KTH 220 Pass and Prosper - Warranty against Latent Defects PDF

KTH 220 PASS AND PROSPER Theme 7 Warranty against Latent Overview Defects ❖ The seller's last duty is to provide a warranty against latent defects in the object sold. ❖ The warranty can ari...

KTH 220 PASS AND PROSPER Theme 7 Warranty against Latent Overview Defects ❖ The seller's last duty is to provide a warranty against latent defects in the object sold. ❖ The warranty can arise by law (naturale) or through a contractual agreement (incidentale). ❖ Contractual warranties can be explicit or implied. ❖ The type of warranty affects what the buyer can claim from the seller. ❖ Legal remedies differ depending on whether the warranty is by law or by contract. Meaning of latent defect Overview ❖ A latent defect is a hidden flaw in a sold object that makes it unsuitable for its intended or usual use, unknown to the buyer at the time of contract, and undiscoverable through reasonable examination. ❖ The difference between latent and patent defects is that latent defects are not easily detectable, while patent defects can be noticed by a diligent person. ❖ The defect's nature determines if it is latent or patent, based on whether a reasonable person would notice it after an examination, not whether an expert or a thorough inspection is required. ❖ Only substantial defects affecting the utility of the object qualify as latent defects, and this is judged objectively. ❖ The defect must have existed at the time the contract was concluded, and the buyer must prove this without having prior knowledge of it. ❖ A concealed servitude is not considered a latent defect but rather a form of eviction since it restricts the use, enjoyment, or disposal of the sold object. ❖ Any imperfection in the sold object may be classified as a defect, and whether it is latent or patent is determined by the facts of the case. Warranties against latent Warranty by Operation of Law defects ❖ An implied warranty against latent defects automatically applies to every contract of sale unless excluded by a "voetstoots" clause. ❖ A distinction is made between a merx being unfit for its intended purpose due to missing attributes and cases where it remains fit for purpose despite lacking certain attributes. ❖ If the merx delivered is different from what was purchased, the seller cannot rely on the voetstoots clause. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER ❖ The remedies available for latent defects are the actio redhibitoria (to claim restitution) and the actio quanti minoris (to claim a reduction in price), but damages cannot be claimed. Contractual Warranties ❖ A seller can provide an express or tacit contractual warranty against latent defects, warranting that the item sold has no latent defects or is suitable for its intended use. ❖ Tacit warranties are often confused with warranties by operation of law; the former is not expressly given, and its existence is determined based on the facts and circumstances of each case. ❖ The seller can guarantee the presence of good qualities or absence of bad qualities, which can be included in the contract. ❖ The remedy for a breach of a contractual warranty is the actio empti, allowing the buyer to cancel the contract and claim damages, though aedilitian actions are also available. Guarantees Distinguished from Misrepresentations and Sales Talk ❖ Contractual guarantees should be distinguished from misrepresentations and sales talk. ❖ Misrepresentation is an untrue statement, which can be fraudulent, negligent, or innocent, made inside or outside a contractual context. If within a contract, the usual remedies for breach apply. If outside, delictual liability may be incurred if the misrepresentation was intentional or negligent. ❖ Innocent misrepresentation entitles the aggrieved party to the aedilitian actions. ❖ Sales talk is marketing or promotional statements that represent opinions, not guarantees or misrepresentations, and do not provide the buyer with any recourse if untrue. Actio empti Grounds for Institution ❖ Warranty against latent defects ❖ The seller may provide an express or tacit warranty against latent defects. ❖ The buyer can use the actio empti if defects are present. Warranty for presence of special qualities ❖ A seller may give a warranty that certain good characteristics are present or certain bad characteristics are absent. ❖ If an object is bought for a specific purpose and the seller is informed, the seller is deemed to provide a tacit warranty that the object is suitable for that purpose. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER ❖ Example: A bull bought for breeding purposes found to be sterile allows the buyer to act against the seller using actio empti. Seller conceals latent defect ❖ The seller must disclose any known latent defects. ❖ Intentionally concealing defects constitutes fraudulent misrepresentation. ❖ The buyer may claim contract cancellation or damages using actio empti if the seller intended to deceive. ❖ There is no general duty to disclose, but disclosure is required if the information is exclusive and its non-disclosure creates an unfair advantage. ❖ A voetstoots clause does not protect the seller if they knew of the defect at the contract's conclusion. Dealer and manufacturer ❖ Dealer: Liable for all damages, including consequential damages, due to latent defects if they act as a dealer and profess expert knowledge publicly. ❖ Manufacturer: Liable for all damages, including consequential damages, due to latent defects without any declaration of expert knowledge. Negligence or ignorance of defects is not a defense What may be claimed with the actio empti ❖ Cancellation: The buyer can cancel the contract if the defect is severe enough that retaining the object is unreasonable. ❖ Damages: The buyer can claim damages for the defect. Aedilitian actions Overview ❖ The aedilitian actions (actio redhibitoria and actio quanti minoris) apply to latent defects in sold objects without an express or tacit warranty from the seller. ❖ These actions can also apply if there was an express or tacit warranty, though buyers rarely use them for damages claims. Actio redhibitoria and actio quanti minoris ❖ Grounds for these actions include: Presence of a latent defect. Seller's fraudulent concealment of a defect. Seller's express or tacit guarantee of quality. Seller’s false statement regarding the object’s characteristics. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER ❖ The actions apply to both corporeal and incorporeal objects, regardless of whether defects were latent or misrepresented. ❖ Trade-in transactions are considered part of the original purchase price, not a datio in solutionem. What may be claimed with the actio quanti minoris ❖ This action allows a pro rata reduction in the sale price and can be used multiple times for additional defects. ❖ The exact reduction is based on the difference between the price paid and the true value of the defective object. When aedilitian actions may not be instituted ❖ Defect arose after the contract: The buyer must prove the defect was present at the contract's conclusion. ❖ Defect not latent: These actions do not apply to patent defects. ❖ Voetstoots sale: No claims for latent defects in a voetstoots sale, unless the seller knowingly concealed defects. ❖ Latent defect repaired: No claim if the defect was repaired before the sale, except if the object was manufactured by the seller. ❖ Waiver: The buyer may waive these actions with proof of deliberate abandonment of the right. ❖ Prescription: These actions prescribe after three years from discovering the defect. Influence of the Consumer Quality of Goods Protection Act on the ❖ Section 55(2) of the Consumer Protection Act 68 of 2008 states that warranty against latent goods must: defects Be suitable for their general purpose. Be of good quality, in good working order, and free of defects. Be durable for a reasonable time considering their intended use and circumstances. Comply with applicable standards set under the Standards Act 29 of 1993 or other public regulations. ❖ Evaluation of goods should consider marketing, packaging, display, trade descriptions, instructions, warnings, and production time. Product Failure or Defects in Goods ❖ A defect in goods is a material imperfection that affects the product's acceptability or usability. ❖ Failure refers to goods not performing as intended. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER ❖ Whether a defect is latent or patent, or if an improved model is available, is not relevant to liability. Available Defence for Product Failure or Defective Goods ❖ Suppliers can defend against claims if consumers were informed of the goods' specific condition and accepted them or acted accordingly Remedies ❖ Consumers can return non-compliant goods within six months for repair, replacement, or a refund at the supplier’s risk and expense. ❖ If a repair fails, the supplier must replace the goods or refund within three months. ❖ Six- and three-month periods for remedies cannot be extended by a court. Implied Warranty for Good Quality of Goods ❖ Section 56(1) provides an implied warranty that goods must meet quality requirements. ❖ This warranty does not apply if goods are tampered with after leaving the control of the seller or if the consumer was informed of the condition and accepted it. ❖ The warranty applies to transactions and agreements involving producers, importers, distributors, and retailers but not suppliers. ❖ Service providers must warranty labor and parts for three months or as specified. Liability for damage caused Overview by defective goods ❖ Producers, importers, distributors, or retailers (excluding suppliers or service providers) are liable for harm caused by unsafe goods, product failures, or inadequate instructions/warnings without needing to prove negligence [section 61(1)]. ❖ A "supplier of services" who provides or installs goods is considered a "supplier of those goods" to the consumer [section 61(2)]. ❖ Damages can include death, illness, injury, property damage, and economic loss [section 61(5)]. ❖ Liability is joint and several if multiple parties are involved [section 61(3)]. ❖ Liability cannot be avoided by contractual indemnity or waiver, though wrongfulness must be proven by the plaintiff [section 51]. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER ❖ Defenses include: compliance with public regulations, defects not present at supply time, adherence to instructions, or unreasonableness of expecting discovery of defects [section 61(4)(a) – (d)]. ❖ Claims for damages must be made within three years from the date of death, injury, illness awareness, property loss/damage awareness, or economic loss [section 61(4)(d)]. ❖ Goods supplied under transactions exempt from the Consumer Protection Act are still subject to sections 60 and 61. Holmdene Brickworks v OVERVIEW Roberts Construction ❖ This case provides guidelines for defining and establishing the requirements of a latent defect. ❖ It involves a manufacturer who sold defective bricks directly to a buyer. Facts ❖ A construction company, R, purchased bricks from H, a manufacturer, for building a factory. ❖ After the factory was completed, it was found that some walls had to be demolished and rebuilt due to defective bricks. ❖ R filed a claim for consequential damages against H, which was successful, leading H to appeal. Court's Findings ❖ A latent defect is: A flaw not observable during a reasonable inspection. It represents an abnormal quality or characteristic. It affects the functionality or usefulness of the product for its intended purpose. ❖ To determine whether a defect is latent, the following questions must be asked: Is the defect visible? Could the defect have been reasonably discovered by an ordinary buyer (not an expert)? Court's Decision ❖ The court found the bricks to have a latent defect. ❖ Consequential damages were recoverable under the contract, regardless of whether the seller was aware of the defect, since the seller was also the manufacturer. ❖ The buyer was awarded consequential damages and restitution, and H's appeal was dismissed. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER Note ❖ The case originally defined latent defects based on physical attributes, but this definition has since broadened to include non- physical defects as well. Ciba-Geigy v Lushof Farms Overview ❖ This case focuses on the distinct liabilities of sellers who are either merchant sellers or manufacturers. ❖ In this instance, the seller and manufacturer were different entities. Facts ❖ A merchant seller sold herbicide to a farmer to treat trees. However, the herbicide had a defect—it not only eliminated pests but also damaged the trees. ❖ The farmer attempted to hold both the manufacturer and seller liable for the defect. Court's Findings ❖ The merchant seller had publicly claimed expert knowledge regarding the product. Under the Pothier rule, this made the seller liable for all consequential damages resulting from latent defects. ❖ The court upheld this rule, finding the seller liable to the buyer due to a breach of a contractual guarantee. The buyer could cancel the contract and claim damages through actio empti. ❖ The court ruled that there was no direct contract between the manufacturer and the buyer. The manufacturer could not be held liable under contract law but could be held liable in delict if the buyer could prove the necessary elements of a delict. In this case, the manufacturer was delictually liable due to negligence in the herbicide's production, testing, and distribution. Contractual Relationship Between Manufacturer and Seller ❖ The manufacturer warranted that the herbicide complied with their specifications but made no guarantees regarding its saleability or suitability. ❖ The merchant seller was not authorized to provide any warranties beyond the manufacturer's printed material and had to distribute the herbicide only for the manufacturer's intended purposes. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER Court's Decision ❖ Both the manufacturer and the seller were held liable to the buyer. ❖ The manufacturer was found liable in delict for damages, while the seller was liable in contract for breaching the common law warranty against latent defects. Criticism ❖ The Pothier rule, which governs the award of consequential damages for latent defects, is considered outdated and in need of modernization, especially in terms of how damages are calculated. Note ❖ This case was decided before the Consumer Protection Act (CPA) was enacted. ❖ However, even if the CPA had been in place, it would not apply because the farmer was a juristic person. ❖ According to the CPA, a juristic person qualifies as a consumer only if their asset value or annual turnover is less than R2 million. ❖ If the farmer’s assets or turnover were below R2 million, they could still rely on the common law (Pothier rule) but not the CPA. Freddy Hirsch Group v Facts Chickenland ❖ F (the seller) sold spices containing banned artificial substances to C (the buyer), making the spices unfit for human consumption. ❖ The buyer brought a delictual claim against the seller for damages caused by the defect. The seller defended using a voetstoots clause in the contract. Court's Findings ❖ The court held that this case was not about a latent defect but about malperformance, as the product delivered was different from what had been purchased. ❖ Since malperformance is not considered a latent defect, the voetstoots clause could not shield the seller. ❖ The seller was held liable for breaching the contract due to malperformance. Court's Reasoning ❖ Allowing the seller to avoid liability due to a voetstoots clause would violate a statutory provision, as delivering food with dangerous chemicals is a criminal offense. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER ❖ It would also go against public policy and be excessively harsh and oppressive. Van der Merwe v Meades Facts ❖ The seller sold a house with a defective roof to the buyer. ❖ The buyer sought to claim the cost of repairs despite the presence of a voetstoots clause in the contract, as the seller acted in bad faith. Court's Findings ❖ The court confirmed that a voetstoots clause cannot protect a seller who is aware of a defect and intentionally conceals it to deceive the buyer. Such a seller is liable under actio empti for damages. ❖ Although the buyer in this case could not prove the necessary requirements, the court outlined the general principles, which remain enforceable. Requirements to Challenge a Voetstoots Clause ❖ The buyer must prove: The seller was aware of the latent defect at the time the contract was made. The seller deliberately concealed the defect with the intent to defraud the buyer. Summary ❖ If the seller knowingly concealed a latent defect with fraudulent intent, they will be held liable despite the presence of a voetstoots clause. Banda v Van der Spuy Facts ❖ The seller sold a house with a leaky roof to the buyer, even after repairs had been made. An addendum to the deed of sale guaranteed the transfer of the right to institute claims from the seller to the buyer. However, the seller knew the repairs were insufficient and concealed the latent defect fraudulently. Court's Question ❖ The court needed to determine whether the seller was aware of the latent defect and whether he fraudulently concealed it. ❖ Awareness of the latent defect alone is not enough; the seller must have intended to defraud the buyer. An objective evaluation of the facts is necessary to establish this. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER ❖ The seller knowingly transferred a guarantee that had already expired, indicating fraudulent concealment. Duty to Disclose ❖ While there is no general obligation for sellers to disclose defects, in certain cases, like this one, the seller has a duty to inform the buyer of latent defects (referencing Waller v Pienaar). In this case, the seller failed to disclose the defect. Court's Decision ❖ Since the seller fraudulently concealed the defect, the voetstoots clause did not protect him. The seller was held liable for damages. Assessment of Damages ❖ There was no evidence provided regarding the market value of the house. ❖ The court based the damages on the cost of repairing the roof. Summary ❖ The seller, knowing the repairs were inadequate, had a duty to disclose the latent defect. ❖ Despite the voetstoots clause, the seller was liable for damages due to fraudulent concealment. Waller v Pienaar Overview ❖ Generally, a seller is not required to disclose latent defects they are aware of, but there is an exception to this rule. Duty to Disclose ❖ The seller must disclose defects if the information is within their exclusive knowledge, and honesty in the situation requires it. Test for Duty to Disclose 1. Does the information fall outside the buyer’s knowledge? 2. Is there no reasonable possibility that the buyer would obtain this information on their own? 3. Does the seller's exclusive knowledge create an unfair bargaining advantage? ❖ If all three questions are answered "yes," a duty to disclose exists. Court's Decision Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER ❖ In this case, the seller had a duty to disclose the latent defect and failed to do so. Therefore, the seller was held liable, and the voetstoots clause did not provide protection. Summary ❖ A voetstoots clause does not shield a seller from liability if they knew of the defect when the contract was made and failed to disclose it. Odendaal v Ferraris Overview ❖ This case further develops the definition of a latent defect. Court's Findings ❖ In the Holmdene case, a latent defect was defined as a physical defect inherent in the object. However, the court in Odendaal expanded this definition to include non-physical defects, such as failure to obtain statutory approval for a building. ❖ A latent defect can now include non-compliance with statutory requirements, which is outside the physical nature of the object but still considered a defect. Case Details ❖ The case involved the sale of a house that did not comply with statutory requirements. The seller knew of this non-compliance but did not fraudulently conceal it. He argued that the defect was latent, and since the contract included a voetstoots clause, he should be excluded from liability. ❖ The court agreed that the voetstoots clause protected the seller, as the defect was latent, even though it was non-physical. Summary ❖ The seller was not held liable because the ineffective roof support structure and the expired roof guarantee were latent defects in the form of non-compliance with statutory requirements. ❖ The warranty for latent defects had been excluded by agreement. Vousvouki v Queen Ace Overview ❖ This was the first case to deal with defective goods under Section 55 of the Consumer Protection Act (CPA). Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. KTH 220 PASS AND PROSPER ❖ It provides clarity on how Sections 55 and 56 of the CPA function and highlights the ongoing role of common law in consumer protection. Case Facts ❖ A defective vehicle was sold, and despite several repairs, it remained defective. ❖ The consumer sought to enforce the Section 55 implied warranty of quality and remedies under the CPA Court Findings ❖ Section 56 of the CPA (implied warranty) applies to both new and second-hand goods. ❖ The CPA aims to protect consumers from exploitation, promote social and economic welfare, and safeguard financially deprived consumers who cannot afford new goods. ❖ When CPA provisions are contradictory or ambiguous, courts must prioritize consumer protection. ❖ Under Section 56, consumers have three remedies (repair, replace, refund) within six months. If repairs fail within three months, consumers can claim a replacement or refund (as per Section 57 CPA – warranty on repaired goods). Time Limitations and CPA Remedies ❖ The consumer did not discover the defect or lodge a complaint within the six-month timeframe. ❖ The court refused to extend the time period, stating that the CPA does not allow for extending the six-month and three-month remedy periods. ❖ After the six-month period lapses, consumers lose access to CPA remedies but retain common law remedies. Role of Common Law ❖ The court confirmed that even after the CPA remedy period ends, common law still applies, particularly in cases involving latent defects. ❖ The defect in the vehicle was not only a non-compliance with Section 55 but also classified as a latent defect, which constitutes a breach of the seller’s common law warranty. ❖ Although common law remedies were available, the buyer did not seek these remedies in court. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER Had they done so, the court would have awarded damages under common law. Summary ❖ The CPA’s six-month remedy period cannot be extended, but common law still plays a vital role in providing consumer protection after the lapse of CPA remedies, especially in cases of latent defects. Theme 8 Payment of Purchase Price Overview ❖ The buyer's primary duty is to pay the purchase price in legal tender; cheques are not accepted. A representative can make the payment on behalf of the buyer. ❖ The buyer must pay the full purchase price even if they have taken delivery of the sold object, unless the exceptio non adimpleti contractus applies. ❖ For movables: In a cash sale, payment and delivery occur simultaneously or on the same day. In a credit sale, payment is made on a future date after delivery. ❖ For immovables, payment typically occurs through guarantees delivered upon registration in the buyer's name. Payment is not required before ownership transfer, which happens on the registration date. ❖ Instalment payments are only allowed if agreed upon, with specific terms for the number, timing, and amount of instalments. An agreement lacking these details is void. ❖ Failure to pay an instalment does not allow the seller to claim all outstanding instalments unless an acceleration clause is in place. ❖ Payment place is either as agreed by the parties or, in the absence of such agreement, where the contract was concluded or where delivery occurs. ❖ The buyer must receive the object sold on the agreed date and place, or within a reasonable time if no date was set. Failure to do so constitutes a breach of contract. ❖ If the delivered object does not meet agreed specifications, the buyer can reject it, and the seller is in breach. ❖ If the buyer fails to collect the object, the seller can claim necessary or useful expenses incurred for its protection and upkeep. Miscellaneous Duties In a contract of sale involving immovable property: ❖ The buyer is responsible for paying transfer costs and transfer duty, while the seller is responsible for paying VAT. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER ❖ The buyer must pay occupational rent to the seller if they occupied the property before the registration. ❖ The buyer must deliver all benefits (e.g., rent) accrued to the property before the contract became effective to the seller, unless otherwise agreed Pre-emptive Right and Option Right ❖ A pre-emptive right is a personal right established by agreement, allowing the holder to claim the right to purchase property before the owner sells it. ❖ The holder of the pre-emptive right can either make an offer to the seller first or receive an exclusive offer from the seller (right of first refusal). ❖ The pre-emptive right only comes into effect when the owner decides to sell the property; prior to this decision, the holder cannot make or receive offers. Option ❖ An option is a contract where the holder has the right to keep an offer to buy or sell open for a specified period, exclusively for their acceptance. ❖ During this period, the offer cannot be withdrawn or offered to anyone else. ❖ If the option is exercised, a second contract (deed of sale) is created, and the person granting the option must adhere to its terms. ❖ If the option is not exercised, the option contract and the associated offer to sell are terminated. Formalities in respect of pre- Movables emptive rights and options ❖ General rule: No formalities required for pre-emptive rights or options unless explicitly required by law or agreement. ❖ Option contracts do not need to comply with formalities required for the main contract. Immovables ❖ Alienation of Land Act 68 of 1981 requires writing and signature for a valid sale of immovables. ❖ The applicability of these formalities to pre-emptive rights and options for immovables is debated. TUTORIAL 4 Question 1 C buys a new colour printer from a printer store and the Consumer Protection Act is applicable to the sale. Two (2) months after the date of purchase, C discovers a defect in the printer as the printer cannot print Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. KTH 220 PASS AND PROSPER in colour anymore. In terms of section 56 of the Consumer Protection Act, C will have the following choices of remedies against the printer store: ❖ Return; ❖ Replace; ❖ Refund Question 2 Monya (a school teacher) sold her house to Refilwe (a dentist) for R950,000. It was common cause between the parties that the house had a leaky roof that Monya repaired before the sale. In order to encourage Refilwe to proceed with the transaction, an addendum was added to the deed of sale specifying that the: "Seller [would] transfer [the] guarantee on the thatch roof to the purchaser from the contractor." However, the problem with the leaking roof persisted even after the sale. It later transpired that the reasons for the leaks in the roof were an ineffective roof support structure (of which Monya was properly aware) and the addendum to the deed of sale concerning the contractor's roof guarantee had already expired when it was furnished by Monya. The deed of sale contained a "voetstoots" clause excluding Monya's liability for any latent defects. Refilwe is very upset and approaches you for advice. ❖ Refilwe will be able to institute the actio empti against Monya if Refilwe can prove that: 1. a latent defect existed; 2. Monya was aware of the latent defect; and 3. Monya fraudulently concealed it. ❖ Refilwe will be able to institute a claim against Monya because Monya did not honestly believe in the adequacy of the repairs to the roof and consequently had a duty to disclose the latent defect to Refilwe. Question 3 Monya (a property developer) sold a house to Refilwe (a dentist) for R950,000. It was common cause between the parties that the house had a leaky roof that Monya repaired before the sale. In order to encourage Refilwe to proceed with the transaction, an addendum was added to the deed of sale specifying that the: "Seller [would] transfer [the] guarantee on the thatch roof to the purchaser from the contractor." However, the problem with the leaking roof persisted even after the sale. Monya argues that her liability for the leaky roof is excluded in terms of section 55(6) of the Consumer Protection Act. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. KTH 220 PASS AND PROSPER ❖ Section 55(6) of the CPA is not a blanket exclusion of Monya's liability or the provisions of the CPA. ❖ The house must comply with standards of quality in terms of section 55 of the CPA. ❖ If the house does not comply with the standards of quality in terms of section 55 of the CPA, Refilwe may institute the remedies in terms of section 56 of the CPA against Monya within the first 6 months after conclusion of the contract. ❖ Due to the wording of section 56 and the implied warranty of quality, Refilwe will also be able to rely on the buyer's common law remedies in the alternative. Question 4 Monya (a school teacher) sold her house to Refilwe (a dentist) for R950,000. It was common cause between the parties that the house had a leaky roof that Monya repaired before the sale. In order to encourage Refilwe to proceed with the transaction, an addendum was added to the deed of sale specifying that the: "Seller [would] transfer [the] guarantee on the thatch roof to the purchaser from the contractor." However, the problem with the leaking roof persisted even after the sale. It later transpired that the reasons for the leaks in the roof were an ineffective roof support structure (of which Monya was properly aware) and the addendum to the deed of sale concerning the contractor's roof guarantee had already expired when it was furnished by Monya. The deed of sale contained a "voetstoots" clause excluding Monya's liability for latent defects. Refilwe is very upset and approaches you for advice. The most relevant case law that would assist in clarifying the legal position: ❖ Van der Merwe v Meades 1991 2 SA 1 (A) because Monya was aware of the latent defect and fraudulently concealed it and will be liable despite the voetstoots clause. ❖ Banda v Van der Spuy 2013 4 SA 77 (SCA) because Monya did not honestly believe in the adequacy of the repairs to the roof and consequently had a duty to disclose the latent defect to Refilwe despite the voetstoots clause. ❖ Odendaal v Ferraris 2008 C All SA 529 (SCA) because the ineffective roof support structure and the expired roof guarantee was a latent defect in the form of non-compliance with statutory requirements. Question 5 Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  KTH 220 PASS AND PROSPER A sold his vehicle to B for R60,000. Three months after the conclusion of the contract of sale, B discovered that the car had a defective steering mechanism that the parties were not aware of but that existed at the time of conclusion of the sale. The parties did not expressly agree on any warranties in the contract of sale, nor did they contractually exclude any warranties applicable by operation of law. (You can assume that the Consumer Protection Act is not applicable.) ❖ The aedilitian actions will always be applicable as naturalia to a contract of sale. ❖ The aedilitian actions can be described as the actio quanti minoris and the actio redhibitoria. ❖ The actio redhibitoria can only be instituted where the defect is substantial enough to justify restitution. ❖ The actio quanti minoris is a claim for a reduction in the purchase price. ❖ The actio quanti minoris can be claimed more than once. The actio redhibitoria can only be claimed once. TUTORIAL 4 LONG Q Question 6 Busi sold her 2017 Mercedes Benz X-class (Merx) to Elsa on 27 October 2021 for R500 000. Elsa took possession of the Merx on 27 October 2021 and paid cash. On 28 October 2021, while Elsa was driving the Merx on the N1 to Johannesburg, she lost control of the Merx and had to make an emergency stop. During this emergency stop, she broke two nails, her left ribs, and a big toe because she had to stop the airbag; otherwise, it would have exploded in her face. Later, it was determined that there was a hairline crack in the engine. Busi and Elsa met each other on 30 October 2021 for coffee at the Formula 224 in Midrand, where Elsa had to sleep over after she was dismissed from the Midrand MediSpa Clinic. Elsa was furious and said the following: "My nails are wasted, my new dress ruined, and I am in a lot of pain. You must compensate me for all the damages." Busi was highly upset and said the following: "You lost your head. Just because you can't drive properly, you can't hold me liable. The damage to the Merx is all your fault." 1. Elsa wants to know if she can return the Merx and claim damages. Fully advise her with reference to relevant case law. ❖ The hairline crack is a latent defect, not a patent one. This defect renders the item unfit for its intended use or its usual purpose, and it was not known to B at the time of entering into Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. KTH 220 PASS AND PROSPER the contract and could not have been discovered through a reasonable examination. Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd. ❖ Busi provided a warranty by operation of law, which is a natural part of the contract of sale. ❖ Elsa can use the aedilitian actions to address this issue. She may claim restitution through the actio redhibitoria (as seen in De Vries v Wholesale Cars) or seek a pro rata price reduction with the actio quanti minoris. However, Elsa cannot claim damages for the latent defect using these actions. The actio empti could be used for damages, but since it is not a contractual remedy, it is not applicable in this case. 2. Would it make a difference to your answer if Busi acted as a manufacturer or dealer? Fully advise Elsa with reference to relevant case law (Assume the Consumer Protection Act is not applicable). Dealer’s Liability: ❖ As a dealer, S is liable for all damages, including consequential damages. This is based on the Pothier rule, which requires: ▪ S must act as a dealer. ▪ S must have publicly professed expert knowledge of the item (merx). ❖ Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd, and Ciba-Geigy case illustrate that a dealer is responsible for all damages. Manufacturer’s Liability: ❖ Manufacturers are also liable for all damages, including consequential damages, without needing to declare any expert knowledge about the item [Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd]. ❖ Case Reference: In contrast to dealers, manufacturers are liable regardless of any declarations regarding their expertise. Negligence or ignorance of the defect does not exempt them from liability. The SCA has criticized the Pothier rule as outdated but did not propose a new solution [Ciba-Ceigy (Pty) Ltd v Lushof Farms]. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. KTH 220 PASS AND PROSPER Actio Empti Claim: ❖ According to Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd, B may claim: Cancellation of Sale: Only if the defect is so severe that B cannot reasonably be expected to retain the item. Damages: B can also seek damages for the defect. 3. Would it make a difference to your answer in Q1 if Busi acted as a supplier in terms of the Consumer Protection Act? ❖ Section 55: Consumer’s Right to Safe, Good Quality Goods Goods must be reasonably suitable for their general purpose. ▪ If the consumer informs the supplier of a specific purpose and the supplier usually offers such goods, or acts knowledgeably, the consumer may accept goods that are reasonably suitable for that specific purpose. Goods must be of good quality, in good working order, and free of defects. ▪ They should be usable and durable for a reasonable period considering normal use and surrounding circumstances. Goods must comply with relevant standards as per the Standards Act. ❖ Section 56: Implied Warranty of Quality Within six months after delivery, the consumer has the right to choose between repair, replacement, or a refund for defective goods [Vousvoukis case]. ❖ Section 61: Product Liability Suppliers, including manufacturers, are liable for damages under Section 61 of the CPA. This includes: Death, illness, or injury to any natural person. Loss or physical damage to property. Any economic loss resulting from the aforementioned issues. ❖ If goods are supplied within South Africa under a transaction exempt from the Consumer Protection Act, the importer, producer, distributor, and retailer of those goods are still subject to Sections 60 and 61 of the CPA. 4. 3 months prior to the sale, Busi took the Merx for a routine maintenance check where the hairline crack was discovered, and Busi was advised to repair the crack as soon as possible. Busi Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. KTH 220 PASS AND PROSPER urgently needed the money and did not get it fixed. Would Elsa have a claim against Busi in this instance where the parties included a voetstoots clause in their agreement, and did Busi have a duty to disclose the crack? (Assume the Consumer Protection Act is not applicable). ❖ General Rule: Elsa will not have a claim based on the warranty of latent defects (LD) if it was excluded in the sale. ❖ Exceptions to the Rule: 1. Seller’s Knowledge and Intent: The seller will be held liable if: The seller was aware of the latent defect. The seller concealed the defect with the intention to defraud the buyer (dolo malo) [Van der Merwe v Meades; confirmed by Banda v vd Spuy]. 2. Duty to Disclose: There is no general duty to disclose latent defects unless the seller's actions are fraudulent. The test from Waller v Pienaar involves: Whether the knowledge of the defect was beyond the buyer's ability to discover. Whether the buyer could have reasonably discovered the defect on their own. Whether the concealment caused an unequal bargaining position. ❖ Conclusion: Busi had a duty to disclose the latent defect. Since it was fraudulently concealed, the exclusion clause (voetstoots clause) cannot be enforced. Elsa can pursue either the aedilitian actions or the actio empti. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.