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UNDERSTANDING SALES

You decide to buy a fridge and a washing machine on Gumtree. It is important to note that there are several elements involved in this seemingly simple sale: (1) the sale agreement; (2) the transfer of ownership; (3) the risk of damage to the items; and (4) defects in the item.

(1) Sale Agreement

The law distinguishes between the contract of sale and the actual transfer of ownership. These two are treated as separate events in the overall transaction. The sale agreement is the underlying contract in terms of which the seller undertakes to transfer the property to the buyer in exchange for consideration. All the remedies under the law of contract are available here and it is in terms of the sale agreement where the buyer is afforded the most legal protection e.g. if the seller guarantees the washing machine will work for 3 years and it does not, then you can claim from the seller for breach of contract; or if the seller misrepresents that the washing machine is a front-loader when in fact it is a top-loader, the contract can be cancelled on the basis of misrepresentation and the goods and monies paid are to be returned. However, the agreement of sale does not on its own transfer property from the seller to the buyer.

(2) Transfer of Ownership

To pass ownership there must be delivery of the item and the intention to actually transfer ownership. In the case of a cash sale, the price must also be paid at the same time as delivery in order for ownership to transfer. In a credit sale, ownership passes on delivery and payment of the purchase price is postponed. In our law, ownership can be transferred if these requirements are met without a valid contract of sale. However, the buyer would have a claim against the seller in unjustified enrichment.

(3) Risk

A further element to consider is who bears the risk of damage or destruction to the property before it is delivered. Risk passes from the seller to the buyer when the sale agreement is ‘perfected’. This is when the price has been set; and the item be determined or identified. Any suspensive conditions must also be fulfilled. A suspensive condition suspends the operation of the contract until the happening of a future event e.g. I will sell the washing machine to you if my cousin does not buy it by Wednesday. The operation of this contract is suspended until Wednesday. Where damage takes place prior to the fulfilment of the suspensive condition, the seller bears the risk.

(4) Defects

Where there is a latent defect (one not visible upon reasonable inspection) then the buyer can ask for a reduction in the purchase price. Only where the item is so defective that it is not fit for its purpose and that a reasonable person would not have bought the item, can it be returned. This is the extent of a buyer’s remedies for latent defects. It is only where the seller is a professional seller (e.g. retail store trading in appliances) or a manufacturer, that the buyer claim for all losses e.g. the loss suffered where a faulty washing machine damaged clothing and the surrounding walls and cupboards.

However, where an item is sold ‘voetstoots’, it is sold in its condition ‘as is’. This voetstoots clause forms part of the sale agreement. Where such a clause is present, there is a duty on the buyer to properly inspect the property and ensure that there are no defects. If the buyer notices a defect later on, he will have no remedies available against the seller.

Conclusion

In most cases where you have entered into a sale and are dissatisfied with the outcome, the most extensive relief would be contractual remedies for breach of the sale agreement. However, it is important to establish whether risk has in fact transferred to you before you took delivery of the item. Furthermore, buyers should be cautious as to whether items are being sold ‘as is’, because such a clause leaves the buyer without any remedies where the item is defective. However, this voetstoots clause would not protect a seller who is acting fraudulently. Should you wish to know more, feel free to make an appointment with our offices.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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