MAGAU LONDANI

COMMERCIAL LAW
COL 1242
A time bar clause

is a provision in contracts that limits the time period within which parties can initiate legal
action. Its relevance lies in providing certainty and finality, preventing indefinite liability for
parties involved.

Over insurance and under insurance

Over-insurance occurs when an asset is insured for more than its actual value, leading to
excessive premiums without additional benefits. In contrast,

under-insurance happens when coverage is less than the asset’s replacement cost, risking
significant financial loss during claims. The key difference is that over-insurance results in
wasted premium payments, while under-insurance can lead to inadequate compensation
during a loss

Huut gaat voor koop rule

The Huut gaat voor koop rule In South African law emphasizes that the buyer of a movable
asset acquires ownership upon conclusion of the sale agreement, even if the seller retains
possession.

Functions of a credit regulator include

• overseeing compliance with credit laws

• and protecting consumer rights,

• while a credit tribunal adjudicates disputes between consumers and credit

providers,
• ensuring fair practices in lending
Contract of sale

What is a contract of sale

It is a contract that is between the seller and the buyer. The buyer promises to buy , how by
paying …the seller promises to deliver .
There are three essential elements in a contract of sale.
 Agreement on the identity of a particular thing/Merx or res vendita
This is the agreement on where the buyer says “this is what I want , he or she describes
what they want and the seller should be having it .
 Agreement to pay particular price .
Both parties should agree on how much the buyer should pay. The price is determined by
the seller .
 Agreement to deliver.
Parties agree on the delivery of the thing. Obviously the seller is the one who has this duty
to deliver to the buyer .
Sales distinguished from other transactions
Sale should be distinguished from other transactions such as barter where people
exchange goods ..I give you a TV You give me a cow….this is not a contract of sale .
Expropriation of land for public use. Let’s say the Government want to construct a role
passing through your home and they pay you for that piece of land . That is not a contact of
sale.
Another one is Donation . “I am dating R100 000 to this community to build a clinic “ this
is not a contact of sale.

Duties of the seller

_Duty to take care of a thing till it is delivered_
Explanation: The seller must protect and preserve the item until it’s handed over to the
buyer.
Scenario: Tom agrees to sell his vintage guitar to Alex. Tom stores the guitar in his attic, but
a leaky roof damages it before delivery. Alex is unhappy when he receives the damaged
guitar.
Question: Did Tom breach his duty to take care of the guitar?
Remember to take good care of the item you’re selling until it’s delivered to the buyer. This
includes storing it safely and protecting it from damage.

_Duty to deliver the thing to the buyer_

Explanation: The seller must give the item to the buyer on the agreed date and time.
Scenario: Rachel buys a new phone from an online store, with a promised delivery date of
March 15th. However, the store delays shipping, and Rachel doesn’t receive the phone until
March 25th.

Question: Did the store breach its duty to deliver the phone on time?
Ensure you deliver the item to the buyer by the agreed-upon date and time. Late delivery
can lead to buyer dissatisfaction and potential legal issues.

_Duty to give free and undisturbed possession_

Explanation: The seller must ensure the buyer can use the item without legal issues or
interruptions.
It has two forms
1. Free from encumbrances such as tax debts , fines , outstanding fees etc.
2. Free from eviction and physical interference
Scenario: Jack buys a house from Sarah, but Sarah’s ex-husband claims ownership of the
property, leading to a lengthy legal dispute.
Question: Did Sarah breach her duty to give Jack free and undisturbed possession of the
house?
Before selling an item, ensure you have clear ownership and no outstanding legal issues.
This protects the buyer from potential disputes and interruptions.
Duty to deliver the thing free from defects:
The seller must ensure the item is in good condition and functions as intended, without any
defects or flaws that could affect its performance or value.
Latent Defect:
A hidden flaw or defect that is not visible or apparent during a reasonable inspection, but
becomes apparent later.
Example:
- Buying a used car that appears to be in good condition, but later develops engine
problems due to a hidden issue with the transmission.
- Purchasing a laptop that works fine initially, but later shows signs of a faulty motherboard
that was not detectable during initial inspection.
Patent Defect:
An obvious flaw or defect that is visible or apparent during a reasonable inspection.
Example:
- Buying a phone with a cracked screen that is clearly visible.
- Purchasing a pair of shoes with a broken buckle that is obvious upon inspection.

Duties of the Buyer:

1. Duty to pay the purchase price:
The buyer must pay the agreed-upon price for the item on time.
2. Duty to accept delivery:
The buyer must receive the item from the seller on the agreed-upon date and time.
3. Duty to pay the seller’s necessary expenses:
The buyer must reimburse the seller for reasonable expenses incurred due to the buyer’s
actions or delays, such as storage fees for late pickup.
Scenario:
Magau agrees to buy a vintage motorcycle from Small for $10,000. The sale agreement
includes a clause requiring Magau to pick up the motorcycle within 7 days. However,
Magau fails to do so, and Small is forced to store the motorcycle in a secure facility for an
additional 14 days, incurring storage costs of $500. Meanwhile, Magau sends a check for
$9,500, claiming that the motorcycle’s engine has a minor issue that reduces its value.
Small disputes this and refuses to accept the reduced payment.
Question:
Which duty (or duties) has Magau broken?
Answer:
Magau has broken two duties:
1. Duty to accept delivery: Magau failed to pick up the motorcycle within the agreed-
upon timeframe, causing Small to incur storage costs.
2. Duty to pay the purchase price: Magau sent a reduced payment of $9,500, despite
agreeing to pay $10,000.

Under the contract of sale, there are special sales that

deviate from the standard sale process. These include:

1. Instalment Sales:
A sale where the buyer pays the price in multiple instalments over a period of time. The
seller retains ownership until the final payment is made.
Example: Buying a TV with a “buy now, pay later” plan, where you pay a portion of the price
each month.
1. Sales by Auction:
A sale where goods are sold to the highest bidder through a public auction process, often
conducted by an auctioneer.
Example: Buying a piece of art or a rare collectible at a live auction house.
1. Sale in Execution of a Court:
A sale where a court orders the sale of a debtor’s goods to satisfy a creditor’s claim or
judgment.
Example: A court orders the sale of a person’s property to pay off an outstanding debt to a
creditor.
These special sales have unique characteristics and requirements, such as:
- Instalment sales: buyer’s risk of losing ownership if payments are missed
- Sales by auction: buyer’s risk of overpaying, and often “as-is” sales - Sale in
execution of a court: seller’s loss of control over the sale process
: Ownership.

Ownership must be transferred from the owner to the buyer . Ownership is only delivered
once the good or thing is received or delivered to the buyer. And it is it the buyers
possession.

: Delivery
is crucial in a sales contract as it transfers
ownership from the seller to the buyer.
Two types of delivery:
 1. Actual Delivery:
Physical transfer of goods from seller to buyer.

Example: Handing over a package to the buyer physically.

1. Constructive Delivery:
Transfer of ownership without physical delivery.
Subtypes of Constructive Delivery:
a. Symbolical Delivery:
Transfer through symbols or tokens. You give the buyer a symbol that yes indeed the
property is yours using a symbol. Another example is certificate of ownership.
Example: Delivering a key to a locked warehouse.
b. Delivery by Short Hand:
Transfer of something already in the buyer’s possession.
Example: Formalizing ownership of a product already being used. This is where the buyer is
already in position of the thing he is buying . EG , khuthadzo borrowed my PC , now he is
loving it and we then agree that he will give me R4000 and takes it .
c. Delivery by Long Hand:
Giving control of the goods to the buyer. Making it to his disposal .
Example: Transferring a deed or title to the buyer.
d. Delivery by Atonement:
Transfer when goods are with a third party.
Example: Authorizing a third party to hand over goods to the buyer.
e. Constitutum Possessorium:
Seller retains control, but buyer has ownership. The seller and the buyer reaches this
agreement that the seller can keep it .
Example: Seller stores goods for the buyer, but buyer has ownership rights. Example is
when I buy a cow but don’t have a kraal , I can say Vho Ndou as the seller should keep it for
me with his cows .

Warranties
The seller must warrant the buyer against eviction and not to be interfered or get disturbed
in the property.
However warranties against Eviction won’t apply when:
Parties agreed so that the seller should not be held liable
When the buyer was aware that the seller is not the owner (let’s say I buy your house from
your son , when you evict me would I complain while I knew before buying that it belongs to
you and not the son ? No.
.
Remedies available for sellers failure to take good care of the thing :
1. Refuse to accept delivery and say no I am not taking this damaged thing , it’s not what I
ordered.
2. Cancel the contact
3. And then claim cash pay or refund
4. Take the thing but claim damages
However the rule is that if the damage is not material or does not take away the property
main duty , you take it and claim damages .
Example Let’s say a car is a bit scratched on the side .

Remedies when the seller fails to make the thing sold available.
Specific performance – you go to court to demand for performance, so the thing is
available.
Cancellation of you’re the contract. You can just say no let’s agree ro balelana and cancel
the contact.
: Failure to give the buyer free and undisturbed possession can be by eviction.
Another important one is called SUCCESSIVE SALE when the seller sold the thing to
someone who then sells it again ..the first seller become excused once I sell the property I
bought since I am now the seller .
A person who buys from me cannot go to the original owner but should come to me .

: In a patent defects , breach of contract remedies are applicable. .

: There are aedilitian remedies available for latent Defects . Here are the Aedilitian
remedies.
1. Cancellation of contact, return of Purchase price and return of
property.(Action redhibitoria)
2. Reduction of purchase price (actio quantis minoris) The Aedilitian
remedies can be waived in two ways.
1. Voetstoots clause – where the buyer made it clear that that he is
buying the property as it is .
2. Waiver of rights by acceptance of article Remedies available to
the seller .
1. Cancellation of contact
2. Specific performance (demand action in court)
3. Damages