KTH Exam Notes 2024 PDF

PASS AND PROPER Unit 2 Theme 1 Introduction Overview ❖ Roman law recognized three types of letting and hiring contracts: locatio-conductio rei (letting and hiring of a thing),...

PASS AND PROPER Unit 2 Theme 1 Introduction Overview ❖ Roman law recognized three types of letting and hiring contracts: locatio-conductio rei (letting and hiring of a thing), locatio-conductio operarum (letting and hiring of services), and locatio-conductio operis (letting and hiring of a job). ❖ Until August 1, 2000, property lease agreements in South Africa were governed by common law and the Rent Control Act of 1976, which limited rent and eviction grounds. The Rental Housing Act 50 of 1999 repealed the Rent Control Act, removing these restrictions but the Consumer Protection Act 68 of 2008 might still influence lease agreements. The Rental Housing Amendment Act 35 of 2014, though not yet in force, may introduce further changes. ❖ Since August 1, 2000, lease agreements for housing have been governed by the Rental Housing Act 50 of 1999, which aims to promote adequate housing, establish Rental Housing Tribunals, and resolve conflicts between tenants and landlords. It repealed the Rent Control Act and provides mechanisms for addressing disputes and unfair practices. ❖ The Rental Housing Act supports the right to adequate housing as per the South African Constitution. ❖ Rental Housing Tribunals enforce the Rental Housing Act, handling complaints about unfair practices by investigating disputes and possibly mediating or ruling on them. Non-compliance with tribunal rulings can lead to criminal penalties. ❖ The Rental Housing Act applies specifically to residential leases, while commercial leases or other property uses fall outside its scope. ❖ The Consumer Protection Act 68 of 2008 may apply to both residential and commercial leases if the lessor operates in the ordinary course of business but does not cover juristic-person lessees with significant net asset value or turnover. Important sections: ❖ Rental Housing Act 50 of 1999: Section 13(1) of the Rental Housing Act allows complaints about unfair practices to be lodged with Rental Housing Tribunals. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER Section 13(2) outlines the tribunal's process for handling disputes, including investigation, mediation, and hearings. Section 13(4)(c) allows tribunals to end unfair practices such as overcrowding or poor living conditions. Section 16 provides for criminal penalties for non-compliance with tribunal rulings. Section 4(5)(c) of the Rental Housing Act pertains to lease termination and unfair practices. Definitions Overview ❖ A lease of things is a reciprocal agreement where the lessor gives the lessee temporary use and enjoyment of a thing in exchange for counter-performance. ❖ Under the Rental Housing Act, a lease refers to an agreement between a tenant and landlord for housing purposes. ❖ A landlord is defined as the owner of a dwelling or their authorized agent, or a person with the lawful right to lease it. ❖ A tenant is the lessee of the dwelling leased by the landlord. ❖ The term "dwelling" includes various structures like houses, rooms, flats, and parking spaces leased as part of the agreement. ❖ The Consumer Protection Act defines a service as including access to or use of premises or property under a rental agreement. ❖ A rental agreement involves temporary possession or use of property by the consumer but excludes leases under the National Credit Act. ❖ The National Credit Act applies to hire-purchase agreements of movables, which are not considered common-law leases. ❖ Common-law leases without deferred payments are not regulated by the National Credit Act. General Requirements for Overview Conclusion of the Lease ❖ A lease is primarily a contract. ❖ The agreement must comply with general contract requirements: consensus, contractual capacity, legality, physical possibility of performance, and formalities. ❖ These general requirements were discussed in earlier chapters. ❖ This chapter focuses on the specific application of these requirements to leases. ❖ Relevant provisions of the Rental Housing Act and Consumer Protection Act are included for applicable lease agreements. Formalities Overview ❖ A lease can be concluded tacitly, verbally, or in writing. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ The Consumer Protection Act [section 50] empowers the Minister of Trade and Industry to prescribe consumer agreements that must be in writing, but no such categories were prescribed at the time of writing. ❖ Leases involving movables must be in writing under the National Credit Act 34 of 2005, which treats these leases as contracts of sale on credit. ❖ Non-compliance with the National Credit Act can result in fines or imprisonment, but does not invalidate the lease. ❖ Long leases must be in writing to bind the lessor’s creditors or successors unless they are aware of the lease. ❖ If an agreement is reduced to writing, it must be determined whether writing is required for validity or just for proof. ❖ Section 5(2) of the Rental Housing Act allows the lessee to request the lessor to reduce the lease to writing, and the Rental Housing Amendment Act 35 of 2014 will make this mandatory. ❖ The written lease must include details such as the names and addresses of the lessee and lessor, description of the dwelling, rental amount and escalation, payment frequency, deposit, lease period or notice period, obligations of both parties, and additional charges. ❖ Failure to reduce a lease agreement to writing is an offense, punishable by a fine and/or imprisonment of up to two years [section 16]. Essentialia of the Contract of Overview Lease ❖ Lease must comply with three additional aspects: the leased property, temporary use, and the rent. ❖ Rental Housing Act and Consumer Protection Act may introduce further essential terms for lease contracts. Leased Property: ❖ Consensus must be reached on the leased property, which can include immovable, movable, corporeal, or incorporeal things. ❖ The leased property must be identified or identifiable to avoid the contract being void. ❖ Movables intended to accompany the leased property are included in the lease. ❖ If land is leased without mentioning immovable structures, they are deemed included. ❖ Distinction between rural and urban tenements is based on their use, not location. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER Temporary Conferment of Power of Use and Enjoyment: ❖ The lessee acquires temporary use and enjoyment of the property, not the right to consume or destroy it. ❖ Property cannot be leased in perpetuity; duration may vary, including fixed dates or periodic leases. ❖ Section 14 of the Consumer Protection Act limits fixed-term agreements to 24 months unless a longer term benefits the lessee Nature and Extent of the Counter-Performance: ❖ Agreement on the nature and extent of the rent is required. ❖ Debate exists on whether the rent must be monetary or can include services or improvements. ❖ Until the legislature changes the law, rent must consist of money, not labor or other forms of compensation. ❖ Rent can be calculated by fixed amounts, formulas, or third-party determination. ❖ The court can correct unjust rent determinations but cannot compel performance based on such corrections. ❖ Nominal rent, if agreed, must be analyzed to ensure the lease is valid and not a donation. ❖ Rent increases must be certain, and lessee consent is required unless there is an objective criterion for the increase. Conclusion Overview ❖ If the essential elements of a lease are absent, the agreement is not considered a lease, but could be another type of contract, such as a partnership or loan agreement. ❖ The intention of the parties is determined by applying the ordinary rules of interpretation. ❖ The courts prioritize the substance of the contract over its form when determining the true intention of the parties. ❖ Even if rent is paid for an activity like removing stone from a property, the court may not consider it a lease. ❖ If the agreement is not a lease, the lessee cannot claim protections specific to leases, such as the "huur gaat voor koop" rule. ❖ A contract is typically taken at face value, and the party challenging its nature must provide proof. Cases: Maphango ❖ SCA: not isolated incident; must be incessant/systemic ❖ CC: can be single act, e.g. terminating lease contrary to RHA 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ This case addresses the significance of the Rental Housing Tribunal (established under the Rental Housing Act) and clarifies the definition of “unfair practice.” ❖ Facts: The tenants contended that their lease agreements were unfairly terminated because the landlord sought to evict them to renovate the property and raise the rent. ❖ SCA Decision: The Supreme Court of Appeal ruled that the landlord’s actions did not qualify as an “unfair practice,” stating that “practice” implies repeated occurrences, so a single act would not meet the threshold. ❖ CC Decision: The Constitutional Court disagreed, asserting that even a single occurrence can be deemed an unfair practice, such as terminating a lease in violation of the Rental Housing Act. ❖ The Court referred the matter back to the Tribunal, emphasizing its role in making the final determination. ❖ The Court clarified that “unfair practice” includes any act or omission by a landlord or tenant that contravenes the Rental Housing Act or unreasonably harms the rights of either party, as outlined in Section 1 of the Act. Benlou ❖ This case addresses the issue of counter-performance, specifically rental payments, and confirms several key principles in lease law. ❖ Principles Confirmed: Rent is considered part of the essential elements of a lease agreement and must be either determined or determinable. ❖ Facts: In this case, the lessor had the discretion to increase the rental if expenses rose, which made practical sense. However, the general rule is that rent cannot be left solely to the discretion of one party. ❖ The case confirmed that while one party may have the power to increase the rent, it cannot have absolute discretion to do so. Any such discretion must be exercised based on an objective standard. ❖ Decision: In this case, the lessor did not have an unrestricted discretion to raise the rent. The lease agreement contained an objective 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER standard for determining rental increases, which justified the lessor’s action. Ferndale Crossroads ❖ This case addressed a statutory requirement related to lease agreements in Johannesburg. ❖ Statutory Requirement: The relevant statute mandates that the City of Johannesburg must first advertise before entering into a lease agreement with a lessee. ❖ Facts: In this case, no advertisement was made prior to concluding the lease agreement, which was argued to be in violation of the statute. The issue raised was whether this noncompliance rendered the lease void. ❖ Counter-Argument: The defense contended that the agreement was not actually a lease, and statutory noncompliance would only be relevant if it were indeed a lease. If the agreement was valid but not a lease, the advertising requirement would not apply. ❖ Court's Approach: The court emphasized the need to assess the true intention of the parties involved. It confirmed the essential elements (essentials) of a lease agreement, which are the minimum requirements for an agreement to qualify as a lease. ❖ Decision: The court concluded that the true intention of the parties was to form a lease agreement, as there was clear consensus on the essential elements. Therefore, the failure to comply with the statutory advertising requirement rendered the agreement void. Theme 2 Introduction Overview ❖ A lease is a reciprocal agreement where both the lessor and lessee have rights and obligations as outlined in the contract. ❖ If neither the Rental Housing Act 50 of 1999 nor the Consumer Protection Act 68 of 2008 applies, the content of these rights and obligations can be determined by the contract itself. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ The chapter discusses the common-law duties of the lessor and lessee. ❖ The Consumer Protection Act impacts the common-law duties, particularly those of the lessor, for applicable lease agreements, and this impact is examined. Duties of the Lessor Delivery of the leased property ❖ The lessor must make the property available for temporary use by the lessee. Delivery can be symbolic (e.g., handing over keys) or actual. ❖ The property must be delivered in the agreed-upon condition, including any required attachments or additions. ❖ If no specific condition is agreed upon, the property must be delivered in the condition it was in at the time of contracting. ❖ If let for a specific purpose, the property must be suitable for that use, and the lessor must comply with any legal requirements. ❖ The Consumer Protection Act (CPA) gives consumers the right to demand quality service, affecting "as is" lease agreements. ❖ The CPA requires leased property to be free from defects unless explicitly excluded in the agreement. Maintenance of the leased property ❖ The lessor must maintain the property unless otherwise agreed, ensuring it is suitable for the leased purpose. ❖ A lessee responsible for maintenance must handle repairs due to wear and tear. ❖ The lessor is not liable for damage caused by the lessee or minor repairs presumed to be the lessee’s responsibility. ❖ The CPA provides the right to timely maintenance and notice of delays. Remedies available to the lessee ❖ Remedies include specific performance, rescission, and damages. ❖ Specific performance may be granted at the court’s discretion, especially if the lessor’s failure affects constitutional rights. ❖ Rescission is available if the defect is significant, and damages can be claimed for foreseeable breaches. ❖ Rent reduction is possible if the use and enjoyment of the property are diminished. ❖ The lessee can repair the property if the lessor fails to do so and recover the costs. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER Providing undisturbed use and enjoyment ❖ The lessor guarantees undisturbed use and enjoyment, regardless of property ownership. ❖ If the lessor disturbs the lessee’s use, remedies include specific performance, rescission, or damages. ❖ The lessor has the right to inspect the property with reasonable notice, and the lessee must tolerate essential repairs, with potential rent reduction depending on the disturbance. Disturbance by Third Parties ❖ The lessor must not disturb the lessee and guarantees that no one with a better title will infringe upon the lessee’s rights. ❖ If a third party with a better title causes a disturbance, the lessee must notify the lessor to help defend their rights. If the lessor fails to act, the lessee must defend their occupation vigorously but is entitled to damages if the third party’s claim is indisputable. ❖ The lessor is not responsible for disturbances caused by a third party with no title or a lesser title; the lessee must handle such issues themselves and may claim damages from the third party. Huur Gaat Voor Koop ❖ In Roman law, lessees had only personal rights and no real rights; a lease could be overridden by a third party with a real right. ❖ Roman-Dutch law introduced the principle of "huur gaat voor koop" (lease takes precedence over sale), which protects lessees' rights against new property owners. ❖ In South African law, the principle applies to both long and short leases, with specific protections based on lease duration and registration. ❖ For short leases, protection applies if the lessee is in occupation. ❖ For long leases, protection lasts the lease term if registered; otherwise, it is limited to ten years. ❖ New rights in the land are subject to the lease, and the lease binds subsequent owners only under certain conditions. ❖ The rule does not apply to land expropriation and is specific to leases of land and buildings. ❖ When a property is sold, the new owner replaces the seller as lessor, inheriting the lease obligations. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER Delegation may be required for this replacement. ❖ The new lessor (purchaser) is entitled to rent from the transfer date and must honor the essential lease terms but not additional obligations like an option to purchase. ❖ Lessees must exercise options to purchase against the original lessor, not the purchaser. If the lease term is extended, the purchaser must respect the extension period. Compensation for Overview attachments and ❖ If the lessor allows the lessee to make attachments and improvements improvements to the leased property and agrees to compensate the lessee, compensation is due. ❖ Issues arise when permission was not granted or granted without compensation. ❖ The Placcaat of 1658, re-enacted in 1696, governs compensation for attachments and improvements in South African law. ❖ There was uncertainty about whether the Placcaat applied to rural or urban tenements. ❖ In 2006, the Supreme Court of Appeal ruled that the Placcaat applies only to rural land. ❖ For urban land, lessees may rely on unjustified enrichment principles for compensation. Compensation ❖ No compensation is recoverable for improvements made without permission; such improvements can be removed but the property must not be left in worse condition. ❖ Lessees cannot claim a lien over the property for such improvements. ❖ With permission, lessees may claim compensation based on unjustified enrichment for improvements: full expenditure for necessary improvements, the increase in market value cost of useful improvements. ❖ If there was an agreement between parties: ❖ Lessor will compensate lessee as agreed in the contract. ❖ If there was no permission or no agreement on compensation: No permission: ▪ Refer to Placaat of 1658/1696 (only applies to rural land). 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ▪ No compensation is due if the lessee had no permission. ▪ Lessee may remove improvements before the lease ends but must avoid causing damage. ❖ Permission but no agreement on compensation (for immovable property): The rules of unjustified enrichment apply: ▪ Necessary improvements: Compensation for all expenses related to maintaining or protecting the property. ▪ Useful expenses: Compensation if the improvements increased the market value of the property. ▪ Key notes: ▪ Placaat will not be assessed. ▪ If the Placaat is not applicable, no permission means no compensation. Cases: Mpange ❖ The common law says that the property must be maintained in such a way that it is suitable for the purpose for which it was hired/leased. ❖ Prior to the Mpange case, courts were generally reluctant to grant specific performance in lease disputes, as it was believed that forcing parties to continue with a lease they no longer wanted would be unfair. ❖ However, in the Mpange case, the court granted specific performance due to the unique circumstances of the case. ❖ Key Points Confirmed by the Court: Although there had been reluctance in the past, this was not an absolute rule. Courts retain discretion to grant specific performance. Specific performance should be considered where a failure to perform maintenance (such as maintaining the property) negatively impacts the lessee’s housing rights. This case connected to the Section 26 constitutional right to adequate housing. The court held that specific performance should be granted when the lessor’s failure to maintain the property infringes on the lessee’s constitutional rights to adequate housing, dignity, and privacy. ❖ Conclusion: When an issue relates to a constitutional right, the law must evolve. Courts should adopt a more lenient approach when granting specific performance in such cases. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER Arnold v Viljoen ❖ In this case, the court ruled that the lessee’s obligation to pay rent is tied to the occupation of the property, rather than the use or enjoyment of it. ❖ If the lessee remains in occupation, they must pay the full rent. Only after vacating the property can the lessee claim damages, such as a reduction in rent. ❖ Key Points: The liability to pay rent depends on whether the lessee is occupying the property, not on the enjoyment or benefit derived from it. If the lessee is in occupation, they must pay the full rent. A lessee can only claim a reduction in rent as damages after they have vacated the property. Vacating the property is considered a form of cancellation of the lease agreement. Steynberg v Kruger ❖ The court in this case disagreed with the Arnold case. ❖ It held that if the lessee is entitled to cancel the lease due to a breach of duty by the lessor but decides not to cancel, the lessee should still be allowed to claim both a reduction in rent and damages. ❖ This decision reflects a shift, allowing the lessee to seek compensation for the breach even if they choose to continue with the lease agreement. Ntshiqa v Andreas Supermarket and Thompson v Scholtz cases, ❖ it was established that a lessee does not need to vacate the leased property before claiming a reduction in rent as damages. ❖ The reduction in rent is not dependent on the lessee’s occupation of the property but on the reduced use and enjoyment due to the lessor’s failure to fulfill their duties. ❖ Key Points: The lessee can claim a reduction in rent without vacating the property. Even if the lessee is not entitled to cancel the agreement, they can still seek a reduction in rent due to the lessor’s non- compliance with their obligations. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER The current legal position aligns with the principles established in these cases. Pothier’s opinion was affirmed, stating that the reduced rent should be proportional to the reduced use and enjoyment, and that the lessee is not required to vacate the property to claim this remedy. Mpange v Sithole ❖ In this case, the landlord leased rooms in a dangerous building to vulnerable lessees, many of whom were homeless and living in poor conditions. ❖ Although there was no written lease agreement, the lessor failed to meet his common law duty to maintain the property in a reasonable condition. ❖ Key Points: The lessees, being destitute and with no alternative housing options, could not simply cancel the lease and find new accommodation. ▪ Their only option would be homelessness. The court recognized that typical legal remedies, such as cancellation and damages, were not practical in this situation. Instead, the court aimed to assist the lessees and simultaneously develop the law. The court ruled that the lessees were entitled to a reduction in rent, proportional to the reduced use and enjoyment of the property, until the property was repaired. Additionally, the court emphasized that the lessor could not claim the full rent unless he fulfilled his duty to maintain the property. ▪ This decision pressured the lessor to repair and upgrade the property. This case marked a development in the common law, with the court applying Section 39(2) of the Constitution to adapt the law to the circumstances. ▪ The court granted specific performance and ruled that a reduction in rent was appropriate in these circumstances, applying two remedies simultaneously. The ruling confirmed that when a lessee continues to pay rent despite defects in the property, they are entitled to a rent reduction in proportion to the diminished use and enjoyment of the property. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER University of Pretoria v Roger ❖ Issue: Complaints from students at university residences about noise from nearby bars and nightclubs. ❖ Action: University sought an interdict against third parties (bars and nightclubs) for creating a noise nuisance. ❖ Complaint: Noise exceeded levels permitted by land use rights. ❖ Court Decision: The court granted an interdict prohibiting the third parties from producing noise above the permitted levels. Theme 3 Duties of the Lessee Overview ❖ The lessee’s three main duties are: payment of the rent; proper use of the leased property; and return of the property on termination of the lease. Payment of rent Duties of the Lessee and Rent Payment: ❖ Lessee’s primary duty is to pay rent as agreed in the lease. ❖ Rent should be paid at the end of each period unless agreed otherwise, or in advance if specified. ❖ Payment must be made even on Sundays or public holidays. ❖ If the lessor refuses to accept rent, the lessee is not in default but the lessor is in breach. Responsibility for Payment ❖ Lessee is responsible for ensuring timely payment. ❖ Risk of loss or late payment is with the lessee if payment is by mail. ❖ Payment by cheque is considered conditional and needs to reach the lessor by the payment deadline. Payment Location ❖ If no place is agreed, the lessee must pay at the lessor’s location if a payment date is set. Reduction of Rent 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ Rent can be reduced if the property is not in agreed condition, not properly maintained, or if there is interference with use and enjoyment. ❖ Under the Consumer Protection Act, lessees can request a refund for unfulfilled obligations. ❖ Rent reduction may also apply in cases of property damage due to vis maior (e.g., natural disasters). Remedies of the Lessor ❖ For non-payment, the lessor can choose specific performance, rescission, or damages. ❖ A claim for arrears is specific performance, not damages. ❖ If the lease ends, claims for unjustified enrichment can be made. ❖ A tacit hypothec covers movable assets and property fruits for unpaid rent. ❖ Hypothec only applies if specific conditions are met and lapses when rent is paid. Proper Use and Return of Property: ❖ Lessee must use property as a reasonable person would, avoid damage, and not alter property without consent. ❖ At lease end, property must be returned in the same condition, allowing for ordinary wear and tear. ❖ If the property is damaged or altered without permission, the lessor can claim specific performance or damages. ❖ The lessee has the onus to prove that damage was not caused by their actions. ❖ If property is not returned or is damaged, the lessor may seek eviction, damages, or loss of rent. Eviction and Legal Considerations ❖ Eviction must comply with relevant statutes and constitutional provisions, including the Prevention of Illegal Eviction Act and the Constitution. ❖ The lessor cannot refuse to accept damaged property but can claim damages based on repair costs and loss of rent. ❖ Damages claims arise only after lease termination. Rights and Duties Imposed by Rental Housing Act 50 of 1999 - Lease Agreement Terms: the Rental Housing Act ❖ Lessor must provide a written receipt for all payments received from the lessee, including details of the payment and property. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ The receipt should indicate whether the payment was for rent, arrears, deposit, or other, and specify the payment period. ❖ Deposits required by the lessor must not exceed the amount specified in the lease agreement. ❖ Deposits must be invested in an interest-bearing account, with interest paid to the lessee. Proof of interest must be provided upon request. ❖ A joint inspection of the dwelling for defects must occur before the lessee moves in, with any defects listed in the lease agreement. ❖ A joint inspection at lease expiry must occur to check for damages. If not inspected, the lessor cannot claim damages and must refund the deposit and interest. ❖ If the property is inspected after the lease, the lessor can deduct repair costs from the deposit, with receipts provided, and must refund the balance within 21 days. ❖ Deposits and interest can be applied to settle outstanding amounts, with any remaining balance refunded within 14 days of property restoration. ❖ If no amounts are owing, the deposit and interest must be refunded within seven days of lease expiry. ❖ If the lessee vacates early without notice, the lease is considered expired on the date of vacating, and the lessor retains all rights. ❖ House rules must be attached as an annexure to the lease agreement. ❖ Costs related to the lease are payable by the lessee only with proof of expenditure. General Provisions ❖ Lessee and lessor cannot waive the above provisions. ❖ Lessor must not unfairly discriminate against lessees or their households based on various personal attributes. ❖ Lessee has rights to privacy, protection from searches or seizures without legal authority, and non-infringement of communication privacy. ❖ These rights extend to the lessee’s household members and visitors. ❖ Lessor’s rights include prompt rent payment, recovery of unpaid rent through legal means, lease termination for valid reasons, receiving the property in good repair, repossession with court order, and compensation for damages. Enforcement 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ Rental Housing Tribunals enforce the Rental Housing Act, with a tribunal to be established in each province as per the Rental Housing Amendment Act 35 of 2014. Sub-lease, Cession, Overview Delegation and Assignment ❖ Sub-letting, cession, and assignment are often confused in leases. Sub-lease ❖ A sub-lease involves a sub-lessor granting temporary use of a property to a sub-lessee in exchange for rent, creating a second lease. ❖ No legal relationship exists between the original lessor and the sub- lessee; thus, the original lessor cannot claim rent from the sub- lessee. ❖ The sub-lease term cannot exceed that of the original lease. ❖ Not all third-party occupation is a sub-lease, e.g., when no rent is charged. ❖ Urban lessees can sub-let unless prohibited; rural lessees need the lessor's written consent to sub-let. ❖ Breaching a sub-letting prohibition is a material breach, allowing the lessor to cancel the lease and seek eviction. Cession ❖ Cession involves transferring lease rights from the lessee (cedent) to a third party (cessionary), without creating a new contract. ❖ The original lessee remains the debtor; the cessionary steps into the lessee's role as a creditor. ❖ The lessor can also cede rights to a third party, and in cession in securitatem debiti, retains rights such as lease cancellation. ❖ Lessees of houses can cede rights freely, while rural lessees need written consent from the lessor. Agreements allowing cession usually also permit sub-letting. Delegation and Assignment ❖ Delegation transfers obligations with the consent of the debtor, creditor, and new debtor. ❖ Assignment transfers both rights and obligations to a third party, without forming a new lease. Termination of the Lease Overview ❖ A lease can be terminated through fulfilment, agreement, setoff, prescription, supervening impossibility, or the specific manners outlined below. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER Effluxion of Time ❖ A lease must be concluded for a determined or determinable period. ❖ For leases not covered by the Consumer Protection Act (CPA), they end on the expiry of the period or occurrence of an event without needing notice. ❖ For CPA leases, section 14 applies, excluding leases between juristic persons. The Minister can prescribe maximum periods for fixed-term agreements, currently 24 months. Longer periods are allowed if agreed upon by both parties and financially beneficial for the lessee. After 24 months, the lease continues month-to-month unless terminated or renewed. ❖ The lessor must notify the lessee 40-80 business days before the lease expires, including any material changes and options for continuation or termination. Notice ❖ For periodic leases not covered by the CPA, termination requires reasonable notice, with the length dependent on circumstances like payment frequency. The notice must give the lessee time to make alternative arrangements and the lessor time to find a new lessee. In public rental housing, termination on notice alone is considered oppressive without additional reasons. ❖ For leases with indefinite terms, termination occurs when either party exercises their choice or upon the death of the person who reserved the choice, with reasonable notice given. ❖ Under the CPA, a lessee can cancel a lease after the fixed term or during the term with 20 business days' notice, with no penalty for fixed-term cancellations. However, the lessee is liable for amounts owing and a reasonable cancellation penalty, as specified in the regulations. Rescission Due to Breach of Contract ❖ Under the CPA, a lessee can cancel or rescind a lease at any time during the term with 20 business days' notice, including due to a breach by the lessor. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ A lessor can rescind a fixed-term lease with 20 business days' notice if the lessee fails to comply with the lease terms, unless rectified in that period. This applies despite any contrary lease agreement terms. The 20 business-day notice applies only to fixed-term leases, not month-to-month leases. Death Overview ❖ Generally, a lease is not terminated by the death of a contracting party, except: If the lease explicitly states termination upon the death of any party. If the lease is valid only as long as the lessor’s will, it terminates upon the lessor's death. If the lease is valid only as long as the lessee’s will, it terminates upon the lessee's death. ❖ A usufruct cannot last longer than the usufructuary’s life and ends upon their death, unless the lessee was unaware of the lessor's limited rights to the property. ❖ In such cases, the lessee cannot demand specific performance but can claim damages from the lessor’s deceased estate. Insolvency Insolvency of the lessor ❖ A lease is not terminated by the insolvency of the lessor. ❖ For immovables, the lease is sold subject to the huur gaat voor koop rule unless another real right (e.g., mortgage) was established earlier. ❖ If the highest bid for the property is insufficient to redeem the mortgage, the property is sold free of the lease. Insolvency of the lessee ❖ Common law terminated a lease upon the lessee’s insolvency, but Section 37 of the Insolvency Act 24 of 1936 provides that the lease is not automatically terminated. ❖ The trustee has the option to terminate the lease by notice within three months of appointment; otherwise, the lease is deemed terminated after three months. ❖ If the trustee cancels the lease, the claim for improvements is lost, but the lessor can still sue for damages. ❖ A stipulation in a lease agreement that terminates the lease upon the lessee’s sequestration is null and void. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER Dissolution of partnership ❖ Dissolution of a partnership does not terminate the lease unless otherwise agreed. ❖ After dissolution, the partners are co-lessees and liable jointly for the rent. Renewal of the Lease By agreement ❖ Lessor and lessee can agree to a new lease after the original one ends, known as relocation. ❖ Continued use of the property does not necessarily mean the lease was tacitly renewed. ❖ Court cases indicate that facts and circumstances must be analyzed to determine if a new lease exists. ❖ New lease is usually on the same terms as the original, but recent rulings may include additional terms like pre-emptive rights if not clearly excluded. By operation of law ❖ Rental Housing Act 50 of 1999 stipulates that if a lessee remains in the property with consent after lease expiry, it is considered a periodic lease, requiring one month's notice to terminate. Option to renew ❖ Lease options to renew may be conditional; lessee must clearly communicate their choice within specified time frames. ❖ Option must include essential lease terms; if rental amount is not specified, the renewal option may be unenforceable. ❖ Consumer Protection Act and Rental Housing Act may apply concurrently, with the more protective provision prevailing if conflicts arise. Cases: Mighty Solutions ❖ The court addressed the common law position regarding the eviction of a sub-lessee when the original lease agreement has expired. ❖ Key Facts: Engen (the lessor) had a valid lease with the property owner, but the lease expired. Engen had sublet the property to Mighty Solutions (M). After the lease expired, M continued occupying the property without paying rent. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER Engen sought to evict M, but M argued that because the original lease had expired, Engen could not evict them. ❖ Issues Considered: Whether Engen had the standing to apply for an eviction order. Whether M could rely on possessory rights from their fuel retail license under the Petroleum Products Act (PPA) to prevent eviction. ❖ Court’s Ruling: The court confirmed that under common law, a lessee (and by extension a sub-lessee) cannot use the lack of title of the lessor as a defense against eviction. ▪ Even if the original lease has expired, this does not affect the lessor’s right to evict. The court upheld that a lease does not depend on the lessor’s ownership of the property, meaning that M could not argue they had a right to remain in occupation based on the lessor’s lack of title. Engen had the right to evict M, and there was no need to develop the common law since the existing rule did not conflict with the Constitution. ▪ The court found no constitutional basis for changing the common law in this case. ❖ Development of Common Law: The court outlined the process for developing common law, which includes determining the current position, assessing whether it conflicts with constitutional principles, and considering the broader consequences of any changes. In this case, the court found that there was no need to alter the common law, as the existing rule did not contravene the Constitution, nor would changing it be just or commercially sensible. ❖ Conclusion: M could not succeed in their argument that the expiration of the original lease affected their eviction because the common law rule does not require a lessor to have title to the property to enforce eviction. The court emphasized that to allow M to remain in the property based on the original lessor’s lack of title would be unjust and commercially reckless. ❖ Quick Summary –JUST TO UNDERSTAND AS PER LECTURE 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER When the original lease expires, a sub-lessee cannot use the lessor’s lack of title as a defense against eviction. The common law does not require a lessor to have title for a lease to be valid or for eviction to be enforced. The court confirmed that there was no need to develop the common law in this case, as the existing rule did not violate the Constitution. Mokone case ❖ The court addressed the development of common law principles to better align with constitutional principles and current practices. ❖ The case is significant because it marks the court’s approach to modifying established common law rules. ❖ Key Facts: The case involved the renewal of a lease agreement, and the issue was whether incidental terms of the original lease automatically became part of the renewed lease. ❖ Common Law Position Before the Case: Prior to this case, the common law position was that incidental terms of the original lease (such as a right of preemption) did not automatically become part of the renewed lease agreement. ❖ Court’s Decision: The Constitutional Court decided to develop the common law and amend the existing principle. It ruled that incidental terms of the original lease (e.g., the right of preemption) do automatically form part of the renewed lease agreement. ❖ Reasoning Behind the Decision: The court acknowledged that sometimes the common law needs to be developed to align with the Constitution, even if the existing principle is not necessarily contrary to it. ▪ In this case, the court sought to adapt the common law to reflect modern practices and the expectations of ordinary people (laypersons). The court emphasized that a layperson would likely consider a renewal of a lease to involve renewing the lease in its entirety, rather than distinguishing between the core terms and incidental terms. ▪ This approach reflects a more practical understanding of lease renewals, where the assumption is that everything in the original lease continues unless expressly modified. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ Impact of the Decision: After this decision, the common law position shifted: all terms of the original lease, including incidental terms, now automatically become part of the renewal unless expressly excluded. The court’s ruling aligns with a broader, more inclusive understanding of lease renewals, aligning legal practice with common expectations. ❖ Conclusion: Demonstrates how courts can develop and amend common law principles to ensure they are in line with constitutional values and modern-day practices. This decision specifically addressed the renewal of leases, clarifying that all terms, even those incidental to the primary lease, are now automatically considered part of the renewal agreement. Unit 3 Theme 1 Introduction and Basic OVERVIEW Concepts ❖ Agency refers to a legal situation where an agent, duly authorized, performs a juristic act on behalf of a principal, such as concluding a contract with a third party. ❖ It is common when it is inconvenient or impossible for the principal to act, for instance, when the principal is a company or a person under legal incapacity (e.g., minors or mentally incapacitated individuals) ❖ Agency involves a tripartite relationship: principal, agent, and third party. ❖ The agent must have authority (or permission) to act on behalf of the principal, which can come from contract, law, or other means. ❖ If the agent acts within the scope of authority, the rights and duties between the principal and third party arise as if the principal acted directly. ❖ The agent is not a party to the legal relationship but acts as a conduit between the principal and third party. ❖ Authority is the power or consent given to the agent to bind the principal, which can be granted contractually or arise from ratification, estoppel, or by law. Act of Agency OVERVIEW ❖ The act of agency refers to the juristic act performed by the agent on behalf of the principal, such as concluding a contract. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ The legal consequences of the agent's act are attributed to the principal, provided the agent acted within the authority granted. ❖ For a contract concluded by an agent to bind the principal, all contractual requirements (consensus, capacity, legality, possibility of performance, formalities) must be met. ❖ The agent must have the necessary authority and must not act beyond that authority for the contract to bind the principal. ❖ Some juristic acts cannot be performed by an agent due to their personal nature, such as marriage, or when statutory rules require the principal's direct involvement. Cases: Ongevallekommissaris v Onderlinge Versekerings Genootskap AVBOB ❖ This case addresses the distinction between agency and employment in the context of a funeral undertaker, X, who was injured in a car accident while working for AVBOB. ❖ The central issue was whether X was an employee or an agent of AVBOB, as this would determine his eligibility for compensation. ❖ Key Facts: X worked as a funeral undertaker for AVBOB, and the question arose as to whether he was an employee or an agent. X was injured in a car accident, and his right to compensation depended on his classification. ❖ Court’s Analysis: The element of control is the key distinction between agency and employment. If the employer provides the equipment needed to carry out tasks, this is more indicative of an employment relationship, where the employee is expected to follow specific directions. However, in X’s case, the court found that X enjoyed great freedom in how he performed his duties. The court specifically looked at the letter of appointment but emphasized that the wording of the letter was not the decisive factor. The most important point was that X had freedom in performing his work, which aligned more with an agency relationship rather than an employment one. ❖ Conclusion & Take-Away: The court held that X was an agent of AVBOB, rather than an employee. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER The general rule is: If the agent is not subject to the control of the employer and can act independently and at their own discretion, they are classified as an agent, not an employee. Theme 2 Authority OVERVIEW ❖ Authority is central to the law of agency; agents must act within lawful authority to bind the principal. ❖ Authority can derive from contracts, ratification, estoppel, or by operation of law. ❖ Contractual authority typically arises through a contract between the agent and principal, often in the form of a mandate. ❖ The contract must meet the requirements for a valid contract, including both parties having the necessary capacity. ❖ An agent's authority can sometimes derive from an employment contract, depending on its terms. ❖ Express contractual authority does not need to be in writing; it can be oral. ❖ Ratification occurs when a principal approves an agent's unauthorized actions after the fact, making the act valid retrospectively. ❖ The requirements for valid ratification include the principal’s existence at the time of the act and their intention to ratify within a reasonable time. ❖ Implied authority can arise by law, such as in cases involving trustees, curators, or partners. ❖ Ostensible authority is based on estoppel, where a principal creates the impression that the agent has authority, even if they do not. ❖ Estoppel applies if a third party is misled into believing an agent has authority, and they suffer prejudice as a result. ❖ The Makate v Vodacom Ltd case blurred the distinction between ostensible and actual authority, leading to criticism and potential uncertainties in company law. Scope of cope of authority OVERVIEW ❖ General Authority The agent's authority must be determined by its source, such as a contract, ratification, or enactment. Authority can be specific to a single act or broader, covering multiple juristic acts or related purposes. Agents can only perform acts that are legal and possible. Agents rarely have unlimited authority; typically, their actions are confined by the terms of the authority. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER If an agent acts beyond the scope of their authority, the principal is not bound, and the agent may be liable under a warranty of authority. ❖ Extension of Authority The scope of authority can sometimes exceed its explicit source, extending through tacit, implied, or ostensible authority. ❖ Express Authority This is the most straightforward form of authority, where the principal clearly expresses the agent’s powers, either verbally or in writing. The express authority defines the limits of what the agent can do, though the principal may allow discretion in some aspects, such as choosing contracts or terms. ❖ Tacit Authority Tacit authority is granted implicitly through the principal’s unspoken intentions or through consensus between parties. To determine tacit authority, one can apply the "objective bystander" test: would an onlooker naturally assume the authority exists? ❖ Instances of Tacit Authority General authority: If an agent is given general tasks or appointed to a specific role, they may also have tacit authority to perform related tasks necessary for the role. Special authority: When given special authority for a task, the agent is tacitly authorized to do everything needed for its execution. Professional authority: Professionals, like attorneys, are tacitly authorized to act in ways customary for their profession unless specifically restricted. ❖ Ostensible Authority Ostensible authority arises when the principal's actions or words create an impression of the agent’s authority to third parties, even if actual authority is absent. This type of authority is determined based on the impression the principal gives to third parties. 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER Formalities when granting OVERVIEW authority: power of attorney ❖ Authority can be granted contractually without formal requirements, and oral authority is usually sufficient. ❖ Written authority is required in specific cases and is referred to as a "power of attorney." ❖ A power of attorney must be in writing, signed by the principal, and clearly state the agent’s authority. ❖ Legal instances requiring a power of attorney: Section 2(1) of the Alienation of Land Act 68 of 1981: Authority to purchase land on behalf of another must be in writing. A conveyancer must have a power of attorney to transfer land ownership or register a mortgage bond. A legal practitioner must have a power of attorney to lodge or oppose an appeal in the High Court. Termination of authority OVERVIEW ❖ Authority terminates when the task given to the agent is completed, or when the agent can no longer perform. ❖ Authority ends when it was granted for a specific period and that period expires. ❖ Agreement between the principal and agent can terminate the authority. ❖ If the authority was based on a specific legal relationship and that relationship ends, authority also terminates. ❖ Authority ends when the principal or agent's status changes, such as mental illness, death, or insolvency (for the principal). ❖ The principal can revoke the authority, but this is not possible if it was irrevocable or already executed. Third parties must be informed. ❖ The agent can renounce authority, but not if the principal will suffer a loss unless the agent has a valid reason, like bad health. CASES; Nel v South African Railways & Harbours ❖ The case involved N, who purchased a car and asked X to transport it to Potchefstroom. X decided to ship the car at railway risk, but N refused to pay the higher railage charge, arguing that he had not explicitly authorized this. The court ruled that there is no distinction between express and implied agency regarding the scope and limitations of authority. Makate v Vodacom Ltd 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER ❖ The approach to ostensible authority was significantly changed, with key points as follows: ❖ Key Legal Change: The court held that ostensible authority is not based on estoppel. In the past, ostensible authority was often linked to the doctrine of estoppel, which required certain elements like reliance and detriment to the claimant. However, the court clarified that ostensible authority does not require all the elements of estoppel. ❖ New Approach: Ostensible authority only requires the element of an impression that the agent has authority to act on behalf of the principal, and it is not dependent on estoppel. This is a significant departure from the traditional view where estoppel was often necessary to assert ostensible authority. Ostensible authority is now seen as a form of actual authority, not merely a defense. This means that the agent, who appears to have authority, can bind the principal just like an agent with actual authority. It is no longer just an argument to defend actions that appear unauthorized; instead, it now carries more weight and can be used to hold the principal liable for the agent’s actions. ❖ Broadened Concept of Ostensible Authority: The case expanded the concept of ostensible authority, making it easier for a third party to assert that an agent had authority to bind the principal, based on the impression created by the principal, even without the formal elements required in traditional estoppel. This change in approach aligns more closely with commercial realities, where third parties often rely on appearances and representations made by agents. Theme 3 Relationship between OVERVIEW Principal and Agent ❖ The legal relationship between a principal and an agent involves rights and duties. These duties are based on the contract of mandate. ❖ The duties of one party correspond to the rights of the other Duties of Principal OVERVIEW ❖ To Compensate Agent 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, there may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction. Note we are in no way affiliated or a branch of the UP Law Faculty as we are an independent service.  PASS AND PROPER The agent is not automatically entitled to compensation unless agreed upon, either expressly or tacitly. The agent must prove the existence of an agreement for compensation. Payment is usually due when the agent completes the task or upon a specific event, such as the payment of a purchase price. Even if the principal does not benefit from the agent’s work, they must still compensate the agent unless agreed otherwise. Compensation can be a specific amount, a method (e.g., percentage of a sale), or the usual/customary fee for the work. If no specific amount is agreed upon, compensation is determined based on usual fees, trade usage, or the court’s decision. The agent is not entitled to compensation if they act outside their authority, cause damage through negligence, make secret profits, have a conflict of interest, or breach the contract. If payment is conditional on an event, the agent is not entitled to payment if the event does not occur unless the principal deliberately prevents it from happening. ❖ To Indemnify Agent Against Loss