Grahamstown • 6140 • South Africa
FACULTY OF LAW • Tel: (046) 603 8427/8 • Fax: (046) 6228960
Web Page: http://www.ru.ac.za/academic/faculties/law
LAW OF
LEASE AND AGENCY
2008
Lecturer: Professor RB Mqeke
Law of Lease and Agency 2008
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1.
Introduction
1.1 Overview
Lease and agency are sub courses that constitute a self-standing semester
course that counts as a credit in the Faculty of Law in the final year LLB. The
purpose of the course is to introduce students to the main principles of the
common law relating to letting and hiring and agency and the extent to which this
branch of the law has been affected by the Constitution, namely section 26(3)
thereof as well as legislation enacted to give effect to the spirit, purport and the
objects of the Bill of Rights. The course will enable the students to get a better
understanding of some of the more common situations which can arise in lease
and agency relationships and how such situations are dealt with by the law. The
students will get an insight into the nature, purpose and the function of the law
lease and agency. The students will be familiarized with the following:
o
The common law rules relating to this branch of the law as well as its
historical development from Roman law, Roman-Dutch law and English law.
o
The extent to which common law principles have been amended by the
Constitution and recent legislation.
o
To familiarize students with the basic legal concepts and the terminology
(Latin phrases) encountered in the law of lease in particular.
o
To assist the students with the practical application of the legal principles by
reading law reports and other relevant source materials.
1.2 Credit value
o
9 credits
1.3 Assumptions of Prior Learning
In order to be able to successfully complete the course students need to be able
to:
o
Be capable of independent learning
Law of Lease and Agency 2008
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o
Have the ability to access resources such as statutes, law reports and
textbooks
o
Be capable of understanding the system of judicial precedent particularly
the hierarchical relationship between the SCA and the Constitutional Court
o
Have a basic understanding of legal problem-solving techniques
o
Have a good knowledge of legal writing conventions as to be found in the
Leading South African Law Journals
o
Have the ability to read, analyse and extract principles from the law reports
o
Have the communication and writing skills
2.
Outcomes
2.1
Critical outcomes
At the end of the course students will be:
o
Conversant with the legal principles and rules relating to this branch of the
law
o
Able to apply the relevant legal principles and the statutory provisions
governing specific transactions, for example, the specific rules governing
the contract of a lease of a dwelling for housing purposes.
o
Able to identify and solve practical legal problems pertaining to this branch
of the law.
2.2 Intended specific outcomes
The law of lease and agency course is designed to enable students, on the
completion of the course to be able to achieve the following outcomes:
o
To understand the nature of the contracts of lease and agency and the
extent to which this branch of the law has been affected by the Constitution
and legislation aimed at giving content to the constitutional values of
equality and human dignity.
o
To understand the essential elements of a valid contract of lease and
agency.
Law of Lease and Agency 2008
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o
To understand the critical role of the superior courts in the harmonization of
the common law principles with the spirit, purport and the objects of the Bill
of Rights.
o
To be able to apply the knowledge acquired during the course to solve
practical legal problems which commonly arise in this branch of the law.
3.
Teaching methods
Teaching will be in the form of discussion of the course material in the lectures.
Students are provided with a synopsis dealing with the changes brought about by
the new Constitution and recent legislation relating to each of the sub-courses.
The notes are separated into lecture topics. There is a selection of important
cases that should be consulted. Students are expected to read the cases and
the relevant chapters on the lecture topics to be covered in the lectures. The
lecture will be used as a discussion forum for the material set out in the notes.
Lecture attendance is compulsory. A student may not miss more than three
lectures without a valid excuse.
4.
Course Contents
Lease
4.1. The nature of the contract
4.1.1 The essentials, formalities and the parties
4.2. Types of leases : Long and short leases and the rule “Huur gaat voor koop”
4.3. The duration of the contract of letting and hiring
4.3.1 Fixed period lease
4.3.2 Tenancy at will
4.3.3 Periodic lease
4.3.4 Hybrid
4.4. The legal effect of leases (rights and duties of the parties).
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4.4.1 The lessor’s obligation to deliver the property to the lessee
4.4.2 Free of impediments
4.4.3 In a fit condition for the purpose leased
4.4.4 Remedies for breach
4.4.5 The lessor’s obligation to give unhindered use and enjoyment during the
currency of the lease
4.4.6 Maintenance and repairs
4.4.7 Warranty against eviction by third parties with greater title
4.4.8 Remedies for breach
4.4.9 The so-called warranty against defects and its remedies
4.4.10 The lessor’s obligation to pay rates and taxes
5.1 The lessee’s duty to pay rent
5.1.1 Cash or kind
5.1.2 Where and how - the danger of using an agent
5.1.3 When
5.1.4 Lessors tacit hypothec
5.1.5 The lessee’s duty to take proper care of the property and remedies
5.1.6 The lessee’s duty to restore the property at the end of the lease and
remedies
6.1 The impact of the Constitution and recent legislation such as PIE, ESTA and
the Rental Housing Act [Holding over]
7.1 The legal effect on third parties (subletting, assignment and cession)
8. Termination of leases
8.1 The effect of termination
8.1.1 The lessee’s right to improvement.
See the leading case of Business
Aviation Corporation v Rand Airport Holdings [2006] SCA 72 (Case No
179/05 judgment given on 30 May 2006.).
8.1.2 Renewal of a lease.
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9. Agency
9.1 Agency, representation and mandate.
9.2 Sources of agency power. (The authority of the agent.)
9.2.1 Express authority (nature and extent of authority): Mijlof t/a Cape Building
Ceramics v Jackson 1980 (3) SA 13 (C); Goosen v Van Zyl 1980 (1) SA 706 (O)
and Meintjies NO v Administrator Van Sentraal Transvaal 1980 (1) SA 283 (T).
9.2.2 Implied authority
9.2.3 Authority by operation of law
9.2.4 Ostensible authority (estoppel).
9.2.5 Ratification
10.
Delegation and revocation of Authority (Sub-agent): See generally A J
Kerr 4th Edition.
11. Different kinds of agents
11.1 Auctioneers
11.2 Brokers
11.3 Estate Agents. See the Estate Agents Act 11 of 1976.
11.3.1 Rogut v Rogut 1982 (3) SA 928 (A), Fairbrass v Estate Agents Board
1999 (4) SA 1052 (W) and Estate Agency Affairs Board v McLaggan and
Another 2005 (4) SA 531 (SCA) and Estate Agency Board v Azevedo
2007 (2) SA 5 (W).
The Estate Agent’s claim for commission – criteria for determining when entitled
to – Mano Ltd v Nationwide Airlines (Pty) Ltd 2007 (2) SA 512 (SCA).
11.4 Factors
12. The legal effect of agency
12.1 The relations between the principal and the agent
12.2 Duties of the agent. Liability of an agent to a third party with whom he
contracted on behalf of a non existent principal. Kantey & Templer (Pty) Ltd v
Van Zyl NO 2007 (1) SA 610 (C).
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12.3 Duties of the Principal
13. The relations between the Principal, Agent and Third Parties
13.1 Undisclosed Principal. See the recent decision inSasfin Bank Ltd v Soho
Unit 14cc t/a Aventura Eiland 2006 4 SA 513 (TPD) where limitations on
the application of the doctrine were considered.
13.2 Termination of Agent’s Authority
14. Resources
The core reading for this course are the textbooks, law reports and specific
legislation relating to this branch of the law which may be accessed in the library.
The list of cases and relevant legislation is reflected in the course outline. On the
lease component of the course there is AJ Kerr The Law of Sale and Lease 3rd
ed, Lexis Nexis, Butterworths (2004). The book also comments on the recent
cases dealing with evictions. Other source materials include Badenhorst et al
Silberberg and Schoeman’s The Law of Property, 5th ed. JTR Gibson South
African Mercantile & Company law 8th Edition (Juta) edited by Visser et al.
On Agency see the following sources: LAWSA Vol 17 Mandate and Negotiorum
Gestio; AJ Kerr The Law of Agency 4th edition (Lexus Nexis Butterworth); Peter
Havenga et al General Principles of Commercial Law, 5th ed (2004) and Robert
Sharrock Business Transactions Law 6th ed, Juta & Co, (2004) and Wille’s
Principles of South African law, 9th Ed (Juta).
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STUDENT ASSESSMENT
criteria
Specific Outcomes (on Assessment
completion of the course) (what evidence must the
the student will be able to student provide to show
that he or she is
competent. The student
must be able to:
Assessment --- (The
evidence will be gathered
in the following ways:
The student will be able
to:
o Understand the origin o Identify from which
system of law
and development of
the law of lease and
particular rule of law
originates
agency
o Write test or essay in
which the various
sources will be
discussed
o Define essentials of a o Write an essay and
o Conversant with the
test, class discussion
legal principles
valid contract of lease
on these topics.
relating to this branch
of the law and
o Identify from
statutory provisions
discussion of case law o Write an essay or test
enacted under the
and recent legislation
in which the various
aspects of the law are
new Constitution
o Demonstrate the
tested
understanding of the
o Ability to identify and
solve practical legal
sources by extracting o Write case notes
discussing landmark
the legal principles
problems pertaining to
this branch of the law.
discussed in the law
judgments of the
Supreme Court of
reports
Appeal and the
Constitutional Court
15.
Assessment strategy
The final mark for the course consists of the following components:
Examination:
out of 70 marks
Class work:
out of 30 marks
Total marks:
100 marks
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Tests
There is one test which will be written in the first term. The test will be on the
lease component of the course. The test will be out of 35 marks and will be
written during the 45 minutes lecture period.
The test will contain questions
equivalent to those that may be found in the June Examination and will require
the students to apply the knowledge acquired from case law and other source
materials. The test will be compulsory. The test and the assignment marks will
constitute a class work.
Assignments
There is one major assignment which will be submitted towards the end of the
second term covering the law relating to agency. The assignment will require the
students to read case law covering the various aspects of the problem set. The
assignment is compulsory and will constitute 50% of the class work.
16.
Examination
One two-hour paper will be written in June. The examination will be out of 70
marks. There will be three 35 mark questions, of which the students will have to
choose two to answer. A 35 mark question may be split up into 10 marks and 5
marks questions.
The questions will all require the application of knowledge gained from the
source materials. The examination is compulsory.
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17. Evaluation
This course is evaluated on a three-year cycle instituted by the Faculty. The
Rhodes University Web-Based Evaluation Assistant is used to conduct the
evaluation. The students evaluate the course by filling in a questionnaire that
requires the students to respond to specific questions, as well as giving them an
opportunity to make handwritten comments about good and bad aspects of the
course. A member of staff who is not involved in the teaching of the course
administers the evaluation in class. The responses are then sent to the
Evaluation
Assistant,
which
compiles
a
computerised
report,
detailing,
statistically and graphically, how the students responded to the specific
questions. The documentation is then passed on to an Academic Development
Specialist in the Academic Development Centre, who incorporates the freeform
responses, writes a global report on the evaluation of the course, and points out
aspects that are impressive, or that require attention. The evaluation is usually
conducted at the end of the course, after the examination. Once the results are
received, a review of the results is conveyed to the students, and the students
are invited to discuss aspects requiring attention with a view to the improvement
of the course.
18.
LEASE
In dealing with the contract of lease one has to distinguish between a lease of
movable property (motor vehicles and office equipment) and lease of immovable
property.
The lease of movable property is subject to the provisions of the
National Credit Act 34 of 2005. In terms of this Act lease means an agreement in
terms of which –
(a)
temporary possession of any movable property is delivered to or at the
direction of the consumer, or the right to use any such property is granted
to or at the direction of the consumer.
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(b)
payment for the possession or use of that property is –
(i)
made on an agreed or determined periodic basis during the life of the
agreement, or
(ii)
deferred in whole or in part for any period during the life of the agreement.
(c)
interest, fees or other charges are payable to the credit provider in respect
of the agreement or the amount that has been deferred, and
(d)
at the end of the term of the agreement ownership of that property either
(i)
passes to the consumer absolutely or
(ii)
passes to the consumer upon satisfaction of specific conditions set out in
the agreement.
This definition has changed the common law of lease because in a contract of
lease there is always an expectation that at the end of the terminal period the
goods will be returned in the same condition as they were received.
When
dealing with this type of contract the relevant provisions of the National Credit Act
relating to pre-agreement disclosures, delivery of the relevant documents free of
charge, compliance with the plain language requirements, provisions relating to
unlawful agreement and unlawful provisions in a contract and the consumer’s
right of cooling off should be noted. Other important legal provisions are those
governing the rescission and termination of credit agreements, namely, sections
121 and 122 of the Act. Section 121 dealing with the consumer’s right to rescind
credit agreement expressly state that the section applies only in respect of a
lease or instalment agreement entered into at any location other that the
registered business premises of the credit provider:
In terms of s121(2) a
consumer may terminate a credit agreement within five business days after the
date on which the agreement was signed by the consumer by –
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“(a)
delivering a notice in the prescribed manner to the credit provider;
(b)
tendering the return of any money or goods, or paying in full for any
services received by the consumer in respect of the agreement …”
A contract of lease is treated in the same way as an instalment agreement. The
National Credit Act does not apply in respect of lease of immovable property.
The common law rules governing such contract have been left intact. Part C of
the Act (ss8-11) dealing with the classification and categories of credit
agreements excludes a lease of immovable property from these categories. This
means that a credit agreement does not include a lease of immovable property.
This also means that the definition of a contract of letting and hiring of property
(immovable) remains the same. Most sources describe the contract of lease as
one whereby one party (the Lessor) undertakes to grant to the other (the Lessee)
the temporary use and enjoyment of a thing in return for the latter’s undertaking
to pay rent.
This definition therefore differs from the one contained in the
National Credit Act – some commentators on this Act have observed that it has in
fact blended the lease of movables with a sale and this will create the problem of
determining which naturalia of the contract will apply. It should be noted that in
terms of the National Credit Act if the agreement provides that ownership will
always remain with the lessor, the agreement is not a lease for the purposes of
the Act.
It will, however, be a credit transaction in terms of s8(4)(f) and will therefore be
subject to the Act provided a fee, charge or interest is payable. A lease in terms
of which the lessee pays rent which does not include a fee, charge or interest
Law of Lease and Agency 2008
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and in terms of which ownership remains with the lessor throughout, will not be
subject to the National Credit Act.
The cumulative effect of this is that the standard text books dealing with the
contract of lease will continue to be used with reference to the lease of
immovable property.
In Wille’s Principles of South African Law 9th Edition at 907, the author states that
by “use” is meant the jus utendi i.e the right of using the property and also the jus
fruendi, ie the right to gather and enjoy the fruits of the property. The lessee
does not obtain the jus abutendi, i.e the right to take any of the substance of the
leased properly. Consequently so-called “mining lease’s” which allow the lessee
to mine for and keep minerals, are not true leases…” See also the comment in
this regard in Dry Motors v Du Toit 1969(1) SA 631(T).
Other aspects of the contract of lease that deserve special mention relate to the
lease of land, namely, the requirement for the registration of leases and subleases. These are governed by the provisions of sections 77, 78 and 79 of the
Deeds Registries Act 47 of 1937. In terms of s77(1) save where provision to the
contrary is made in any law, any lease or sub lease of land or of any rights to
minerals in land and any cession of such a lease or sub-lease intended or
required to be registered in the deeds registry, shall be executed by the lessor
and the lessee or by the lessee and the sub lessee or by the cedent and the
cessionary, as the case may be, and shall be attested by a notary public :
provided that any such lease shall be registered for the full term thereof…”
In terms of s77 (1) bis whenever a cession of a lease is to be registered in
respect of any portion of the land leased, a notarial copy of the lease shall be
Law of Lease and Agency 2008
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attached to such cession and after registration such cession with the notarialy
certified copy of the lease annexed thereto shall be deemed to be the title to the
portion of the lease so ceded and for any subsequent registration in respect
thereof it shall be part of the title.
The termination of registered lease is regulated by s78 of the Deeds Registries
Act. Note the steps to be taken by the registrar upon termination of a registered
lease or sub-lease.
Registration has a bearing on cessions of such leases or sub-leases. In terms of
s80 of the Deeds Registries Act no cession of a lease or sub-lease shall be
registered in any deeds registry unless the lease or sub-lease has been
registered therein.
In terms of s81 no hypothecation of a lease or sub-lease shall be registered in
any deeds registry unless such hypothecation is effected by means of –
(a)
a mortgage bond, if the lease or sub-lease is immovable property; or
(b)
a notarial bond, if the lease or sub-lease is not immovable property.
Students should read also secs 82 and 83 of the Deeds Registries Act.
Registration is a requirement of the law in respect of long leases. In terms
of s1 (2) of the Formalities in Respect of Leases of Land Act No 18 of
1969, a long lease entered into after the commencement of the Act, that
is, after 1 January 1970 shall not be valid against a creditor or a successor
under onerous title of the lessor for a period longer than ten years after
having been entered into unless
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(1)
it has been registered against the title deed of the leased land or
(2)
the aforesaid creditor or successor at the time of the giving of credit
or the entry into the transaction by which he obtained the leased
land or a portion thereof or obtained a real right in respect thereof,
as the case may be, knew of the lease. See the comment of J S
Mclennan on this Act in
1969 SALJ 345.
The registration requirement is also mentioned in s 25(2)(a) of the Mineral and
Petroleum Resources Development Act 28 of 2002 which provides for the
registration of mining rights at the Mining Titles Office.
In terms of s11(4) of the Act transfers, cessions, leases, sub leases, alienations,
mortgages or variations thereof must also be so registered. In terms of s11
prospecting and mining rights may be transferred, let and sublet – such dealings
may not occur save with ministerial consent. Draft regulations refer to sketch
plans and diagrams that are required to be certified by a surveyor.
The lessee’s right to undisturbed enjoyment (commodus usus) is a naturalia of a
contract of lease. See the leading case of Sishen Hotel (Edms) Bpk v SuidAfrikaanse Yster en Staal Industriele Korporasie Bpk 1987 (2) SA 932 (A). In
that case the court held that if the property has been leased for the purpose of
conducting a business from it, the lessee’s right to commodus usus also relates
to the profit to be gained from conducting the business. Where the profitability of
the lessee’s business has been reduced, the lessee’s commodus usus has been
impaired. See in this regard Sweets from Heaven (Pty) Ltd & Another v Ster
Kinekor Films (Pty) Ltd 1999 (1) SA 796 (W). As a lease is a reciprocal contract
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the exceptio non-adimpleti contractus applies. See also the effect of the Huur
Gaat Voor Koop rule.
The law relating to lease has been affected by the new Constitution and
legislation enacted under it. The relevant provision of the Constitution is section
26 (3) which has been considered in a number of decision. We have already
alluded to the effect of the National Credit Act on lease of movable property.
The legal effect of the following statutes on the legal relationship of landlord and
tenant has also been considered in case law: The Prevention of Illegal Eviction
from and Unlawful Occupation of Land Act 19 of 1998 (PIE) and the Extension of
Security of Tenure Act 62 of 1997 (ESTA).
The courts have considered the effect of these statutes on the common law right
of eviction. The following cases are relevant:
Ross v South Peninsula Municipality 2000 (1) SA 589 (C);
Betta Eindomme (Pty) Ltd v Ekple-Epol 2000 4 SA 469 (W) and Van Zyl v
Maarman 2000 1 SA 957 (LCC);
ABSA Bank Ltd v Amod [1999] 2 ALL SA 423 (W);
Skosana v Roos t/a Roose Oord 2000 (4) SA 561 (LCC) and
Khuzwayo v Dludla [2000] 4 ALL SA 329 (LCC).
The controversial issue relating to eviction orders concerns the effect of s 26(3)
of the Constitution on the common law right of the Landlord to claim eviction of a
tenant upon the termination of the lease.
Another question that has been raised is whether s 26(3) applies horizontally as
opposed to vertical application. The Supreme Court of Appeal has addressed
some of these concerns in the following cases which should be read carefully:
Brisley v Drotsky 2002 (4) SA 1 (SCA);
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Mkangeli & others v Joubert & others 2002 (4) SA 36 (SCA);
Ndlovu v Ngcobo; Bekker v Jika [2002] 4 ALL SA 384 (SCA).
There have been provincial and national legislation which seek to regulate unfair
practices arising from the legal relationship between landlord and tenant. These
include Gauteng Residential Landlord and Tenant Act 3 of 2001; Rental Housing
Act 50 of 1999. The latter Act repealed the Rent Control Act 80 of 1976. It also
creates mechanisms to regulate the relationship between landlords and tenants.
Some of these statutory provisions seek to govern the contents of a contract of
lease.
Another important provision relates to the establishment of rental housing
tribunals. See Thabo Legwala “An introduction to the Rental Housing Act 50 of
1999” Vol 12 No. 2 2001 Stellenbosch Law Review 277 and Mukheiber 2000
Obiter 332.
Students should also read section 32 of the Magistrates’ Courts Act 32 of 1944
relating to the enforcement of the landlord’s security which he enjoys by virtue of
his landlord’s hypothec. This hypothec is excluded if a notarial bond has been
registered with regard to the specific movable property in terms of Act 57 of
1993.
See the following cases on the landlord’s hypothec:
Halstead v Durant NO 2002 (1) SA 277 (W) and Timmerman v Len Roux 2000
(4) SA 59 (W) and Bloemfontein Municipality v Jacksons Ltd 1929 AD 266.
Other important pieces of legislation include:
(a)
the Formalities in Respect of Leases of Land Act 18 of 1969 considered in
Kessoopesadh v Essop 1920 (1) SA 265 (A);
(b)
Deeds Registries Act 47 of 1937 (on unregistered long leases).
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19.
AGENCY
The problem area in this branch of the law relates to the requirements of agency
by estoppel or ostensible authority. The question that remains unsettled and
unclear is whether negligence is a requirement of ostensible authority. See NBS
Bank Ltd v Cape Province Co. (Pty) Ltd 2002 1 SA 396 (SCA) and Glofinco v
ABSA Bank 2002 (6) SA 470 (SCA).
Another related problem is the legal relationship between an agent and an
undisclosed principal vis-à-vis third parties. Is the liability of an agent and an
undisclosed principal cumulative or alternative? In other words is it competent
for a third party after suing the agent and after the judgment against the latter has
been taken, to proceed against the principal once the latter becomes known to it?
See the case of Talaccchi & Another v The Master and others 1997 1 SA 702
(T).
The court criticized the views of academic writers such as Professors
Joubert and Kerr.
19.1
The nature of agency
According to Michele Havenga1 the concept of agency arises when one person,
the agent concludes a juristic act for or on behalf of another, who is called the
principal, with the result that a legal tie (vinculum juris) arises between the
principal and a third party or third parties.
Hosten et al2 refer to agency or representation. The latter refers to instances of
purely juristic representation e.g. parent and child; curator at litem
and the
person he or she is representing etc. We shall deal with these under the sources
of agency.
1
2
“The Law of Agency” in Peter Havenga et al General Principles of Commercial Law, Juta,
(1991): 157.
Introduction to South African Law and Legal Theory, Butterworths, (1997), 730. See also
AJ Kerr The law of Agency, Third edition, Butterworths, (1991): 3 who states that the aim of
the appointment of an agent is the performance of a service for the principal. See the
sources considered in the fourth edition.
Law of Lease and Agency 2008
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AJ Kerr states that in legal contexts the word agent is most commonly used of a
person whose activities are concerned with the formation, variation or termination
of contractual obligations and agency has a corresponding meaning.
19.2
Origin and brief historical development of the concept
In the Fourth Edition of Wille’s Principles of South African Law, Juta & Co (1956)
p435 it is recorded that our law of agency is a combination of the Roman-Dutch
law of the contract of mandate and the modern English principles of commercial
agency. See also the historical development of the concept described in De
Villiers and Macintosh The Law of Agency in South Africa, Third Edition, Juta &
Co. p 4 as well as the comments of Innes CJ in Blower v Van Noorden 1909 TS
890 at 897. “At the end of the 17th century the law of Holland had reached an
interesting stage in the gradual development of what has since been accepted in
all countries as the modern doctrine of agency. Starting from the principle of the
civil law, that an agent was always personally liable on his contracts as such, and
that even the remedy subsequently given against the principal was in theory
regarded as founded upon an obligation accessory to the obligation of the agent,
the Roman-Dutch lawyers yet recognized that the employment of agents was
essential to the transaction of commercial business and that their services would
never be freely available if they were held liable upon the contracts into which
they entered in their representative capacity. And hence the idea evolved that
the principal and not the agent was, as a general rule, the person upon whom
liability ought to be imposed by such contracts… But to the general rule thus
enunciated certain exceptions were recognized. Voet (ad Para 14.3.6) states
that they were three in number. The agent was liable when he bound himself
personally on behalf of his principal. When he contracted with a person who did
not know that he was an agent and who dealt with him as principal and when
though he contacted as an agent, his authority to do so was duly and properly
repudiated by the alleged principal.” See De Villiers and Mackintosh p 9 on the
differences between the mandator and the agent.
Law of Lease and Agency 2008
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At page 11 the authors state that the essence of the modern view of agency is
that there must be a third party in contemplation and that the agent acts purely as
a channel bringing the principal into legal relations of a contractual nature with
the third party. “The acts of the agent are done in the name of the principal and
are deemed to be the acts of the principal himself ...”
The following caveat found in De Villiers and Mackintosh at page 12 should be
kept in mind when studying our law of principal and agency: “to a certain extent
the attempts to coalesce the Roman-Dutch law and English systems have been
beneficial but the guiding principle nevertheless still remains that the law of
principal and agency in South Africa is basically portion of South African law and
the determination of problems arising in connection therewith must take place as
far as possible in accordance with, and against the background of the principles
of the general Roman-Dutch law applying in South Africa and particularly the
principles regulating contractual relations.
19.3
Legislation
An important legislation passed during the post-apartheid period in this area has
been the Estate Agents Amendment Act 90 of 1998.
The Act provides for
various matters, inter alia, revising the objects of the Estate Agency Affairs Board
which are to maintain and promote the standard of conduct of estate agents; the
regulation of fidelity fund certificate and the substitution of section 34A of the
Estate Agents Act 112 of 1976, the Close Corporations Act 69 of 1984,
Convention on Agency in the International Sale of Goods Act 4 of 1986.
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LEASE AND AGENCY ASSIGNMENT
DUE DATE: TO BE ANNOUNCED
NOT MORE THAN 1 000 WORDS
Mr JZ Dondo of No. 10 Kobi Street, Joza, Grahamstown is a wealthy man who
owned two farms situated within 20 km from the city of Grahamstown. He gave
verbal instruction to Mr Dinah of JJ Estates CC to sell one of his two farms,
identified as Erf 1 Blue Bulls, Grahamstown. Mr Dinah introduced Mr T Jeff, a
managing director of ZEF Corporation who bought the farm for R2m for the ZEF
Corporation. Upon the conclusion of the deed of sale Mr Dinah sent Mr JZ
Dondo a statement of account for the payment of R200 000 being his
commission calculated at the rate of 10%.
Mr Dondo denies liability on the
grounds that Mr Dinah was not his agent as he lacked a written authority in terms
of the statute governing the sale of land. According to Mr Dinah at all material
times he acted in good faith expecting that any defect in his appointment could
be ratified. He further alleged that Mr Dondo was estopped from raising the lack
of written authority since the sale has been validly concluded.
You are required to comment on three issues pertaining to this transaction.
(a)
Is Mr Dondo’s denial of liability by reason of lack of written authority valid?
Refer to case law.
(7)
(b)
Is it correct that the defect in the agent’s appointment falls within the
rectifiable acts? Does the fact that the buyer was a company have any
bearing on the issue of written authority?
(8)
(c)
Comment on the issue of estoppel as well as the relevance of the
provisions of Estate Agents Act 112 of 1976 in this problem.
(9)
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(d)
When is an estate agent entitled to a commission? What criteria used to
determine and entitlement to a commission?
(11)
[35]
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LECTURES ON LEASE
Lecture No.1 on the Law of Lease
1.1
The nature of the contract: see the synopsis in your handout on leases of
movable property.
1.1.1 Reciprocal contract: Ntshiqa v Andreas Supermarket 1997 1 SA 184
(TK) and 1997 3 SA 60 (TK).
1.1.2 The legal position in Roman Law where it was known as Locatio
conductio and had three forms, namely, Locatio conductio rei (the letting
and hiring of a thing); locatio conductio operis (the contract of
employment) and locatio conductio operarum (the letting and hiring of
services).
1.1.3 The legal position in Roman Dutch Law and the current South
African law.
1.1.4 The relationship between the law of lease and the branches of the Law.
1.1.4.1 Law of Property and Lease
In the handout we demonstrated that a lease is a property right which
can either be ceded or hypothecated.
1.1.4.2 Lease and Contracts of Sale and Loan.
The National Credit has
blended lease of movables with a sale.
1.1.4.2.1
The contract of sale and the Huur Gaat Voor Koop. See Dr
Cooper The South African Law of Landlord and Tenant at
page 246 on the origin of the rule and its scope in the South
African Law. See the comparisons made between contracts
of loan and lease in the case of NBS Boland Bank v One
Law of Lease and Agency 2008
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Berg River Driver and Others 1999 (4) SA 928 (SCA) – see
Van Heerden DCJ’s obiter dictum concerning the validity of a
contract of lease containing a stipulation conferring a power
on one of the parties to fix the price or rental. See also
Benlo Properties (Pty) Ltd v Vector Graphics (Pty) Ltd 1993
(1) SA 179.
1.2
Proof of the existence of a contract of lease: see De Jager v Sishana
1930 AD 71, Schmidt v Dwyer 1959 3 SA 896 (C), Southernport
Developments 2003 (5) SA 665 (N).
1.2.1 Main source of the rules pertaining to the contract of lease
-
rules creating statutory naturalia. See also Pete’s Warehousing
and Sales CC v Bowsink Investments CC 2000 (3) SA 833 (ECD).
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LEASE AND AGENCY
Lease No.2
2.1
Essentials of the contract
2.1.1
agreement on the use and enjoyment of the leased premises.
2.1.1.1
commodus usus: see the Sishen Hotel case referred to in the
synopsis and the comments thereon by Professor Hawthorne
2000 THRHR 668.
2.1.2
Sweets from Heaven case and comment thereon by Kerr 1999
SALJ 116.
2.1.3
Identification of the leased property: see Kerr (2004) and Cooper.
2.1.4
The payment of rent: see, inter alia, Gibson (2003) 172-173
and Kerr (2004) and the cases cited therein.
2.1.4.1
The legal position where services will be rendered in lieu of cash:
Rubin v Botha 1911 AD 569 and Jordaan NO and Another v
Verwey 2002 1 SA 643 (E). See Kerr’s comment on this case in
Kerr (2004).
2.1.5
the period
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LEASE
Lecture No 3
Formalities and the various kinds of lease. On the creation of formalities in the
law of contract, see generally A J Kerr The General Principle of the Law of
Contract 6th Edition. The relevant cases on lease include the following: Eastern
Cape Provincial Government and Others v Contract Props 25 (Pty) Ltd 2001 4
SA 142 (SCA), Woods v Walters 1921 AD 303, SA Bus and Taxi Association v
Cape of Good Hope Bank Ltd 1987(4) SA 315 (C) and BLP Investments Pty Ltd
v Angels Precision Works Pty Ltd 1984 (4) 303.
3.1
Lease of movables. Formalities introduced by the National Credit Act.
3.1.1 immovables: validity inter pares-
3.1.2 Effectiveness against third parties
3.1.2.1
short leases; see generally s1(2) of the Formalities in Respect of
Leases of Land Act 18 of 1969 and Keesoopersandh and Another v
Essop and Another 1970 1 SA 265 A.
3.1.2.2
Long leases; see Hitzeroth v Brooks 1964 4 SA 443 and Mclennan
1969 SALJ 3 45.
3.1.2.3
Formalities introduced by the Rental Housing Act of 1999. On this
Act see the following: Mukheibir 2000 obiter 329; Thomas 2000
De Jure 235.
4.1
Categories of lease of immovable property
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4.1.1 short term lease and huur gaat voor koop rule:
see the explanation
of the rule in Genna-Wae Properties v Medico-Tronics (Natal) 1995 2
SA
926 (A).
4.1.2 Unregistered long lease: see The Formalities in Respect of Leases of
Land Act 18 1969 – huur gaat voor koop rule and the doctrine of notice.
See also the following cases:
De Jager v Shisana 1930 AD 71,
Schwedhelm v Hauman 1947 1 SA 127 (E).
4.1.3 Registered long lease:
see Deeds Registries Act 47 of 1937 which
describes long term leases as leases for ten years or longer.
4.1.4 Alternative common law land-use rights.
4.1.4.1
Partiarian lease: This is said to be a special kind of land lease
which applies to the use of agricultural land. The owner and the
lessee agree that the lessee shall farm the land against payment in
the form of a certain percentage of the crop or produce: see Lubbe
v Volkskas 1992 SA 868 (A).
4.1.4.2
Labour tenancy. Since 1996 this form of lease is governed by the
Land Reform (Lebour Tenants) Act 3 of 1996: see the case of Zulu
and Others v Van Rensburg and Others 1996(4) SA 1236 (LCC).
4.1.4.3
Lease hold – this form of tenure has been affected by legislation.
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Lecture No.4
Duration of a Lease
Cases:
Pareto Ltd and Others v Mythis Leather Manufacturing (Pty) Ltd 3
SA 999 (W); Ebrahim v Pretoria Stadsraad 1980 (4) SA 10 (T);
Tiopaizi v Bulawayo Municipality 1995 AD 317; Maharaj v Sing
1955 1 SA 4 (NBD); Enslin v Joubert 1910 AD 6 on computation of
time.
1.
Fixed period lease
Fulton v Nunn 1904 TS 123 – and Tiopaizi.
2.
Tenancy at will : Ebrahim case.
3.
Periodic Lease: Tiopaizi case.
4.
Hybrid lease
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Lecture No 5
Legal Obligation of the Lessor
1.
Duty to deliver the leased premises to the lessee.
Fourie NO en
Andere v Potgietersrusse Stadsraad 1987 2 SA 921 (A); Poynton v Cran
1910 AD 206 and Harlin Properties Ltd and Another v Los Angeles Hotel
Ltd 1962 3 SA 143 (A).
2.
Duty to maintain
Heerman’s Supermarket (Pty) Ltd v Mona Road Investments (Pty) Ltd
1975 4 SA 391(D), The Treasure Chest v Tambuti Enterprises (Pty)
Ltd 1975 2 SA 739 (A).
3.
Lessee’s remedies in respect of the lessor’s failure to deliver or
maintain the thing in a proper condition
3.1
Specific performance: Woods v Walters 1921 AD 303;
3.2
Claim damages: Woods case where Innes CJ referred to Farmers CoOperative Society v Berry 1912 AD 343.
3.2.1 the court can refuse to grant an order to effect repairs:
Blood’s Estate 1911 WLD 213.
Chancerry v
The lessee may effect the repairs
herself for himself and recoup the same from the rent due. See also
the case of Poynton v Cran 1910 AD 205 and Harlin Property case.
3.3
Reduction of the rental.
Ntshiqa v Andreas Supermarket. (full bench
decision) and Arnold v Viljoen 1954 3 SA 322.
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4.
Duty not to disturb the lessee:
Soffiantini v Mould 1956(4) 150 (D);
Sishen Hotel case, Aggouras v Mac Farlane 1943 CPD 103.
5.
Warrant against eviction or judicial disturbance:
Baum v Rode 1905
TS 66 Glathaar v Hussan 1912 TPD.
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Lecture No 6
Duties of the Lessee
6.1
Duty to pay rent
6.1.1 Place of performance: Venter v Venter 1949 1 SA 768 (A).
6.1.2 Nature of Rent
Jordaan NO and Another v Verwey 2002 SA 643 (EC)
6.1.3 Withholding of Rent
Sapro v Schlinkman 1948 2 SA 637 (A); Arnold v Viljoen 1954 3 SA
322 (C). Ntshiqa’s case.
6.2
Lessor’s remedies
6.2.1 Landlord’s tacit hypothec
And its limitations: s 2 of the Security by means of
Movable
Property Act 57 of 1993.
6.3
Duty of Proper use and care
6.4
Duty to restore the property at the end of the lease and remedies.
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LECTURE NO 1
AGENCY
9.1.1 Definition
Gibson South African Mercantile and Company Law 8th Edition at 200 defines
agency as contract in terms of which one person (the agent) is authorised and
usually required by another (the principal) to contract on the latter’s behalf with
third person.
9.1.1 Two meanings of the term agency : See Wille’s Principles of South African
Law 9th Edition at 984; Michele Havenga in Peter Havenga et al General
Principles of Commercial Law 5th Edition 271; Totalisation Agency Board,
OFS v Luvanos 1987 (3), SA 283 (W); Commissioner for Inland Revenue
v Wardrag Arbestos (Pty) Ltd 1995 2 SA 197 (A), Pase Real Estates (Pty)
Ltd v Wilson 1983 (3) SA 753 and Adcork – Ingram Laboraties v SA
Druggist Ltd 1983 2 SA 350 (T).
9.1.2 Direct and Indirect Agency
9.1.3 Mandate
See generally D H Van Zyl “Mandate and Negotiorum Gastio” Vol 17 LAWSA
paras 2-35 and General Principles of Commercial Law pp 271-276.
9.1.4 Representation
9.1.4.1
Authority (Agency power)
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B S Markesinis and RJC, An outline of the Law of Agency,
Second Edition, Butterworths 1986 at page 7.
Agency power
1.1
The concepts of the power and authority
B S Markesinis and R J C Munday, An Outline of the Law of Agency,
Second Edition, Butterworths (1986) at page 7 describe agency as poer –
liability relationship between two persons – the principal and the agent.
They quote with approval Professor Dowrick (The relationship of Principal
and Agency (1954) 17 MLR 24 at 36) statement that the essential.
Agency
11.
Different kinds of agents. See generally Gibson (2003: 211-213) AJ Kerr
third ed and Wille’s Principles of South African Law 987-988.
11.1
Auctioneer:
Hofmeyer and Son v Luyt 1921 CPD 831; Mounton v
Wessels 1951 (3) SA 147 (T); Meikle and Co Ltd v Von Eyssen 1950 (2)
SA 405 (T).
11.2
Brokers (There are various types of Brokers): Benoni v Gundelfinger 1918
TPD 452; Durr v ABSA Bank Ltd 1997 (3) SA 488 (SCA); Robinowitz and
Another NNO v Ned-Equity Insurance Co Ltd and Another 1980(1) SA 403
(W); Dicks v South African Mutual Fire and General Insurance Co Ltd
1963 (4) SA 501 (W) and House Calls Projects CC and Others 1995 (3)
SA 589 (T)
11.3
Estate Agents: Borsh v Flower Box (Pty) Ltd 1971 (4) SA 640; Michael v
Vermuelen and Another 1971 (1) SA 442 (TPD); Glasson v Peace Real
Law of Lease and Agency 2008
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Estate (Pty) Ltd 1969 (3) SA 113 (D). See also Estate Agency Affairs Act
112 of 1976 and Estate Agency Affairs Board v McLaggan and Another
2005 (4) SA 531 (SCA).
13.
The legal obligations of the principal and agent vis-à-vis third
parties.
13.1
The position of the Principal
13.1.1 Different types of principals: named, unnamed and undisclosed principal.
See generally A J Kerr The Law of Agency, Fourth Edition Part 5.
13.1.2 Named Principal.
13.1.3 Unnamed Principal.
13.1.4 Fictitious Principal.
13.1.5 On behalf of a company not yet incorporated.
Cases:
Cullinan v Noordkappelandse Artappel Kemmoekwerkers Ko-operasie Bpk 1972
1 SA 761 (A); Karstein v Moribe 1982 2 SA 282 (T); Natal Trading and Milling Co
Ltd v Inglis 1925 TPD 724 and Talachi and Another v the Master and Others
1997 1 SA 702 (T). Sasfin Bank Ltd v Soho Unit 14 CC t/a Aventura Eiland 2006
(4) SA S 13 (TPD).
13.2
The legal position of the agent
13.2.1 The agent acting without authority or in excess of authority on behalf of
the principal: Blower v Van Noorden 1909 TS 890.
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13.2.2 Agent acting within authority on behalf of a named principal: Howard’s
Debt Collecting Agency v Haarhoff 1925 TPD 272
13.2.3 Agent acting on behalf of an undisclosed principal (see the cases referred
to under the principal’s relationship with third parties)
13.2.4 Agent acting on behalf on a non-existent principal or one lacking in
capacity. Akromed Products (Pty) Ltd v Suliman 1994 (1) SA 673 (T) and
Kantey & Templer (Pty) Ltd v Van Zyl NO 2007 (1) SA 610 (CPD).
13.3
Duties of the Principal.
Kantey & Templer (Pty) Ltd and Another v Van Zyl NO 2007 (1) SA 610
(CPD)
13.
The relations between the Principal and Agent and Third Parties
14.
Termination of Agent’s Authority
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