Exam (elaborations)
LPL4801 EXAM PACK 2023
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- University Of South Africa
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LPL4801 EXAMPACK 2023
UPDATED
REVISION PACK
, 1
LPL4801
Questions and Answers
SALE LONG QUESTIONS:
1. Does the purchaser in a contract of sale have the same
obligations arising ex lege with regard to the thing used as a
trade in as the seller with regard to the thing sold? Discuss.
It is one of the naturalia of a contract of sale that the seller is liable for
latent defects in the thing sold. But the question is whether the same
rule applied in the case of a latent defect in a thing used as a trade-in
regarding a contract of sale. In Wastie, the buyer used his old car to
buy a new one from the seller, along with a cash price. The old traded
in car had a latent defect, which cost R120 to fix. The seller
successfully claimed the repair cost from the buyer with the actio
quanti minoris. The court held that, where part of the purchase price
consists in something other than money, the same principle that
applies to the thing sold (liability for latent defects) applies to the non-
monetary part of the purchase price. The reason being that in the
contract of exchange both parties are protected by the aedilitian
remedies against latent defects in the thing forming the subject matter
of the contract. It would thus be unfair, and illogical not to afford the
same protection to the seller in respect of the thing traded in.
This approach was rejected in Mountbatten, as the court could not find
any authority for this approach, and distinguished the facts of Wastie
from the facts of this case as this case dealt with a dictum et
promissum.
But in Janse van Rensburg, the court approved and followed the
approach in Wastie on the basis that good faith and public policy
require a balance between the rights and duties of parties to such
contracts. It would be unjust and unequitable to have the seller liable
for latent defects and misrepresentations relating to the thing sold,
while no such liability attaches to the buyer regarding the thing
traded in. this extension of the common law was also in line with the
Constitution.
2. X enters into a contract of sale with Y in regard to a TV.
The terms of the contract state that the buyer, Y, may
return the TV to X within one month after the contract if
he no longer wants it. 3 weeks after the contract, Y tells X
that he now wants to exercise this right. But, before Y is
able to return the TV to X, its destroyed by a fire in his
house, caused by lightning. What is Y’s position now? And
would it make a difference if the TV was only damaged in
the fire?
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, 2
In order to establish Y’s legal position, one has to determine which
party bears the risk at the time of the destruction of the television set.
In other words, was the contract of sale already perfecta? The risk
falls on the purchaser as soon as the contract of sale is perfecta. This
means that the purchaser remains obliged to pay the purchase price
even though the seller cannot deliver the thing sold at all, or is able to
deliver it only in a damaged condition. The term perfecta has a specific
juristic meaning which is important for the purposes of transfer of
risk. For the purposes of transfer of risk the sale is perfects if the
following requirements have been complied with:
1) The purchase price must be determined
2) The thing sold must be ascertained
3) The agreement must be unconditional
This problem deals with requirement (3), as it is clear that a pactum
displicentiae is present. According to the pactum displicentiae, the
buyer acquires the right to return the thing to the seller within a
certain time, if he is no longer pleased with it. A pactum displicentiae
can either be interpreted suspensively or resolutively.
The question however remains: who bears the risk if the thing is
destroyed in the meantime? In Fitwell, the appellant delivered goods to
the respondent in terms of a contract of sale. The respondent refused
to face delivery on the ground that the invoiced price was higher than
the agreed price. Hereafter the goods were destroyed by a fire. In his
decision the judge concludes that it is beyond question that when the
goods were destroyed, the appellant was not prepared to reduce the
price and it follows that the appellant must have known that the
respondent’s attitude in the circumstances was that the goods had to
be taken back. Thus, the contract of sale was not perfecta and
because of this the risk remained with the appellant. It is unclear
whether the pactum displicentiae has a resolutive or suspensive effect
because insufficient facts are given. It has both a suspensive and
resolutive effect. Y has already notified X that he wants to return the
goods in terms of the pactum displicentiae. Thus, just as in the Fitwell
case, it is clear that it is Y’s intention that the television set must be
taken back.
X thus bears the risk for the destruction of the television set. Y can
rely on the pactum displicentiae in terms of which he may withdraw
from the contract. When the thing is merely damaged, the seller (X)
bears the risk for such damage. The buyer (Y) may return the thing.
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, 3
3. A squatter comes to an agreement with the owner of a farm
according to which the farmer allows the squatter to live on
the farm in return for certain services. Later, the farm is
sold and transferred to Y, who is aware of the agreement. Y
tells the squatter that he is prepared to allow him to stay
on the farm on condition that he renders the same services
he rendered to the previous owner. But the squatter refuses
to acknowledge Y as the new owner and indicates that he is
only prepared to render services to the previous owner. And
the squatter claims the right to continue living on the farm.
Discuss Y’s legal position and give reasons for your answer
and refer to case law.
To be able to ascertain the relevant principles of law, one firstly has to
establish whether a contract of lease has been concluded. Thus the
essentialia of a contract of lease are the following:
1) The lessor has to deliver a thing
2) The tenant has to be granted the use and fruits of the thing
3) The use of the thing should be placed at the disposal of the
lessee only temporarily.
4) The lessee has to give the lessor either a fixed or ascertainable
sum of money or a portion of the proceeds from the thing
leased.
However, there seems to be no sign of monetary compensation in the
given facts. Thus the fundamental question is whether the lessee’s
performance can consist in something other than the payment of a
sum of money.
In Rubin v Botha, the court accepted that there was a lease despite
that fact that, in casu, the lessee’s performance did not consist in the
payment of money. In De Jager v Sisana, the court ruled that no lease
exists. Therefore the squatter cannot rely on the ‘huur gaat voor koop’
rule. The squatter only had a right to occupation in return for his
services. This innominate contract ceases to exist by reason of the
sale of the land by the person entitled to the services. The squatter
has not shown any legal right to occupation.
Y, however, has the right to decide whether he will allow the squatter
to continue with his services, in return for the right to occupy his
land. In spite of various attempts made by Y to prove to the squatter
that he (Y) is truly the new owner of the land, the squatter still refuses
to recognise Y as the owner. Y therefore had the right to have the
squatter removed from his land. It is therefore a question of legal
policy. Except in the case of the bywoner’s contract, the rent can
consist only in money.
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