Sale: Part 2 Flashcards
Under the CPA what is implied about the risk?
In terms of the Act, it is an implied term that the risk remains with the seller until delivery, unless otherwise expressly agreed.
When does profit pass to the buyer?
under CPA vs under common law?
Profit in the thing passes to the buyer at the same time as the risk
CPA: profit passes to the buyer on deliver
Common law: profit passes to the buyer when the sale is perfecta
Who’s duty is it to take care of the item until delivery?
The seller under both CPA and common law
Who’s duty is it to take care of the item until delivery?
The seller under both CPA and common law
Don’t confuse delivery with the actual transportation. Who’s duty is it to deliver items under common law and CPA?
Common law: the seller must make delivery BUT the buyer is liable for
the transportation costs including incidental costs
CPA: the seller must make delivery AND pay for the transportation
costs AND incidentals
what happens if res is damaged or destroyed after contract concluded but before date for delivery?
Seller’s improper care: breach of contact, seller is liable
Risk: risk issue
What does ‘risk’ refer to?
is the risk of accidental loss i.e. arising from damage to or destruction of the goods, or any legal disadvantage that attaches to goods, through no fault of the seller or buyer.
What does ‘benefit’ refer to?
refers to the fruits and other advantages that attach to the goods.
When does RISK and BENEFIT pass from seller to buyer, under CPA and common law?
CPA: When the contract is perfecta
Common Law: When goods delivered to the buyer
What are the options when faced with third party dispossession?
- Do not give up possession until dispossessed by an order of court
- He can give up the goods to the third party without a court order and without notice to the seller
What can the buyer claim from owner in case of third party dispossession? [2]
a claim against the seller under the implied warranty IF the third party had an indisputeable/undefendable title I.E. OWNERSHIP
- Cancel and Claim purchase price
- Any natural increase in the value of the article + Costs incurred in defending the action by the true owner + Any further loss as a result of the eviction but subject to general rules regarding contractual damages
If the buyer has made improvements to an item eg. New tyres to a car,
against who will he have a claim for those improvements?
Against the TRUE OWNER under UNJUSTIFIED ENRICHMENT
Define defects
An abnormal quality or attribute which destroys or impairs the utility or effectiveness of the thing for the purpose for which it was sold or for which it is commonly used.
The implied warranty against latent defects is a ___________ (residual) term.
implied
implied = residual
HOWEVER, even if they expressly ___________(that there is no implied warranty) , the ___________ will always be entitled to reclaim the ____________ price.
agree
buyer
purchase
What are situations in which an implied warranty does not apply? [3]
-If the seller KNEW that he was not the owner then a clause excluding the
warranty will be ineffective.
-If the buyer is aware that a third party had a claim to the article
- If the cause of evictions due to the unlawful act of a third party (eg. A thief), or an
accident, or an act of state (eg. Expropriation
Under the CPA what is the automatic right and what does it not seem that you can expressly exclude? [2]
Under the CPA:
* There is an automatic right to claim against the supplier even if the consumer doesn’t
defend the third party’s claim or give notice to supplier
* Does not seem that you can expressly exclude the warranty
Under the common law, who is liable for latent defects?
The seller is liable for any latent defects which existed at the time of the sale whether
he knew about them or not.
Latent = It is not obvious to the ordinary person upon a reasonable inspection.
When are characteristics that impair usefulness not = defects?
only if “Not a flaw which a reasonable person would expect to find in articles of that type, age and price.”
What is the VOETSTOETS clause?
It means the item is sold with defects and the buyer has no claim against the seller
under the implied warranty
Why include a VOETSTOOTS clause?
To protect against innocent/negligent failure to disclose.
Cannot contract out of fraud.
What are the two types of aedilitian remedies? [2]
i. Actio redhibitoria
ii. Actio quanti manoris
When is Actio redhibitoria used?
This is used where the defect is so serious that the reasonable purchaser would not have bought the item at all had he known of it i.e. MATERIAL defects.
Under Actio redhibitoria, what can be claimed?[4]
a) Return of the purchase price if paid.
b) Payment of all foreseeable and necessary sale expenses e.g. delivery costs, import
duty etc.
c) Payment of expenses incurred in examining the object to discover the defect
d) Expenses incurred in returning the object to the seller e.g. transport and possibly
storage
(Cancellation + restitution)
Under Actio redhibitoria, can consequential loss be sued for?
No, consequential loss/ contractual damages are not allowed
What is Actio quanti manoris?
Here the defect is such that a reasonable buyer , had he known of it would have paid
less(but he still would have bought it).
How is Actio quanti manoris applied?
The buyer is entitled to have the PRICE REDUCED to the market value of the object in its defective state at the time that the defect was discovered.
Under Actio quanti manoris, is action against consequential loss allowed?
NO consequential loss/ contractual DAMAGES are allowed.
What are the exceptions to consequential damages, under Com. law and CPA ?
Com. law: if the Seller is fraudulent
CPA S61: Producer/importer/distributor/retailer all liable for damages for consequential loss
UNLESS, unreasonable for distributer or retailer to have discovered the defect
under the common law the aedilition remedies can be excluded by _______
agreement , this is known as a _______________ clause
express
VOETSTOETS
What are other possible remedies for defective goods? [2]
- Where the seller has warranted that there are no defects then the normal remedies
for breach will be available, this would allow consequential loss i.e. damages in
contract. - Where the seller has misrepresented that the item was free of defects then the
remedies for misrep will be available . Note the misrep could be in the form of nondisclosure as seller has a duty to disclose any latent defects that he knew about , this
would allow one to claim consequential loss/damages in delict.
What is the implied warranty of quality under the act, CPA vs COM. law ?
CPA: Under this warranty, the consumer has the right to receive goods that are:
Of good quality and free of latent AND patent defects.
COM. Law: supplier is liable
What happens if good received were not of good quality and not free of latent and patent defect? [3]
Then the consumer has 6 months after delivery to return goods and is entitled
to:
- Have the item repaired or replaced or
- A refund of the full purchase
-NB! This is in addition to any further rights under the implied warranty against
latent defects under the common law
Under CPA, true or false, The producer, importer, distributor or supplier/retailer is liable for ANY harm caused by:
1. Supplying unsafe goods; OR
2. Defective goods; OR
3. Inadequate warnings provided to the consumer regarding any possible dangers
True
What is STRICT LIABILITY?
Even if the harm was not caused by any negligence or fault on their part
What is mean by ‘eviction’?
When dispossessed by someone who has a better right to possess than you have
The implied warranty against eviction is a ____________ term
implied
What must buyer do with eviction? [3]
- Inform seller & ask for assistance in contesting claim.
- If seller assists & lose case in court, can claim compensation from seller.
- If seller does not assist, must still defend 3rd parties claim in court. If lose case, can claim compensation from seller.
BUT: If clear that 3rd party’s claim is incontestable, do not need to defend claim in court. Can simply hand over the goods to 3rd party, and claim compensation from seller.
What compensation can the buyer obtain?
the purchase price + improvements?
Lesser of amount spent or amount by which value increased/decrease (choose)
increased
Can the buyer claim for a natural increase in value?
Only if foreseeable
