CONTRACT OF SALE

A sale is a contract in which one person, called the seller/vendor, promises to deliver a thing/
merx to another person called the purchaser/vendee, with the purchaser agreeing to pay a
price/pretium.

A contract of sale may be made orally or in writing. Where the parties agree to reduce it to
writing the contract becomes conditional and therefore its actionability arises when it is
reduced to writing. (See Mhute v. Chifamba 1999 (2) ZLR 115)

NB: The agreement reached constitutes the sale, neither delivery nor payment is important
for a valid sale.

There are 3 requirements for a valid sale;

1. Thing/merx
2. Purchase price/pretium
3. Meeting of the minds/ consensus ad idem

Consent

Consensus involves the intention and reciprocal agreement to buy and sell. Clear intention for
an exchange of property for a price must be present. Consent has 3 important ingredients

1. Consent must be rational (The parties must be able to enter into an agreement, etc)
2. Consent must be free and not induced by fraud, undue influence or duress
3. The parties must mutually communicate the intention of contracting to sell (there
should be a firm offer and acceptance)

Subject matter of the sale

The merx must be defined and must be ascertainable. The parties must be in agreement as to
the merx. The courts have tended to follow a liberal approach in disputes involving the
identification of the merx.

H v. T 1938 SR 89

Addition of words such as etc in a contract of sale and in the description of the merx, was
held not to invalidate a sale.

(See Regenstein v. Bravo Investments 1959 (1) R&N 393, R v. AJ Construction 1964
RLR 456)

NB: One may be guided by trade practices, issue of intention of the parties and if the
additions are immaterial.

The following can be sold.

1. Expectation or hope
 2. A thing not yet in existence (which may not be necessarily expectation or hope)

3. Unascertained goods may be sold

4. Goods to be manufactured

5. The property of a third party (a sale involving stolen goods is valid in law, however,
ownership will not pass, it will only pass with consent of the original owner)

6. Property subject to litigation may be sold. That property may not be sold to litigating
lawyers.

The following cannot be sold,

1. Things owned by the buyer

2. Things prohibited by law

3. Things subject to litigation cannot be sold by a client to his lawyer

4. A thing that unknown to the parties has seized to exist

5. Public property

6. A right of a person still living

The concept of freedom of contract applies to sale and purchase transactions; one has
freedom to choose what to sell and to whom. The common law freedom of contract and
sanctity of contract is subject to statutory intervention e.g.

i. Prevention of Discrimination Act [10:12] prohibits discrimination in the sale of

immoveable property on the basis of race, tribe, place of origin, political opinions,
colour or sex.

ii. The Grain Marketing Act [18:14] confers monopoly on the Grain Marketing
Board in the sale and purchase of controlled products including the price thereof.

iii. The Control of Goods Act [14:05] delaminates the control of the distribution,
disposal, purchase and sale of certain controlled goods from time to time.

iv. Much recently SI 159A-2007 (Presidential Powers Temporary Measures

Amendment of National Incomes & Pricing Commission Act and Education
Act Regulations) seeks to further control increases on remuneration, rentals,
service charges, prices and educational fees. Section 17(b)(1) of those regulations
provides that the regulations take precedence over all other laws in Zimbabwe.
The regulations therefore purport to override the constitution (regulations are a
subject of jurisprudential debate because no law can claim to be superior to the
constitution of Zimbabwe in Zimbabwe). It is also interesting to note that the
regulations are a product of a Presidential gazette and not a constitutional
amendment. The trite procedure in the law of Zimbabwe is that the constitution
 can only be amended or repealed through the procedure set out in the constitution;
Presidential Gazettes are not such a procedure. It raises questions because it seems
to be ultra vires.

The Pretium

The price must be in current money, it must be fixed, certain and real. There must be
intention as to the real price. In the absence of express or implied agreement as to the price to
be paid there is no sale.

Smith v. Market Right HH 156-90

Held that whereas under Roman-Dutch law there can be no sale at a reasonable price, it may
be necessary to validate a sale where parties are able to come up with a reasonable price.

The position was summarised clearly by the Supreme Court

Chikomo v. Mukweza 1998 (1) 5841

It was held that there can be no valid sale unless the parties have agreed on the purchase
price. If it is not stated clearly then it must be stated implicitly and there must be an agreed
method by which the price can be ascertained provided this can be achieved.

The price must be expressed in money. If it is expressed in some other form e.g. goods or
services, it will not be a contract of sale. If the price is expressed partly in money and in
goods or services then it will only be a contract of sale if the money component is greater.

There is no sale if the price is left to one person or his nominee to fix. The price has to be
agreed by both parties.

Baxter v. Maxwell 1923 SR 113

It was held that a contract to sell milk at current ruling rate was impossible and therefore
void because evidence showed that it was not possible to calculate the current ruling rate in
that trade at that time.

Masses Consolidated Ltd v. C 1957 RLR 253

It was held that a contract to sell future goods at the then ruling rate was valid because it
was possible to calculate the ruling rate.

Common Law

By common law the parties may fix the price as high or low as they wish subject to the
limitation that the price must be real and serious. This is the basis of the old laesio enormis
doctrine which allowed rescission of sale were price was less than half or more than double
the value of the merx (rescission and not seeking cancellation of the sale)

 Rescission – going back to the status quo

  Cancellation – compensation e.g. damages, etc

The doctrine was abolished in Zimbabwe with the amendment of the General Laws
Amendment Act [8:07] (Section 8). In practice it is not possible to repeal the doctrine.

Lambs v. Walter

It was held that a shocking disproportion between the price and value might entitle one party
to rescind on the basis of implied fraud.

The Control of Goods Act also purports to limit the common law freedom to fix prices in
sales involving controlled goods as defined in the act.

Once the 3 elements are met, a valid contract of sale comes into being. It does not follow that
ownership has passed at this stage because the rights between the parties are still personal
rights (rights via the contractual relationship) – vacant possession.

Passing of Ownership

For ownership to pass, the following conditions have to be met

1. There must be intention by the seller to pass ownership and a related intention by the
purchaser to receive ownership upon paying the pretium (Intention to pass and receive
ownership)

2. The seller must be owner of the merx. In law one cannot pass on rights that one does
not possess (nemo dat qua non habit). The true owner can always vindicate the goods
from whoever is in possession (rei vindicatio)

R v. von Kotzee 1936 SR 130

It was held that a purchaser commits theft were without intending to purchase the
merx sells it to a third party.

3. There must be a valid contract of sale. In cash sales, the pretium must be paid before
ownership passes. In credit sales delivery and other requirements depending on the
contract would be sufficient to pass ownership. Unless otherwise agreed all sales are
presumed to be for cash in which case the seller has the right to demand payment or to
reclaim the merx within a reasonable time. What is a reasonable time depends on the
circumstances of each case.

However Section 15 of the Insolvency Act presupposes a reasonable period of 10

days.

Parties can agree to delay passing of ownership till a later date for convenience.

NB: Where immoveable property is sold by a non-owner, ownership may eventually

pass on to the purchaser if the purchaser has been in possession of the property for 30
uninterrupted years (Ownership by Prescription)
 Where payment of the pretium is by way of a cheque, ownership does not pass until
the cheque is honoured. Where a cheque is honoured acquisition of property is with
retrospective effect.

4. The merx must be delivered.

Passing of Risk

Risk relates to the destruction or damage of the merx as well as profit of the merx. Under
Roman-Dutch law risk generally passes to the purchaser when the contract of sale is
concluded. The purchaser in such cases has to pay the pretium even when the merx is
destroyed. The purchaser cannot plead supervening impossibility.

In modern practice risk passes if the contract is perfecta (when the contract is concluded
or when involving unascertained merx, as soon as property of the contract description has
been appropriated to the contract)

There are exceptions to the risk rule;

1. Risk does not pass were the sale is subject to a supervening condition no matter how
trivial the condition is.

2. The parties may agree that the risk rule must not apply to them.

3. Negligence of the seller

4. Merx having destroyed by a third party.

5. Where pretium has not been fixed.

Modes of Delivery

Immovable property is delivered by registering the names of the purchaser on the title deeds
of the property in terms of the Deeds and Registry Act. With movable property there is
either actual delivery or symbolic delivery.

Physical delivery is the actual movement of the merx from the seller to the purchaser.

Fictitious delivery occurs where the actual delivery is difficult, impossible or unnecessary. It
means the merx stays where it is at the time of legal delivery and need not move.

Constructive delivery takes the following forms,

a. Symbolic Delivery – this involves delivery, not of the merx itself but of some symbol
of the merx which allows the purchaser to take delivery, for instance handing over the
 key to the warehouse were merx is stored. (See Land Lease Finance Pvt Ltd v. C
1976 (4) SA 464).

b. Delivery with the long hand (Traditio longa manu) – It takes place in the form of
pointing out the merx to the purchaser and giving the purchaser the right to remove
the merx at his own convenience. It is normally applied in circumstances were the
merx is bulky or where there are special government regulations.

c. Delivery with a short hand (Traditio brevu manu) – It happens were the purchaser is
already in the physical possession of the merx and then subsequently takes delivery as
the owner.

d. Atonement – Occurs were an agent has possession of the merx but continues to hold
the merx, not for the seller, but for the purchaser.

e. Costitutum Possesanum – The seller remains in possession of the merx as the agent of
the buyer (See ex parte Smith 1896 SR 92)

NB: Under Roman-Dutch law there is no sale based on a reasonable price. However there
are exceptions.

Duties of the Vendor

1. The duty to take care of the merx. Until delivery the vendor must take proper care of
the merx even if risk has passed to the purchaser. Seller liable for any loss caused by
his wilful act or negligence. If delivery is late because of the seller’s fault then the
vendor is only responsible for gross negligence. The buyer can claim damages, but if
damage to the merx is extensive he is allowed to cancel the contract. (See Fruner v.
Maitland 1954 (3) SA 840)

2. Duty to deliver the merx. It must be delivered at the stipulated contractual time; if no
time is stipulated then delivery must be done within a reasonable time. The quantity
delivered must not be more or less than what was contracted. Where the seller has
supplied more than the required merx the purchaser can either reject the entire merx in
its totality or accept it on condition that he would be able to sue and recover for
damages occasioned to him (rescission or damages). Where the merx delivered is less
than the agreed quantity, the buyer may reject it in totality or accept the delivered
portion of the merx on payment of a pro rata pretium. If there has been mixed
delivery, the buyer may reject the whole package or may opt to sort them out and be
paid damages for doing so (rescission or damages). If there is no delivery at all and
delivery is material to the contract, the buyer may opt out of the contract with or
without damages; alternatively the buyer may seek specific performance of the
contract. The other option open to the buyer is simply to reclaim the purchase price.
 3. The seller has a duty to guarantee against eviction. All contracts of sale have an
implied warranty against eviction. The seller promises that the buyer would not be
disturbed in his possession of the merx. This is what is referred to as vacant
possession. It arises were the merx is destroyed in part or in whole, through the
conduct of third parties. The seller is always presumed to be the bridge in which no
third party is allowed to cross with a view to disturb the purchaser. Where eviction
becomes imminent, the purchaser must instantly advise the seller to enable the seller
to protect the buyer’s rights accordingly. The warranty against eviction would not be
open to the buyer in situations where the buyer himself is responsible for his eviction.

a) In circumstances were the buyer knows that the merx is owned by a third party
and the third party comes to evict him

b) Were the cause arises after the sale

c) Negligence by the buyer to other people and his peace is disturbed by these
people, even eviction

It is a breach of contract for a seller to fail to guarantee against eviction. Buyer is

entitled to ordinary remedies available for breach of contract.

4. Seller has a duty to guarantee against defects. Generally the buyer must be given the
opportunity to inspect the merx and see if it tallies with what was contractually
agreed. If the merx does not tally then the buyer is entitled to reject the same as the
seller would have failed to effect delivery. Defects may be patent or latent. A patent
defect is one that must have been obviously seen by an ordinary purchaser at the time
of the sale. A buyer who, at the time of sale, inspects the merx when it is suffering
from a patent defect cannot complain when such a merx is subsequently delivered to
him. Where the buyer has not inspected the merx, his remedy is dependent on whether
the merx takes the form of ascertained goods or unascertained goods. If the merx was
ascertained, the purchaser is at liberty to reject it on delivery. If it was unascertained
then the buyer’s remedy is aedilition in nature.

Aedilition remedies

Latent Defects – These are hidden defects. It is not the seller’s duty to guarantee against
latent defects. To protect themselves sellers normally invoke voetstoots clauses which limit
the seller’s liability.

Section 5(1) (d) of the Consumer Contracts Act says that a court may find a consumer
contract to be unfair for the purposes of this act if the consumer contract excludes or limits
the obligations or liabilities of a party to an extent that is not reasonably necessary to protect
his interests.

Elstone v. Dicker 1995 (2) ZLR 375 SC

The respondent bought a house from the late mother of the appellant. Before the sale a crack
in the building was observed by the buyer, but the seller described it as minor and mentioned
no others. Her son, the appellant, had lived in the house for several years and had noticed
several cracks, which he said were progressive. They had been filled in as they appeared, but
not professionally.

When the sale took place, the agreement included a condition that the property was sold as it
stood. It was also recorded that where cracks had appeared they had been temporarily
repaired. After the buyer moved in, however, major cracks started appearing at the end of the
rainy season. All were old cracks which had been previously patched up and plastered over.
Experts were called in to assess the damage and as a result major repair work to the
foundations of the house was carried out. The buyer sued the seller’s estate for the expenses
and succeeded in the High Court.

On appeal:

Held, that to establish the seller’s liability for the defect complained of, the purchaser must
show directly or by inference that the seller actually knew of the defect. It was clear from the
evidence that the seller must have known of the defects at the time of the sale and deliberately
refrained from disclosing them. Even if she had been unaware of the exact cause of the
cracking, she must have appreciated that there was something remiss with the structure.

Held, further, that the duty on the seller of the property, notwithstanding legal consequences
which flow from the fact that the sale was voetstoots (which would otherwise exculpate the
seller from liability in respect of all defects of which she was genuinely ignorant up to the
time of sale), was to disclose to the purchaser the existence of all defects of which the seller
was aware, but which the purchaser did not know of at the time of sale. The duty embraced
the full disclosure of the progressive and recurring nature of the defects, regardless of the
voetstoots provision.

Appeal dismissed.

Goods sold voetstoots are goods sold as they stand by a seller who does not want liability if
the goods prove defective in quality. If however the seller knows the goods are defective and
fraudulently conceals this to the buyer then the sale won’t be considered voetstoots. The
purchaser can cancel the contract and seek damages or a reduction of the purchase price.

Where there is doubt as whether a sale is voetstoots or not there is a presumption against a
sale being voetstoots. There is also a presumption that a defect that manifests itself shortly
after the sale of the merx existed at the time of the sale.

The buyer’s remedies for latent defects are generally non-contractual in nature. This is
because liability arises not because of an implied warranty against latent defects but by
operation of the law from the aedile edicts. It is not necessary to prove that the seller had
knowledge of the defects because the remedy arises ex lege.
Buyers’ remedies in the event of latent defects in the merx are not contractual but delictual.
They are called aedilition remedies. Liability arises not from an implied warranty against
latent defects but by operation of law from the aediles edicts. It is therefore not necessary to
prove that the seller had knowledge of the defects. It is also possible that contractual relief
may be available in circumstances where there are latent or aedilition remedies.

NB: Aedilition damages – seeking rescission. Approach a question in the widest

approach, do not narrate – analyse, read aedilition remedies.

It can happen that in some cases the existence of an aedilition remedy is also a breach of
warranty in which case one must choose the most appropriate remedy.

Aedilition damages may be

1. Actio rhedhebitoria

2. Actio quanti minoris

Actio Rhedhebitoria

It entitles the purchaser rescission or rhedhebition (looking to achieve status quo) when the
merx does not live up to the dictum ad promisum and where restitution is possible. It’s
possible for parties to exclude this remedy. (See R v. C 1973 (1) RLR 225; C v. R 1948 (1)
SA 413; P v. P 1973 (3) SA 397)

The statement can be read in conjunction with Consumer Contracts Act especially with
regard to exemption clauses. Also look at the voetstoots clauses.

Actio Quanti Minoris

This is an action for the reduction of the purchase price. It is normally available for a buyer
entitled to rhedhibit but does not do so for the following reasons;

a. He may not be able to give restitution

b. The defects in the merx may not be sufficiently serious to justify rhedhebition

c. Where a buyer who is entitled to rhedhibit does not but insists on the reduction of the
price

The relief that is available is the reduction of the purchase price, what they call the
aestmatoria.

Original Market price – Price in Defective Form = the price to be paid by the purchaser

Consequential relief is the hybrid of the merx and the prospective profits.

Factors Persuading Contractual Relief

In some cases contractual remedies are a preferred remedy than aedilition remedies in
particular where the following circumstances exist;

1. Where the seller knows of a defect and either misrepresents its absence or fails to
disclose its presence. Breach of contract may be a better relief because it entitles the
purchaser to consequential damages (e.g. if the purchaser wronged was a farmer the
value of cattle and their prospective profits)

2. Where the seller actually manufactures the article himself or makes it his business to
deal in such articles. A breach arising there from entitles the purchaser consequential
damages. This is part and parcel of the Pothiers Rule. (See L v. W 1949 SR 216; J v.
S 1974 (1) RLR 92)

3. Where the existence of a defect in the merx amounts to breach of a tacit term of the
contract, in this case the buyer can opt for contractual damages by way of
consequential relief.