The South African law of sale is an area of the legal system in that country that describes rules applicable to a contract of sale (or, to be more specific, purchase and sale, or emptio venditio), generally described as a contract whereby one person agrees to deliver to another the free possession of a thing in return for a price in money.Wille's Principles of South African Law, 9th Edition at 889.See also Kleyhans Bros v Wessels' Trustee 1927 AD 271.
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.Paul D 18.1.1.2. There is no sale without a price.Ulpian D 18.1.2.1. There can be no sale without a thing to be sold.Pomponius D 18.1.8.pr.
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.Commentarius ad Pandectas 18.1.1 (Gane's translation).
In South African law today, the definition of a contract of sale remains virtually the same. In Treasurer-General v Lippert,(1883) 2 SC 172. 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).Sale of Goods in SA at 1.
Remember that a sale contract is a special form of contract, and so all law discussed under the article on the South African law of contract 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.Wasmuth v Jacobs 1987 (3) SA 629 (SWA) at 633D. 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:
the subject matter of the sale and its essential characteristics; 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.Hamburg v Pickard 1906 TS 1010. The general requirement is that the subject matter of the sale should be
defined and ascertainable (although the merx need not be entirely specific);See, on this, JR 209 Investments v Pine Villa Country Estate 2009 (4) SA 302 (SCA). 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.D 18.1.34.1; Voet 18.1.13. 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 res sua 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.See Cawcutt v Teperson and Saacks 1916 CPD 406. It is possible, however, for the purchaser to buy rights in his own property that he does not yet hold.See Hilton Quarries Social and Athletic Club v CIR 1956 (3) SA 108 (N).
Unascertained goods may form the subject matter of a valid contract of sale. Such sales may be termed generic sales, or emptio generis. Future goods, 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.For a discussion of these two forms, see Hamilton-Browning v Denis Barker Trust 2001 (4) SA 1131 (N) 1139.
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.See Tulloch v Marsh supra. 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.A Treatise on the Contract of Sale para 5.
These sorts of contracts are known as emptio rei speratae. 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.See Richtown Development (Pty) Ltd v Dusterwald 1981 (3) SA 691 (W).
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.D 18.1.8.1.
Such a contract is a contract emptio spei.See also Pothier Sale para 5. 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.See Kleynhans Brothers v Wessels' Trustee 1927 AD 271.
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,s 60 of the National Health Act 31 of 2003. 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.Institutes 3.19.1.
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 Theron Ltd (in Liquidation) v Gross,1929 CPD 345. 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.347.