NATIONAL UNIVERSITY OF SCIENCE AND TECHNOLOGYDepartment of Quantity Surveying Faculty of the Built Environment Msc Construction project Management CONSTRUCTION LAW INDIVIDUAL ASSIGNMENT Question 5 Mthabisi has a construction company and he ordered 200 bags of Tylon Cement from Cement Wholesalers Limited on the 24th November 2010 in preparation for the festive season sales in December and pays in advance for his order which will according to the Sales representative of the company be delivered to him by the 15th December 2010 at the very latest because it was yet to be imported from Italy. His order is eventually delivered to him on 20 December 2010. The Explanation for the Delay in delivery given to him by the general manager of Cement Wholesalers limited, after he had insisted on seeing him is the general shortage of fuel in the country as a result of the government’s refusal to grant fuel import permits to private fuel importers through whom the company sourced its supplies. When the order is delivered to him the driver faces him with an invoice including an additional duty, which the government had imposed on imported Tylon Cement and informs him that he has strict instructions not to offload the order unless the additional amount of the duty was paid on delivery. He paid the amount of the duty in order to obtain the cement. He learned subsequently that the duty was only imposed on the day before the delivery was made to him. His 200 Bags of cement had been stacked together separate from the rest of the stock of Cement Wholesalers Limited since the 15th December, 2010. They had been marked with his name and were shown to him by the salesman on that date. Advise Mthabisi. By CHARMAINE MTSHENA. N011 2574D LECTURER MR DUBE 17 August, 2012 The passing of risk means that the risk of loss or damage to the hardware is transferred from the transferor to the transferee. The passing of risk is a different legal concept. There must also be the intention of the transferor to the transferee that right for ownership be transferred and acquired. If one party lacks intention then ownership won’t pass. Delivery through marking Delivery took place by marking the cement with his name. Mthabisi become the owner through delivery which was done on the 15th December. delivery seals ownership.The legal principle applicable in this question is contract of sale. 2010 through: 1. In its most basic form. a contract of sale comes into existence when two people agree that one of them (the seller) will sell to the other (the buyer) a certain article (the thing sold) in return for a sum of money (the price). Delivery with long hand . It is a Derivative method because transferee acquires his ownership from transferor. In this instance Cement Wholesalers Limited the transferor. and they must agree on the subject-matter of the sale and the price at which it is to be sold. No contract of sale exists until one party has made an offer to buy or sell and the other party has accepted that offer. Anneliese Seymour 2009). 2010. As of 15th December. One of the key legal concepts that is involved in an agreement of sale is passing of ownership and risk (The Passing of Risk in Contracts for Sale in Roman Law and Australian Law: A Comparative Perspective. Entering into a contract alone does not cause ownership to pass. 2. transfered ownership to Mthabisi the transferee. Mthabisi was now the owner of the 200 bags of cement through derivative methods of acquiring ownership and this method applies to movables. A binding contract of sale is therefore concluded as soon as the prospective buyer and seller have reached agreement on three essential aspects: they must intend to buy and sell respectively. Result is that Buyer bears the Risk where the thing is damaged / destroyed through coincidence or Act of God. If the contract was imperfect. ‘for whose the risk is. Held the sale was subject to the suspensive condition that ownership was only going to pass on payment of the full purchase price. Buyer and Seller have intention of buying and selling 2. A Contract is perfecta when: 1. The doctrine of passing of risk. so too are the benefits. Contract is not subject to a suspensive condition. Doctrine of passing of risk causes risk to pass to the buyer when sale is perfecta. The contract was subject to the condition that ownership of the property was to pass only on payment of the full purchase price. determines whether seller or buyer bears the risk where accidental damage is caused by COINCIDENCE or ACTS OF GOD and not by culpable conduct of either party. his the gain should also be’. It must be noted that. 2010. (The Passing of Risk in Contracts for Sale in Roman Law and Australian Law: A Comparative Perspective. In the case of Jacobs v Petersen & Another [1914] CPD 705 J sold and delivered a horse and cart to P for a price of $8 which was to be paid in instalments. the risk remained with the seller. hence .Delivery took place in that the cement was pointed out by Cement Wholesalers Limited to Mthabisi with the intention that ownership passes. J sued for the balance of the purchase price. Buyer still has to pay the purchase price even where the seller has not delivered the thing to him. The General Rule is that the owner suffers loss when his property is destroyed or damaged. just as risk of loss is transferred to the buyer. Purchase price is determined 3. P paid the first instalment but the horse died soon thereafter. Anneliese Seymour 2009). The cement was shown to him by the salesman on the 15th December. (There was none). Where there is fault on the part of the seller in making delivery. weighed or counted in order to fix the price or appropriate them to the contract. The contract was not subject to a suspensive condition. Where there has been an express or implied agreement varying the general rule. however. as seller. Nothing had been done by 25 July. Risk will not pass to Mthabisi in the aforesaid manner in the following situations: 1. A paid the duty on the remaining 90 hogsheads that had not yet been delivered to B and then sought to recover this duty from B. Purchase price is determined 3. ( the goods had a price already) 3. Where the goods bought have to be measured.( delivery had been done on the 15th of December by long hand and marking) Case History . the government imposed a duty on stocks of brandy on hand. after 110 had been delivered.The duty on brandy 1 On 6 July 1878 A sold 200 hogsheads of brandy to B. The contract between Mthabisi and Cement Wholesalers Limited was perfecta in that: 1. The court held that A could not recover the duty from B since the expense of paying it formed part of the risk that A.the risk of destruction of the goods remained with the seller until the counting or weighing is done. . to separate the remaining 90 hogsheads of brandy that were due to be delivered to B from the rest of A's stock. Mthabisi and Cement Wholesalers had the intention of buying and selling 2. On 25 July 1878. bore until the further 90 hogsheads of brandy had been appropriated for delivery to B. 2. 1879) (Cases for Business Law (CUAC211)) The general rule . the risk passes to the buyer only once the weighing.subject. set . because the brandy had been appropriated to the contract and the risk in relation to the brandy had therefore passed to D. measuring or counting has taken place. C had sold a quantity of brandy to D. reduced it to the strength specified in the contract and placed it in casks marked with D's name before the duty was imposed on 25 July 1878.The duty on brandy 2 In a different case arising out of the imposition of the duty on brandy. provided the seller is not to blame for the destruction of the item sold. of course. Dunn & Co. The buyer will therefore generally remain liable for the purchase price even if the article is totally destroyed before delivery takes place. to certain exceptions and any agreement to the contrary on the part of the buyer and seller. The same applies when goods have to be separated from the remainder of a supply held by the seller: the risk passes to the buyer only once the actual items that will be delivered to the buyer have been appropriated. 1879) Case History .(Poppe. (Taylor & Co v Mackie. the risk passes to the buyer. measured or counted out in order to determine the price due by the buyer. in other words. It did not matter that the brandy was still in the possession of C at the time when the duty was imposed. The court held that D was obliged to reimburse C in the amount of the duty paid. In the case of sales of goods that have to be weighed. is that as soon as the contract of sale has been concluded. C paid the duty and consequently sought to recover it from D. Schunhoff & Guttery v Mosenthal & Co. measured it off. aside to meet the seller's obligation under the contract with the buyer. Dunn &Co 1879. In the event that it had not been marked and was among the rest of the suppliers cement he would not have to like in the Poppe. 3. His cement had been marked even while it was in the possession of Cement Wholesalers Limited. The general risk rule had not been varied in the contract He has no ground to claim the duty he to paid Cement Wholesalers Limited. thus risk was passed to Mthabisi. he has to pay the extra fee (duty) because: 1. and thus he has to pay the duty. 2. References . Schunhoff & Guttery v Mosenthal & Company in [1879] Buch 91and the case of Taylor & Co v Mackie. Purchase and Sale) In the situation of Mthabisi. The contract between Mthabisi and Cement Wholesalers Limited was perfecta. (Legal City: You and your Rights. Schalk Willem Jacobus Van der Merwe.1. Principles of Construction law notes :Msc in project management Dube 2012 . Van Huyssteen. Contract Law in South Africa by Louis F. Southern Cross: Civil Law and Common Law in South Africa 4. The Roman law of Contract by Prof D J Ibbetson Lent Term 2010 3. MBA. IOBZ) Accounting Sciences and Finance August 2010 5. Cases for business law (CUAC211) and Commercial law (CUAC106) Mbizi Rangarirai( Bcom (hons) Economics. Catherine J. Maxwell 2.