KTH 220: CLASS TEST

 Unit 1: Theme 4-6

 20 Marks
 20% of semester mark

Theme 4: Seller’s Duty of Safekeeping of the Thing Sold

- Commercial Law paras 14.01-14.12
14.01 When a valid contract of sale is concluded, both the seller and the buyer have
to fulfil certain contractual duties. These duties or the contents thereof are the
naturalia of each and every contract of sale. The parties may by agreement exclude
or limit these duties (in the form of incidentalia).
14.02 In this chapter the following duties of the seller are discussed: safe-keeping or
duty to take care of the object sold, delivery of ownership and the warranties against
eviction and latent defects. The aforesaid duties of the seller will also be discussed
against the backdrop of the Consumer Protection Act 68 of 2008. The duties of the
buyer are discussed in the next chapter.
Safe-keeping of Object Sold
Seller’s duty Seller’s duty
General principle
14.03 The first duty of the seller is to take care of and protect the object from the
time of conclusion of the contract until the object is delivered to the buyer [Frenkel v
Ohlsson’s Cape Breweries 1909 TS 957]. A buyer may claim damages from a seller
for any damage caused by the seller’s intentional or negligent conduct. As a general
rule the seller will not be liable for damages where his conduct was without fault.
Here, the so-called doctrine of the passing of risk has to be applied. The parties may
change the duty of safe-keeping through agreement.
14.04 The culpable conduct of the seller resulting in the damage or destruction of the
object sold, can be divided into the following:
(a) intentional acts, where the seller intended the specific consequences of his act;
or
(b) negligent acts, where the seller does not act in the way a reasonable man would
have acted under the same circumstances. Negligence takes two forms, namely
mere carelessness and gross negligence. In this instance, coincidence or an act of
God is irrelevant.
Factors that influence the duty of safe- keeping
14.05 The mora debitoris or mora creditoris of the buyer and the mora debitoris of
the seller influence the duty of safe-keeping. Where the buyer is in mora debitoris or
mora creditoris (where he fails to pay the price or fails to receive the object sold), the
seller will only be held liable for damages caused by his intentional or grossly
negligent conduct. Where the seller is in mora debitoris (where he fails to deliver the
object sold), he is responsible for any damage whatsoever, even in the absence of
fault on his part. Mora creditoris of the seller (where he fails to receive payment) has
no influence on the duty of safe-keeping. Passing of risk Passing of risk General
principles General principles 14.06 The doctrine of the passing of the risk determines
whether the seller or the buyer bears the risk where accidental damage is caused to
the object either by coincidence or by acts of God, and not by the culpable conduct
of either party.
14.07 The general rule is that the owner suffers the loss when his property is
destroyed. The seller, while retaining ownership, would bear the burden of the total
or partial destruction of the object, without being able to claim the purchase price
from the buyer.
14.08 The doctrine of the passing of the risk causes the risk to pass to the buyer
when the sale is perfecta. A contract is perfecta when:
(a) the buyer and the seller have the intention of buying and selling;
(b) the object to be sold is determined. In the case of:
(i) an emptio rei speratae, the object sold is fixed after being measured or weighed;
(ii) an emptio spei, the object sold is fixed as soon as the contract is concluded; and
(iii) a generic sale, the object sold is fixed after individualisation;
(c) the purchase price is determined; and
(d) the contract is not subject to a suspensive condition.
14.09 The result is that the buyer bears the risk where the object is damaged or
destroyed through coincidence or an act of God. The buyer is still liable to pay the
purchase price even where the seller has not yet delivered the object to him. This is
a naturale of any contract of sale and the parties may by agreement exclude or
change it [Gengan v Pathur 1977 (1) SA 862 (D)]. Damage and advantage Damage
and advantage
14.10 All damage caused to the object of sale without the fault of any of the parties is
borne by either the seller or the buyer, as set out above. Such damage may be
caused by many different factors (for example fire, floods, earthquakes or war), as
long as it is due to coincidence or an act of God, and not to the culpable conduct of
either the seller or the buyer.
14.11 Any advantage or benefit derived from the object sold after conclusion of the
contract but before delivery, is also allocated to one of the parties according to the
rules as set out above. The principles as applied to the passing of the risk also apply
to the allocation of benefits. Advantages may consist of natural accrual (also known
as accessory accrual) of the object of sale (for example, where a cow has a calf after
date of sale but before delivery of the cow to the buyer), or those benefits (also
known as substitutive advantages) which form an inherent part of the object sold (for
example, to bring a civil action against a thief after conclusion of the contract but
before delivery of the object sold). Duty of safe- Duty of safe-keeping and passing of
risk keeping and passing of risk keeping and passing of risk Damage to Object after
Conclusion of Contract but before Delivery Fault (Intent/Negligence) No Fault
(Coincidence/Acts of God) Duty of Safe-keeping Passing of Risk Seller bears
Damages Buyer bears Risk if contract is Perfecta Influence of the Consumer
Protection Act on Influence of the Consumer Protection Act onrisk
14.12 The Consumer Protection Act 68 of 2008, if applicable [see 41.13 – 41.17],
provides that in the absence of an express agreement to the contrary, goods to be
delivered, remain at the supplier’s (seller’s) risk until the consumer (purchaser) has
accepted delivery [section 19(2)(c)]. Acceptance of delivery is deemed when a
consumer expressly or implicitly communicates to a supplier that he or she has
accepted delivery of such goods, or if a consumer does anything in relation to the
goods that is inconsistent with the supplier’s ownership, or if a consumer keeps the
goods for an unreasonable period without informing the supplier that he or she does
not want it [section 19(4)]. These provisions do not apply to franchise agreements or
where the transaction is governed by section 46 of the Electronic Communications
and Transactions Act 25 of 2005.
Theme 5: Seller’s Duty of Delivery; Transfer of Ownership (if Seller is the
Owner) and Double Sales
- Commercial Law paras 14.13-14.40
Passing of ownership
14.13 Mere conclusion of a contract of sale does not transfer ownership to the buyer.
Other requirements have to be met before ownership is transferred. On conclusion of
the contract, the buyer only obtains a personal right (legal claim) against the seller
for delivery of the object sold. The contract merely enables the buyer to obtain a real
right in the object sold. The real right can only exist if all the requirements as
mentioned, are met [Lendalease Finance (Pty) Ltd v Corporacion De Marcadeo
Agricola 1976 (4) SA 464 (A); Vasco Dry Cleaners v Twycross 1979 (1) SA 603 (A);
Marcard Stein & Co v Port Marine Contractors (Pty) Ltd 1995 (3) SA 663 (A); De Wet
v Santam Bpk 1996 (2) SA 629 (A)].
14.14 There is no duty on the seller to transfer ownership to the buyer, as ownership
is not one of the requirements for a valid and binding contract. This will not be so
where the seller is in fact the owner of the object sold, in which case the duty to
transfer ownership is present.
Requirements for passing of ownership.
Immovable property Immovable property
14.15 A buyer will only obtain ownership (a real right) of immovable property where:
(a) the seller is the owner of the object sold;
(b) the seller has the intention of transferring ownership and the buyer has the
intention of obtaining ownership [AXZS Industries v AF Dreyer (Pty) Ltd 2004 (4) SA
186 (W); Oriental Products (Pty) Ltd v Pegma 178 Investments Trading CC 2011 (2)
SA 508 (SCA)]; and
(c) the property is registered in the name of the buyer. (Note that payment of the
purchase price is not required for the transfer of ownership of immovable property.)
Movable property
14.16 A buyer will only obtain ownership (a real right) of movable property where:
(a) the seller is the owner of the object sold;
(b) both parties have the intention to pass ownership from the seller to the buyer;
and
(c) where it is a cash sale:
(i) the seller must deliver the object to the buyer; and
(ii) the buyer must pay the purchase price;
(d) where it is a credit sale, the only requirement is delivery of the object to the buyer.
The price does not have to be paid to transfer ownership, as is the case with a cash
sale. The parties could, moreover, agree that ownership only passes when the price
has been paid. The intention of the parties will determine whether it is a cash or a
credit sale.
Payment of purchase price
14.17 A distinction is made primarily between cash and credit sales. As has already
been discussed above, the distinction between a cash and a credit sale is of material
interest in order to determine the passing of the right of ownership as far as
movables are concerned. Whether a deed of sale is concluded on the basis of cash
or credit depends directly on the express or tacit intention of the parties to the
contract.
Cash sale
14.18 A cash sale exists where both parties intend to effect delivery and payment of
the purchase price at the same time, or at least on the same day [International
Harvester (South Africa) (Pty) Ltd v AA Cook & Associates (Pty) Ltd 1973 (4) SA 47
(T)].
14.19 The contract itself determines whether it is a cash or a credit sale. In general,
the presumption exists that each sale is a cash sale unless the parties expressly or
tacitly agree that it is a credit sale.
14.20 Mere delivery of the object sold to the buyer does not constitute a credit sale.
If payment has to be made in cash (in other words, at the same time as delivery or at
least on the same day), the seller is entitled to reclaim the object from the buyer
within a reasonable time if he does not receive payment from the buyer. If he does
not do so, his actions could constitute a change of intention of the parties. This could
mean that the parties intend the sale to be a credit sale. In this case the buyer will
receive ownership through mere delivery of the object sold. What is seen as a
reasonable time will depend on the facts and circumstances of each case. For
purposes of the Insolvency Act 24 of 1936, 10 days is deemed to be a reasonable
time for a seller to reclaim the object delivered in terms of a contract of sale. The
statutory period can be used as a broad guideline for the determination of a
reasonable time.
Credit sale
(a) General
14.21 As mentioned above, a presumption exists that all sales are cash sales unless
the parties reach an express or tacit agreement to the contrary. All the facts and
circumstances of each case will determine whether the parties intended the sale to
be a cash or a credit sale [Eriksen Motors (Welkom) Ltd v Protea Motors Warrenton
1973 (3) SA 685 (A)].
(b) Tacit granting of credit
14.22 It is often difficult to determine whether the seller tacitly provides credit to the
buyer, as ownership then passes to the buyer through mere delivery of the object
sold [Grosvenor Motors (Potchefstroom) Ltd v Douglas 1956 (3) SA 420 (A)]. In
general, the following would constitute tacit granting of credit:
(a) where the seller accepts security for the payment of the purchase price (such as
a pledge, bond or surety);
(b) where the parties agree on an interest rate for the payment of interest on the
purchase price;
(c) where the granting of credit can be deduced from previous transactions between
the parties;
(d) where it is customary for that specific commercial transaction to be concluded on
a credit basis;
(e) where the seller accepts a post-dated bill of exchange or cheque as payment;
(f) where the seller does not insist on immediate payment or does not reclaim the
object sold within a reasonable time even though the parties agreed on a cash sale.
(c) Payment by cheque
14.23 Where the purchase price is paid by cheque payable on demand (and not a
post-dated cheque which constitutes a credit sale), the question exists whether this
constitutes a cash or credit sale.
14.24 A cheque is not legal tender. The seller may refuse to accept payment by
cheque unless an agreement exists between seller and buyer that such payment will
be accepted. A cheque is an instruction to the bank of the drawer of the cheque (the
buyer) to pay the amount of the cheque to the payee (the seller). The seller is the
holder of the cheque and is entitled to receive payment from the bank. A cheque
payable on demand merely represents the purchase price and is not seen as cash or
credit. It enables the seller to obtain the money only when the bank pays out the
amount of the cheque. If the cheque is dishonoured, the seller never receives
payment for the object sold.
14.25 Payment by cheque, therefore, is merely conditional payment. The condition is
that the amount represented by the cheque is actually paid to the seller. A cheque
payable on demand is simply a document through which the seller can obtain real
payment of the purchase price. It does not, on its own, constitute payment of the
purchase price nor does it constitute granting of credit to the buyer, unless it is a
post-dated cheque.
14.26 The intentions of the seller and the buyer will still determine whether it is a
cash or a credit sale, irrespective of whether payment is by cheque or not
[Grosvenor Motors (Potchefstroom) Ltd v Douglas 1956 (3) SA 420 (A); Eriksen
Motors (Welkom) Ltd v Protea Motors Warrenton 1973 (3) SA 685 (A); B & H
Engineering v First National Bank of South Africa Ltd 1995 (2) SA 279 (A)].
14.27 The legal position regarding payment by cheque can be summarised as
follows:
(a) the sale is not a credit sale, and ownership is not transferred to the buyer merely
by the delivery of the object sold;
(b) the sale is not a cash sale, and ownership is not transferred to the buyer when
payment is made by cheque;
(c) the intention of the parties determines whether it is a cash or a credit sale;
(d) payment by cheque is a conditional payment and payment will only be made
when the amount represented by the cheque is actually paid to the seller;
(e) a post-dated cheque suggests tacit granting of credit, where ownership passes to
the buyer on delivery of the object sold and not when the amount of the cheque is
actually paid to the seller;
(f) if a cheque is drawn in one place (for example, Pretoria) payable on demand, but
is collected in another place (for example, Frankfort), the same principles as
mentioned above apply. The fact that a considerable lapse of time arises between
the time when the cheque is drawn and when it is collected (paid out) does not
cause it to be a credit sale, unless the parties to the contract have expressly or tacitly
intended it to be so.
Delivery of object sold
14.28 The minimum requirement for the transfer of ownership from the seller to the
buyer is the delivery of the object sold [Eskom v Rollomatic Engineering (Edms) Bpk
1992 (2) SA 725 (A); Bank Windhoek Bpk v Rajie 1994 (1) SA 115 (A)]. Ownership
will never be transferred to the buyer where delivery has not been affected, even
though the buyer has already paid the purchase price. The right to use, enjoy and
dispose of the object is transferred to the buyer on delivery of the object sold.
Ordinarily a buyer is entitled, upon delivery, to deal with the object sold as he
pleases without any need to account to the seller [Commissioner for Inland Revenue
v Wandrag Asbestos (Pty) Ltd 1995 (2) SA 197 (A)].
Forms of delivery
(a) Movable and immovable incorporeal property
14.29 All movable incorporeal property (such as debts) is delivered through cession.
All immovable incorporeal property (such as servitudes) is delivered through
registration of the cession of rights in terms of the Registration of Deeds Act 47 of
1937.
(b) Immovable corporeal property
14.30 Registration in terms of the Registration of Deeds Act 47 of 1937 constitutes
delivery of immovable corporeal property (such as land).
(c) Movable corporeal property
14.31 Delivery can be affected in many different ways. The most common form of
delivery is where the seller physically hands over the object of sale to the buyer. This
is delivery in its literal form. Delivery could also be affected through the mere change
of intention of the parties (where the seller or buyer already possesses the object
and will continue to do so after delivery thereof); symbolic delivery (where something
is delivered to the buyer to enable him to use the object sold); and delivery through
marking or pointing out.
14.32 Each of these methods of delivery will subsequently be discussed briefly.
(a) Actual delivery (de manu in manum). In this case the object sold is handed
physically by the seller to the buyer.
(b) Delivery with the shorthand (traditio brevi manu). In this case the buyer is already
physically in possession of the object sold and delivery takes place by the mere
change of intention of the buyer and seller. For example, where the buyer, before
concluding the deed of sale, rents a car from the seller and later decides to buy the
car. No giving back of the car by the buyer to the seller is necessary to establish
delivery. The buyer remains in possession of the car and delivery takes place
through the change of intention of the parties to the contract.
(c) Constitutum possessorium. This method of delivery is the opposite of delivery
with the shorthand. Delivery in this case also takes place through the change of
intention of the buyer and seller, but the seller remains, after the contract has been
concluded, physically in possession of the object sold. For example, S sells a car to
P, but at the same time S and P agree that S will rent the car from P. Therefore S
(the seller) remains physically in possession of the car after the contract has been
concluded.
(d) Attornment. In this case the object sold is physically in the possession of a third
party and delivery (as above) takes place through a change of intention of the buyer
and seller. Before the deed of sale is concluded the third party concerned keeps the
object on behalf of the seller, but after the conclusion thereof the intention of the
buyer and seller is that the third party should keep the object on behalf of the buyer.
For example, a car is placed by the seller in possession of a panel-beater for repairs
and the car is sold during this period of repair. Before the contract is concluded the
panel-beater keeps the car on behalf of the seller, but after the contract has been
concluded, the panel-beater keeps the car on behalf of the purchaser. Consequently,
delivery has taken place through the change of intention of the parties to the
contract. Mere notice to the third party of this change of intention is sufficient and no
co-operation of the third party in respect of this change of intention is required
[Caledon & Suid-Westelike Distrikte Eksekuteurskamer Bpk v Wentzel 1972 (1) SA
270 (A); Air-Kel (Edms) Bpk h/a Merkel Motors v Bodenstein 1980 (3) SA 917 (A)].
(e) Symbolic delivery. In this case delivery takes place by the seller placing the buyer
in possession of a symbol by means of which the buyer gains control over the object
sold. For example, a shipload of maize has been bought and the buyer is placed in
possession of the bills of lading to place him in control of the maize. Delivery
therefore takes place fictitiously (symbolically).
(f) Delivery through marking. In this case delivery takes place by marking the object
or objects bought or sold. For example, where part of a flock of sheep is bought, the
sheep forming part of the object sold can be marked by a yellow mark on the hind
leg. Delivery takes place as soon as the yellow marks are made on the hind legs of
the sheep concerned.
(g) Delivery with the long hand. Delivery in this case takes place in that the object
sold is pointed out by the seller to the purchaser with the intention that ownership
should pass [AXZS Industries v AF Dreyer (Pty) Ltd 2004 (4) SA 186 (W)].
(h) Clavium traditio. Clavium traditio means delivery by handing the keys to or for an
object to the purchaser. This is not a form of symbolic delivery, but the handing over
of possession and control. If the party delivering retains a duplicate of the keys,
delivery is deficient.
Object delivered
14.33 The seller must deliver the object agreed upon. All accessories required for the
proper use and enjoyment of the object sold must also be delivered to the buyer
(such as the keys of a car). The seller is also obliged to deliver to the buyer all
benefits which accrued after the contract became perfecta (such as calves of cows
sold).
Date of delivery
14.34 The parties may agree on a date for delivery. If no agreement was reached,
the seller must deliver the object sold within a reasonable time. The facts and
circumstances of each case will determine what is a reasonable time.
Place of delivery
14.35 The seller must deliver the object sold to the buyer at the place agreed upon. If
no agreement was reached, the delivery must be effected at the place where the
contract was concluded, or at the business or home of the seller.
Influence of the Consumer Protection Act on delivery
14.36 If the Consumer Protection Act 68 of 2008 is applicable [see 41.13 – 41.17]
and the par ties did not expressly agree on the details of delivery, it is an implied
term that the supplier (seller) is responsible to deliver the goods on the agreed date
and time, if any, or otherwise within a reasonable time at the agreed place of delivery
and at the cost of the supplier [section 19(2)(a)]. The supplier may not require that
the consumer (purchaser) accept delivery at an unreasonable time [section 19(3)].
The presumed place of delivery is the supplier’s place of business, if any, or
residence [section 19(2)(b)].
14.37 Acceptance of delivery is deemed when a consumer expressly or implicitly
communicates to a supplier that he or she has accepted delivery of such goods, or if
a consumer does anything in relation to the goods that is inconsistent with the
supplier’s ownership, or if a consumer keeps the goods for an unreasonable period
without informing the supplier that he or she does not want it.
14.38 Before accepting delivery of goods, a consumer is entitled to examine them to
make sure they are of the type and quality agreed upon or, if a special order was
placed, reasonably match the material specifications [section 19(5)]. If a supplier
tenders the delivery of goods at a location, date or time other than as agreed, a
consumer has the option of either agreeing to the change or insisting on delivery at
the agreed location, date and time or cancelling the transaction without penalty,
treating the delivered goods as unsolicited goods in accordance with section 21 [see
41.48 – 41.50]. If a supplier delivers a larger quantity of goods than were ordered, a
consumer may reject all of the delivered goods or accept and pay only for the agreed
quantity and treat the rest as unsolicited goods. If some of the goods delivered are
as agreed, but others not, a consumer may accept those goods as agreed and reject
the rest or reject all of the delivered goods [section 19(8)].
14.39 These provisions do not apply to franchise agreements or where the
transaction is governed by section 46 of the Electronic Communications and
Transactions Act 25 of 2005.
Double sales
14.40 A double sale takes place when a seller sells the same object to two different
purchasers [Barnard v Thelander 1977 (3) SA 932 (C); Kazazis v Georghiades 1979
(3) SA 886 (T); Meridian Bay restaurant (Pty) Ltd v Mitchell NO 2011 (4) SA 1 (SCA)].
Two possibilities are at issue, namely:
(a) Neither the first buyer (B1) nor the second buyer (B2) has already acquired
ownership of the object bought or sold. In this case the principle is as follows: He
who is first in time, is preferred in right. Consequently, the legal claim of the buyer
(B1) with whom the seller first concluded a deed of sale enjoys preference above the
legal claim of a buyer (B2) with whom the seller later concluded a deed of sale. B1
can enforce his legal claim in terms of the deed of sale against the seller and B2 or
protect it by means of an interdict. If B2 had been unaware of the first deed of sale,
he has a contractual claim on the basis of the following: eviction; mora debitoris;
rendering performance impossible; or repudiation against the seller.
(b) If either the first buyer (B1) or the second buyer (B2) has already acquired
ownership, the personal right of the buyer who did not become owner is subordinate
to the real right of the buyer who did become owner of the object sold, provided that
the latter was unaware of the other contract of sale. The (prejudiced) buyer without
ownership has a contractual claim based on eviction, mora debitoris, rendering
performance impossible or repudiation against the seller, provided he did not know of
the other contract of saIe. However, in terms of the doctrine of notice, a purchaser
who acquires a merx to which his predecessor in title has granted a personal right to
a third party, may be held bound to give effect thereto if the purchaser received
notice that the object acquired is emburdened by another’s personal right. Thus, a
purchaser who knows that the merx has been sold to another, may, in spite of having
obtained transfer or delivery, be forced to hand it over to the prior purchaser
[Meridian Bay Restaurant (Pty) Ltd v Mitchell NO 2011 (4) SA 1 (SCA)]. However, the
doctrine of notice appears to be inconsistent in so far as it allows the holder of a
personal right to prevail over the holder of a real right to the extent of compelling the
transferee of a merx with notice to give effect to the contractual undertakings of the
predecessor in respect of the merx.
(c) If the merx is the subject matter of a lawsuit, the res litigiosa doctrine is to the
effect that where a second sale occurs pending such a lawsuit, the rights of the first
purchaser must prevail and are consequently enforceable against the second
purchaser, irrespective of whether the second purchaser acted in good or bad faith
[see 13.27].
Theme 6: Warranty against Eviction
- Commercial Law paras 14.41-14.55
Definition of eviction
14.41 Any action by a third party who has better rights in the object sold than the
buyer, and who deprives the buyer of the total or partial use, enjoyment and disposal
of the object sold, constitutes eviction [Lammers and Lammers v Giovannoni 1955
(3) SA 385 (A); Alpha Trust (Edms) Bpk v Van der Watt 1975 (3) SA 734 (A); Lavers
v Hein & Far BK 1997 (2) SA 396 (T)].
General principles
14.42 A buyer does not become the owner of the object sold by the mere conclusion
of a valid contract of sale. The seller is also not obliged to transfer ownership to the
buyer except where he himself is the owner of the object sold.
14.43 The seller is obliged to give the buyer a warranty against eviction. This
warranty forms a naturale of any contract of sale and is applied by operation of law.
The contract does not have to contain an express warranty. Therefore, the warranty
against eviction is imposed ex lege and has nothing to do with the consensus or
absence thereof between the parties to the contract [Plitt v Imperial Bank Ltd 2007
(1) SA 315 (SCA)] The warranty against eviction cannot be ex cluded contractually
[Van der Westhuizen v Arnold 2002 (6) SA 453 (SCA)]. The reason for evic tion
must already be present at the time of conclusion of the contract. Eviction takes
place when it appears that the temporary deprivation of possession has become
permanent [Vrystaat Motors v Henry Blignaut (Edms) Bpk 1996 (2) SA 448 (A)].
Where eviction is merely a threat, the buyer has no cause of action against the
seller.
Forms of eviction
14.44 Different forms of eviction exist, such as:
(a) The true owner of the object sold claims his property from the buyer [Mdakane v
Standard Bank of South Africa Ltd 1999 (1) SA 127 (W)].
(b) A third party obtains possession of property and the buyer cannot claim this
property from the third party due to a defective title [Par Excellence Colour Printing
(Pty) Ltd v Ronnie Cox Graphic Supplies (Pty) Ltd 1983 (1) SA 295 (A)].
(c) In terms of the rule that lease goes before sale (huur gaat voor koop) [see 17.25
– 17.32], the buyer is sometimes obliged to allow the lessee to use and enjoy the
property until the lease expires.
(d) The holder of a limited real right (such as the holder of a servitude of right of
way), may prevent the buyer from having the full use and enjoyment of the object
sold [Glaston House (Pty) Ltd v Inag (Pty) Ltd 1977 (2) SA 846 (A)].
Duties of buyer when eviction imminent
General
14.45 The buyer must comply with certain rules as soon as eviction threatens. The
buyer could lose his cause of action against the seller if he does not comply with the
rules, unless he can prove that the title of the seller was defective and that the third
party would in any case have succeeded with his action for eviction. In this case the
burden of proof does not rest with the third party but rests with the buyer, who has to
prove that the title of the seller was defective.
14.46 These rules prevent the buyer from immediately relinquishing the object sold
to the third party where eviction by the latter threatens. It could happen that the third
party does not have a better title or that the seller might have a defence against the
claim of the third party [Lammers and Lammers v Giovannoni 1955 (3) SA 385 (A)].
The rules
14.47 As a general rule, the buyer must not surrender the object to someone
threatening him with eviction.
14.48 The buyer must notify the seller of the threatened eviction. The purpose of the
notification is to enable the seller to assist the buyer, or to put up a defence against
the claim of the third party. The notification must be given in sufficient time as to
enable the seller to prepare his defence and to assist the buyer in proving his title.
The buyer has to notify the seller even if the seller has already received knowledge
of the eviction. Where the seller cannot be found, or where the seller intentionally
avoids the notification, the buyer is relieved from any further duty of notification. It is
deemed to be sufficient if he delivers the notification to the seller’s last known
address.
14.49 As soon as the seller receives notification of the threatened eviction, he can:
(a) take cession of the buyer’s rights and intervene;
(b) assist the buyer and furnish the necessary proof of title;
(c) be joined as a party to the lawsuit; or
(d) do nothing.
14.50 Where the buyer does not effectively notify the seller of the eviction, or where
the seller does not assist the buyer in the lawsuit, the buyer must put up a forcible or
so-called virile defence against the claim of the third party before he can hold the
seller liable. The circumstances of each case will determine whether the defence is
forcible or not. The buyer must act as a reasonable litigant in the lawsuit. If the buyer
does not defend the lawsuit or fails to put up an available defence, he is not acting
as a reasonable litigant.
Buyer’s right of recourse
Total eviction
14.51 In Alpha Trust (Edms) Bpk v Van der Watt 1975 (3) SA 734 (A), Van der Watt
bought a car for R4 955 from Alpha Trust (Edms) Bpk by means of a hire-purchase
agreement. At the time the contract was concluded both of the above parties
believed in good faith that Alpha Trust (Edms) Bpk was the real owner of the car.
Twelve months later, after R2 960 had already been paid by Van der Watt to Alpha
Trust (Edms) Bpk, the car was repossessed by the real owner. Van der Watt
contended that he was entitled to claim the money paid up to date of the eviction (R2
960) from Alpha Trust. As against this Alpha Trust argued that Van der Watt was
entitled only to the market value of the vehicle at the time of the eviction (being R1
900). Moreover, Alpha Trust (Edms) Bpk argued that Van der Watt was not entitled to
cancellation and that the outstanding purchase price of R1 933 should be set-off
against the said market value (R1 900). The Appellate Division decided that the
buyer is, in terms of the actio ex empto, entitled to:
(a) cancel the contract of sale;
(b) claim repayment of the total purchase price (not the value of the object at the
time of eviction). Where there is a lot of wear and tear, the courts may adjust the
purchase price; and
(c) claim damages, which can include the following: Fruits which had to be delivered
to the true owner, legal costs of the lawsuit, costs for any improvements, and any
increase in value of the object sold. [See also Katzeff v City Car Sales (Pty) Ltd 1998
(2) SA 644 (C).]
Partial eviction
14.52 The following possibilities exist [Lammers and Lammers v Giovannoni 1955
(3) SA 385 (A)]:
(a) where the eviction has left the buyer with so little a remainder of the object sold
that it cannot be said that a reasonable man would have bought the same, the buyer
may cancel the contract, claim repayment of the purchase price and payment of
damages, provided that he offers to return the remains of the object sold to the
seller; or
(b) where the portion evicted is not of such a substantial nature, and the remains of
the object sold can be effectively used, the buyer may retain the remains and claim a
pro rata repayment of the purchase price as well as damages from the seller.
Where buyer has no or limited right of recourse
14.53 The following possibilities exist:
(a) The seller is only liable in terms of the warranty where the reason or cause of
eviction already existed at the time of conclusion of the contract, or where it was
caused after conclusion of the contract due to the seller’s fault.
(b) Even where the seller has excluded his liability for damages, the buyer may still
cancel the sale and reclaim the purchase price [Van der Westhuizen v Arnold 2002
(6) SA 453 (SCA)].
(c) The seller will not be held liable where the buyer knew that the seller was not the
owner of the object at the time of conclusion of the contract.
(d) Where the seller was unsure at the time of conclusion of the contract whether or
not the object belonged to him and has made this known to the buyer, the seller
cannot be held liable.
(e) The seller will not be liable where the buyer’s claim against him has prescribed.
(f) Where the eviction was caused by force majeure (vis maior) the buyer has no
right of recourse.
Influence of the Consumer Protection Act on the warranty against eviction
14.54 Every consumer (purchaser) has the right to assume, and it is an implied term
of every transaction or agreement, that a supplier (seller) of goods has the legal right
and authority to supply, sell, provide ownership or lease those goods [section
44(1)(b)]. In the case of a supply of goods per se, in other words if no transaction or
agreement is involved, a consumer also has the right to assume that a supplier has
the legal right and authority to supply those goods [section 44(1)(a)]. In the latter
instance it is uncertain whether the supplier must pass ownership to the purchaser. A
supplier is fully liable for any charge or encumbrance relating to the goods (for
example the outstanding debt on a car) pertaining to a third party if it is not disclosed
in writing before conclusion of the transaction, or if the supplier and consumer has
colluded to defraud the third party [section 44(1)(c) read with section 44(2)]. It is
uncertain how the rule “huur gaat voor koop” is influenced by this provision.
14.55 It is also guaranteed by the supplier that consumers will have and enjoy quiet
possession of the goods [section 44(1)(d)].