SAL 3141/3541 GUIDELINES FOR EXAMINATIONS/ASSESSMENTS

A. Structure of the answers to the assessment questions at 3 rd year level.

1. The questions will be asked in a scenario format, meaning that a certain set of
facts will be given. Treat the facts as if they are based on a real client, who is
your client. Thus, when you respond, imagine that it was you who was the
recipient of the advise that you will be writing in the examination.

2. Take note of the mark allocation. A 10 marks question should not be more that
1 page. Ideally, a quarter of a page should suffice; however, in some cases
you should make allowance for the peculiarities of your own handwriting.

3. Read the facts first, and make a note of the legal principle/s that the
question is based on. State the principle/s in your answer. You did this part
well in the last Lease test. Great, keep it up.

4. Then analyse the factual situation against the principle, eg from the recent
Lease test in question 1.2; you should write something like this; ‘from the facts
it is clear that Phillip’s visits to James’ townhouse are not for purposes of
repairing any damages to the property, or for necessary inspections.
Moreover, Phillip does not give prior notice of his visits as well as the purpose
thereof. If Phillip made the unannounced visits for a lawful purpose, his visits
would still be tolerable, but that is not what he is doing”. This means that you
analyse Phillip’s behaviour against the duty or duties that he has as the
landlord based on the facts. In question 1.4 on the huur gaat voor koop; an
analysis of the facts would have shown you that James can lawfully stay in
Ivy’s property for the remainder of the lease period, and you should have
stated the actual remainder of the lease period in terms of months. None of
you wrote in the Lease test, the actual advise to give to Ivy and James
regarding the actual period that James is entitled to be law. The advises given
where just general; eg, remainder of the lease period. Some response created
the impression that James could stay for 24 months or the original lease.

5. THE MAJORITY OF YOU MISSED THIS STEP OF FACTUAL ANALYSIS IN

ANSWERING THE LEASE TEST QUESTIONS. Don’t miss it again in the
exams.

6. REMEMBER THIS: FACTS MATTER TO LAWYERS, AND FACTS SHOULD

MATTER TO YOU AS WELL. IF YOU IGNORE THE FACTS, YOU DO SO AT
YOUR OWN PERIL. You can lose clients from your law firm. If you miss
the stage of factual analysis and jump to opinion and advise or jump to
advising and skipping the opinion, I will take that you are not answering
the question in the exam. You will just be writing everything that you
may have read in preparation for the exam and I have already said that
so-called scope does not answer the question/s asked. IGNORING THE
FACTS IS TO IGNORE YOUR CLIENT AND YOUR BUSINESS.

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7. After the analysis of the facts against the principle/s; then you should form an
opinion on the issue of liability in particular. This is where you can invoke case
law on the issue. In invoking case law, do not repeat the facts of the case that
you are referring to; you can just mention the decision of the court and the
reason for the decision. If you have to refer to facts of the case, please
summarise those facts. You cannot have the bulk of your answer being on a
case that you are referring to. The important thing is whether the case you are
using is authority to the opinion that you have reached on the facts in the
exam question or whether the case law only answers part of the question, or
whatever the case might be. If the case answers the question partly, you need
to refer to another case that is relevant for the other part. But, what is needed
is that you should form an opinion based on the facts of the exam question
and not on a case that you are referring to.

8. After forming the opinion, you can now proceed to give advise on the nature
of the liability, who is affected, which remedies are applicable and how they
are applicable.

9. Lastly, conclude by saying something like, ‘based on this, that, etc….James

has good prospects of success in pursuing the remedies of…..and….’. Make
sure you are answering the question/s asked. It is not the job of the one who
is marking to pull together loose ends and make a conclusion on your
argument. It is your job. In any event, just imagine if the answer that you are
writing was exactly the way your lawyer is dealing with your case and whether
you would have been happy with it.

B. GUIDELINES FOR EXAMS

1. Never go into the exam room when you have not studied. Spot reading, and
reading the night before will lead to detriment. You need to have a good
understanding of the content. I will be able to see when you are fudging and
just giving generalist answers. Most importantly, the External Examiner will
also see these things.
2. Remember that the so-called scope does not provide the answer. You must
still answer the question in line with the template presented above, unless you
have a better approach than the one proposed by me.

B1. LAW OF SALE

3. WHAT IS A SALE TRANSACTION, PASSING OF RISK AND THE SALE OF

FUTURE THINGS/THINGS THAT DON’T YET EXIST.

4. IMPLIED WARRANTY AGAINST LATENT DEFECTS. Here you should be

able to determine ALL the actual sources of the liability from the facts given.
An example from Question 3 of the Sale test; are sources such as the duty of

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 the seller to not make untrue promises, etc. You would have noticed that the
issue of dicta et promissa was one of the distinguishing differences between
the Vousvoukis case and the one of Thandaza which you were supposed to
answer in that test. Such information becomes relevant when you form an
opinion from your analysis of the facts/against the principle/duty/rule, etc.

5. NATIONAL CREDIT ACT: (I) CONSEQUENCES OF RECKLESS

LENDING/CREDIT, (2) APPLICATION OF DEBT REVIEW/ ROLE OF THE
DEBT COUNSELLOR/ ROLE OF THE MAGISTRATE.

B2. LAW OF LEASE

6. USE THE GUIDELINES FOR THE LEASE TEST WRITTEN ON 19 MAY 2023

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 REMEMBER THAT YOU HAVE AMPLE NOTES ON MOODLE ON SALE AND
LEASE. USE THEM

SAL 3141/3541 CASES TO EXPLAIN THE PRINCIPLES: law of sale

FORMALITIES OF SALE CONTRACT

The general rule is that a valid contract of sale needs no formalities, except to sale of land,
credit agreements, sale of insolvent business and express agreement on the formalities.

1. Osborne and another v West Dunes Properties 176 (Pty) Ltd and others 2013
(6) SA 105 (WCC) is authority to the principle that an agreement to sell land and any
rights over land must be in writing and signed by both parties.
2. Just Names Properties 11 CC and another v Fourie and others 2007 (3) SA 1
(W). Several parties entered into an agreement to sell immovable property. At the
time the contract was made, the parties had not yet agreed on the terms relating to
occupational rent. The plaintiff’s representative then suggested that the sellers sign
two blank pages and that he would later insert the terms agreed upon. The court had
to consider whether signatures on a blank page in a contract for the sale of land
made the agreement invalid. The court held that where the terms of the contract were
required by statute to be included in a document and signed by a particular party to
show agreement with the terms, the later insertion of these terms after signature on a
blank piece of paper could not constitute compliance.

ESSENTIALS OF A SALE CONTRACT

Price: the price must be certain and consist of money, the price must be real and serious,
the price must be fixed and ascertainable.

3. In R v Pearson 1942 EDL. 117, the court held that where the seller is a dealer in the
goods and has a ‘usual charge’, it is assumed that the price would be the usual
charge.

PASSING OF RISK

Passing of Risk and Existence of a Suspensive Condition. When there is a suspensive

condition, the contract is not complete/perfecta until the condition is met, and as a result, the
risk will not pass until then.

4. In Equistock Group CC, trading as Autocity Motor Holdings v Mentz 2004 All SA
46 (T), court held that an agreement of sale in respect of a motor vehicle was made
subject to a suspensive condition, and the purchaser of the vehicle did not fulfil the
suspensive condition because he stopped payment of the cheque that he gave to the
seller in part payment for the vehicle, the vehicle remained property of the seller

Regarding sale of a standard item; counting is required to separate the purchased material
from a greater quantity of the same material in the seller’s possession, for example 20 bags
of oranges at a certain price per bag, to be appropriated from a pile of hundreds of bags.

5. In Poppe, Schuhoff and Gutter v Mosenthal and Co 1879 9 Buch 91, a law was
introduced requiring he payment of tax on brandy sold. The law came into effect after
the goods had been sold, but before they had been set aside for the purchaser. The

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 court held that the risk had not yet passed to the buyer and that accordingly the seller
was still liable for the tax

DUTY OF THE SELLER TO DELIVER THE THING BEING SOLD

With delivery by long hand, it suffices that the seller points out the article to the buyer to
enable the buyer to exercise full control over it when the buyer pleases. This is used when
actual delivery is difficult or impossible, for example due to the size of the thing being sold.

6. In Xapa v Ntsoko 1919 EDL 177, cattle were pointed out and identified by their
markings so serve as dowry for a marriage. The cattle were never physically
removed at the time as this would have contravened certain Fever Regulations. The
court held that sufficient delivery had taken place.

PASSING OF OWNERSHIP

Movable Property: The real right of ownership of movable property can be transferred by
actual delivery or constructive delivery. Where movable are sold for cash, ownership does
not pass until the price has been paid, even if there has been delivery. The agreed price
must be paid and delivery effected before the article may be regarded as sold. There is a
rebuttable presumption that every sale is a cash sale. If the seller agrees to accept payment
on a day after the date of delivery, the seller will be deemed to have given credit.

7. International Harvester (SA) (Pty) v AA Cook and Associates (Pty) Ltd 1973 (4)
SA 47 (W), the seller and the buyer agreed that a truck could be handed over to the
buyer on delivery of a cheque. The buyer sent the cheque to his financial adviser,
who told the seller it could be fetched the next morning. The seller released the
vehicle. The cheque was dishonoured at the bank and the seller sued for the return
of the truck. The court held that the seller had agreed to provide credit and that
ownership of the vehicles and passed to the buyer immediately on the delivery.
Accordingly the seller could not sue for the return of the truck.
8. Concor Holdings (Pty) Ltd t/a Concor Technicrete v Potgieter [2004] 4 All SA
589 (SCA). A builder purchased paving stones from Concor on credit. The contract of
sale provided that Concor would retain ownership until the paving stones were paid
for. On failure to pay, Concor would be entitled to repossess the paving stones. The
builder laid the paving stones at premises belonging to Potgieter, who paid the
builder for them. However, the builder did not pay Concor. Concor brought the true
owner’s action against Potgieter for the return of the paving stones. Potgieter claimed
that Concor had allowed the builder to remove the paving stones from Concor’s
premises and to cut the paving to fit the layout. Concor had thus made a
representation to outsiders that the builder was the owner of the paving stones. The
court held that the test in regard to a representation made by conduct was whether
the representor (Concor) should reasonably have expected that the representee
(Potgieter) might be misled by its conduct, and if Potgieter acted reasonably in
construing the representation the way he did. Concor had known that the paving
stones were going to form part of the permanent work being constructed for
Potgieter. The conduct of Concor could therefore reasonably have been expected to
mislead Potgieter into believing that the builder had the right to transfer ownership of
the paving stones and Potgieter had acted reasonably in forming the belief that he

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 did. The court held in favour of Potgieter and found Concor negligent since it must
have been aware of the possibility that the builder might not pay the amount owing to
it.

IMPLIED WARRANTY AGAINST EVICTION

The right of possession is a term implied by law in a contract of sale. In terms of this right,
the seller warrants that the possession of the buyer will not be interfered with or disturbed by
the seller or any third party as a result of any defect of the seller’s title. If the buyer suffers
interference with the right of possession, there are 3 remedies for the buyer’s protection: (i)
the seller has a duty to come to the buyer’s defence when the buyer’s possession is
threatened, (ii)the buyer must give the seller notice of the threat and (iii) put up a proper and
competent defence, so as not to lose a right of recourse against the seller

9. In Lammers and Lammers v Glovannoni 1955 (3) SA 385 (A), C Motors sold a
second hand motor car to T on an instalment sale agreement. T then wrongfully sold
the car to Lammers & Lammers. They stripped the car and sold it off as spare parts.
They then sold the chassis to Giovannoni, who wanted to rebuild the car. They were
not aware that C Motors remained the true owner of the car. In the rebuild of the car,
Giovannoni used spare parts costing 289 pounds. He also had the car registered in
his name. C Motors then launched action against for recovery of the vehicle, and
attached it legally while it was in the possession of Giovannoni, who vigorously
protested the car being attached. He also called on Lammers & Lammers to assist
him to retain possession of the vehicle, but they did not do so. In court, when sued by
Giovannoni for the price of the chassis plus 289 pounds, Lammers & Lammers
claimed that Giovannoni should have been more vigorous in defending his
possession. The court held that once the seller had failed to come to the assistance
of the buyer, the seller was not able to claim that the buyer should have been more
vigorous in the buyer’s defence of possession.

IMPLIED WARRANTY AGAINST LATENT DEFECTS

A latent defect is a fault with the thing being sold that is not apparent to an ordinary person,
and that impairs the usefulness or effectiveness of the thing for the purpose for which it was
sold and bought. The seller has a duty to deliver a thing bought free from any defects that
make it unfit for the purpose for which it was sold.

10. In Sarembock v Medical Leasing Services (Pty) Ltd and another 1991 (1) 344
(A), the buyer of a sports car found out after the purchase that the front portion of the
vehicle had been replaced, and claimed a reduction of the purchase price because
his investment in the vehicle was substantially affected. The court held that the car
had been bought as n investment. Since the replaced portion reduced that value
considerably, it was a latent defect.

The remedy for a latent defect is the same as for breach of contract; the
buyer may accept or reject the article. The buyer may waive his or her
remedies by accepting the defective thing being sold.
11. In Goldblatt v Sweeney 1918 CPD 320, a buyer purchased a second-hand motor
vehicle. Some time after this, he discovered that the vehicle had a mechanical
problem and sent it to the garage to repair. He instructed the garage to make several

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 other repairs as well. Later he told the seller that the mechanical problem was a
latent defect and claimed compensation. The seller argued that he had accepted the
defect. Instead of requesting the seller to make good at the time, he had sent the car
in for repairs. The court held that he had accepted the latent defect.

Where the seller is a person who publicly professes skills or expert

knowledge, or is an expert deader, the buyer, can in addition to the
remedies for latent defects, also claim for consequential damages.
12. In D and H Piping Systems (Pty) Ltd v Trans Hex Group Ltd and another 2006
(3) SA 593 (SCA), the pipe manufacturer had been buying gravel and sand from
another company for over 30 years. One batch of latently defective and resulted in
the failure of the concrete pipes it manufactured, causing liability of more than R13
million to its customers. The seller argued that its standard terms and conditions on
the back of the delivery notes and invoices it sent expressly excluded liability for
consequential loss. The court held that these standard terms and conditions were not
incorporated in the contract of sale between the parties. The seller had not made
reasonably sufficient efforts to give the buyer notice of its standard terms, since it had
only attached the terms to its invoices and delivery notes. By simply attaching these
terms to invoices it was unlikely that they could reach someone authorised to accept
them on behalf of the buyer. The court held that a manufacturer was liable for
consequential loss caused by a latent defect in the goods sold, even if it was ignorant
of the latent defect. It would have such liability irrespective of whether it was skilled in
the manufacture of such goods and irrespective of whether it publicly professed skill
or expertise in that regard.

The seller will not be responsible for latent defects where the sale agreement excludes
liability through a voetstoots clause. However, if the seller was fraudulent, and knew of the
defect and knew that the buyer would not have bought the thing or would have demand a
reduced price, the seller would be liable. The seller is not liable if the defect does not exist at
the time of the sale, or if the buyer was aware of the defect at the time of sale, or
subsequently became aware and accepted the position, explicitly or implicitly or if
prescription has intervened.

13. In Van der Merwe v Culhane 1952 (3) SA 42 (T), the property was sold voetstoots
despite it being infested with wood-borer. The court held that the non-disclosure of
this defect amounted to fraud. Despite the voetstoots clause, the buyer was entitled
to the damages.
14. In Schwarzer v John Roderick’s Motors (Pty) Ltd 1940 OPD 170, the buyer of a
second-hand motor vehicle found a defect in the oil pump two weeks after the sale.
She had it repaired at the garage and continued to use the car and to pay
instalments on it. The court held that she was not entitled to cancel the contract.

REMEDIES AVAILABLE TO THE BUYER

False Material Statement of Praise.

A false material statements of praise or dictum et promissum means a false statement made
by the seller during negotiations before the contract is entered into. The statement must bear

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on the quality or value of the thing sold and go beyond mere praise or commendation. It
must be reasonably interpreted that the statement was intended to be acted upon the buyer.

15. In Phame (Pty) Ltd v Paizes 1973 (3) SA 397 (A), the agent for the seller of a
company, that owned a shopping centre told the buyer that the municipal rates were
about a third of what they really were. Phame relied on that statement and paid a
price for the shares that was above their market value. The court held that the agent
had made a false statement that was material and had been relied on, and reduced
the purchase price to the market value of the shares.

CONSUMER’S RIGHT TO RETURN GOODS

The Consumer Protection Act gives the buyer the right to return goods bought, but goods
that have combined with or been attached to other property do not have to be returned.

16. In Vousvoukis v Queen Ace CC t/a Ace Motors 2016 (3) Sa 188 (ECG),
Vousvoukis bought a second-hand car from Ace Motors in September 2011 for
R470 000. In December after driving 4000km, the vehicle had mechanical problems.
Ace replaced the engine at their expense and returned the vehicle in February 2012.
In July 2012, after another 8000 km, the replacement engine had problems and an oil
pump was damaged. Vousvoukis sued for cancellation and full refund of the
purchase price. Ace argued that the Consumer Protection Act did not apply to used
goods and, even if it did, that the defect was not so serious that the buyer was
entitled to cancel the contract. The court held that the Act applies to every transaction
occurring within South Africa, unless specifically exempted. The term ‘goods’
included used goods. However, the protection against defective goods under the Act
lapses after six months as stipulated in section 56(2); also the protection for defective
repairs lapses after 3 months in terms of section 56(3). In this case, both these
protections had lapsed and the consumer was not entitled to rely on the protective
rights under the Act. However, where the statutory rights have lapsed, consumers still
retain their common-law rights under the aedilitian actions for latent defects. In order
to terminate the agreement, the consumer had to prove that the defect was serious
enough to warrant termination. The test was whether a reasonable consumer would
have refused to enter into the contract if he or she had known of the defect. The court
held that the latent defect was not serious enough to warrant rescission as the defect
could be repaired relatively easily by replacing the oil pump as a cost of about
R15 000.00.

CONSUMER PROTECTIONS IN THE ELECTRONIC COMMUNICATIONS AND

TRANSACTIONS ACT

The Right to Prompt Performance

The supplier must ensure that the order is met within 30 days after the day on which the
supplier received the order unless the parties have agreed otherwise. Failure to comply
within the relevant period of time gives the consumer the right to cancel the contract on
seven day’s written notice. The Act also provides that anyone who intentionally accesses
or intercepts any data without authority or permission to do so is guilty of an offence.

17. Harvey v Niland and others 2016 92) SA 436 (ECG), Harvey and Niland were
members and employees of a close corporation called Huntershill, which ran a

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 hunting and safari business. After a disagreement, Niland left the employment of
Huntershill, but continued as a member of the Close Corporation (CC). Niland
believed that Harvey was secretly competing with the CC and soliciting business
away from it, in violation of the fiduciary duties he owed to the corporation. He
hacked Niland’s facebook page and unlawfully accessed his communications with
various clients. The facebook messages were copied and handed to court in support
of an application for an interdict to stop Niland competing with the CC.

Niland argued that the Electronic Communications and Transactions Act made unlawful
access to information an offence, that material obtained unlawfully should not be
admitted as evidence and also that his constitutional right to privacy was being violated.

The court held that the facebook information had been obtained unlawfully and the
conduct complained of was a violation of Niland’s constitutional right to privacy. However,
the right to privacy had to be viewed in context. The Act did not specify how a court
should deal with unlawfully obtained evidence. Accordingly, the court had a discretion. In
exercising its discretion the court had to consider the extent to which and the manner in
which the right to privacy had been infringed; the nature and the content of the evidence;
and whether the party using the evidence had tried to obtain it by lawful means. In this
case, without the unlawful evidence, Harvey would have had no case. The court
admitted the use of the unlawfully obtained evidence and granted the interdict.

NATIONAL CREDIT ACT

Credit Agreements that are Credit Guarantees

18. In FirstRand Bank Limited v Carl Beck Estates (Pty) Ltd and another 2009 (3)
SA 384 (T), the bank sued a company, as well and an individual who signed a
suretyship for the company’s obligations, for R3.7 million and an order that the
company’s immovable property be executed against. The respondents claimed that
the bank had not complied with the provisions of the National Credit Act (NCA) and
therefore should not be granted the order. Specifically, the bank had not given them
written notice of any default, nor had it proposed referring the issue to an entity to
resolve the dispute or result in agreement on a plan for full payment. The company
argued that the NCA applied to the credit agreement between the bank and itself as a
consumer, and the surety argued that the Act applied to the credit guarantee by
which he was bound. The court held that no evidence had been presented as to the
asset value of the company and so the NCA could apply to it. Accordingly, the bank
was not required to issue the notice and the company’s defence failed. Similarly, as
surety and co-principal debtor, the other party had bound himself to the obligations of
the company and since the NCA did not apply to the company, it could not apply to
the surety.

The NCA has sections that do not apply when the

consumer is a juristic person.
19. In Standard Bank of South Africa Ltd v Hunkydory Investments 194 (Pty) Ltd
and another (no 1) 2010 (1) SA 627 ( C), a bank applied for judgment against a

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 company based on 4 mortgage bonds. The company argued that even though the
NCA does not apply to large credit agreements with juristic persons, the legislation
should afford it the same protection as any other natural person, and that the bank
should therefore have complied with the provisions of the NCA before suing the
company. The court held that the purpose of the Act was to prevent the reckless
provision of credit by institutions to people who could not afford credit. If the relevant
provisions of an Act of Parliament differentiated between people or categories of
people, then it must be asked if there was a rational connection between the
differentiation in question and the legitimate governmental purpose it was designed
to achieve. If these requirements were met, the differentiation did not fall foul of the
Constitution.

ACKNOWLEDGEMENT OF DEBT (AOD)

20. In Carter Trading (Pty) Ltd v Blignaut 2010 (2) SA 46 (ECP), Blignaut bought
goods on credit and signed an acknowledgement of debt. In the AOD, she agreed to
pay the principal debt by a particular date, plus the costs of negotiating and preparing
the AOD. Failure to pay these amounts by the due date would result in collection
commission plus legal costs in enforcing the AOD. After she failed to pay by the due
date, she was sued on her failure to comply with the terms of the AOD. In court she
argued that the AOD constituted a credit agreement in terms of section 8)4) (f) of the
NCA and the plaintiff had failed to comply with the procedural requirements of the
Act. The court agreed with her, holding that the terms of the AOD that related to the
cost of preparing the document amounted to a fee or charge, and this meant that he
AOD was within the definition of a credit transaction and was therefore subject to the
NCA. The AOD was therefore void.

Read also

21. Rodel Financial Service (Pty) Ltd v Naidoo and another [2011] JOL 26799 (KZP)
22. Grainco (Pty) Ltd v Brookdryk NO en andere 2012 (4) SA 517 (FB)

REGULATION OF CONSUMER CREDIT INDUSTRY

23. Friend and Sendal 2015 (1) SA 395 (GP)

APPLICATION FOR DEBT REVIEW

Debt Counsellor

24. BMW Financial Services (SA) (Pty) Ltd v Donkin 2009 (6) SA 63 (KZD)

If the consumer is over-indebted, the debt counsellor may issue a proposal

recommending that a magistrate’s court orders that one or more of the consumer’s credit
agreements be declared to be reckless credit. And one or more of the consumer’s
obligations be rearranged. Rearrangement can occur by extending the period of the
agreement and reducing the amount of each payment, postponing the dates on which

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payments are due; extending the period of the agreement; or recalculating the
consumer’s obligations because of contravention of the NCA.

25. Bornman v National Credit Regulator [2014] 2 All SA 14 (SCA)

DEBT REVIEW AND THE ROLE OF THE MAGISTRATES’ COURT.

26. Wesbank, a division of FirstRand Bank Limited v Papier (14256/10) [2011] ZAWCHC
2 2011 (2) SA 395 (WCC) (1 February 2011)

The court dealt with a credit agreement for the lease of a Mazda motor vehicle to be paid
by monthly instalments. The debtor got into financial difficulties and applied for debt
review with a debt counsellor. The debt counsellor sent notices informing the credit
providers, including Wesbank, that the application for debt review was successful, that
the defendant was over-indebted and that the defendant’s obligations were in the
process of being restructured. These notices were accompanied by an instalment offer.
The debt counsellor launched an application for a court order that the defendant and his
wife be declared over-indebted and that their debt obligations be restructured as
proposed by the debt counsellor. Before the matter could be heard by the court,
Wesbank demanded immediate payment of the full amount due from the debtor. The
court had to decide if it was legal for a credit provider to terminate a debt review process
after an application had been lodged with a magistrates’ court for an order restructuring a
consumer’s debts but before a court order had been made.

The court held that this kind of conduct of the bank was counterproductive and contrary
to the purpose of the Act. A credit provider was not allowed to unilaterally terminate the
consumer’s protection at the precise moment when he may need it most.

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