KTH 220: CLASS TEST

 Unit 1: Theme 4-6

 20 Marks
 20% of semester mark

SELLER’S DUTY OF SAFE-KEEPING OF THING SOLD:

 Seller + buyer have contractual duties but may exclude or limit duties.

 SAFE-KEEPING OF OBJECT SOLD (SELLER’S DUTY):

 Frenkel v Ohlsson’s Cape Breweries: 1st duty of seller = to protect object from
time of conclusion until delivery to buyer.
 Buyer may claim damages from seller is object is damaged, but not where
seller’s conduct was without fault.
 Conduct of seller resulting in damage of object is divided into following:
a) Intentional acts
b) Negligent acts

 FACTORS THAT MAY INFLUENCE DUTY OF SAFE-KEEPING:

 These factors are:
1) Mora debitoris or mora creditoris of buyer (fails to pay price or fails to
receive object sold)
- Seller is only liable for damages he caused)
2) Mora debitoris of seller (fails to deliver object sold)
- Seller is responsible for any damages.

 DOCTRINE OF PASSING OF RISK:

 This doctrine determines whether seller or buyer bears risk where accidental
damage is caused to object, by coincidence or act of God, NOT by culpable
conduct.
 Doctrine causes risk to pass to buyer when sale is perfecta.
 Sale is perfecta when:
a) Buyer + seller have intention of buying and selling.
b) Object sold is determined. In cases of:
(i) Object sold is fixed after being measured or weighed.
(ii) Object sold is fixed as soon as contract is concluded.
(iii) Object sold is fixed after individualisation.
c) Purchase price is determined.
d) Contract is not subject to suspensive condition.
 Buyer bears risk when object is damaged through coincidence or act of God.

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  DAMAGE & ADVANTAGE:
 All damage caused to object without fault of any party is borne by seller or
buyer, as long as damage is not caused by culpable conduct of either party.
 Any benefit derived from object sold after conclusion of contract, but before
delivery, is allocated to one party according to rules.
 Advantage eg. Where cow has calf after date of sale but before delivery.

Damages to object after conclusion of contract, but before delivery.

Fault No fault
(Intent/negligence) (coincidence/act of God)

Duty of safe-keeping Passing of Risk

(S) bears damages (B) bears risk if contract is perfecta

 INFLUENCE OF CONSUMER PROTECTION ACT ON RISK:

 S 19(2)(c) of CPA: in absence of express agreement to contrary, goods to be
delivered remain at seller’s risk until buyer has accepted delivery.
 Acceptance is deemed when:
a) When buyer expressly communicates acceptance of delivery.
b) When buyer does anything to goods that is inconsistent with seller’s
ownership.
c) When buyer keeps goods for unreasonable period without informing seller
that he doesn’t want the object.

PASSING OF OWNERSHIP:
 Mere conclusion of contract does not transfer ownership.
 On conclusion of contract, buyer obtains personal right against seller for
delivery of object.
 Contract enables buyer to obtain real right in object sold.
 Lendalease Finance (Pty) Ltd v Corporacion De Marcadeo Agricola: real right
can only exist is all requirements are met.

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 REQUIREMENTS FOR PASSING OF OWNERSHIP:

Immovable property:
 Buyer will obtain ownership where:
a) Seller is owner of object sold.
b) Seller has intention of transferring ownership + buyer has intention of
obtaining ownership.
c) Property is registered in name of buyer.

Movable property:
 Buyer will obtain ownership of movable property where:
a) Seller is owner of object sold.
b) Both parties have intention of to pass ownership from seller to buyer.
c) Where it is a cash sale:
(i) Seller must deliver object to buyer.
(ii) Buyer must pay purchase price.
d) Where it is a credit sale, only requirement is delivery of object to buyer.
Price does not have to be paid to transfer ownership.

 PAYMENT OF PURCHASE PRICE:

 Can have cash or credit sale.

Cash sale: when purchase + delivery is at same time / day.

- General perception that it is a cash sale unless expressly agreed it is a
credit sale.
- If cash payment is, seller is entitled to reclaim object from buyer within
reasonable time if he does not receive payment from buyer.
- Insolvency Act: 10 days = reasonable time.

Credit sale: presumption that it is a cash sale, unless expressly agreed that
it is a credit sale.
1) Tacit granting of credit:
 Grosvenor Motors (Potchefstroom) Ltd v Douglas: is difficult to determine
whether seller tacitly provides credit to buyer, as ownership then passes to
buyer through mere delivery of object sold.
 The following would constitute tacit granting of credit:
a) where seller accepts security for payment of purchase price.
b) Where parties agree on interest rate for payment of interest on price.
c) Where granting of credit can be deducted from previous transactions
between parties.

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 d) Where it is customary for that specific commercial transaction to be
concluded on credit basis.
e) Where seller accepts post-dated bill of exchange or cheque as
payment.
f) Where seller doesn’t insist on immediate payment or does not reclaim
object sold within reasonable time even though parties agreed on cash
sale.

2) Payment by cheque: purchase price paid by cheque payable on

demand.
 Cheque = instruction to bank of buyer to pay amount of cheque to seller.
 Seller is entitled to receive payment from bank.
 Must determine if cheque purchase is seen as cash of credit sale.
 Seller may refuse payment by cheque unless it is stipulated in agreement.
 Cheque = conditional payment.
 Grosvenor Motors (Potchefstroom) Ltd v Douglas: Intentions of seller + buyer
will determine whether payment is cash or credit sale, irrespective of whether
payment is by cheque or not.

 Legal position regarding cheque payment:

a) Is not a credit sale + ownership is not transferred to buyer merely by
delivery of object sold.
b) Is not a cash sale + ownership is not transferred to buyer when payment is
made by cheque.
c) Intention of parties determine whether it is cash or credit sale.
d) Payment of cheque = conditional payment + payment will only be made
when amount represented by cheque is actually paid to seller.
e) Post-dates cheque = tacit granting of credit, where ownership passes to
buyer on delivery of object sold and not when amount of cheque is actually
paid to seller.
f) If cheque is drawn in one place payable on demand, but is collected in
another place, same principle as mentioned above apply.

 DELIVERY OF OBJECT SOLD:

 Minimum requirement for transfer of ownership from seller to buyer is delivery.
 Ownership is not transferred where delivery has not been affected, even
though buyer has already paid for object.

 Forms of delivery:
1) Movable + immovable incorporeal property:
- Movable incorporeal property is delivered through cession.
- Immovable incorporeal property is delivered through registration of
cession of rights ito Registration of Deeds Act.

2) Immovable corporeal property (eg. Land):

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 - Registration ito Registration of Deeds Act constitutes delivery.

3) Movable corporeal property:

 Methods of delivery of movable corporeal property:
a) Actual delivery = object sold is handed physically by seller to buyer.
b) Symbolic delivery = something is delivered to buyer to enable him to use
object sold.
c) Delivery with shorthand = buyer is already physically in possession of
object and delivery takes place by change of intention of parties (1st party
used to rent car, but the decides to but it. Party keeps car (delivery takes
place))
d) Delivery by long hand = delivery takes place in that object sold is pointed
out by seller to buyer with intention that ownership should pass.
e) Clavium traditio = delivery by handing keys for object to buyer.
f) Delivery through marking = delivery takes place by marking object
bought or sold (mark sheep that have been sold with yellow)

 OBJECT DELIVERED:
 Seller must deliver object agreed upon.
 Accessories for proper use of object must also be delivered.
 Seller must also deliver all benefits accrued after contract becomes perfecta.

 DATE OF DELIVERY:
 Parties must agree on date of delivery.
 No agreement? Seller must deliver object within reasonable time.
 Facts + circumstances of case determined ‘reasonable time’.

 PLACE OF DELIVERY:
 Seller must deliver object to buyer at place agreed upon.
 No agreement? Delivery must be affected at place where contract was
concluded or at business or home of seller.

 INFLUENCE OF CONSUMER PROTECTION ACT ON DELIVERY:

 If CPA is applicable + parties did not expressly agree on details of delivery, it
is an implied term that seller must deliver object on agreed date + time, or
within reasonable time at agreed place of delivery + at cost of seller.
 Seller may not require that buyer accepts delivery at unreasonable time.
 Presumed place of delivery = business / home of seller.
 Acceptance of delivery = when buyer communicates that he accepts delivery.
 Before acceptance of object, buyer can examine object.
 If seller delivers larger quantity of goods than agreed upon, buyer may reject
all goods or accept + pay only for agreed upon quantity + treat rest of goods
as unconsolidated goods.

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  DOUBLE SALES:
 Double sales = when seller sells same object to 2 different buyers.
 Possibilities with double sales:
1) Neither 1st nor 2nd buyer has acquired ownership of object.
- 1st buyer who seller concluded a deed of sale with, is preferred in right.
- 1st buyer can enforce his legal claim ito deed of sale against 2nd buyer.
- If 2nd buyer is unaware of 1st deed of sale, he has a contractual claim
on basis of eviction, rendering performance impossible or repudiation.

2) If either 1st or 2nd buyer has acquired ownership.

- The personal rights of buyer who did not acquire ownership are less
important than buyer who did acquire ownership, as long as buyer
(who now has ownership) was unaware of other sale.
- Buyer who did not acquire ownership has contractual claim on basis of
eviction, mora debitoris or repudiation against seller, if he did not know
about other sale.
- Doctrine of notice = if buyer, who the acquired ownership knows about
other sale that seller communicated to other buyer, new owner might
have to honour the sale communicated to another buyer.
- Meridian Bay Restaurant (Pty) Ltd v Mitchell: If buyer who acquires
ownership, knows that object has first been to another, they mey be
forced to give object to first buyer.
- Doctrine of notice is in conflict with ruling in Meridian Bay Restaurant
(Pty) Ltd v Mitchell.

WARRENTY AGAINST EVICTION:

Eviction = when 3rd party with stronger rights than the buyer takes away the buyer's
ability to fully or partially use, enjoy, or control the thing they bought. (Lammers and
Lammers v Giovannoni 1955 (3) SA 385 (A); Alpha Trust (Edms) Bpk v Van der
Watt)
 Buyer doesn’t become owner of object by mere conclusion of valid contract.
 Seller is not obliged to transfer ownership to buyer except when seller is
owner of object.
 Seller is obliged to give buyer warranty against eviction.
 Warranty has nothing to do with consensus or absence thereof between
parties to contract (Plitt v Imperial Bank Ltd)
 Warranty against eviction cannot be excluded contractually.

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 FORMS OF EVICTION:
a) True owner of object sold claims his property from buyer.
b) 3rd party obtains possession of property and buyer cannot claim his
property from 3rd party due to a defective title.
c) Ito rule that lease goes before sale, buyer is sometimes obliged to allow
lessee to use property until lease expires.
d) Holder of limited real right may prevent buyer from having full use of object
sold.

 DUTIES OF BUYER WHEN EVICTION IMMINENT:

 Buyer must comply with rules as soon as eviction threatens, otherwise buyer
can lose cause of action against seller, unless title of seller was defective.
 Burden of proof rests on buyer.
 Rules for eviction prevent buyer from immediately giving up object sold to 3rd
party where eviction by latter threatens. Could be because 3rd party has better
title or that seller has defence against claim of 3rd party. (Lammers and
Lammers v Giovannoni)

 RULES FOR EVICTION:

 General rule = buyer mustn’t surrender object to someone threatening them
with eviction.
 Buyer must notify seller of eviction threat. Purpose = for assistance.
 As soon as seller is notified of threatened eviction, he can:
a) Take cession of buyer’s rights and intervene.
b) Assist buyer + furnish necessary proof of title.
c) Be joint as party in lawsuit.
d) Do nothing.
 Where buyer doesn’t effectively notify seller of eviction, or where seller
doesn’t assist buyer in lawsuit, buyer must put up forceable defence against
claim of 3rd party before holding seller liable.
 Buyer must as act reasonable litigant in lawsuit. If buyer doesn’t defend
lawsuit or fails to put up available defence, he is not acting as a reasonable
litigant.

 BUYER’S RIGHT OF RECOURSE:

1) Total eviction:
- Alpha Trust (Edms) Bpk v Van der Watt: buyer is ito the action ex
empto entitled to:
a) Cancel contract of sale.
b) Claim repayment of total purchase price.
c) Claim damages (legal costs of lawsuit / increase in value of object.

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 2) Partial eviction:
 Lammers and Lammers v Giovannoni: following possibilities exist:
a) Where eviction has left buyer with so little remainder of object sold that it
cannot be said that a reasonable man would have bought the same, the
buyer may cancel the contract, claim repayment of purchase price +
payment of damages, provided that he offers to return the remains of
object sold to seller.
b) Where portion evicted is not of such a substantial nature, and remains of
object can be effectively used, buyer may retain remains + claim pro rata
repayment of purchase price as well as damages from seller.

 WHERE BUYER HAS NO OR LIMITED RIGHT OF RECOURSE:

 Following possibilities exist:
a) Seller is only liable ito warranty where reason or cause of eviction already
existed at time of conclusion of contract, or where it was caused after
conclusion of contract due to seller’s fault.
b) Even where seller has excluded his liability for damages, the buyer may
still cancel sale + reclaim purchase price.
c) Seller will not be held liable where buyer knew that seller was not owner of
object at time of conclusion of contract.
d) Where seller was unsure at time of conclusion of contract whether or not
object belonged to him and has made this known to buyer, seller cannot
be held liable.
e) Seller will not be liable where buyer’s claim against him has prescribed.
f) Where eviction was caused by force majeure, buyer has no right to
recourse.

 INFLUENCE OF CPA ON WARRENTY AGAINST EVICTION:

 Every buyer has right to assume, and it is an implied term of every
agreement, that seller of goods has legal right + authority to supply, sell,
provide ownership + lease those goods.
 In case of supply of goods (no transaction or agreement), buyer has right to
assume that seller has legal right + authority to supply goods.
 It is uncertain whether supplier must pass ownership to purchaser.
 Supplier is fully liable for any charge relating to goods pertaining to 3rd party if
it is not disclosed in writhing before conclusion of transaction, or if supplier +
consumer has colluded to defraud the 3rd party.
 Is also guaranteed by supplier that consumer will have + enjoy quiet
possession of goods.