BUSL6222 LU10
BUSL6222 LU10 – The contract of
sale
Chapter 14 – The law of a sale
14.1 The nature of a contract of sale in terms of the common law
A contract of sale is when:
The seller agrees to transfer a thing (the res vendita) or at least the
possession of it
To the buyer,
In return for the buyer paying a price.
The two essential elements (essentialia):
Agreement on the thing being sold and that it will be transferred (or
possession will be given).
Agreement on the price that must be paid.
With contracts of sale, there are terms that apply automatically to the contract
by way of law, even though they may not be mentioned in the contract. These
are the naturalia of a contract of sale.
- Passing of risk and profit
- Passing of ownership
- Duties of the seller
- Duties of the buyer
14.2 The passing of risk and profit in the thing sold
Risk = who carries the loss if the item is damaged or destroyed.
Profit = who benefits if the item gains value.
Risk and ownership don’t always pass at the same time.
The problem usually comes up when the sale is concluded, but the item hasn’t
been delivered yet.
Risk passes to the buyer as soon as the contract is perfecta, delivery does not
need to happen first. A contract is perfecta when:
1. Price is fixed, not just guessable.
2. The item is identified, not just general or uncounted.
3. Any suspensive condition is fulfilled.
Once perfecta:
- Buyer carries the risk.
1
, BUSL6222 LU10
- Buyer also gets profit/advantages (for example, fruit growing on a farm).
When the risk does NOT pass to the buyer
1. Seller is late (mora debitoris)
o Seller delayed delivery.
o Seller carries risk during the delay.
o Unless seller can prove the item would have been damaged
anyway.
2. 2. Buyer is late (mora creditoris)
o Buyer refuses or fails to take delivery.
o Seller only liable for gross negligence.
o Not liable for ordinary negligence.
3. Parties agree otherwise
o They can change the rule in the contract.
4. Goods must still be weighed, measured or counted
o If this hasn’t been done yet, the sale is not perfecta, even if the
price is known.
5. Sale subject to a condition
o If the contract has a suspensive condition, risk stays with the seller
until the condition is fulfilled.
14.3 The passing of ownership in the thing sold
Risk and ownership do not pass at the same time. Ownership passes through a
separate legal act, and the requirements depend on the type of property.
There are four requirements for ownership to pass.
1. Both parties must intend that ownership passes
2. Seller must be able to transfer ownership
3. The purchase price must be paid, or credit granted
4. When movable property is sold, there is a rebuttable presumption that the
sale was for cash. This presumption can be countered (argued against) or
challenged by evidence showing that the parties did not intend the sale to
be for cash. We call this a rebuttable presumption, which means that if
there is evidence to show that the normal position does not apply to a
particular case, then the presumption will be rebutted (defeated). By
contrast, irrebuttable presumptions cannot be challenged in this way.
General rules: ownership passes when…
o If sale is for cash - Ownership passes when payment is made.
o If sale is on credit - Ownership passes on delivery.
2
BUSL6222 LU10 – The contract of
sale
Chapter 14 – The law of a sale
14.1 The nature of a contract of sale in terms of the common law
A contract of sale is when:
The seller agrees to transfer a thing (the res vendita) or at least the
possession of it
To the buyer,
In return for the buyer paying a price.
The two essential elements (essentialia):
Agreement on the thing being sold and that it will be transferred (or
possession will be given).
Agreement on the price that must be paid.
With contracts of sale, there are terms that apply automatically to the contract
by way of law, even though they may not be mentioned in the contract. These
are the naturalia of a contract of sale.
- Passing of risk and profit
- Passing of ownership
- Duties of the seller
- Duties of the buyer
14.2 The passing of risk and profit in the thing sold
Risk = who carries the loss if the item is damaged or destroyed.
Profit = who benefits if the item gains value.
Risk and ownership don’t always pass at the same time.
The problem usually comes up when the sale is concluded, but the item hasn’t
been delivered yet.
Risk passes to the buyer as soon as the contract is perfecta, delivery does not
need to happen first. A contract is perfecta when:
1. Price is fixed, not just guessable.
2. The item is identified, not just general or uncounted.
3. Any suspensive condition is fulfilled.
Once perfecta:
- Buyer carries the risk.
1
, BUSL6222 LU10
- Buyer also gets profit/advantages (for example, fruit growing on a farm).
When the risk does NOT pass to the buyer
1. Seller is late (mora debitoris)
o Seller delayed delivery.
o Seller carries risk during the delay.
o Unless seller can prove the item would have been damaged
anyway.
2. 2. Buyer is late (mora creditoris)
o Buyer refuses or fails to take delivery.
o Seller only liable for gross negligence.
o Not liable for ordinary negligence.
3. Parties agree otherwise
o They can change the rule in the contract.
4. Goods must still be weighed, measured or counted
o If this hasn’t been done yet, the sale is not perfecta, even if the
price is known.
5. Sale subject to a condition
o If the contract has a suspensive condition, risk stays with the seller
until the condition is fulfilled.
14.3 The passing of ownership in the thing sold
Risk and ownership do not pass at the same time. Ownership passes through a
separate legal act, and the requirements depend on the type of property.
There are four requirements for ownership to pass.
1. Both parties must intend that ownership passes
2. Seller must be able to transfer ownership
3. The purchase price must be paid, or credit granted
4. When movable property is sold, there is a rebuttable presumption that the
sale was for cash. This presumption can be countered (argued against) or
challenged by evidence showing that the parties did not intend the sale to
be for cash. We call this a rebuttable presumption, which means that if
there is evidence to show that the normal position does not apply to a
particular case, then the presumption will be rebutted (defeated). By
contrast, irrebuttable presumptions cannot be challenged in this way.
General rules: ownership passes when…
o If sale is for cash - Ownership passes when payment is made.
o If sale is on credit - Ownership passes on delivery.
2
