1 NATURE AND CONCLUSION
1 1 DESCRIPTION
DEFINITION
An agreement between the parties 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 The essentialia must be present in order for the contract to qualify as a
contract of sale.
Agreement on the merx
Agreement on the purchase price
NB: It is not a validity requirement or an essentialia of a contract of sale that the
seller transfer ownership to the buyer.
o A contract of sale will not be void or invalid if the seller does not make the
buyer the owner.
DISTINGUISHING: LEASE, EXCHANGE, AND INDEPENDENT CONTRACTOR
Lease
o Superficially: payment of sum of money for a res in both a lease
contract and a contract of sale.
o Distinguishing factor: in the case of a sale, the intention of the parties
is that the seller will transfer his rights in the merx (whatever those
rights might be) permanently. With a lease the intention is that the
lessor is only going to transfer his rights to the leased object
temporarily.
Contract of exchange
o With a contract of exchange, there is usually an object given in
exchange for another object.
o In the case of a contract of sale, a merx is usually given in exchange for
the payment of sum of money, but we do also get a mixed type of
contract: object given in exchange for object + a sum of money (car
trade-ins).
This type of contract can either be a contract of sale or a contract
of exchange.
, o How do we determine which?
Wastie v Security Motors
POD: the parties’ intention is decisive. If the court
concludes that the parties intended to conclude a contract
of sale, it is a contract of sale.
o If, however, the intention is not clear: then the court
will look at which aspect of the traded in performance
has the largest value.
E.g. which aspect of the performance has the
greater value? the vehicle or the sum of
money? if the vehicle has the greater value,
then we are dealing with a contract of
exchange. If the sum of money has greater
value than the car = contract of sale.
o Practical relevance of the classification between trade and sale?
Right of pre-emption and what constitutes a trigger event that
would make that right enforceable.1
Trigger event: indication that the grantor of the right wants
to sell (e.g. by making an offer) the merx subject to a right
of preference.
It is possible for the grantor to circumvent the trigger event
giving rise to the right of pre-emption by rather trading the
merx to someone.
Transfer of ownership (where relevant): price payment rule
If the seller is owner of the merx and sells the merx then
the seller’s rights of ownership will transfer to the buyer.
o In a contract of sale, ownership is transferred at
delivery. We need to draw a distinction here between
a cash sale v a credit sale.
In the event of a cash sale, ownership is transferred when
there has been delivery of the merx + payment of the
purchase price.
In the event of a credit sale, ownership is transferred
upon delivery only.
1
Right of pre-emption recap: where someone has a preference to acquire an object. It is generally
formulated as: “should the grantor of the right ever wish to sell the object the holder of the right will
have first choice to purchase the object”.
, Aedilitian actions – available in both contracts of sale and
exchange
Recap of Aedilitian remedies:
o They are available when dealing with a merx that is
defective or where the seller has made certain
misrepresentations about the characteristics or
attributes of the merx.
o The available remedies to a party in the event that
the object is defective (or not what it was promised
to be) is either to terminate the contract and to
reclaim the purchase price, or alternatively to claim a
reduced purchase price.
These Roman Law Aedilitian remedies were initially
developed for contracts of sale and were then extended
also to be applicable to contracts of exchange.
o The question then arose whether they were also
available when dealing with trade-in/mixed
transactions Janse van Rensburg v Grieve Trust
Janse Van Rensburg v Grieve Trust
Trade-in transaction: if intention of parties is to conclude a
contract of sale, it is a contract of sale. In such a contract
of sale, the price consists of the merx (car) + the price.
Even though in a contract of sale traditionally a purchaser
only warrants to give the seller ownership of the price
whereas the seller undertakes to give undisturbed
possession, parties in a contract of sale where a portion of
the price consists of a thing other than money, the parties
are in the same position as barterers and therefore the
purchaser also tacitly warrants against latent defects in the
non-money portion of the purchase price.
The court extended the aedilitian actions to be
available to a seller in such a situation (where the
seller is also buying a merx).
Contract of mandate with an independent contractor
o Independent contractor: someone who renders a service for
remuneration
, Roman law: example of having someone make a gold ring.
If the customer provides the gold and the jewellery-maker
fashioned the ring, this is a contract with an independent
contractor (the sole purpose is the rendering of a service).
Alternatively, where one party provides both the material
and the service, we are dealing with a contract of sale.
o More difficult is the distinction between a contract with a building
contractor v a contract of sale:
A building contractor supplies both the material and the services,
but we nevertheless classify this contract as one with an
independent contractor, and not a contract of sale.
The best solution to explain this deviation comes from
international trade law two-fold test:
A) who provides the material?
B) if one of the parties provides both the material and the
service then we must ask whether the preponderant part
(the dominant part) of the duties on that party relates to
the provision of material or services (if provision of material
is dominant = sale; if provision of service dominant =
contractor).
o Practical relevance of the distinction:
Historically, two reasons:
1) This reason was based on a misunderstanding that the
exceptio non adimpleti contractus (right to withhold
performance) and its relaxation was only applicable to
contracts with independent contractors confirmed in
Thompson v Scholtz that the exceptio is available to all
reciprocal contracts.
2) If you are dealing with a contract with an independent
contractor, the parties can validly agree that the services
will be rendered for reasonable remuneration.
o It is not possible at this stage for parties to contract
of sale or a contract of lease to agree to a
‘reasonable price’ or a ‘reasonable rental’.2
2
NBS Boland v Berg River Drive criticised this rule as being illogical.
1 1 DESCRIPTION
DEFINITION
An agreement between the parties 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 The essentialia must be present in order for the contract to qualify as a
contract of sale.
Agreement on the merx
Agreement on the purchase price
NB: It is not a validity requirement or an essentialia of a contract of sale that the
seller transfer ownership to the buyer.
o A contract of sale will not be void or invalid if the seller does not make the
buyer the owner.
DISTINGUISHING: LEASE, EXCHANGE, AND INDEPENDENT CONTRACTOR
Lease
o Superficially: payment of sum of money for a res in both a lease
contract and a contract of sale.
o Distinguishing factor: in the case of a sale, the intention of the parties
is that the seller will transfer his rights in the merx (whatever those
rights might be) permanently. With a lease the intention is that the
lessor is only going to transfer his rights to the leased object
temporarily.
Contract of exchange
o With a contract of exchange, there is usually an object given in
exchange for another object.
o In the case of a contract of sale, a merx is usually given in exchange for
the payment of sum of money, but we do also get a mixed type of
contract: object given in exchange for object + a sum of money (car
trade-ins).
This type of contract can either be a contract of sale or a contract
of exchange.
, o How do we determine which?
Wastie v Security Motors
POD: the parties’ intention is decisive. If the court
concludes that the parties intended to conclude a contract
of sale, it is a contract of sale.
o If, however, the intention is not clear: then the court
will look at which aspect of the traded in performance
has the largest value.
E.g. which aspect of the performance has the
greater value? the vehicle or the sum of
money? if the vehicle has the greater value,
then we are dealing with a contract of
exchange. If the sum of money has greater
value than the car = contract of sale.
o Practical relevance of the classification between trade and sale?
Right of pre-emption and what constitutes a trigger event that
would make that right enforceable.1
Trigger event: indication that the grantor of the right wants
to sell (e.g. by making an offer) the merx subject to a right
of preference.
It is possible for the grantor to circumvent the trigger event
giving rise to the right of pre-emption by rather trading the
merx to someone.
Transfer of ownership (where relevant): price payment rule
If the seller is owner of the merx and sells the merx then
the seller’s rights of ownership will transfer to the buyer.
o In a contract of sale, ownership is transferred at
delivery. We need to draw a distinction here between
a cash sale v a credit sale.
In the event of a cash sale, ownership is transferred when
there has been delivery of the merx + payment of the
purchase price.
In the event of a credit sale, ownership is transferred
upon delivery only.
1
Right of pre-emption recap: where someone has a preference to acquire an object. It is generally
formulated as: “should the grantor of the right ever wish to sell the object the holder of the right will
have first choice to purchase the object”.
, Aedilitian actions – available in both contracts of sale and
exchange
Recap of Aedilitian remedies:
o They are available when dealing with a merx that is
defective or where the seller has made certain
misrepresentations about the characteristics or
attributes of the merx.
o The available remedies to a party in the event that
the object is defective (or not what it was promised
to be) is either to terminate the contract and to
reclaim the purchase price, or alternatively to claim a
reduced purchase price.
These Roman Law Aedilitian remedies were initially
developed for contracts of sale and were then extended
also to be applicable to contracts of exchange.
o The question then arose whether they were also
available when dealing with trade-in/mixed
transactions Janse van Rensburg v Grieve Trust
Janse Van Rensburg v Grieve Trust
Trade-in transaction: if intention of parties is to conclude a
contract of sale, it is a contract of sale. In such a contract
of sale, the price consists of the merx (car) + the price.
Even though in a contract of sale traditionally a purchaser
only warrants to give the seller ownership of the price
whereas the seller undertakes to give undisturbed
possession, parties in a contract of sale where a portion of
the price consists of a thing other than money, the parties
are in the same position as barterers and therefore the
purchaser also tacitly warrants against latent defects in the
non-money portion of the purchase price.
The court extended the aedilitian actions to be
available to a seller in such a situation (where the
seller is also buying a merx).
Contract of mandate with an independent contractor
o Independent contractor: someone who renders a service for
remuneration
, Roman law: example of having someone make a gold ring.
If the customer provides the gold and the jewellery-maker
fashioned the ring, this is a contract with an independent
contractor (the sole purpose is the rendering of a service).
Alternatively, where one party provides both the material
and the service, we are dealing with a contract of sale.
o More difficult is the distinction between a contract with a building
contractor v a contract of sale:
A building contractor supplies both the material and the services,
but we nevertheless classify this contract as one with an
independent contractor, and not a contract of sale.
The best solution to explain this deviation comes from
international trade law two-fold test:
A) who provides the material?
B) if one of the parties provides both the material and the
service then we must ask whether the preponderant part
(the dominant part) of the duties on that party relates to
the provision of material or services (if provision of material
is dominant = sale; if provision of service dominant =
contractor).
o Practical relevance of the distinction:
Historically, two reasons:
1) This reason was based on a misunderstanding that the
exceptio non adimpleti contractus (right to withhold
performance) and its relaxation was only applicable to
contracts with independent contractors confirmed in
Thompson v Scholtz that the exceptio is available to all
reciprocal contracts.
2) If you are dealing with a contract with an independent
contractor, the parties can validly agree that the services
will be rendered for reasonable remuneration.
o It is not possible at this stage for parties to contract
of sale or a contract of lease to agree to a
‘reasonable price’ or a ‘reasonable rental’.2
2
NBS Boland v Berg River Drive criticised this rule as being illogical.
