Conveyancing is the legal process whereby ownership in immovable South African property is transferred from one party to another and related aspects such as the registration of and real rights in respect of immovable property. Immovable property is any land (whether improved or not) such as a dwelling, a house, a farm, a vacant erf or a. A conveyancing transaction involves a number of steps which normally begins with a Deed of Sale and continues through to the registration of transfer of ownership or the registration of the mortgage bond in the Deeds Office, the reconciliation of finances and the ultimate payment of the purchase price to the Seller. 3.1 Agreement of sale – a written agreement in which the Purchaser, the Seller and the immovable property as well as the purchase price is specified, is essential to constitute a binding agreement of sale. A Deed of Sale must be signed by both the Purchaser and the Seller or a person who has been authorized by such party in terms of a written Power of Attorney. A verbal contract for the sale of immovable property is unenforceable.
3.2 Transfer of the property – On receipt of the Agreement of Sale the conveyancer takes the necessary steps to effect registration of transfer of the immovable property in the relevant Deeds Office. Both the Purchaser and the Seller will be required to call at the offices of the Conveyancer to sign the necessary transfer documents which have been prepared by the Conveyancer and which will enable him to effect transfer. The Conveyancer requires the following:- A.
From the Seller:. A Power of Attorney to pass transfer. Declaration in respect of marital and solvency status. Particulars of Bond Holder. Valid Electrical Wiring Certificate. Valid Electrical Fencing Compliance Certificates (if relevant). Valid Gas Compliance Certificates (if relevant).
VAT Declaration (if applicable) B. From the Purchaser. Declaration in respect of marital & solvency status. Particulars concerning the identity of the attorney transferring the Purchasers property if the Purchaser is utilising the proceeds to pay for his purchase. Particulars of the bond granted. Transfer duty and/or VAT declaration (if applicable) C.
From the existing bondholder. Cancellation figures and Title Deed. Particulars of second or further bond holders. Identity of attorney’s attending to the bond cancellation D. From the Purchasers Transferring Attorney in the event of a subject to offer:. Confirmation that the transaction is proceeding. Particulars of estimated amount available.
Feasibility of linking matters at the Deeds office for simultaneous registration. From the Estate Agent. Confirmation of payment of the deposit, the bond grant and relevant information. SARS information from estate agency/ies and estate agent/s 3.3 Upon receipt of the documents referred to in A – E:-.
Transfer and/or bond documents are drawn;. Accounts prepared for both seller and purchaser;. Both Seller and Purchaser telephoned to arrange appointment for signature;. The Purchaser is requested to pay the balance of the purchase price, costs and disbursements;.
Guarantees are requested from the Bond Attorneys. 3.4 After signature of documents by both Seller and Purchaser and payment of disbursements by Purchaser:-.
Obtain receipt;. Obtain rates clearance certificate. 3.5 After receipt of guarantees:-. Forward guarantees plus payment of bond cancellation costs to the existing bondholder’s attorneys. 3.6 After receipt of clearance certificate and transfer duty receipt:-.
Liaise with the relevant parties to arrange lodgement. 3.7 Transfer is effected in the Deeds Office. 3.8 After Registration:-. Advise all parties of registration;. Present guarantees for payment;.
Obtain payment of balance of deposit (if applicable). Do final account;. Request refund of overpayment (if any) from local authority and bond holder. 3.9 Upon receipt of payment i.t.o. Guarantee presented:-. Finalize the accounts of the Seller and Purchaser;. Arrange for parties to collect payment;.
Request refund of overpayment of rates, etc. 3.10 Upon receipt of documents from Deeds Office:-. Forward Title Deeds to bondholders for safekeeping, or if no bond, arrange with Purchaser to collect documents.
Receive instructions to attend to the transfer. Immediately request the original title deed, original mortgage bond and the cancellation figures form the existing bondholder. The cancellation figure is the amount which the existing bondholder requires to be paid before it will cancel the bond over the property. Immediately request a statement from the local authority setting out the rates and taxes payable for a period of approximately five months in advance. No transfer can be effected until the Registrar of Deeds is satisfied that the rates and taxes have been paid up to date of transfer.
Immediately obtain the relevant information from either the purchaser or the agent or the mortgage originator regarding where the bond has been granted. Obtain payment of the deposit in terms of the Agreement of Sale (if applicable). Once the purchaser’s bond has been granted, one then has to request guarantees from the attorneys attending to the registration of the bond and draw the transfer documents.
The guarantees are letters from the financial institution concerned guaranteeing that payment of certain monies will be made on registration of the property. One of the guarantees is utilized to guarantee the payment to the existing bondholder in respect of the cancellation figures. See example of a guarantee. A second guarantee is normally issued in favour of the transferring attorney and represents the seller's proceeds. Call upon the purchaser and seller to sign the documents drafted to give effect to the transfer of the property.
The purchaser is required to pay the transfer duty, the transfer fees and other costs upon signature of the documents. The transfer duty is then paid to the Receiver of Revenue in order to obtain a transfer duty receipt as proof of such payment. See example of transfer duty receipt. Payment is made to the Local Authority for the rates and taxes as per the statement in order to obtain a clearance certificate as proof of payment. See example of clearance certificate. Upon receipt of the guarantees from the bond attorneys, the guarantee required to cancel the existing bond is sent to the attorneys attending to the cancellation of the bond.
Once the transfer duty receipt and the clearance certificate have been obtained, arrangements are made with the attorneys involved to have all the documents lodged simultaneously in the deeds office. After examination of the documents by the deeds office (which takes approximately 7-10 working days) the transfer will be registered.
See example of diagram once documents have been lodged. Upon registration of the transfer the purchaser then becomes the owner of the property. The guarantees are then presented at the various financial institutions and after the guarantees have been cashed, the seller receives payment of the balance of the purchase price after payment of the monies which have to be paid on behalf of the seller. This normally takes place on the first working day after the registration date.
The above is only a brief guide and should not be interpreted as being an extensive lay-out of all the steps to be taken to effect transfer of a property. Receive instructions to attend to registration of mortgage bond. Obtain details of the existing bondholder. Request the cancellation figures and title deed from the existing bondholder. Draft the necessary bond documents.
Call upon client to attend to signature of the bond documents drafted. Forward the guarantees to the attorneys attending to the bond cancellation and request bank’s permission to proceed with lodgement. Liaise with the bond cancellation attorneys to arrange for the documents to be lodged simultaneously at the deeds office. Information Kindly Supplied by Dykes Van Heerden Inc Attorneys. On the 14th of April 2005 SARS issued a statement entitled 'SARS LAUNCHES A NEW ELECTRONIC TRANSFER DUTY SYSTEM'. According to SARS this new transfer duty system will improve client service and will ensure that all parties comply with South African tax law. New transfer duty forms will be used for all transactions concluded after the 1st of May 2005.
Deed Of Sale Philippines
Effectively SARS will only issue the relevant transfer duty receipt on condition that all parties concerned are not only registered but that all their tax returns and taxes are up to date. In essence now, SARS will use all property transactions in South Africa to monitor everyone’s tax status, not only in relation to the property purchased or sold but in relation to their tax status in general. As such, the following additional information will now have to be obtained from all parties concerned:-.
VAT registration numbers of both Purchaser or Seller (if applicable). Details of directors, shareholders, members etc (if either party is a legal entity). Details of the original purchase price paid by the Seller and the actual date of acquisition of the property. Method of payment of the purchase price by the Purchaser i.e. Details of bond grant and institution granting bond. Income Tax numbers of both Seller and Purchaser.
VAT registration number of estate agency (if applicable) Regrettably it now takes a few days longer to obtain a transfer duty receipt from SARS due to the fact that they now proceed to check all details and the tax status of all parties concerned before SARS will issue the necessary transfer duty receipt. This places an additional burden on conveyancers and could potentially delay transfers where for instance either the Seller or the Purchaser is deemed to have outstanding tax issues with SARS. These outstanding tax issues will first have to be resolved and only thereafter will SARS provide the necessary transfer duty receipt. As transferring attorneys we, without delay and immediately after obtaining payment of the transfer costs which will include the transfer duty, approach SARS with a request to provide the necessary transfer duty receipt. If there is a problem in regard to the tax status of either party, this will be detected at an early stage which will then provide the relevant party the necessary opportunity to approach SARS and correct any outstanding issues.
Estates agents should at an early stage advise their sellers and buyers of the above and inform them that should they not be tax compliant the registration process will be delayed due to the fact that the Receiver of Revenue will refuse to issue the necessary transfer duty receipt. This will give both parties ample opportunity to resolve any outstanding issues with SARS. We suggest you add the following clause in your agreement:- 'As a result of the South African Revenue Services (SARS) doing risk analysis on both the transferor and the transferee on all property transactions both the Seller and the Purchaser warrant to each other and the agent that all tax issues (whether personal or otherwise) including but not limited to tax returns and tax payments are current and up to date. The defaulting party will be liable for all costs incurred and damages suffered by the aggrieved party as a result of a breach of this warranty. The aggrieved party shall also be entitled to place the defaulting party on terms and thereafter cancel the agreement if this warranty is breached.
These remedies are in addition to all rights which the parties have in terms of this agreement or in Law.' The above should be seen as a brief comment and our interpretation thereof and should not be seen as an extensive guideline.
Please obtain a full legal opinion if you wish to act on any aspect hereof as the guideline is not fully comprehensive.
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Contents. Definition and essentials of the contract Definition The contract of sale, as it is known in South Africa today, derives its origins from the Roman consensual contract of emptio venditio.
In D 18.1 (the title devoted to the contract of emptio venditio), there is no all-embracing definition of the special contract, but certain critical features can be extracted from the early fragments of the title: Sale is a contract of the law of nations, and so is concluded by simple agreement. There is no sale without a price. There can be no sale without a thing to be sold. The Roman-Dutch lawyers followed these guidelines closely in their definitions of the contract of sale. For example, Voet said: Purchase defined—But in this title, as distinguished from lease, it is a bonae fidei contract, resting on consent, by which it is arranged that merchandise shall be exchanged at a definite price. There are three essential requirements for it—consent, merchandise and price. If one of them is wanting, there is no purchase.
In South African law today, the definition of a contract of sale remains virtually the same. In, the full board of the Judicial Committee of the Privy Council cited with approval the following statement by De Villiers CJ: A sale is a contract in which one person (the seller or vendor) promises to deliver a thing to another (the buyer or emptor), the latter agreeing to pay a certain price. According to Mackeurtan, Purchase and sale ( emptio venditio) is a mutual contract for the transfer of possession of a thing in exchange for a price. It has three essentials: consent ( consensus ad idem); a thing sold ( merx); and a price ( pretium). Remember that a sale contract is a special form of contract, and so all law discussed under the article on the is relevant in considering sale contracts. Essentials In general terms, the essential elements of a contract of sale are no different from the essential elements of any other contract.
There must be contractual capacity and consensus, the agreement must be legal (not contrary to public policy), performance must be possible, and any formalities required by law must be complied with. The contract of sale does, however, have a number of additional substantive requirements (known as essentialia), which are assimilated into the general contractual structure. Of course, like any contract, the requirement of consensus, or agreement, is the most important general element.
Agreement The parties must be in agreement that the object of the contract is to purchase and to sell the res concerned, for the price agreed upon, and that the seller (usually) ensures the transfer of possession and/or ownership of the res to the buyer. The general principles relating to consensus in purchase and sale are the same as those pertaining to other multilateral consensual contracts. The relevant points may be summarised as follows:. There must be an agreement of the minds of the parties, mutually communicated, usually by means of offer and acceptance. The parties must act with the intention of contracting a sale. There must be a concursus animorum animo contrahendi. The agreement should be free from mistake or error, and should not have been induced wrongfully by misrepresentation, duress or undue influence.
The agreement should be legal and satisfy the dictates of public policy. The agreement should be rational. It cannot therefore exist in cases of extreme youth, irrational intoxication or insanity. In sales in particular, there must be agreement as to:. Auto talker emps-scape. the subject matter of the sale and its essential characteristics;.
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the price to be paid; and. any other item raised in the negotiations and expressly or impliedly regarded as material. The two essentialia of a contract of sale are therefore.
the thing sold; and. the price to be paid.
Thing sold The parties to the sale must reach agreement over the subject matter of the sale. The general requirement is that the subject matter of the sale should be. defined and ascertainable (although the merx need not be entirely specific); and. existing at the time of the contract, or having a potential existence. It is best to tackle the intricacies of this particular section by first examining things that can be sold, and secondly, things that cannot validly be sold. Things that can be sold Generally speaking, anything can be sold, be it corporeal or incorporeal in nature. Physical existence is not required for there to be a valid sale.
Anything that can be held, possessed or sued for can be the subject of a valid sale. There are, however, certain more specialised issues that need to be discussed for the full picture to emerge. These things or articles are not only restricted by common law, but are also prohibited by legislation, except where the courts can set aside such stipulations.
The question in respect of a sale of is whether or not a person can enter into a valid contract of sale, involving the purchase of a thing that is (unbeknownst to him) his own property already. The general rule is that things owned by the buyer cannot be the subject of a valid sale. It is possible, however, for the purchaser to buy rights in his own property that he does not yet hold. May form the subject matter of a valid contract of sale. Such sales may be termed generic sales, or emptio generis., or goods that do not yet exist, may also be the subject of a valid sale. Such a sale may take one of two forms. A sale can come into being if it involves something that does not yet in exist, provided that the thing may, in the ordinary course of events, come into existence.
Pothier says the following: There cannot, in truth, be a contract of sale without a thing sold, but it is sufficient that the thing sold may exist, though it has no present existence. Thus, it is common before harvest, to sell the wine which we may make; and in such case, there is a sufficient thing to constitute the object of a valid contract, though as the thing sold does not yet exist, the contract depends upon the condition of its future existence; and if it should not yet happen to exist, that is, if no wine should be made, there is no sale. These sort of contracts are known as. A classic example would be that where Boucher agrees to purchase Smith's next crop of maize at R40 per bag. Because the sale involves maize, it appears at first glance to be a generic sale, but it is distinguishable on at least two grounds:.
The source of the grain is specified: It must be Smith's crop. The agreement is subject to a suspensive condition: If Smith's crop does not materialise, there is no sale.
It is possible to purchase the expectation or hope that something might come into existence, irrespective of whether it does or does not come into existence in future. The jurisprudent Pomponius is quoted as saying: Sometimes, indeed, there is held to be a sale, even without a thing, as where what is bought is, as it were, a chance.
This is the case with the purchase of a catch of birds or fish. The contract is valid even if nothing results, because it is the purchase of a hope. Such a contract is a contract. For example, Boucher agrees to purchase Smith's next catch of fish for R200. What is sold in this case is the hope or expectation of a catch, not the catch itself.
The spes exists at the date of sale. It makes no difference to the obligations of the parties whether Smith catches anything at all. Thus, Boucher runs the risk of making a loss, in that he must pay even if nothing comes into existence, but may benefit in that he may receive greater value than his capital outlay. Res aliena, things that are not the property of the seller, may also be the subject of a valid sale. It is not essential that the seller be the owner of the goods at the time of delivery. The sale is not void simply because the seller is not the owner of the res vendita, and has sold it without the owner's authority. What is essential is that the seller delivers the property to the buyer, and ensures that his possession is not thereafter interfered with by anyone with better title.
The buyer in such circumstances is protected (at the very least) by the residual warranty against eviction. Delivery of the res, in such circumstances, would result in transfer from the seller to the buyer of whatever rights the seller had. The buyer would acquire civil possession of the res, the consequences of which would be, inter alia,. the right to ownership upon completion of prescription;. the right to the fruits of the property; and. the right to use possessory remedies. Things that are the subject of litigation in rem ( res litigiosa) may be the subject of a valid contract of sale as well.
Such a sale might occur where property, which is the subject of pending court action, is sold in the interim. Should such property be sold, the purchaser is bound by the judgment in the action. The successful plaintiff is entitled to recover it from the purchaser (the new possessor) by execution, without further proceedings. Where property is the subject of an action in rem, it becomes res litigiosa at litis contestatio. Things that cannot be sold Various things cannot be sold under South African law. Res extra commercium are among them. Numerous rules of statutory and common law prohibit the sale of certain things, often on grounds of public policy.
For example, the common law does not sanction the sale of a person (slavery), and statute prohibits the sale of human tissue, and of many narcotics, chemical substances and so forth. It is also quite clearly impossible to purchase a thing that never existed.
The most extreme example would be the putative sale of a mythical or fictitious object. Justinian says: Anything, whether movable or immovable, which admits of private ownership, may be made the object of a stipulation; but if a man stipulates for the delivery of a thing that either does not or cannot exist, such as. an impossible creature, like a hippocentaur, the contract is void. Where the subject of a proposed contract of sale is a specific thing, and it has, prior to the agreement, and unbeknownst to the parties, ceased to exist, the agreement is ordinarily void.
In, Watermeyer J said, Undoubtedly it is a principle of our law that a contract for the sale of a specific thing, made in ignorance of the fact that the things had been destroyed at the time of the contract, is not binding upon the parties. For a good factual example, see.
It is impossible for res litigiosa to be sold to the seller's advocate or attorney. This is known as champerty. Mackeurtan states, There can be no valid sale, at any stage of the proceedings, of property the subject of such an action, to the advocate or attorney of the seller. Such agreements are known as and are void. The sale by Wells to Samuels of an inheritance expected from Hutton, while Hutton is still alive, is stigmatised by being unenforceable, although it is not void ab initio. Once Hutton has died, however, an inheritance may be sold. Sales by description and sample Some sales occur either by description or by sample.
Price In, Corbett JA said the following: It is a general rule of our law that there can be no valid contract of sale unless the parties have agreed, expressly or by implication, upon a purchase price. Mackeurtan identifies the following essentials in connection with price. It must be. serious;.
fixed or capable of ascertainment; and. sound in current money. Serious Being serious in amount implies that any price that is real, not illusory, suffices. If the price set is merely nominal in amount, this may be a strong indication that the parties intend a donation, not a sale. The question can be settled only on the circumstances of each individual case. In other words, the price should be real and bear some sort of relationship to the actual value of the thing, and the seller must intend actually exacting the price.
Ulpian says, If a person sells for a small price meaning to make a gift, the sale is valid, for it is only when donation is the sole consideration moving the sale that we hold it absolutely void; but when a thing is sold at a reduced price as a mode of donation there is no doubt that the sale is good. The parties are not prevented by this requirement from driving a hard bargain and obtaining the thing for a very low price, or selling it for a very high price, given the intention to buy or sell for that price. It follows then that the price need not necessarily be fair or equivalent to the value of the thing, but that it should be a real price the seller must intend to exact and the buyer intend to pay. Zulman and Kairinos say, The policy of the law is to allow everyone, in the absence of fraud, to make the best bargain he can, and both vendor and the purchaser are entitled by the exercise of superior shrewdness, to circumvent each other as long as such circumvention does not amount to fraud.'
Although it is a question of fact, a price is often not held to be real or serious if it bears absolutely no relation to the value of the thing sold. This is the situation, for example, where the price is truly nominal or illusory—as in circumstances where the seller has no intention whatsoever of exacting the so-called price. Some parties may also dress up a contract as a 'sale,' when in fact it is designed to be some other form of contract entirely. Certain, fixed or readily ascertainable Ordinarily speaking, the price to be paid for the merx must be fixed by the parties. This is not an absolute rule. The general principle is id certum est quod certum reddi potest: That which can readily be made certain is certain. It is therefore not necessary that the price actually have been fixed to fulfil this requirement; it is sufficient if the parties have agreed upon a method by which the price can be fixed.
In, Colman J said, It is I think clear that there can be no valid contract of sale unless the parties have agreed, expressly or by implication, upon a purchase price. They must either fix the amount of that price in their contract or agree upon some external standard by the application whereof it will be possible to determine the price without further reference to them.' If the parties take the latter route, the important thing is that it must be possible to ascertain the price by the method agreed upon. This can be done in several ways:. The price would be regarded as readily ascertainable if it could be fixed by reference to some independent circumstances. The price may be left to a named third party agreed upon by the parties to the contract.
Should the third party be unable to set the price, or refuse to do so, there is no sale. If the third party cannot be identified—for example, where the parties have not fixed a way of identifying the third party, or have not named him—then the contract does not come into existence; there is no sale. Similarly, where the agreement is that one of the parties or their nominee fixes the price, there is no sale. This basic principle of the common law of sale has, however, been called into question in a strenuous obiter dictum in the case of.
It is quite acceptable for the parties to agree expressly that the purchase price is 'the usual or the current market price.' This scenario presents no difficulties. The formula 'the usual price' may also be implied in many sales where no purchase price is expressly mentioned. The situation regarding the fixing of the price in such circumstances is as follows: There is an implied contract on the basis of the usual price at which that commodity is sold, or the current market price of that particular type of goods. Current money The price must consist in valid currency.
It need not be expressed in South Africa currency; if it is not, however, then in some convertible foreign currency. Where the consideration is completely in goods, rather than in money, the contract is one of exchange, not a sale. If it consists partly in money and partly in goods, the contract may be a sale or an exchange, depending upon the intention of the parties. Generally, though, the contract is a sale. This section considers legal consequences of the contract of sale, along with those of conditional sales, which modify the usual consequences.
Certain relevant contractual terms are also briefly be discussed. Legal effects of the contract Passing of ownership It is not a requirement of a valid contract of sale that ownership should pass from seller to buyer. Although parties to a sale usually contemplate this happening, it is not an essential feature of a contract of sale, and (as we have seen) sales by non-owners are permissible. At common law, the transfer of a real right of ownership (the performance of the contract) is regarded as a separate legal transaction from the contract itself, which creates only personal obligations. Because ownership does pass as a result of most contracts of sale, however, the issue of ownership is an important incidence of a sale.
Usually, to transfer ownership in a res, it is not only necessary that it be physically delivered by the owner; it is necessary also that the owner have the intention of transferring the right of ownership to the buyer, and that the buyer have the intention of becoming the owner of the thing in question. As far as sales are concerned, there are certain additional refinements: Immovable property In the case of immovables, ownership passes upon registration of transfer in the Deeds Registry. The position is regulated by the. In other words, registration constitutes delivery in the case of immovables, and ownership passes whether the price has been paid or not. Incorporeals Ownership in incorporeals is transferred by means of cession. Movable property Ownership in movable property is transferred. upon delivery of the res; coupled with.
either payment of the purchase price, the provision of security or the giving of credit. Delivery Delivery usually occurs by means of traditio.
Ownership passes on traditio only if the following essentials are present:. The thing must be capable of ownership. The seller must have legal capacity to sell. Traditio must be made by the seller (or his agent), since the owner of the thing cannot be deprived of his ownership by the wrongful act of another, and no-one can transfer greater rights in a thing than he possesses. No one can make someone else the owner of a thing he does not own. The seller must intend to pass ownership to the buyer. Delivery must be made to the buyer (or his agent).
The buyer must have legal capacity to become owner of the thing. The buyer must accept delivery, intending to acquire ownership in the thing. Forms of delivery Delivery may occur in two ways. Actual delivery Actual delivery ( traditio vera) occurs where the res vendita is physically handed over by one person to another de manu in manum. Constructive delivery Constructive delivery concerns those various methods of transferring ownership by which no physical handing over of the res vendita takes place.
There are five methods of constructive delivery:. delivery with a long hand;. delivery with a short hand;. constitutum possessorium;. symbolic delivery; and. attornment. Payment Ownership passes on delivery only if cash is paid, or if credit has been allowed.
In, Juta JA said, 'On a sale of movables followed by delivery the property does not pass until the purchaser has paid the money or secured the seller for the same, or unless the sale is on credit.' At this juncture, it is important to distinguish between how ownership passes in cash and credit sales respectively. In a cash sale, ownership passes once there has been (in addition to delivery) due payment of the purchase price. In a sale on credit, the fact that credit has been given is an indication that ownership merely passed on delivery. In an ordinary credit sale, the seller cannot claim that he did not intend ownership to pass until the full price had been paid.
(This does not cover the situation where the sale is one subject to a pactum reservati dominii). In the absence of agreement (express or implied) that credit has been granted, it is presumed that every sale is a cash sale. The point is well illustrated in.
The presumption of a cash sale may therefore be rebutted by adducing evidence of an agreement to give credit. If the rebuttal succeeds, ownership passes on delivery. If credit has not been granted, ownership does not pass until the price is paid—even if delivery has, in the meantime, taken place. An agreement to give credit must be clear and specific.
That being said, it is now much more difficult to show an agreement on credit than under the common law. This is so because of legislation. If the sale happens to be one on credit, the requirements of the apply to it. Where a sale is for cash, and the seller accepts a cheque for payment of the cash price, ownership does not pass (notwithstanding the delivery of the res vendita) unless the cheque is met when presented for payment. Risk and benefit Common law In most ordinary, day-to-day commercial transactions, the conclusion of a contract of sale and the passing of ownership by delivery of the res occurs instantaneously. In some types of sale, however, there is a delay between the time of entry into the contract of sale and the time of transfer of possession and ownership. The question that must be answered in these circumstances is this: Who gains the advantage of any benefits accruing to the res, and who bears the risk of damage occurring to it, during this window period?
Risk Mackeurtan defines risk as follows: By risk is meant the loss resulting from damage to, or destruction of, the thing sold, or any other disadvantage accruing to, or affecting it, arising through any agency other than the breach of contract or wrongful act or default of the seller. Losses that fall within the rule include those due to vis maior, casus fortuitus, general deterioration over time and even theft. Voet says: Under the name of risk falls here every disadvantage which overtakes a thing sold, such as death; running away and wounding in the case of. an animal sold; an opening of the ground in the case of a field.; conflagration and collapse in the case of a house; shipwreck in the case of a ship; mustiness, souring or leakage in the case of wine; and finally spoiling, going bad, perishing or purloining in the case of all things. For a modern example, see.
Not falling within the rule are losses caused by the failure of the seller to observe the appropriate standard of care. Where the risk lies South Africa follows the Roman-law rule with regard to risk.
In the absence of negligence on the part of the seller, the general rule is that the risk passes to the buyer when the sale is perfecta: that is, as soon as the agreement of sale is concluded, and before delivery or payment of the price. The natural consequence of this rule is that the full price must be paid by the buyer, even though the thing sold is damaged or destroyed before it is handed over. This general rule applies, however, where:. The parties have agreed to the contrary.
Specific goods still must be weighed, measured, or counted. The goods are unascertained. There is a statutory provision to the contrary.
There is default by either party The parties may vary the normal rules regarding risk by express agreement in their contract. Courts are loath to accept that such an agreement to vary was implied from the parties' negotiations, although it is possible for this to occur. One salient question here is whether or not an undertaking by the seller to deliver the goods at a specified destination necessarily implies agreement to vary the incidence of the risk. The answer would appear to be no. Why should a mere agreement to deliver at a distance imply a term that risk is to remain with the seller until delivery? The situation would be quite different where the seller undertakes to deliver the thing 'safely' to the agreed destination. The general rule also applies where specific goods must be weighed, measured, or counted.
In this regard, a distinction must be drawn between sales ad quantitatem and sales per aversionem. Where the sale is ad quantitatem, there is a sale of specific goods, but the price depends on the counting, weighing or measuring: for example, R300 per sheep, for the flock. The risk does not pass in this case until the price has been ascertained by counting the flock. Pothier explains the situation in the following way: If the sale is of things which consist in quantitate, and which are sold by weight, number or measure, as if one sells ten casks of corn. ten thousand pounds of sugar, or one hundred carp, the sale is not perfect until the corn is measured, the sugar weighed, or the carp counted.
For this reason, until the thing is measured, weighed or counted, it does not become at the risk of the buyer; for the risk cannot fall upon some indeterminate thing. Where the sale is per aversionem, it is, as it were, in the gross. The price is a lump sum for the ascertained goods, even if the res vendita is of a type normally weighed, measured, or counted: for example, a flock of sheep at R10,000 for the lot. Pothier says: But if the goods are not sold by weight or measure, but per aversionem, that is, in bulk, and for a single and only price; in such case, the sale is perfect from the instant of the contract, and from that time these goods are at the risk of the buyer. While the situation envisaged in respect of unascertained goods is analogous to that, the price is usually ascertained, but the res vendita is not. The subject matter has not yet been appropriated to the contract: for example, 100 bags of maize at R55 per bag from a warehouse containing 10,000 bags.
Risk in the res vendita does not pass until goods answering the description in the contract have been appropriated to the contract. For appropriation to occur, there must be some overt act by the seller, such as a setting aside or marking of the relevant goods. The general rule also applies, obviously, where there is a statutory provision to the contrary. The ordinary rules of risk are altered where a party is in default of his obligations under the contract. The rule varies by.
Fraud of either party. Failure of the seller to observe the required standard of care. Default of either party in performance. The doing of anything by either party that hinders the other in his performance The rule here is that the presence of one of these factors relieves the injured party of the incidence of risk, save in so far as any damage of the thing may be due to his own misconduct or gross negligence. Benefit Kerr defines benefit as 'any natural or civil fruits and other similar advantages, gains or profits.' The general rule is that the benefit in the res vendita follows the risk. Any benefits pass to the buyer once the sale is perfecta.
This does not, however, include fortuitous gains. The benefit must be directly connected with and actually produced by the property that has been sold. If the profits were purely accidental, and would not have been in the contemplation of the parties at the time of concluding the sale, the buyer cannot claim such a benefit.
Consumer Protection Act This area of the law faces significant changes under the Consumer Protection Act. Conditional sales As already indicated, the ordinary rules of the common law regarding the passing of ownership and risk or benefit may be modified if the parties agree to certain conditions. Conditions 'The contracting parties,' writes Mackeurtan, 'may include in their agreement any provisions that they wish, subject to the limitations hereinafter laid down.
These may suspend the operation, or cause the dissolution of the contract, until or upon the happening of an uncertain future event. The first class are suspensive, and the second resolutive.' Whether a condition is suspensive or resolutive is a matter of construction. The courts look beyond the ipse dixit of the parties and interpret the words as they stand. The following prerequisites must exist for a condition to be operative:. The coming into force or dissolution of the contract must be made to depend upon the occurrence or non-occurrence of an uncertain future event. It must not be impossible, illegal or immoral.
It must not be subversive of the essentials of the contract. Terms As noted above, conditions proper affect the operation, or bring about the dissolution, of the contract. On the other hand, terms only modify the ordinary effect of the contract. For example, the parties might agree to a term that the ordinary rule of risk is varied.
Suspensive conditions The legal effect of suspensive conditions in the law of sale is a matter of some controversy, but effectively the position is this: Unlike other contracts, a contract subject to a suspensive condition only becomes a contract of sale once the condition is fulfilled. Since this is contrary to the common-law position (and, indeed, to logic), the significant types of contracts with the character of a sale, and subject to suspensive conditions, have been covered by legislative amendments, so that the anomaly does not apply. Most of its significant effects in practice have been ameliorated by legislation. Resolutive conditions A valid resolutive condition has the following effect:.
The contract has full legal effect from the moment it is perfecta pending fulfilment of the condition. An affirmative resolutive condition is fulfilled by the occurrence of the event; a negative resolutive condition is fulfilled when it is certain that the event will not occur. Should the condition be fulfilled, the contract is dissolved retrospectively, and must therefore be regarded as never having existed. Examples The following are examples of commonly-encountered conditional sales. Approval of financial stability or availability of loan A suspensive condition is sometimes found in commercial transactions to the effect that the transaction depends upon the seller's approval of the buyer's financial stability.
There is no contract of sale until the seller gives his approval. He must exercise his discretion reasonably and in good faith.
A similar clause is found in a deed of sale, where the sale of land is subject to the conditions that the buyer is able to:. Sell his previous home (if relevant). Get approval for a loan secured by a mortgage bond from a recognised financial services provider within a particular period of time If it becomes clear the conditions cannot be satisfied, the contract falls through. Sale or return Sale or return ( pactum displicentiae) is a type of conditional sale often encountered in practice. It involves the buyer receiving goods from the seller with the option of becoming the owner.
He can exercise his option in several ways:. by buying the goods at the named price;. by selling the goods to another; or. by keeping them for so long that it would be unreasonable to return them. This type of contract could be considered as subject to a condition that suspends the sale until the buyer has done one of the above-mentioned things to indicate his intention to become the buyer. Mackeurtan, however, feels that contracts of sale or return are examples of contracts subject to a resolutive condition. Sales on approval There is some disagreement about approval sales.
Some argue that these are sales subject to a suspensive condition: Since the sale is subject to the examination and approval of the buyer, the operation of the sale is suspended until the buyer's approval has been expressed. There is another view: that these are sales subject to a resolutive condition. On this view, the sale transaction is carried out completely, and the client is charged. If, however, the client feels that the merchandise is no good, he is entitled to return the item to the seller, and the transaction is reversed. In modern-day consumer contracts, this seems to be the better view. Residual obligations of the seller and remedies of the buyer Seller required to take care of res vendita until merx is made available The discussion of risk above indicates that the risk of accidental loss normally passes to the buyer as soon as the contract of sale is perfecta.
This, however, does not release the seller from all responsibility for the thing sold while it remains in his possession. The general rule is that the seller is under an obligation to take care of the thing until the time comes for performance, and that he is responsible for any damage caused by his fraud or negligence. In, Schreiner JA said, It will be convenient to consider first the obligations of a vendor who has not yet delivered the property sold. It is his duty to look after it as would a bonus paterfamilias and if he fails in that duty the purchaser would be entitled to claim damages, or, if, but only if, the result of the vendor's neglect is that the thing sold is materially different from the thing tendered, to repudiate the contract and to refuse to take delivery.' Where it is the seller who is in mora, the seller becomes liable for all loss, no matter how it comes about. Only if it can be shown that the damage would nonetheless have occurred, even if the thing had been delivered, will the loss be the buyer's. The extent of the duty to take care pending delivery is altered if the buyer is in mora in taking delivery.
If the buyer has failed to take delivery, the seller is only liable for the consequences of his gross negligence ( culpa lata) or fraud ( dolus). He is not liable for ordinary negligence. The measure of care may also be varied by agreement. Where the res vendita has been damaged or lost while in possession of the seller prior to delivery, and the responsibility is not the seller's, he must cede to the buyer any rights of action he might have in respect of the damage, so that the buyer might exercise these rights in covering his own loss. If, for example, the goods are stolen and found in possession of a third party (not the thief), the seller must cede his vindicatory rights to the buyer. The buyer's remedies Where the seller has not taken due care, the remedies available depend on whether the goods are specific or unascertained. Specific goods In the case of specific goods, where the damage is material, the buyer is entitled to refuse to accept delivery of the goods and to repudiate the contract, claim damages, and a refund of the price if paid.
In other words, he is entitled to treat the situation as he would non-delivery of the thing. Where the damage is not material, the buyer must accept the delivery of the goods, and then claim damages. Unascertained goods Where the sale is of unascertained goods, the buyer may reject the goods and once again treat the seller as if there had been no delivery at all (whether the breach is major or not), provided the damage is not trifling. Where, however, the purchaser accepts the res vendita, but claims damages, the damages are estimated on the basis of the difference between the value of the sound goods and the value of the damaged goods delivered. The buyer may also claim any wasted necessary expenditure. Seller's duty to make available the thing sold This duty is the same as the duty to 'deliver the res vendita,' as it is most often described—including in the new Consumer Protection Act.
Deed Of Sale Sample
Some prefer Kerr's description. One should understand the terms 'making the thing sold available' and 'delivery' as being synonymous. Wille’s Principles of South African Law, 9th Edition at 889. See also 1927 AD 271.
Paul D 18.1.1.2. Ulpian D 18.1.2.1. Pomponius D 18.1.8.pr.
Commentarius ad Pandectas 18.1.1 (Gane's translation). (1883) 2 SC 172. Sale of Goods in SA at 1. 1987 (3) SA 629 (SWA) at 633D. 1906 TS 1010. See, on this, 2009 (4) SA 302 (SCA).
D 18.1.34.1; Voet 18.1.13. See 1916 CPD 406. See 1956 (3) SA 108 (N). For a discussion of these two forms, see 2001 (4) SA 1131 (N) 1139. See Tulloch v Marsh supra. A Treatise on the Contract of Sale para 5. See 1981 (3) SA 691 (W).
D 18.1.8.1. See also Pothier Sale para 5. See 1927 AD 271. s 60 of the National Health Act 31 of 2003. Institutes 3.19.1.
1929 CPD 345. 1908 TS 300.
See Kerr Sale and Lease 11–23. 1986 (2) SA 555 (A). Norman's Purchase and Sale 46. See 1927 TPD 162 for a good example.
See 1910 AD 302; 2004 (4) SA 550 (C) 560–563. 1964 (1) SA 669 (W). See 1948 (2) SA 656 (O) 663, 665. See also 1996 (1) SA 799 (A). D 18.1.35.1; Grotius Inleiding 3.14.23; Westinghouse at 574C-D.
1999 (4) SA 928 (SCA). 1920 CPD 333 at 338. 1942 EDL 117 at 121–2. 1948 (3) SA 48 (N).
For more on this topic, see the entry on the. 1980 (3) SA 917 (A) 922F. Act 47 of 1937. See the entry on the. 1921 AD 387.
1976 (4) SA 464 (A) at 490F. (1880) 1 EDC 174. Act 34 of 2005. 1949 (1) SA 1195 (T). 1953 (1) SA 60 (A).
See D 18.6.8.pr; Inst 3.23.3; 1910 TPD 47; 2004 4 SA 550 (C) 563; 2010 (4) SA 200 (SCA) para 9. See 1915 CPD 331. Sale para 309.
See 1878 Buch 169; 1879 Buch 91, and 1879 Buch 166. See in particular s 59 of the Customs and Excise Act 91 of 1964. See the case of 1966 (3) SA 407 (RAD). Sale and Lease 235. See the question posed earlier under contracts emptio spei. See 1960 (4) SA 100 (T).
1978 (2) SA 872 (A). 1920 CPD 333. 1924 TPD 730. 1954 (3) SA 840 (A). Voet 18.6.2. 1951 (2) SA 82 (C). ' See the quotation from Frumers case above.
1946 NPD 377. 1948 (4) SA 914 (T). 1962 (4) SA 447 (T) at 453. (1902) 19 SC 373. 1954 (3) SA 840 (A).
A sample of what is to be supplied is shown to the prospective purchaser, and the contract is concluded upon that basis. Norman 214.
A Student's Guide to the Law of Purchase and Sale 75. 1922 TPD 106. 1921 OPD 138. 1925 OPD 61. Kerr Sale and Lease 167. s 19(8) of the Consumer Protection Act. Goudsmit Pandecten-Systeem para 44.
(1902) 19 SC 136. 1931 CPD 305. 1903 TH 121. 1921 CPD 654. 1921 NPD 79. Sale and Lease 167ff. A detailed analysis of all the details may be found in Volpe A Student's Guide to the Law of Purchase and Sale 84–97.
Cedarmount. 1940 AD 284. 1927 AD 271.
See Kerr Sale and Lease 177ff. s 44(1)(d).
1956 (1) SA 802 (C). 1983 (3) SA 793 (A). See 1968 (3) SA 458 (T). See 2005 (6) SA 205 (SCA), overruling a contrary decision in 2005 (4) SA 389 (D).
1905 TH 356. For example, he may have absented himself to prevent his receiving notice. This has been dealt with above. 1955 (3) SA 385 (A).
2007 (5) SA 456 (C). Sale and Lease 197. 1975 (3) SA 734 (A) 748G.
For the effect of this, see 1996 (2) SA 448 (A). 1919 AD 204. (1904) 21 SC 669. 1977 (3) SA 670 (A). 1977 (2) SA 846 (A).
1971 (3) SA 188 (A). s 56 of the Consumer Protection Act. 1964 (3) SA 561 (A). 1995 (4) SA 312 (A). 1996 (2) SA 565 (A).
1997 (2) SA 1 (A). 2002 (2) SA 447 (SCA) 465. 2006 (3) SA 593 (SCA). D 21.1.1, 2 (De Zulueta's translation). Kerr Sale and Lease 219.
See Sale and Lease 116ff. 1949 (3) SA 337 (T). 2002 4 All SA 232 (T). Sale and Lease 114–115.
1960 (4) SA 582 (A) at 589–90. 1914 TPD 578. An example of a case where the defect did not justify rescission is 1951 (4) SA 73 (C). 1981 (2) SA 684 (A).
1968 (4) SA 818 (D). 1920 AD 12. 1962 (2) SA 709 (D) at 714B-D. 1917 EDL 221.
1916 AD 400 at 413. 1910 AD 137 at 149. Sale and Lease 131–133. Douglas v Dersley. 1918 CPD 296.
1959 (3) SA 986 (C). 1948 SALJ 532. 1991 (2) SA 1 (A). 2009 4 SA 313 (SCA). Act 34 of 2005.
s 90(2)(g). See the passage quoted from D 21.1.1 earlier. 1959 (2) SA 304 (O). 1973 (3) SA 397 (A).
1981 (3) SA 216 (C). See s 17 of the SA Reserve Bank Act 90 of 1989.
1923 AD 541. (1899) 16 SC 286. See Mackeurtan at 208–240. See generally Norman's Purchase and Sale chapter 7. Act 68 of 1981. For a thorough review of this legislation, see the entry on the;.
Act 25 of 2002. Act 24 of 1936. See the entry on the for more details. Act 23 of 1955. For the future, a new Second-Hand Goods Act 6 of 2009 is in the pipeline. It was passed into law at the end of March 2009.
Like so many pieces of commercial legislation, however, its commencement date is 'yet to be proclaimed.' .
Act 57 of 1959. The Regulations were only published in December 2010. They are to be read together with the Act. Para 129 of the new version of LAWSA on Sale (published August 2010).