Private Law 411
Contents
Topic 1: Introduction ........................................................................................................................ 3
1 Why rules relating to specific contracts? ................................................................................ 3
2 Methodology of classification ................................................................................................. 3
3 Sources of rules relating to specific contracts ........................................................................ 3
Topic 2: Contract of Sale ................................................................................................................. 4
1 Nature and conclusion ........................................................................................................... 4
11 Definition.......................................................................................................................... 4
12 Merx, res vendita ............................................................................................................. 6
13 The price.......................................................................................................................... 8
14 Formalities ..................................................................................................................... 14
2 Consequences of a contract of sale ..................................................................................... 14
21 Transfer of ownership .................................................................................................... 14
22 Risk rule......................................................................................................................... 15
3 Duties of the parties: naturalia.............................................................................................. 20
31 Buyer ............................................................................................................................. 20
32 Seller ............................................................................................................................. 20
4 Liability for attributes of the merx ......................................................................................... 28
41 Double basis of liability – when is the seller liable? ....................................................... 28
42 Remedies ...................................................................................................................... 31
Topic 3: Lease ............................................................................................................................... 40
1 Introduction .......................................................................................................................... 40
11 Nature and conclusion of the contract ........................................................................... 40
12 Formalities ..................................................................................................................... 42
13 Distinction from other types of contracts ........................................................................ 42
2 Duties of the parties ............................................................................................................. 42
21 Lessor ............................................................................................................................ 42
22 Duties of the lessee ....................................................................................................... 48
3 Subletting, cession, delegation............................................................................................. 51
4 Huur gaat voor koop............................................................................................................. 52
41 Short-term lease ............................................................................................................ 52
42 Long-term lease............................................................................................................. 53
43 Relationship between successor and lessee ................................................................. 53
5 Termination of the lease relationship ................................................................................... 54
51 Termination: B & L 185-192 ........................................................................................... 54
52 Renewal......................................................................................................................... 54
1
, 53 Compensation for improvements ................................................................................... 55
6 Rental Housing Act 50 of 1999............................................................................................. 56
61 Relationship between tenants – ‘landlords’.................................................................... 56
62 Rental Housing Tribunals .............................................................................................. 57
63 Position of the courts? ................................................................................................... 58
Topic 4: Suretyship ........................................................................................................................ 59
1 Introduction .......................................................................................................................... 59
2 Nature and conclusion ......................................................................................................... 60
21 Definition........................................................................................................................ 60
22 Conclusion of a suretyship agreement........................................................................... 61
3 Legal relationships involved in suretyship ............................................................................ 62
31 Surety & creditor (most NB) ........................................................................................... 62
32 Relationship between surety & principal debtor: right of recourse ................................. 64
33 Co-sureties inter se ....................................................................................................... 65
4 Termination of a surety’s liability .......................................................................................... 68
41 Extinction of principal debt ............................................................................................. 68
42 Extinction of surety’s obligation ..................................................................................... 69
2
,Topic 1: Introduction
1 Why rules relating to specific contracts?
• General underlying principles insufficient
• Sometimes reason to deviate
o Parties may have a particular reason or purpose for concluding a contract – where overarching
rules relating to the rules of contracts are not enough
• sometimes silent
o sometimes the law does not provide for a particular situation
• specific legislation
2 Methodology of classification
• 2 broad approaches to classifying specific contract types
(a) Essentialia-naturalia model
➢ Essentialia = characteristic rights and duties which distinguish one contract type from
another (e.g., merx coupled with intention that there will be a permanent transfer of seller’s
rights in that merx in a contract of sale)
➢ One the parties have agreed to the essentialia, the law steps in and reads in certain terms
automatically and these ex lege terms are referred to as the naturalia.
➢ Benefits
o Leads to certainty and efficiency, and thus fairness as parties know what is going
to happen
o Aimed at balancing the interests of the parties
➢ Shortcomings
o All or nothing approach – if cannot agree that parties agree on merx and purchase
price then cannot be a contract of sale, regardless of parties’ intention. Thus, it can
result in a formalistic approach.
o Does not lend itself to a nuanced approach – it hides the need to differentiate
between subtypes of contracts
▪ Trade-in transaction (car dealership) example –
o Essential terms of two contracts could be the exact same e.g. distinction between
employment contract and independent contractor (provision of a service for
remuneration, but very real difference in the way these contracts are treated).
▪ Look at supervision, whose tools they use, etc.
(b) Typological approach
➢ Inherited from German law
➢ Analysis in terms of set “concepts” are valuable, but insufficient
➢ Therefore sees contracts as “types“: not all or nothing criteria
➢ Looks at a number of different factors, not all of which have to be present, in order to
determine whether the dominant impression is that the parties concluded a contract of sale
or any other contract.
➢ Eg employment contract / independent contractor: essentialia the same, look at other
factors
• Approaches are applied in conjunction with one another – not either or
3 Sources of rules relating to specific contracts
• Common law rules
o Roman law as interpreted by Roman-Dutch authorities, which have remained largely
unchanged in our law since the 1700s
• Legislation:
o Formalities
3
, o Rental Housing Act 50 of 1999
o Formalities in respect of Leases of Land Act 18 of 1969
o Consumer Protection Act 68 of 2008
• Constitution
Topic 2: Contract of Sale
1 Nature and conclusion
11 Definition
• Agreement between the parties that seller will deliver an object (merx) and transfer all his rights therein
to the buyer in return for payment of purchase price by buyer
• Essentialia:
o Merx
o Purchase price
o NB: these essentialia must be present in order for a contract to qualify as a contract of sale
• What is NOT an essentialia of a contract of sale?
o It is not an essentialia that the seller transfer ownership of the merx to the buyer – a contract
of sale will not be void/invalid if the seller does not make the buyer owner (see: sale of
something belonging to someone else)
o Textbook refers to the intention to sell and to buy
▪ Intention to buy and sell is implicit from agreement on merx and purchase price
• Distinguish:
(a) Lease
• With a contract of sale, the intention of the parties is that the seller is going to transfer his
rights in the merx permanently; whereas with a contract of lease, the parties’ intention is
that the lessor is only going to transfer his rights to the leased object temporarily.
(b) Exchange
• With a contract of exchange, it is usually an object given in exchange for another object,
whereas with a contract of sale, a merx is usually given in exchange for payment of a sum
of money.
• However, there is also a mixed type of contract where an object is given in exchange for
an object plus a sum of money (e.g. trade in car plus sum of money for a new car). That
type of contract can either be a contract of sale or a contract of exchange.
o Object for object + money?
▪ Wastie v Security Motors 1972 (C)
• POD: parties’ intention is decisive – if the court can conclude that the parties
intended to conclude a contract of sale, then it will be a contract of sale.
• If, however, the intention is not clear, the court will look at which aspect of the
traded-in performance has the largest value (traded-in car + sum of money). If
it is the vehicle that has the greater value, then it is a contract of exchange. If
the money has the greater value, then it is a contract of sale.
▪ Trade-in transactions (particularly for vehicles) are presumed to be contracts of sale
o Practical relevance of distinction between sale and exchange?
▪ Trigger event – right of pre-emption (preference)
• “Should the grantor of the right ever decide to sell the object, the holder of the
right will have first choice to purchase it.”
• The trigger event = any indication that the grantor of the right wants to sell the
object. To circumvent the reference, the grantor could exchange the object,
because the trigger event is a sale, and it would not be breached by an
exchange.
▪ Transfer of ownership: price payment rule
4
Contents
Topic 1: Introduction ........................................................................................................................ 3
1 Why rules relating to specific contracts? ................................................................................ 3
2 Methodology of classification ................................................................................................. 3
3 Sources of rules relating to specific contracts ........................................................................ 3
Topic 2: Contract of Sale ................................................................................................................. 4
1 Nature and conclusion ........................................................................................................... 4
11 Definition.......................................................................................................................... 4
12 Merx, res vendita ............................................................................................................. 6
13 The price.......................................................................................................................... 8
14 Formalities ..................................................................................................................... 14
2 Consequences of a contract of sale ..................................................................................... 14
21 Transfer of ownership .................................................................................................... 14
22 Risk rule......................................................................................................................... 15
3 Duties of the parties: naturalia.............................................................................................. 20
31 Buyer ............................................................................................................................. 20
32 Seller ............................................................................................................................. 20
4 Liability for attributes of the merx ......................................................................................... 28
41 Double basis of liability – when is the seller liable? ....................................................... 28
42 Remedies ...................................................................................................................... 31
Topic 3: Lease ............................................................................................................................... 40
1 Introduction .......................................................................................................................... 40
11 Nature and conclusion of the contract ........................................................................... 40
12 Formalities ..................................................................................................................... 42
13 Distinction from other types of contracts ........................................................................ 42
2 Duties of the parties ............................................................................................................. 42
21 Lessor ............................................................................................................................ 42
22 Duties of the lessee ....................................................................................................... 48
3 Subletting, cession, delegation............................................................................................. 51
4 Huur gaat voor koop............................................................................................................. 52
41 Short-term lease ............................................................................................................ 52
42 Long-term lease............................................................................................................. 53
43 Relationship between successor and lessee ................................................................. 53
5 Termination of the lease relationship ................................................................................... 54
51 Termination: B & L 185-192 ........................................................................................... 54
52 Renewal......................................................................................................................... 54
1
, 53 Compensation for improvements ................................................................................... 55
6 Rental Housing Act 50 of 1999............................................................................................. 56
61 Relationship between tenants – ‘landlords’.................................................................... 56
62 Rental Housing Tribunals .............................................................................................. 57
63 Position of the courts? ................................................................................................... 58
Topic 4: Suretyship ........................................................................................................................ 59
1 Introduction .......................................................................................................................... 59
2 Nature and conclusion ......................................................................................................... 60
21 Definition........................................................................................................................ 60
22 Conclusion of a suretyship agreement........................................................................... 61
3 Legal relationships involved in suretyship ............................................................................ 62
31 Surety & creditor (most NB) ........................................................................................... 62
32 Relationship between surety & principal debtor: right of recourse ................................. 64
33 Co-sureties inter se ....................................................................................................... 65
4 Termination of a surety’s liability .......................................................................................... 68
41 Extinction of principal debt ............................................................................................. 68
42 Extinction of surety’s obligation ..................................................................................... 69
2
,Topic 1: Introduction
1 Why rules relating to specific contracts?
• General underlying principles insufficient
• Sometimes reason to deviate
o Parties may have a particular reason or purpose for concluding a contract – where overarching
rules relating to the rules of contracts are not enough
• sometimes silent
o sometimes the law does not provide for a particular situation
• specific legislation
2 Methodology of classification
• 2 broad approaches to classifying specific contract types
(a) Essentialia-naturalia model
➢ Essentialia = characteristic rights and duties which distinguish one contract type from
another (e.g., merx coupled with intention that there will be a permanent transfer of seller’s
rights in that merx in a contract of sale)
➢ One the parties have agreed to the essentialia, the law steps in and reads in certain terms
automatically and these ex lege terms are referred to as the naturalia.
➢ Benefits
o Leads to certainty and efficiency, and thus fairness as parties know what is going
to happen
o Aimed at balancing the interests of the parties
➢ Shortcomings
o All or nothing approach – if cannot agree that parties agree on merx and purchase
price then cannot be a contract of sale, regardless of parties’ intention. Thus, it can
result in a formalistic approach.
o Does not lend itself to a nuanced approach – it hides the need to differentiate
between subtypes of contracts
▪ Trade-in transaction (car dealership) example –
o Essential terms of two contracts could be the exact same e.g. distinction between
employment contract and independent contractor (provision of a service for
remuneration, but very real difference in the way these contracts are treated).
▪ Look at supervision, whose tools they use, etc.
(b) Typological approach
➢ Inherited from German law
➢ Analysis in terms of set “concepts” are valuable, but insufficient
➢ Therefore sees contracts as “types“: not all or nothing criteria
➢ Looks at a number of different factors, not all of which have to be present, in order to
determine whether the dominant impression is that the parties concluded a contract of sale
or any other contract.
➢ Eg employment contract / independent contractor: essentialia the same, look at other
factors
• Approaches are applied in conjunction with one another – not either or
3 Sources of rules relating to specific contracts
• Common law rules
o Roman law as interpreted by Roman-Dutch authorities, which have remained largely
unchanged in our law since the 1700s
• Legislation:
o Formalities
3
, o Rental Housing Act 50 of 1999
o Formalities in respect of Leases of Land Act 18 of 1969
o Consumer Protection Act 68 of 2008
• Constitution
Topic 2: Contract of Sale
1 Nature and conclusion
11 Definition
• Agreement between the parties that seller will deliver an object (merx) and transfer all his rights therein
to the buyer in return for payment of purchase price by buyer
• Essentialia:
o Merx
o Purchase price
o NB: these essentialia must be present in order for a contract to qualify as a contract of sale
• What is NOT an essentialia of a contract of sale?
o It is not an essentialia that the seller transfer ownership of the merx to the buyer – a contract
of sale will not be void/invalid if the seller does not make the buyer owner (see: sale of
something belonging to someone else)
o Textbook refers to the intention to sell and to buy
▪ Intention to buy and sell is implicit from agreement on merx and purchase price
• Distinguish:
(a) Lease
• With a contract of sale, the intention of the parties is that the seller is going to transfer his
rights in the merx permanently; whereas with a contract of lease, the parties’ intention is
that the lessor is only going to transfer his rights to the leased object temporarily.
(b) Exchange
• With a contract of exchange, it is usually an object given in exchange for another object,
whereas with a contract of sale, a merx is usually given in exchange for payment of a sum
of money.
• However, there is also a mixed type of contract where an object is given in exchange for
an object plus a sum of money (e.g. trade in car plus sum of money for a new car). That
type of contract can either be a contract of sale or a contract of exchange.
o Object for object + money?
▪ Wastie v Security Motors 1972 (C)
• POD: parties’ intention is decisive – if the court can conclude that the parties
intended to conclude a contract of sale, then it will be a contract of sale.
• If, however, the intention is not clear, the court will look at which aspect of the
traded-in performance has the largest value (traded-in car + sum of money). If
it is the vehicle that has the greater value, then it is a contract of exchange. If
the money has the greater value, then it is a contract of sale.
▪ Trade-in transactions (particularly for vehicles) are presumed to be contracts of sale
o Practical relevance of distinction between sale and exchange?
▪ Trigger event – right of pre-emption (preference)
• “Should the grantor of the right ever decide to sell the object, the holder of the
right will have first choice to purchase it.”
• The trigger event = any indication that the grantor of the right wants to sell the
object. To circumvent the reference, the grantor could exchange the object,
because the trigger event is a sale, and it would not be breached by an
exchange.
▪ Transfer of ownership: price payment rule
4
