LPRO: Unit 7- Derivative acquisition of ownership
APPLICATION QUESTIONS WIL COME FROM UNITS 7 AND 8!!!
Introduction:
In the case of derivative transfer of ownership, the co-operation of the transferor (current
owner) is required.
A bilateral juridical act is required in terms of which ownership is transferred by the current
owner to the new owner and accepted by the new owner.
Result = new owner accepts all the rights as well as certain obligations and limitations that exist
with regards to ownership of the thing.
Ito the nemo plus iuris rule no person can transfer more rights iro the thing than he himself has,
and all limitations with real effect are transferred to the new owner.
Requirements for transfer of ownership
The requirements for the transfer of ownership according to the derivative method are the following:
(Concor Construction (Cape) (Pty)Ltd v Santambank): *NB!!!*
1. The thing must be negotiable (res in commercio) which means that it must be a thing in respect
of which real rights can be acquired and transferred.
2. The transferor must have contractual capacity, which means that he must have the capacity to
transfer ownership. The capacity of the transferor is determined by factors such as age, mental
health and marital status. Owners with limited contractual capacity must be assisted by a parent
or legal guardian.
3. The transferor (current owner) must be the owner of thing the thing. Ito the nemo plus iuris
rule, no person can transfer more rights than he himself has and the owner is therefore the only
person who can transfer ownership.
4. The transferee must have contractual capacity to accept the transfer of ownership . Again factors
such as age, mental health, marital status could affect contractual capacity. A transferee with
limited capacity must be assisted.
5. Ownership must be accepted by the transferee or his nominee or his agent.
6. Transfer of ownership of movables takes place only if the thing is delivered to the transferee in a
legally accepted way (traditio).
In the case of immovables, transfer of ownership takes place by means of registration in the
deeds registry. This is known as the objective aspect of transfer of ownership and is a
manifestation of the common-law requirement that publicity must be given to transfer of
ownership.
7. The delivery (movables) and registration (immovables) must take place with the intention of the
owner to transfer ownership and with the intention of the transferee to accept ownership.
The reciprocal intention of the transferor and transferee embodies the subjective aspect of the
transfer of ownership and this intention must exist in the minds of both parties at the time of
transfer of ownership.
, 2
The subjective intention of the parties that transfer of ownership must take place must be
apparent from the real agreement (Dreyer v AXZS industries (Pty) Ltd 2006)
In Air-Kel h/a Merkel Motors v Bodenstein 1980 the court held: “mere agreement is insufficient
for the transfer of ownership – traditio (delivery) is also required; and conversely mere delivery is
also insufficient – it must be accompanied by the agreement between transferor and transferee
that ownership is thereby transferred and accepted – this is known as a ‘real agreement’.
8. There must be a legal cause (causa) for the transfer of ownership.
9. If ownership is transferred on the basis of a preceding contract of sale, it is only transferred to
the buyer if the full purchase price has been paid unless credit is granted by the seller to the
buyer.
This indicates that the intention of the owner that ownership must be transferred can be made
subject to a suspensive condition.
Abstract system of transfer of ownership
1. Since the decision in Commissioner of Customs and Excise v Randles Brothers and Hudson
1941, the abstract system of transfer of ownership has been followed in South African law.
2. This means that the invalidity of the preceding obligatory agreement (contract) does not affect
the validity of the transfer of ownership and that ownership can be transferred in spite of the
invalidity of the obligatory agreement if there was a valid real agreement coupled with delivery
(movables) or registration (immovables).
3. In Commissioner of Customs and Excise v Randles Brothers and Hudson the court held: “…the
legal transaction preceding the traditio may be evidence of an intention to pass and acquire
ownership. But there may be direct evidence of an intention to pass and acquire ownership and
if there is, there is no need to rely on the preceding legal transaction in order to show that
ownership has, as a fact, passed… the question whether ownership has passed depends on the
intention of the parties and such intention can be proved in various ways.”
4. This principle has been confirmed in several decisions: Trust Bank van Afrika v Western Bank
1978 (A); Air-Kel h/a Merkel Motors v Bodenstein 1980 (A); Cape Explosive Works Ltd v Denel.
Cash and credit sales NB!!!
a. Ownership is transferred in the case of a cash sale only once the purchase price has been paid in
full, except in those cases where the parties intended that the seller would grant credit to the
buyer and that ownership is transferred before the full payment of the purchase price (credit
sale): Grosvenor Motors (Potchefstroom) v Douglas 1956 and Concor Construction (Cape) (Pty)
Ltd v Santambank Ltd 1993.
b. If there is no explicit provision that credit is granted to the buyer there is a rebuttable
presumption that it is a cash sale.
c. The presumption can be rebutted by the circumstances that existed at the time the contract was
concluded i.e. if the seller agreed to accept payment on a date after delivery of the thing or if the
seller accepted security for the payment of the purchase price.
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