Question 1

Awuku states that the warranty against latent defects may be excluded by the parties. This
can be achieved in any way from which the intention to exclude the warranty can be deduced,
but the usual way is to state that the article is sold voetstoots or as is (Awuku Commercial
Law Study Manual at p. 117). The purchaser then has no legal remedies if the article sold has
a latent defect, except where the seller knows about the defect. If the seller knows of the
defect but conceals it, he will not be able to rely on the voetstoots clause and the seller will
have the aedilitian actions at his disposal (Awuku at p. 117). In addition to this, the purchaser
will probably succeed in proving intentional or negligent misrepresentation, permitting him to
also recuperate damages. (Awuku at p. 117).
The remedies for breach of the implied warranty against latent defects are the so-called
aedilitian actions namely, the actio redhibitoria and the actio quanti minoris. When a latent
defect is discovered, the purchaser will, depending on the degree of the defect, be entitled to
the actio redhibitoria and in the alternative, the actio quanti minoris, or the latter only.
(Awuku at p. 126).
a) The actio redhibitoria: if the latent defect is so material that, had he known about the
defect, the purchaser would never have bought the article, or if the defect renders the
article useless, the purchaser may claim the following:
1. Return of the purchase price.
2. Interest
3. Repayment of all expenses incurred regarding the receipt and preservation of
the merx.
4. Reimbursement for improvements effected by him to the merx.
The purchaser must return the merx together with all that has accrued to it. However,
if the merx is destroyed as a result of the very defect, or for some or other reason
through no fault of the purchaser, the inability to return the merx will not prevent the
purchaser from enforcing this remedy. (Awuku at p. 127
It is noteworthy that in the case of a very serious defect, the purchaser is not forced to
use the actio redhibitoria. The purchaser might still prefer the actio quanti minoris
despite the seriousness of the defect. (Awuku at p. 127).
b) The Actio Quanti Minoris: if the latent defect is not so material that the purchaser
would have refused to buy the article if he had known about the defect, or if the defect
does not render the article completely useless, but there is nevertheless a defect, the
purchaser will have to be satisfied with keeping the merx and claiming a reduction of
the purchase price. The reduction is calculated by deducting the value of the defective
merx from the purchase price (Awuku at p. 127).
c) The Actio Empti: the actio empti is not a separate common law right of the purchaser,
but a remedy the purchaser can use to enforce his rights against the seller. Just as the
aedilitian actions, this action is also derived from Roman law. The purchaser may
rely on the actio empti in the following circumstance:
1. Defective performance: where the merx is delivered without the good
qualities guaranteed by the seller or with defects the absence of which was
guaranteed by the seller, the purchaser may claim damages based on his
positive interest and, if the merx is seriously defective, cancellation (Awuku at
p. 127).
2. Misrepresentation: where the seller is aware of defects in the merx but does
not disclose this to the purchaser, or if the seller induces the contract by making
false representations about good qualities of the merx, the purchaser may rely
on the actio empti to claim damages according to his negative interest.
3. Manufacturers Liability: where the seller is the manufacturer of the merx or
a specialist dealer who publicly claims to have expertise regarding the merx, he
can, if it is defective, be held liable for damages, including damages for
consequential loss. The seller should have guaranteed the absence of latent
defects expressly or by implication. Consequential loss is loss resulting from
the use of the defective merx for example, the loss of crops resulting from a
defective weed-killer. (Awuku at p. 128).
4. Breach of the warranty against eviction: this is a term which implies by law,
in a contract of sale by virtue of which the seller undertakes that the buyer will
not be disturbed, whether by the seller himself or by a third party, in his vacua
possessio, as a result of any defect in his title. (Awuku at p. 128).




Question 2 (a)
According to Gibson (Gibson South African Mercantile and Company Law 6
th
ed. Cape
Town Juta 1988), there are five types of specific agents. These are:
a) Auctioneers: an auctioneer is an agent authorised by the principal (the seller) to sell
property on his behalf at a sale by public auction. The sale is usually subject to the
conditions of sale which are read out at the time of the auction by the auctioneer. Both
seller and purchaser are deemed to have assented to these terms, as per the case of
Hofmeyer and Son v Luyt 1921 CPD 837. Once the conditions of sale have been read
out, anything said by the auctioneer must be understood within the context of the
stated conditions, as stated in the case of Mouton v Wessels 1951 3 SA 147 (T). The
result is that the principal (seller) will not be bound by any warranty or representation
made by the auctioneer without the sellers permission and if it is in conflict with the
conditions of sale (Gibson at p. 248).
b) Brokers: a broker is an agent appointed by either the buyer or the seller to negotiate a
contract of sale on his behalf. His ordinary function is to negotiate the terms of the
contract until the parties thereto reach consensus. The true contract is concluded by
the buyer and the seller. (Gibson at p. 249).
c) Del credere agents: a del credere agent is an agent authorised to sell goods on behalf
of a principal and who guarantees the payment of the purchase price by the purchaser.
In return for this guarantee the agent receives an additional commission known as a
del credere commission (Gibson at p. 251).
d) Estate Agents: an estate agent is an agent authorised to negotiate the sale or purchase
of immovable property. In terms of our common law an estate agent must comply
with three requirements in order to be entitled to payment of commission by the
principal (Gibson at p. 252).
i. a mandate must exist
ii. the agent must execute the mandate; and
iii. the agent must be the effective cause of the transaction.
e) Insurance agents: an insurance agent is normally the agent of the insured although
his commission is paid by the insurer. This is a result of trade usage. The agents
relationship with the insured is governed by the rules of the law of agency, as was
stated in the case of Rabinowitz NO v Ned-Equity Insurance Co. Ltd 1980 1 SA 403
(W). As a canvassing agent, his mandate will be to introduce prospective customers to
the company. This might include giving assistance in completing the proposal form
and to receive premiums, but this does not mean the insurance agent has the authority
to accept the proposal or even to issue temporary cover. In this regard see the case of
Dicks v SA Mutual Fire and General Insurance Co Ltd 1963 4 SA 501 (N).
Question 2 (b)
In certain instances, by a mandate contract an agent may be authorised and intends to contract
on behalf of the principal, but fails to disclose his representative capacity to the third party.
(Awuku at p. 87). However, in terms of the doctrine of the undisclosed principal which is
derived from English law, the principal is entitled, once the representative has reached
agreement with the third party, to step into the agents shoes as the real party to the contract.
In the same way, the principal may hold the third party liable. (Awuku at p. 87)
For this doctrine to apply, the agent must have the authority to contract on behalf of the
principal. Successive ratification by the principal is not enough. Furthermore, the agent must
also have the intention of acting on behalf of the principal. The agent must also not disclose
to the third party that he is acting on behalf of another person. Where the agent notifies the
third party of his representative capacity while withholding the principals name, this doctrine
will not apply (Awuku at p. 87).
The undisclosed principal may choose to claim performance promised to the agent in certain
instances. If the principal fails to make such claim, the third party is liable to the agent, who
may enforce the contract in his own name. If the third party performs to the agent before the
intervention of the principal, the third party is released and performance to the principal
cannot be enforced. The agents right to performance comes to an end when the principal
comes forward and claims performance. The principal obtains no greater rights than the
agent, and the third party can raise any defence which was available to him against the agent,
against the principal (Awuku at p. 88).
On discovery of the true facts, the third party can hold either the agent or the principal liable
and is bound to this decision once it is made. Where the agent is acting on behalf of more
than one principal, the doctrine can expose the third party to a multiplicity of actions, since he
would be obliged to perform to more than one creditor. It therefore is excluded in these
instances (Awuku at p. 88).

Question 5 A
Question 5 B
Question 5 D
1. The contract is void as it is not reduced to writing as required by section 5(a) of the
Credit Agreements Act.
2. The contract is void, as the credit receiver must obtain the money himself as required
by section 6(7) (C) of the Act.
3. According to section 11 of the Credit Agreements Act, the credit receiver is granted
an opportunity to rectify a breach of contract. The credit grantor must notify the credit
receiver in writing of his breach and require him to comply with his obligations within
30 days of delivery of the notification.
4. The contract will be void from the beginning as the credit grantor is not registered to
provide credit.
5. According to section 16 of the High Court Act the court has jurisdiction over all
persons residing in Namibia. This contract was signed in Namibia so any dispute
arising from the contract will be heard in the High Court.