The contract of Sale
Commercial Law
Definition:
The seller (vendor) promises to
deliver a thing (merx) to another
person known as the buyer(emptor)
for payment of a certain price
(pretium)
The parties to the contract
Seller (who sells)
Purchaser (who buys)
Formalities
Generally no formalities – but:
Parties may agree that no sale unless
certain formalities complied with
Some Statutes require formalities
(Some) Statutory Formalities
Sale of land – signed & in writing
Credit agreements – in writing & signed
by both buyer & seller
Sale of business – sale to be advertised
Labelling of goods
The essential elements of sale
Agreement to deliver
Agreement on the thing sold
Agreement on the sale price
Price must be ascertainable & in money
Agreement to deliver
The seller must give control of the
merx to the buyer
Generally, deliver immediately,
otherwise within a reasonable time
Delivery
Actual delivery
Constructive delivery
Types of constructive
delivery
Symbolic delivery – keys
Long hand (longa manu) – pointing out
Short hand (brevi manu) – buyer already
has
Constitutum possessorium – seller keeps
Attornment – gallery keeps
The merx
Buyer and seller must agree
Can sell anything unless law forbids
Thing may not yet exist
Hope or spes
Thing sold (object of the sale)
Movables
Immovables
Specific things
Generic things
Corporeals and Incorporeals
Things in existence now or in the
future
Price
Price must be agreed upon
Must be in money
Price must be fixed or ascertainable
Sale of 3rd party goods
You can sell something that is not yours!
Sale of 3rd party goods
Seller does not have to own goods
Sale creates a personal right to delivery
Examples
Sale of generic goods you expect to
acquire
Sale of specific item you expect to
acquire
Fraudulent sale of another's property
Sale of goods bought under credit
agreement where ownership reserved
Rei vindicatio
Action available to true owner of
goods for recovery
Only needs to prove
Is true owner
Defendant in possession
Conditional contracts
Suspensive condition
Resolutive condition
Suspensive Condition
The operation of the obligation
(performance of rights & duties) is
suspended or delayed until the
uncertain future event (condition)
takes place
Eg: A agrees to buy B’s car if she can
get a loan
Resolutive Condition
 The obligation comes into operation
immediately (performance takes place) but if
the uncertain future event (condition) is
fulfilled the obligation will immediately
terminate
 ◦ Eg: A agrees that B may use his car until
he finds employment. Once B is employed
he must hand back the car to A
Rights of the Purchaser
 To receive delivery of the merx
 Does not mean seller must deliver, but must make available
 Preservation of the merx pending delivery
 Seller must look after goods until delivery. Risk passes on sale
being perfecta but seller liable for negligent loss or damage
 Purchaser to be protected against eviction
 Sellers warranty against eviction
 Purchaser entitled to merx free from latent defects
Duties of the Buyer
 To pay the purchase price
 General rule – pay in legal tender upon delivery
 To pay the seller’s necessary expenses
 Costs of caring between sale & delivery, transfer costs
 To accept delivery of the merx
The Passing of Risk
General Rule
The risk passes from the seller to
the purchaser as soon as the sale
is perfecta.
The parties may agree to change
this, for example, for risk to pass on
delivery
When is the sale perfecta?
Agreement on price
Merx identified
Any suspensive conditions fulfilled
Did you get that?
 Examples
Ownership
Passing of ownership
Seller must be owner at delivery
Seller intends to pass ownership
Buyer intends to acquire ownership
Seller must deliver to purchaser
Purchase price paid or credit
granted
Transfer of ownership
 Immovable property – on registration of transfer
 Incorporeal property – on cession
 Movable property – on delivery
 If cash sale – price paid & delivery
 If credit sale – on delivery
Cession
Transfer of a personal right
Cedent transfers to the Cessionary
Requirements for cession
Cedent must hold the right being
transferred
Must be a personal right
Parties must intend to transfer
Object of cession must be identified
Must be lawful
Warranties
 May be express or implied
 A contract of sale always implies the following warranties:
 Warranty against eviction
 Warranty against latent defects
Latent defects
 Defect existing at time of sale but unknown to ordinary buyer even if
apparent to an expert
 There is an implied warranty that goods are fit for the purpose for
which sold
 If latent defect - entitled to remedy unless:
 Voetstoots or “as is” sale (parties agree to exclude)
 No defect at time of sale
 Buyer aware of defect and accepted
 Prescription
Requirements for claim of latent
defect
 There is or was a material defect in the goods
 The defect was present when the sale was concluded
 The defect was latent (not easily noticable on inspection)
 Purchaser was unaware of the defect at the time of purchase
The Aedilitian Remedies
 Actio redhibitoria
 Available if latent defect renders goods useless or if purchaser would not
have purchased the goods if aware of defect
 Purchaser tenders return of merx & claims purchase price plus interest & costs
of maintaining merx and cost of any improvement to merx
 No compensation
The Aedilitian Remedies
 Actio quanti minoris
 If defect not so material as to render goods useless or if purchaser would
still have purchased goods (but maybe at lesser price)
 Buyer sues for reduction in purchase price
 No compensation
The Aedilitian Remedies
 Actio ex empti
 Allows buyer to claim compensation in certain cases:
 If seller fraudulent
 Seller a manufacturer, expert or professes skill
 Seller has given an express warranty
NB
 The Consumer Protection Act prohibits the use of a voetstoots clause
 This only applies to contracts covered by the Act
 Other specific legislation relating to certain types of sale
 Share Blocks
 Sectional Title etc