definition:
• An agreement that the seller will deliver an object (i.e., merx) and transfer all his rights
therein in return for payment of the purchase price by the buyer
• Essentialia
o Agreement on the merx
o Agreement on the purchase price
o These essentialia must be present for a contract to qualify as one of sale
• Note:
o It is not an essentialia of a contract of sale that the seller transfer ownership to the buyer
§ The contract of sale will thus not be invalid if the seller does not make the buyer an
owner of the thing
§ See later when we do the sale of something belonging to somebody else
o In textbook, there is reference to 3rd ‘essentialia’ à parties must have intention to sell
and to buy
§ Myburgh: this is redundant as if you already agree on what you are going to buy and
at what price, this idea is implicit in the essentialia
Distinguish
• Contract of sale from lease contract
o Similar looking contracts
o Main distinction: in the case of a sale, the intention is to transfer rights in the merx
permanently. Whereas with a lease, the intention is that the lessor transfers rights in
the leased object temporarily
• Contract of sale v contract of exchange
o With contract of exchange à object given in exchange for another object
, o BUT do get a contract where an object is given for an object + sum of money
§ E.g., somebody trades in old car + money for a new car
§ This type of contract can either be a contract of sale or a contract of exchange
§ How do we determine which type we are dealing with?
§ Wastie v Security Motors 1972 (C) à not prescribed
• Because we are working with a contract, the intention of the parties = decisive à
if intention is for exchange, then it is an exchange, if the intention is for sale, then
it is sale
• If it is still unclear, the court will consider which aspect of the traded-in performance
has the largest value
§ In the example, if the vehicle has the greater value in the performance, then it is a
contract of exchange. However, if it is the money which has the greater value in the
performance, then it is a contract of sale
o Trade-in transactions, particularly when in exchange for vehicles, there is a
presumption in favour of it being a contract of sale
o Practical relevance of distinction?
§ Trigger event à right of pre-emption
• What constitutes a trigger event which would make this right enforceable depends
on the distinction
• Right of pre-emption is where somebody has a preference to acquire an object
o Generally formulated as: should the granter of the right ever wish to sell the
object; the holder of the right will have first choice to purchase such object
• Trigger event which will activate this right ^
o Making the decision to sell, or any other conduct from which an intention to sell
can be inferred
o To circumvent this, you would exchange the object and therefore you would not
be in breach as it would not be a sale
§ Transfer of ownership where the transfer of ownership is relevant
• Transfer of ownership ≠ validity requirement, but if the seller is owner of the merx
and sells it then the intention is that the right of ownership will be transferred
• With exchange, ownership is transferred at delivery
• With a contract of sale must distinguish between cash sale and credit sale
o Cash à ownership is transferred when there has been delivery of the merx +
payment of the purchase price
o Credit à ownership is transferred upon delivery only
§ Aedilitian actions
• Available when dealing with defective merx, or where seller has made certain
misrepresentations about the characteristics/attributes of the merx
• Available on 2 grounds à latent defect, misrepresentation
• Available remedy for defective/misrepresentation = termination and reclaim
purchase price or claim reduced purchase price
• Initially developed for contracts of sale, but later extended to include contracts of
exchange
• Then, question of whether these remedies are also available when dealing with
trade-in transactions
• Janse van Rensburg v Grieve Trust 2000
o Trade-in transaction of vehicles
o Buyer wanted new car, as payment for which he traded in old car and paid sum
of money
o Buyer misrepresented the year model of the car that he traded in
o Question was then whether the seller could institute aedilitian action against the
buyer
o Trade-in transactions = presumed contracts of sale
