The contract of Sale Commercial Law

Definition: The seller (vendor) promises to deliver a thing (merx) to another person known as the buyer(emptor) for payment of a certain price (pretium)

The parties to the contract Seller (who sells) Purchaser (who buys)

Formalities Generally no formalities – but: Parties may agree that no sale unless certain formalities complied with Some Statutes require formalities

(Some) Statutory Formalities Sale of land – signed & in writing Credit agreements – in writing & signed by both buyer & seller Sale of business – sale to be advertised Labelling of goods

The essential elements of sale Agreement to deliver Agreement on the thing sold Agreement on the sale price Price must be ascertainable & in money

Agreement to deliver The seller must give control of the merx to the buyer Generally, deliver immediately, otherwise within a reasonable time

Delivery Actual delivery Constructive delivery

Types of constructive delivery Symbolic delivery – keys Long hand (longa manu) – pointing out Short hand (brevi manu) – buyer already has Constitutum possessorium – seller keeps Attornment – gallery keeps

The merx Buyer and seller must agree Can sell anything unless law forbids Thing may not yet exist Hope or spes

Thing sold (object of the sale) Movables Immovables Specific things Generic things Corporeals and Incorporeals Things in existence now or in the future

Price Price must be agreed upon Must be in money Price must be fixed or ascertainable

Sale of 3rd party goods You can sell something that is not yours!

Sale of 3rd party goods Seller does not have to own goods Sale creates a personal right to delivery

Examples Sale of generic goods you expect to acquire Sale of specific item you expect to acquire Fraudulent sale of another's property Sale of goods bought under credit agreement where ownership reserved

Rei vindicatio Action available to true owner of goods for recovery Only needs to prove Is true owner Defendant in possession

Conditional contracts Suspensive condition Resolutive condition

Suspensive Condition The operation of the obligation (performance of rights & duties) is suspended or delayed until the uncertain future event (condition) takes place Eg: A agrees to buy B’s car if she can get a loan

Resolutive Condition The obligation comes into operation immediately (performance takes place) but if the uncertain future event (condition) is fulfilled the obligation will immediately terminate ◦ Eg: A agrees that B may use his car until he finds employment. Once B is employed he must hand back the car to A

Rights of the Purchaser To receive delivery of the merx Does not mean seller must deliver, but must make available Preservation of the merx pending delivery Seller must look after goods until delivery. Risk passes on sale being perfecta but seller liable for negligent loss or damage Purchaser to be protected against eviction Sellers warranty against eviction Purchaser entitled to merx free from latent defects

Duties of the Buyer To pay the purchase price General rule – pay in legal tender upon delivery To pay the seller’s necessary expenses Costs of caring between sale & delivery, transfer costs To accept delivery of the merx

The Passing of Risk General Rule The risk passes from the seller to the purchaser as soon as the sale is perfecta. The parties may agree to change this, for example, for risk to pass on delivery

When is the sale perfecta? Agreement on price Merx identified Any suspensive conditions fulfilled

Did you get that? Examples

Ownership Passing of ownership Seller must be owner at delivery Seller intends to pass ownership Buyer intends to acquire ownership Seller must deliver to purchaser Purchase price paid or credit granted

Transfer of ownership Immovable property – on registration of transfer Incorporeal property – on cession Movable property – on delivery If cash sale – price paid & delivery If credit sale – on delivery

Cession Transfer of a personal right Cedent transfers to the Cessionary

Requirements for cession Cedent must hold the right being transferred Must be a personal right Parties must intend to transfer Object of cession must be identified Must be lawful See consequences of cession on page 71

Warranties May be express or implied A contract of sale always implies the following warranties: Warranty against eviction Warranty against latent defects

Latent defects Defect existing at time of sale but unknown to ordinary buyer even if apparent to an expert There is an implied warranty that goods are fit for the purpose for which sold If latent defect - entitled to remedy unless: Voetstoots or “as is” sale (parties agree to exclude) No defect at time of sale Buyer aware of defect and accepted Prescription

Requirements for claim of latent defect There is or was a material defect in the goods The defect was present when the sale was concluded The defect was latent (not easily noticable on inspection) Purchaser was unaware of the defect at the time of purchase

The Aedilitian Remedies Actio redhibitoria Available if latent defect renders goods useless or if purchaser would not have purchased the goods if aware of defect Purchaser tenders return of merx & claims purchase price plus interest & costs of maintaining merx and cost of any improvement to merx No compensation

The Aedilitian Remedies Actio quanti minoris If defect not so material as to render goods useless or if purchaser would still have purchased goods (but maybe at lesser price) Buyer sues for reduction in purchase price No compensation

The Aedilitian Remedies Actio ex empti Allows buyer to claim compensation in certain cases: If seller fraudulent Seller a manufacturer, expert or professes skill Seller has given an express warranty

NB The Consumer Protection Act prohibits the use of a voetstoots clause This only applies to contracts covered by the Act Other specific legislation relating to certain types of sale Share Blocks Sectional Title etc