Contracts Law - Question 1

a. Issue:

What are the duties of Nicolway Investment Cars as the Seller in the instant case.

Principle:

  • Essentialia of Contract of Sale
  • Naturalia of Contract of Sale (Seller’s Duties)

Application:

“Lotz” has defined Contract of Sale as “An agreement which is reciprocal made between the parties to sell a particular thing where the parties have the intention to do so, this includes the buyer getting all the rights in the product delivered and the seller getting the price of the product.” Under South African law of contracts, a contract of sale is said to be valid when the general requirements of a contract are fulfilled. These general requirements include that the Consensus must be reached on the following three things:

  • The nature of the Contract which includes the intention of the parties to sell or buy the product.
  • The product which is being bought or sold which includes the merx.
  • The price of the product or the

In the case of Vasco Drycleaners vs. Twycross, the court clearly held that the nature of the contracts is determined by the intention of the parties to a contract and this intention can be seen from the duties of the seller and the buyer who have entered into a contract.

The Duties of the Seller:

When all the essentials or essentialia of the contract of sale have been fulfilled, what applies to the parties is the naturalia of the contract of sale which in general is known as duties of the sellers and buyers. The terms provided in the contract of sale entered into between the parties may be limited or excluded. The duties of the seller in this regard are as follows:

  1. Safekeeping of the things sold or the merx The duty of the seller starts when the contract is concluded and it ends when the product is delivered to the buyer. Until the time when the product is delivered to the buyer, the seller has the duty to protect the merx and take care of it. If in case, there is any harm caused to the merx as in the instant case where the front end of the car was cut off and replaced with another car’s, the buyer has the claim for damages as it is uncertain as to when this replacement of front end was done. It is possible that it was replaced when Samson paid the price of the car. In the case of Gengan vs Pathur 1977 (1) SA 862 (D), the Court held that this duty of the seller may be amended by an express agreement in this regard between the parties.
  2. Delivery of Ownership – The contract of sale creates an obligation on the seller to deliver ownership of the product or the merx to the buyer. It is not the contract itself which grants the ownership to the buyer but the contract enables the seller to grant ownership to the buyer and grants the buyer the right to take the ownership from the seller. However, these are subject to considerable fulfillment of the requirements of contract of sale including transfer of ownership. This was held in the case of Lendalease Finance Pty Ltd. Vs. Corporacion De Marcadeo Agricola 1976 (4) SA 464.
  3. PaymentHow the payment has to be made is to be determined by the parties entering into contract of sale. It is usually presumed that every payment is made in cash unless otherwise agreed by the parties.
  4. DeliveryIn the case of Eskom vs. Rollomatic Engineering (Edms) Bpk 1992 (2) SA 725 (A), it was held “to satisfy the requirements of passing the ownership or transferring the ownership, Delivery of the merx is an important ingredient.” Movable property is transferred by hand or by delivery in any manner but an immovable property is transferred by way of registration under registration of Deeds Act, 1937.
  5. Warranty against eviction and latent defectsIt is the duty of the seller to warrant the buyer against eviction, disposal and enjoyment of the product or the merx. Eviction can only be held valid when it is present at the time of a contract between the seller and the buyer. It is a clear rule of law that the seller would be held liable for any charge relating to the goods which relates to the third party if not disclosed prior to the transaction of sale. The latent defect means that any defect in the product or the merx which renders the product unfit as such in the instant case where a defeat device was installed in the car. After reasonable examination, it was discovered and hence the seller can be held liable.

Conclusion:

The seller that is Nicolway investment Cars would be held liable as it did not carried out its duties in a proper way. A defeat device was installed in the car which is illegal as well as front end of the car was replaced from the front end of another car.

b. Issue:

What is the validity of the contract between Samson Schumacher and Nicolway Investment Cars?

Principle:

  • Requirements of a Valid Contract
  • Effect of a Valid Contract

Application:

Under the South African Law of Contracts there are 6 general requirements or conditions which are to be fulfilled for a contract to be valid. These are as follows:

  1. There must be Consenses between the contracting parties – The first requirement for a valid contract is that the parties must have an intention to agree on all the terms and conditions of a contract i.e. the offer is made by one party and the other party accepts that offer. In some circumstances, silence can also be considered as acceptance. This was held in the case of McWilliams vs. First Consolidated Holdings Pty Ltd. 1982 (2) SA 1 (A). The intention to agree must be specifically expressed by the parties.
  2. Capacity of the parties to Contract – The second requirement states that the parties must have the legal ability to enter into a contract. Legal capacity means the ability of the person to possess certain rights and duties. In this regards, contractual capacity means “competence to create rights and duties by entering into contract with other persons.” A person entering into a contract must not be a minor, insolvent and of unsound mind.
  3. Formalities – Contract law in South Africa usually does not provide for formalities but specific performance requires the same, such as contract of sale or purchase. It is upon the parties that may agree upon the formalities which are to be done when concluding a contract.
  4. Legality – If any contract is illegal or unlawful, it will be void. If the terms of an agreement and or performance of contract are illegal or unlawful or violate the common law principles or any provision of statutory legislation, the contract or the agreement will not be enforceable. This was held in the case of Sasfin Pty Ltd. Vs. Beukes 1989 (1) SA 1 (A).
  5. Possibility – The terms and conditions laid down in the agreement must be possible of performance. There would be no obligations on the parties if there the performance of contracts is impossible to perform. For instance, if the product is destroyed at the time of conclusion of contract, the object does not exist, in this case contract will be void because it is impossible of performance.
  6. Certainty – The terms and conditions of the agreement or the contract must be certain and determinable. Due to uncertainty, a contract must be void. There would be no obligations on the parties if the terms of the agreement are uncertain.

Conclusion:

The contract between Samson and Nicolway Investment Cars was valid as it fulfilled all the requirements of the contract and the effect of a valid contract was made as provided by law.

c. Issue:

What are the legal remedies available to Samson against Nicolway Investment Cars?

Principle:

Remedies for breach of contracts

Application:

The parties to a contract can commit a breach of contract in many ways. However, breach can be committed by any of the parties to a contract. The ways in which breach may happen are as follows:

  • Mora Debitoris – The Debtor failed for timely performance of an obligation
  • Mora Creditoris – The Creditor did not timely receive the performance of obligation
  • Positive Malperformance – The Debtor has performed some illegal task while performing is duty or there is a defect in his duty
  • Repudiation – When a party manifests an intention that it will no more be a party to a contract.
  • Prevention from Performance – When due to the fault of either of the parties, the performance becomes impossible.

The innocent party has a remedy to rescind from the contract and claim restitution. The innocent party can also claim for damages if a breach has been caused by the other party.

  • If the innocent party is of a mind to continue the contract, he may claim remedies of specific performance or interdict.
  • If he wants to terminate the agreement or the contract, he can make use of cancellation remedy.
  • The innocent party can also claim for damages or compensation for the harm caused by the breaching parties.

Conclusion:

Samson can claim damages from Nicolway Investment cars for front end fault and for the installation of defeat device.

Contracts Law - Question 2

Issue:

Whether Sherman can sue Sun Coast Beach Hire Co. for the injuries caused to him?

Principle:

Ticket cases

Application:

Preferably, the customer peruses and comprehends the ticket and, by his lead in proceeding with the agreement (entering the film or sports ground, boarding a train) he gets bound to its terms, either in light of the fact that he genuinely consents to them or, if that can't be demonstrated, based on semi shared consent, since the provider is sensibly qualified for accept his consent from his end.

In the event that it is demonstrated that the client has read the terms of the ticket it isn't important to go further and demonstrate that he comprehended it so as to tie him to it. Nor, if the ticket alludes to another term (for example a railroad ticket alluding to the rail route guidelines) is it important to demonstrate that a client who read the ticket terms followed up the reference and read the second.

If it can't be demonstrated that the customer read the terms of the ticket he will by and by be limited by it if the provider did what was sensibly adequate, or sensibly fundamental, or everything sensibly conceivable, to cause him to notice the terms contained or alluded to in the report.

Conclusion:
Sherman can sue the company for injuries caused to him.

Contracts Law - Question 3

Answer No. 3: There is a contractual relationship between the principal and an agent. This contractual relationship is known as an Agency. An Agent is known as the “extension” of the Principal. In an Agency, the Agent represents the Principal in the contracts and their negotiations but he does not obtain any right or he does not incurs any obligation from entering into the contract as he enters into that particular contract on behalf of the principal and not in his personal capacity. An Agent physically enters into an agreement with the third party but actually the third party has entered into a contract with the Principal. These kinds of contracts are generally used by companies. There are some golden rules of agency laid down by Van Jaarsveld. These are as follows:

  1. There exists a tripartite relationship between the parties in case of agency as there are three parties involved.
  2. The Principal grants authority to the Agent to act on his behalf
  3. The right and obligations are on the third party and the principal and not on the agent.

The Principal can only held liable for the acts of the agent in the following two circumstances. These are:

  1. In case the agent is the employee of the principal and the fraud or delict is committed while acting in the duty of the principle.
  2. If the agent acts within the authority of the Principle to do an act and the act done by the agent was within the knowledge of the Principal. Held in Chatraprops 16 Pty Ltd. Vs. Silberman 2009 (1) SA 265 (SCA).
  3. The Principal would be liable for damages due to misrepresentation or fraud caused by the agent and the loss has occurred to the third party.

Apart from this, the Principle would not be liable for any act committed by the agent outside the authority of the Principal or outside the knowledge of the principal.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Law Assignment Help

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