CONTRACT OF SALE: NATURE AND CONCLUSION
Contract of Sale vs Exchange
Wastie v Security Motors - Type of contract depends on intention.
- Intention unclear leading factor:
- 1. Money > Value traded in = Contract of Sale
- 2. Money < Value traded in = Exchange
- Where the monetary value of the car is used to calculate the
amount of cash that has to be paid in = Contract of Sale.
Mountbatten - Aedilition actions only apply to a defective merx, not the
Investments v Mahomed purchase price.
Janse v Rensburg v Grieve - Aedilitian remedies are also available to the seller.
Trust - May apply to the thing being traded in.
Independent Contractor
Tulloch v Marsh - Test: who provides the material. If the manufacturer also
provides the material = Contract of Sale.
- If client provides material and manufacturer only does work =
Contract for letting and hiring of services of independent
contractor.
PRICE
Westinghouse Brake and - No valid contract of sale without a price.
Equipment (Pty) Ltd v - Agreed upon or method of determination (without further
Bilger Engineerings (Pty) reference to the parties)
Ltd
Certain and Ascertainable
Burroughs Machines v - An approximate price is not final, not sufficiently certain.
Chenille Corp of SA - No valid contract of sale.
Reasonable Price
Erasmus v Arcade Electric - A reasonable price is uncertain.
- Contract of sale = invalid
- It could be an innominate contract.
Adcorp Spares v - Uncertain.
Hydromulch - How is reasonableness determined? Who will determine it?
Genac Properties v NBC - Obiter remarks: it should be allowed
Administrators - It is sufficient for a contract for work to be done.
- Reasonable price will depend on circumstances which can be
determined.
Price fixed by one of the parties
Burroughs Machines v - Confirmed the current position in South Africa (traditional
Chenille Corp of SA position) that the determination of the price cannot be to the
discretion of one of the parties to the contract.
Westinghouse Brake and - No valid contract of sale if the price is to be fixed in future by
Equipment (Pty) Ltd v one of them.
Bilger Engineerings
Murray and Roberts - When it depends entirely on the will of a party to an alleged
Construction v Finat contract to determine the extent of prestation of either party
Properties the purported contract is void for vagueness.
NBS Bolank Bank v One - Rule containing a power to fixed, a price is invalid is:
Berg Drive River - 1. Out of step with modern legal systems.
- 2. Illogical in the view of recognition that determination of a
price may validly be left up to a third party and that either the
buyer or the seller may be accorded the power to
1
, individualise a merx in a generic sale.
Price to be fixed by a third party
Reymond v Abdulnabi - The third party must be identified or identifiable.
- Need to be specific when referring to an office of position in a
company.
Westinghouse Brake and - Third party must be able to determine the price without
Equipment (Pty) Ltd v reference to the parties.
Bilger Engineerings
Unacceptable price
Gillig v Sonnenberg; - Disadvantaged party may approach the court.
Hurwitz v Table Bay - Based on abolished lisio enormous
Engineering - Merged two remedies:
- 1. Remedy where disadvantaged party is able to rescind the
contract in terms of the lisio enormous in Roman Law after
the court has set a price.
- 2. Roman-Dutch Law: could rescind a contract where a third
party sets an unjust price.
Van Heerden v Basson - Cannot rely on lisio enormous.
- Court developed new remedy: where third party sets
manifestly unjust price, there is no basis for enforcement of
the contract because you cannot argue that there was
consensus or reliance on consensus for that price.
- Parties agreed third party must set a just price.
CONSEQUENCES OF A CONTRACT OF SALE
Transfer of Ownership
Lendalease v CMA - Sale of maize via ship; attach goods to establish jurisdiction.
- Price payment rule: ownership transfers where there has
been delivery and payment of the price, credit is given, or
security provided.
- Cash sale: transfer upon delivery and payment
- Credit sale: transfer upon delivery
- Presumption in favour of cash sale
DUTIES OF THE PARTIES
Seller’s Duties
Lendalease v CMA - Bill of lading was required to delivery to take place; not
sufficient if goods are on the ship.
- Delivery includes symbolic or constructive delivery.
Warrant against Eviction
Alpha Trust v Van Der - True owner attached car.
Watt - Seller has alternative duties; assist or compensate.
- It is not necessary to cancel the contract to reclaim the
purchase price.
2
, - Damages: purchase price is the minimum.
- Seller argued that it was unfair; but it was the true owner
that was prejudiced.
- Obiter: Merx is rapidly depreciating modify what the seller
pays back.
A Becker & Co v Becker - Depriving a purchaser of goodwill amounts to eviction by the
seller.
Eviction by a third party
Vrystaat Motors v Henry - Attachment by police and decision that goods are stolen
Blignaut amounts to eviction, the loss of possession is permanent.
Louis Botha Motors v - Loss of surrogate of merx (purchase price).
James & Slabbert Motors - LBM wanted the law to be developed so that the claim does
not have to go up the chain.
- Actual eviction in the sense of a judicial process is not
required.
- Buyer can rely on warranty even if they voluntary surrender
the merx, provided they can prove the incontestable title.
- Although formalistic, the chain prevents disruption.
- Person in possession of the merx is in the best position to
determine whether they have a valid defence against the
third party.
- Prepared to assume that the last buyer did not have to prove
eviction and that LBM had to be faced with a claim from its
own buyer.
- Must prove that claim would have gone up the chain.
Garden City Motors v - Cadman cannot institute his own claim; barred from own
Bank of OFS fraud and did not have physical possession of the car
(required in lease).
- Claim would not go up chain.
- Bank claimed that it could not institute rei vindicatio, so
Garden City Motors breached their warranty. However,
transfer of ownership is not warranted.
Par Excellance Colour - When someone else has a limited real right over the merx it
Printing v Ronnie Cox can amount to eviction.
Graphic Supplies
Buyer’s Remedies
Alpha Trust v Van Der - Buyer does not need to cancel the contact to reclaim the
Watt purchase price, claiming specific performance.
Lammers & Lammers v - Seller knew that buyer wanted to affect improvements.
Giovannoni - Seller ignored buyer’s notice of threatened eviction.
3
, - Claims (low to high): purchase price, value of merx at time of
eviction (purchase price + economical improvements), full
compensation (purchase price + economical improvements +
luxury improvements)
- Could claim value of merx at time of eviction – principle of
foreseeability
- Generally, buyer would have claim for unjustified enrichment
(strengthened by right to retain until compensated) but it is
uncertain, expensive and time-consuming.
- Seller cannot argue that the buyer should have defended
more.
Hendler Bros v Lambons - Buyer is entitled to claim the value of the merx at eviction.
- In casu the value was lower than the purchase price.
Alpha Trust v Van Der - Changed: Hendler Bros v Lambons
Watt - Damages: purchase price is the minimum.
- Claiming repayment of the purchase price – claiming specific
performance. Claiming further loss – claim for damages.
- Claim for damages is limited by the foreseeability principle.
- Obiter: could be deviation in case of rapidly depreciating
merx.
- Rejected seller’s argument that it is unfair that the buyer gets
use and the purchase price, but it is unfair to the true owner.
Katzeff v City Car Sales - Rejected obiter of rapidly depreciating merx.
(Pty) Ltd - Buyer bought the merx, not the use thereof.
Mdabane v Std Bank - Taxi = rapidly depreciating merx.
- Legislature needs to deal with this issue.
Soar h/a Rebuilds for - Argued that the buyer has a duty to mitigate loss by taking
Africa v JC Motors reasonable steps.
- One cannot expect a buyer to first institute an enrichment
claim against the true owner for improvements made,
because the outcome is uncertain, it is expensive, and it is
time-consuming.
Exclusion of liability for eviction: pactum de evictione non praestanda
Alpha Trust v Van Der - Exclusion clause only protects seller against payment of
Watt damages or loss of profit, but he remains liable for
repayment of the purchase price.
Vrystaat Motors v Henry - Confirmed the above in Alpha Trust.
Blignaut
Westhuizen v Arnold - A seller cannot exclude itself from liability to pay the
purchase price.
Plit v Imperial Bank - Two instalment sale agreements
- Aircraft and engines got attached; Imperial Bank is claiming
the balance of the instalments.
- Plit’s defence: he was evicted.
- Imperial Bank argues that they had excluded liability in the
event of eviction.
- De Wet & Van Wyk: Parties may exclude liability for damages,
seller may even be exempted from repaying the purchase
price if the buyer took on the risk of uncertainty of the
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Contract of Sale vs Exchange
Wastie v Security Motors - Type of contract depends on intention.
- Intention unclear leading factor:
- 1. Money > Value traded in = Contract of Sale
- 2. Money < Value traded in = Exchange
- Where the monetary value of the car is used to calculate the
amount of cash that has to be paid in = Contract of Sale.
Mountbatten - Aedilition actions only apply to a defective merx, not the
Investments v Mahomed purchase price.
Janse v Rensburg v Grieve - Aedilitian remedies are also available to the seller.
Trust - May apply to the thing being traded in.
Independent Contractor
Tulloch v Marsh - Test: who provides the material. If the manufacturer also
provides the material = Contract of Sale.
- If client provides material and manufacturer only does work =
Contract for letting and hiring of services of independent
contractor.
PRICE
Westinghouse Brake and - No valid contract of sale without a price.
Equipment (Pty) Ltd v - Agreed upon or method of determination (without further
Bilger Engineerings (Pty) reference to the parties)
Ltd
Certain and Ascertainable
Burroughs Machines v - An approximate price is not final, not sufficiently certain.
Chenille Corp of SA - No valid contract of sale.
Reasonable Price
Erasmus v Arcade Electric - A reasonable price is uncertain.
- Contract of sale = invalid
- It could be an innominate contract.
Adcorp Spares v - Uncertain.
Hydromulch - How is reasonableness determined? Who will determine it?
Genac Properties v NBC - Obiter remarks: it should be allowed
Administrators - It is sufficient for a contract for work to be done.
- Reasonable price will depend on circumstances which can be
determined.
Price fixed by one of the parties
Burroughs Machines v - Confirmed the current position in South Africa (traditional
Chenille Corp of SA position) that the determination of the price cannot be to the
discretion of one of the parties to the contract.
Westinghouse Brake and - No valid contract of sale if the price is to be fixed in future by
Equipment (Pty) Ltd v one of them.
Bilger Engineerings
Murray and Roberts - When it depends entirely on the will of a party to an alleged
Construction v Finat contract to determine the extent of prestation of either party
Properties the purported contract is void for vagueness.
NBS Bolank Bank v One - Rule containing a power to fixed, a price is invalid is:
Berg Drive River - 1. Out of step with modern legal systems.
- 2. Illogical in the view of recognition that determination of a
price may validly be left up to a third party and that either the
buyer or the seller may be accorded the power to
1
, individualise a merx in a generic sale.
Price to be fixed by a third party
Reymond v Abdulnabi - The third party must be identified or identifiable.
- Need to be specific when referring to an office of position in a
company.
Westinghouse Brake and - Third party must be able to determine the price without
Equipment (Pty) Ltd v reference to the parties.
Bilger Engineerings
Unacceptable price
Gillig v Sonnenberg; - Disadvantaged party may approach the court.
Hurwitz v Table Bay - Based on abolished lisio enormous
Engineering - Merged two remedies:
- 1. Remedy where disadvantaged party is able to rescind the
contract in terms of the lisio enormous in Roman Law after
the court has set a price.
- 2. Roman-Dutch Law: could rescind a contract where a third
party sets an unjust price.
Van Heerden v Basson - Cannot rely on lisio enormous.
- Court developed new remedy: where third party sets
manifestly unjust price, there is no basis for enforcement of
the contract because you cannot argue that there was
consensus or reliance on consensus for that price.
- Parties agreed third party must set a just price.
CONSEQUENCES OF A CONTRACT OF SALE
Transfer of Ownership
Lendalease v CMA - Sale of maize via ship; attach goods to establish jurisdiction.
- Price payment rule: ownership transfers where there has
been delivery and payment of the price, credit is given, or
security provided.
- Cash sale: transfer upon delivery and payment
- Credit sale: transfer upon delivery
- Presumption in favour of cash sale
DUTIES OF THE PARTIES
Seller’s Duties
Lendalease v CMA - Bill of lading was required to delivery to take place; not
sufficient if goods are on the ship.
- Delivery includes symbolic or constructive delivery.
Warrant against Eviction
Alpha Trust v Van Der - True owner attached car.
Watt - Seller has alternative duties; assist or compensate.
- It is not necessary to cancel the contract to reclaim the
purchase price.
2
, - Damages: purchase price is the minimum.
- Seller argued that it was unfair; but it was the true owner
that was prejudiced.
- Obiter: Merx is rapidly depreciating modify what the seller
pays back.
A Becker & Co v Becker - Depriving a purchaser of goodwill amounts to eviction by the
seller.
Eviction by a third party
Vrystaat Motors v Henry - Attachment by police and decision that goods are stolen
Blignaut amounts to eviction, the loss of possession is permanent.
Louis Botha Motors v - Loss of surrogate of merx (purchase price).
James & Slabbert Motors - LBM wanted the law to be developed so that the claim does
not have to go up the chain.
- Actual eviction in the sense of a judicial process is not
required.
- Buyer can rely on warranty even if they voluntary surrender
the merx, provided they can prove the incontestable title.
- Although formalistic, the chain prevents disruption.
- Person in possession of the merx is in the best position to
determine whether they have a valid defence against the
third party.
- Prepared to assume that the last buyer did not have to prove
eviction and that LBM had to be faced with a claim from its
own buyer.
- Must prove that claim would have gone up the chain.
Garden City Motors v - Cadman cannot institute his own claim; barred from own
Bank of OFS fraud and did not have physical possession of the car
(required in lease).
- Claim would not go up chain.
- Bank claimed that it could not institute rei vindicatio, so
Garden City Motors breached their warranty. However,
transfer of ownership is not warranted.
Par Excellance Colour - When someone else has a limited real right over the merx it
Printing v Ronnie Cox can amount to eviction.
Graphic Supplies
Buyer’s Remedies
Alpha Trust v Van Der - Buyer does not need to cancel the contact to reclaim the
Watt purchase price, claiming specific performance.
Lammers & Lammers v - Seller knew that buyer wanted to affect improvements.
Giovannoni - Seller ignored buyer’s notice of threatened eviction.
3
, - Claims (low to high): purchase price, value of merx at time of
eviction (purchase price + economical improvements), full
compensation (purchase price + economical improvements +
luxury improvements)
- Could claim value of merx at time of eviction – principle of
foreseeability
- Generally, buyer would have claim for unjustified enrichment
(strengthened by right to retain until compensated) but it is
uncertain, expensive and time-consuming.
- Seller cannot argue that the buyer should have defended
more.
Hendler Bros v Lambons - Buyer is entitled to claim the value of the merx at eviction.
- In casu the value was lower than the purchase price.
Alpha Trust v Van Der - Changed: Hendler Bros v Lambons
Watt - Damages: purchase price is the minimum.
- Claiming repayment of the purchase price – claiming specific
performance. Claiming further loss – claim for damages.
- Claim for damages is limited by the foreseeability principle.
- Obiter: could be deviation in case of rapidly depreciating
merx.
- Rejected seller’s argument that it is unfair that the buyer gets
use and the purchase price, but it is unfair to the true owner.
Katzeff v City Car Sales - Rejected obiter of rapidly depreciating merx.
(Pty) Ltd - Buyer bought the merx, not the use thereof.
Mdabane v Std Bank - Taxi = rapidly depreciating merx.
- Legislature needs to deal with this issue.
Soar h/a Rebuilds for - Argued that the buyer has a duty to mitigate loss by taking
Africa v JC Motors reasonable steps.
- One cannot expect a buyer to first institute an enrichment
claim against the true owner for improvements made,
because the outcome is uncertain, it is expensive, and it is
time-consuming.
Exclusion of liability for eviction: pactum de evictione non praestanda
Alpha Trust v Van Der - Exclusion clause only protects seller against payment of
Watt damages or loss of profit, but he remains liable for
repayment of the purchase price.
Vrystaat Motors v Henry - Confirmed the above in Alpha Trust.
Blignaut
Westhuizen v Arnold - A seller cannot exclude itself from liability to pay the
purchase price.
Plit v Imperial Bank - Two instalment sale agreements
- Aircraft and engines got attached; Imperial Bank is claiming
the balance of the instalments.
- Plit’s defence: he was evicted.
- Imperial Bank argues that they had excluded liability in the
event of eviction.
- De Wet & Van Wyk: Parties may exclude liability for damages,
seller may even be exempted from repaying the purchase
price if the buyer took on the risk of uncertainty of the
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