NAME: BONGANI FANA
SURNAME: KHUMALO
ID. NO: 31EMB 13510
PROGRAM: MBA, EVENING
COURSE: BUSINESS LAW
LECTURER: MR. MTAMBO
INTAKE: 31, MBABANE
QUESTION: What are the rules governing the passing of ownership and risk under the Roman Dutch Law? Do they differ from the rules under English law?

CHAPTER ONE
Introduction:
Ownership does not, as in English law, pass on account of a mere agreement between the parties. Delivery of the goods is required. South African law adheres to the “abstract system” of passing ownership whereby the mere intention of the parties to transfer and accept ownership is sufficient, independent of the existence or non-existence of a valid underlying causa. Ownership will pass even if an underlying causa (like a contract of sale) is lacking, putative or invalid.
Among the essential requirements of ownership, in which we are specifically interested include the conditions that (i) the delivery must be made by the owner of the goods, or by an agent of his/her who is expressly or by implication authorized to alienate them. This rule follows from two complimentary principles: (a) that which belongs to a person cannot be transferred without his own act – “id quod nostrum est, sine facto nostro ad alium transferri non potest,” (b) no-one can transfer to another a greater right than he himself has – “nemo plus juris ad alium transferre potest ipse harberet.” (ii) The transferor must have the intention of passing the ownership of the thing, and not merely of some right in it less than ownership. The, ownership, consequently does not pass if the seller hands over the goods of another person with the intention of giving the other possession only of the goods, as in the case of a pledge or of a cash sale; or of a sale for credit with a condition suspending the passing of the ownership; particularly where the possession is handed over for a very short period only. (iii) Delivery must be made to the transferee, or to an agent of his who is expressly or impliedly authorized to accept the thing on his behalf. (iv) The transferee must accept delivery of the thing with the intention of acquiring the ownership of it. (v) In the case of movables there is a special rule that ownership does not pass notwithstanding delivery unless either the purchase price is paid or security for its payment is given.
Under a cash sale ownership normally passes once (in addition to delivery) the purchase price is paid; whereas in a credit sale the fact that credit has been granted by the seller to the purchaser is taken as a strong indication that ownership was intended to pass on delivery. Where the seller has accepted security for the payment of the purchase price, ownership usually passes on delivery, probably because credit is regarded as having been given by implication.

CHAPTER TWO
Rules governing the passing of ownership and risk under the Roman-Dutch Law
Private ownership is valued highly in Western societies and implications extend beyond the legal order, forming as it does, the basis of the social and economic order. Because of far-reaching changes that have occurred through the ages with respect to the social, economic and political bases of the different societies that lived according to Roman and Roman-Germanic law, it cannot be maintained that ownership today has the same content and function as it had in Roman times, during the Middle Ages or in Roman Dutch law. Ownership in a Western capitalist society will likewise differ in content and function from ownership in a socialist and customary African society.
As is generally the case with definitions, it is also difficult to define ownership. This is so, not only because of the different possible points of departure, but also a definition, historically accepted in theory, does not necessarily reflect the true character of the notion as it indeed functions in present day practice, nor does it necessarily reflect the nature of the notion as it should exist in order to serve the needs of the specific society in the best manner. As far as modern South African legal theory is concerned, it seems that the two most influential definitions of ownership were those proposed by Bartolus de Saxoferrato and Hugo Grotius. The ideas that emanate from these two definitions are to some extent reflected in the definition of ownership generally upheld in South Africa. According to this perception, ownership is the real right that potentially confers the most complete or comprehensive control over a thing, which means that the right of ownership entitles the owner to do with his or her thing as he or she deems fit, subject to the limitations imposed by the public and private law. In Gien v Gien ownership is defined accordingly:
The right of ownership is the most comprehensive real right that a person can have in respect of a thing. The point of departure is that a person can, in respect of immovable property, do with and on his property as he pleases. This apparently unfettered freedom is, however, a half-truth. The absolute power of an owner is limited by the restrictions imposed thereupon by the law. In light of this perception, it is usually advocated that ownership is an “absolute” and “individualistic” right. The “absoluteness of ownership” implies that it is, in principle, an unrestricted right, a plena in re potestas. With regard to ownership of land, this idea is reflected in the maxims of superficies solo cedit and cuius est solum, eius usque ad caelum at ad inferos. The cuius est solum rule has, however, been amended by legislation. The characteristics of absoluteness and individuality of ownership are sometimes traced to Roman-Dutch law and in this sense the modern South African concept of ownership is equated with that of Roman and Roman – Dutch Law. The principle of absoluteness is also used to contrast ownership, being a right to one’s own thing (ius in re propia/sua), as the most comprehensive real right, with limited real rights being rights to the thing of another (iura in re aliena), such as servitudes mortgage and pledge, which are sometimes regarded as “unnatural” limitations upon ownership. Ownership is seen as the “mother right” from which limited real rights flow.
The notion of “individuality” denotes the idea that the owner, in principle, has exclusive control over the thing which he or she can enforce against the whole world, and the fact that there exists but one kind of ownership which can be exercised either by a sole owner or by co-owners.
On the other hand, ownership is often described with reference to the different entitlements or powers of ownership as well as with respect to certain specific characteristics thereof which purport to distinguish it from limited real rights. As it is impossible to compile an exhaustive list of entitlements of ownership and seeing that some of the characteristics usually ascribed to ownership are not akin to ownership only, these methods do not serve to define ownership. They do, however, cast light upon the fact that ownership potentially confers the most comprehensive control over a thing. Some of the entitlements usually listed are the following: (a) The entitlement to use the thing (ius utendi); (b) The entitlement to the fruits, including the income from the thing (ius furendi); (c) The entitlement to consume and destroy the thing (ius abutendi); (d) The entitlement to possess the thing (ius possidendi); (e) The entitlement to dispose of the thing (ius disponendi); (f) The entitlement to claim the thing from any unlawful possessor (ius vindicandi); and (g) The entitlement to resist any unlawful invasion (ius negandi).
Some of the characteristics of ownership that are usually emphasized are the following: (a) Ownership is a “mother right” in the sense that it confers the most comprehensive control over a thing. An owner can, however, dispose of many of the entitlements of use and enjoyment by granting limited real rights to others. (b) Ownership has a residuary character, sometimes referred to as the “elasticity of ownership”. This implies that no matter how many entitlements the owner disposes of, he or she retains a reversionary right to these entitlements, so that once those entitlements are extinguished, the ownership automatically becomes unencumbered again. This characteristic of ownership is inherent in ownership as a natural corollary of it. (c) Ownership is unlimited in duration. (d) Ownership is an independent right. Unlike real rights, it is in the final instance not dependent on or derived from any other right.
However, it is obvious that changing social, economic and political conditions cannot justify a concept of ownership unchanged in content and function since Roman and Roman-Dutch times. Since the turn of the previous century, and even more so since the dawn of a new constitutional era, the legitimacy of the notion of private ownership depends on the measure of success with which it can follow and/or shape the changes in society. Stated differently, the notion of private property must coincide with modern day practice on the one hand and the future needs of the society on the other. It is clear with regard to the absoluteness of ownership, that an owner is not always in the position to exercise full and absolute control of the thing of which he or she is the owner. This theoretical possibility is restricted by external limitations imposed by law and more often by the owner him or herself. It is also clear that the creation and implementation of sectional titles, property time-sharing and the possibility of ownership of airspace necessarily suppose a deviation from common-law principles such as superficies solo cedit and the cuius est solum principle. Furthermore, it has been pointed out that although the modern South African concept of ownership has its roots in Roman law, the notions of absoluteness and individuality of ownership as presently perceived do not stem from Roman or Roman-Dutch law, but were rather accentuated and elevated by the nineteenth century German pandectists, and superimposed on Roman law principles.
It must be noted that although Bartolus de Saxoferrato in his definition restricts ownership to corporeal things, it has been stated above that incorporeal can also function as patrimonial objects. It was pointed out that incorporeals in the form of rights, could function as the objects of limited real rights. However, there seems to be no convincing reason why ownership with regard to other kinds of incorporeal such as electricity, heat sound and radioactivity should not be protected under certain circumstances as property.
Whilst it is accepted that ownership constitutes the most comprehensive real right over property, ownership was never regarded as absolute in the common law. Some contemporary jurists advocate the idea that ownership is in principle, restricted and not absolute. The new approach towards ownership has received fresh impetus with the introduction of the new constitutional dispensation. In view of the present future needs of South African society, it is unrealistic to view and define ownership as an abstract notion without any regard to its socio-economic function, and the idea of absoluteness has become intolerable. It has been suggested that ownership should be more functionalized and socialized. In this respect the rights to use property, especially land, have been emphasized and attention has been drawn to the necessity of land reform in general and the possible role that a concept of divided ownership can play in this regard. Van der Merwe encapsulates the new approach towards ownership as follows:
Ownership should no longer be regarded as a universal and timeless set of abstract and neutral principles based on the authority of rational (Grotius) and scientific (Pandectist) reasoning. By contrast, the traditional notion of ownership should be subjected to criticism on moral and expediency grounds and adapted to the changing needs of the society in which it functions. Thus recent developments in nature conservation and land reform policy of the government should not be seen as pernicious and abnormal inroads into the sanctity of ownership but rather as natural and beneficial consequences of allowing the concept of ownership to fulfill its social function by inter alia eradicating fundamental inequalities that exist in contemporary society.
After an analysis of recent judgments in neighbor law, Scott argues and convincingly shows that the content of ownership has not undergone radical or uniform changes under this rubric over the last 10 years. Her analysis did not detect a tendency to deviate from the existing approach to ownership as formulated in the Gien decision. The emphasis still remains on the absoluteness of ownership as a point of departure. According to Scott, the definition of Bartolus de Saxoferrato accommodated the needs of owners over many centuries, in different countries and under different political dispensations. She maintains that the definition “can still accommodate the needs of South Africans in our constitutional democracy.” Scott acknowledges that the concept of ownership has changed and will change in future. It is expected that these changes will to a large extent be determined by the society in which the definition operates.
In accordance with the Roman-law tradition from ownership should be distinguished possession, namely constituting a factual relationship between a person and a thing giving rise to certain consequences.
Derivative Acquisition (Transfer) of ownership: Delivery
Where ownership is acquired by a person with the co-operation of the current title holder, the derivative mode of acquisition of ownership is involved. This refers to the fact that ownership passes and is acquired by means of a bilateral legal act between the current owner, that is the transferor, and the prospective owner, that is the transferee. In our law, ownership does not pass merely because the parties agree to transfer ownership, but pursuant to an act of publicity of the change in legal relationships to third parties. This publicity function is fulfilled by either delivery of the thing (in the case of corporeal movables) or registration of the transfer (in the case of immovables).
Delivery of movables: The term “delivery” (traditio) is traditionally used to denote either the acquisition of possession as a result of a bilateral act. It is also used in a more comprehensive sense to refer to the legal fact, of which the acquisition of possession in the said manner is but an element, which leads to the acquisition of ownership. This must be borne in mind to avoid any confusion as the term “delivery” (traditio) is also encountered in the context of acquisition of limited real rights.
Possession as element of delivery – Transfer of ownership of a corporeal movable is effected through delivery. This requires, in the place, a transfer of possession. It is also pointed out that possession combined with other requirements, that is, as an element of a more complex legal fact, may give rise to further legal consequences, including the acquisition of ownership. In the latter case possession consists of physical control with the intention of an owner. It follows therefore that possession may lead to the acquisition of ownership by means of appropriation and prescription. In these cases a unilateral act of taking possession, combined with other certain requirements, for example, that the thing in question should be res nullius suffices. The acquisition of possession in this manner combined with other requirements including the intention to transfer and acquire ownership respectively causes ownership to pass from the transferor to the transferee.
Delivery may be in various forms. In most cases, delivery involves an actual physical handing over a thing. Delivery may also involve changes in possession without any physical handing over taking place based on changes in the intentions of the parties involved. This form of delivery is used in circumstances where actual physical handing over of a thing is not possible.
Physical or actual delivery, also known as traditio vera, occurs where the thing is physically handed over by the transferor to the transferee. However, the intention of the two parties it is of paramount importance that the intention of the two parties should determine the nature of the real right which the transferee obtains in it ie the right of ownership. According to Groenwald v Van der Merwe, the state of mind of the transferee is, in general, sufficiently shown by his or her acts. However, it suffices to point out that it will not always be easy to establish the intention of the transferor, for example, in Marcus v Stamper & Zoutendijk one Hilton instructed S&Z who were auctioneers to sell his furniture by public auction in their “usual” terms which provided among others that they would pay H immediately for every article they sold even if they did not receive payment from the buyer and that, vis a vis the public, all goods which were not paid for immediately would “remain the auctioneers property” until the purchase price had been paid to them. At the auction, one Blumenthal purchased several pieces of furniture and although he did not pay for them, was allowed to take them away. He then sold the furniture to another firm of auctioneers who acquired it in good faith and in turn resold it to Marcus. When S & Z who had paid H, subsequently sought to vindicate the furniture from Marcus on the basis that ownership in it had passed to them either when H had delivered the furniture to them against their promise to pay H irrespective of whether or not they themselves received payment or when they actually paid him. The court held that they had never acquired ownership in it as there was no evidence that H had the requisite intention of transferring ownership to S & Z when he delivered the furniture to them or at any other time.
This decision illustrates several important points. The intention of the parties is determined by the courts objectively and ex post facto with reference to surrounding circumstances in which the delivery was made. Thos means that the conduct of the parties and everything they may have said at the time of the delivery or any contract into which they may have entered prior to it, will be taken into account, but only in so far as it is consistent with their overt acts. If, therefore, their conduct was likely to have a different effect on third parties their alleged intentions may be disregarded even if they were genuine. To this extent a decision which is ostensibly concerned only with the rules governing the transfer of ownership will often contain an implied value judgment on commercial conduct and usages.
Various forms of Delivery:
The term “traditio ficta” or “constructive delivery” is applied to various methods of transferring ownership (or some other real right) by which no actual, physical handing over of the thing concerned takes place. Nevertheless, the physical element is not altogether irrelevant in these cases. The transferee may be placed in a position to exercise physical control. Alternatively, the transferee may already be in physical control by virtue of some other legal relationship, or someone else may exercise physical control on behalf of the transferee.
Constructive delivery is useful where the objects at stake cannot be handled with ease or where the circumstances of the particular case exclude physical delivery or renders it impractical. Since the physical element of transfer is less obvious in such cases, and publicity of the transactions may thereby be impaired, additional requirements must be met in order for a delivery to qualify as “constructive.” South African common law recognizes five different forms of constructive delivery based on Roman law and English law: (a) Symbolical delivery (traditio symbolica); (b) Delivery with the long hand (traditio longa manu); (c) Delivery with the short hand (traditio brevi manu); (d) Consitutum possessoriu; and (e) Attornment.
Symbolical Delivery (clavium traditio)
The concept of symbolical delivery is appropriately applied to all those transactions in which the transferor supplies the transferee with the means which will enable the latter to deal with the property in which he or she is supposed to acquire a real right. In these cases the thing is neither handed over nor pointed out. The transferee is supplied instead with a “symbol” (or rather the means) which will enable him or her to take the property into physical control or to dispose of it by handing the symbol “symbol” to another person to whom he or she, in turn, may wish to transfer the thing which that “symbol” represents. It is typically used to transfer the contents of a storeroom, warehouse, box, cupboard or the like from one person to another. The most obvious examples are keys to a warehouse or a storeroom and bills of lading or similar documents. There is authority to the effect that the handing over of keys has to take place at the warehouse or storeroom concerned, but this requirement is at least open to some doubt. It is essential that the transferee obtains effective control of the property which the transferor intends to deliver. Therefore, a bill of lading under a CIF contract must generally be in negotiable form as the transferee could otherwise not dispose of the goods until he or she has obtained physical control over them. Similarly, if a person intends to pledge a portion of his or her stock-in-trade (the underlying principle in the case of a transfer of his or her right of ownership remains the same) and hands the pledge the key to the building where it is kept, but retains, the pledgee’s consent. A duplicate key so that he or she may remove from time to time goods which do not form part of those which have been pledged, there is not sufficient delivery to constitute a valid pledge (unless of course, the pledge physically removes the pledged goods immediately), because the pledgor still retains possession of the goods and the plesgee’s control over them is not effective.
Delivery with the Long Hand (traditio longa manu)
Delivery with the long hand is a form of delivery which is most suitable and common when the goods to be delivered are so large or bulky that it is difficult to move them as, for example, a load of timber, stones in a quarry, or if it desired to make special arrangements for their removal as in the case of a machine or herd of cattle. Since no obvious change in possession occurs, strict requirements are set for this mode of acquisition. “Resort to it in respect of ‘portable’ movables would need some very special explanation.” In AXZS Industries v AF Dreyer (PTY) LTD, it was accepted that transfer through delivery with the long hand may occur in case of an auction sale, “lock, stock and barrel” of innumerable goods which were spread out over a large area of a factory’s premises, and that upon such a construction the transfer would occur at the fall of the hammer.
It is requisite that the transferor places the thing to be transferred at the disposal of the transferee so that the latter can immediately exercise effective control over it. It is, however, generally assumed that it applies only to those cases in which the thing is placed at the disposal of the transferee in the presence of the latter. In Roman law it was required that delivery takes place “by the eyes and the intention” (oculis et affectu). Similarly, our common-law writers require that the thing concerned must be placed in sight of the acquirer with the requisite intention and this approach has also been adopted by our courts. For example, in Groenewald v Van der Merwe Innes CJ said: The subject-matter is placed in the presence of the would-be possessor in such circumstances that he and he alone can deal with it at pleasure. In that way the physical element is sufficiently supplied, and if the mind of the transferee contemplates and desires so to deal with it, the transfer of possession…is in law complete (our emphasis).
In Xapa v Ntsoko the requirement of a “pointing out in presence” (in presenti) was introduced. While this requirement (and more especially the requirement that the thing must be pointed out to the transferee) is perhaps somewhat unfortunate in so far as it confuses the physical element of delivery with identification, which rather belongs to the law of obligations, it is submitted that the traditional requirement that the thing to be delivered must be placed within sight of the acquirer, or simply that delivery must take place in the sight of the thing, does not necessarily relate to identification, but is simply the consequence of an (albeit somewhat formalistic) approach not to dispense with the physical element of delivery, as an outwardly perceptible act, to a greater extent than is really necessary.
In Botha v Mazeka, the branding of heifers and the fact that they were subsequently driven into a separate camp on the seller’s farm were, in the light of the surrounding circumstances, not regarded as sufficient to constitute a transfer of physical control from the seller to the purchaser. The court pointed out that the branding of cattle is an ambivalent act – though farmers often brand their cattle in order to indicate that they belong to them, it may also be done for identification purposes. Although the heifers were subsequently driven into a separate camp, the court held that it is clear from the evidence that the purchaser had not thereby obtained physical control over or free access to them. This appeared amongst other things from the fact that several unsuccessful attempts were subsequently made to obtain the seller’s permission to remove them. Consequently, ownership had not passed to the purchaser.
Our courts have been reluctant to extend the scope of delivery with the long hand to things which can be handled easily. Accordingly, the parties’ intention needs to be closely scrutinized in all cases where no physical handing over of the subject matter takes place, to establish the intention with which the thing at stake was acquired. Where delivery with the long hand is applied in the context of a sale between a creditor and his or her debtor, the requirements will also be applied strictly.
Delivery with the Short Hand (traditio brevi manu)
Delivery with the short hand occurs when the intended transferee is already in possession of the thing in respect of which he or she will acquire ownership – for example as a lessee, borrower or depository. If the thing in question is now donated or sold to the transferee it is not necessary that there should be a further act of actual physical delivery for ownership to pass. The original delivery serves for the second transaction between the parties. Everything done at the time of the first transaction is considered to be done again at the time the second transaction is concluded.
To the extent to which it can still be said that possession raises a presumption of ownership, it may be true that the third parties are not likely to be decided either. However, the creditors of a large company which is unable to pay its debts might express some surprise if they are told that ownership of its major shares has been transferred (by traditio brevi manu) to its managing director in settlement of a debt. This is illustrated by Meintjes v Wilson which has now remained unchallenged for almost 80 years. In that case a company had settled the claim of a director for arrears of his salary by transferring ownership of all its office and equipment to him brevi manu – that is, by agreeing with him that such furniture and equipment should become his personal property. When a creditor subsequently attached the furniture and equipment in execution of a judgment of a debt owed to him by the company, the writ was set aside. Mcgregor J emphasized, however, that as there is no prehension of the subject matter in the case of traditio brevi manu, the intention of the parties must be closely scrutinized “in order to see that we have to do with a genuine transaction, where there is bona fides on the part of those who are parties to the transaction.”
The applicability of the principles relating to traditio brevi manu may further prove problematic in the context of hire-purchase agreements. This is illustrated by several decisions. In Consolidated Factors of SA (PTY) LTD v National Cash Register Co. SA (PTY) LTD,Jetlen Investments (PTY) LTD had made an offer, irrevocable for a period od 90 days, to National Cash Register in terms of which it was prepared to enter into a hire-purchase agreement for a cash register. The hire-purchase agreement was to come into existence if and when the offer was accepted in writing as indicated in the order. The purchase price for the cash register was payable by way of a cash deposit and 17 subsequent installments. The first of the installments would be payable on the 23rd day of the month following the delivery of the cash register and the remaining installments on the same day of each succeeding month. The irrevocable offer was made on the 5th November 1970 and the cash register was delivered to Jetlen on the 13th November, before the offer had been accepted by National Cash Register. The offer was eventually accepted on 1st December. On 8th December – and before payment had been made to National Cash Register – Jetlen was placed under a provisional order of liquidation which was subsequently confirmed. National Cash Register then filed a claim for the amount due under the hire-purchase agreement, claiming a preference in respect of that amount by virtue of Section 84 (1) of the Insolvency Act 24 of 1936. Consolidated Factors and others, who had undertaken to guarantee Jetlen’s obligations under the hire-purchase agreement, together with Jetlen, opposed the claim on the ground that because the register was delivered to Jetlen on the 13th November before the order of the 5th November was accepted on the 1st December – that is to say, before the hire-purchase agreement came into existence – it cannot be said that the register was delivered under the hire-purchase agreement within the meaning of Section 84 (1) of the Insolvency Act. It was not disputed that the order, as accepted, created a hire-purchase agreement, in terms of section 1 of the Hire-Purchase Act 36 of 1942, but it was contended that there was no evidence of a delivery of the register under the hire-purchase agreement. The court rejected this argument and held that such delivery had been made brevi manu on 1st December. It pointed out that delivery with the short hand may denote either delivery as a method of transferring ownership or simply the “transfer of possession where the person to whom delivery is to be made already has the detention of the article”, and that the principles involved in both these two forms of delivery remain the same. It arrived at its decision on the following basis:
Since the passing of ownership in the register was reserved in the hire-purchase agreement until all the installments were paid, we are only concerned with the delivery of the possession… the register was handed over to Jetlen Investments on the 13th November, 1970, which act placed the company in control thereof. To convert the detention into possession a mere declaration of intention by the parties that the company was to hold it animo possidendi, was necessary. The declaration of intention occurred when the parties concluded the hire-purchase agreement on the 1st December, 1970.
Although the decision in the Consolidated Factors case did not deal with the question of passing of ownership directly, but with the applicability of one of the constructive delivery forms to a transfer of possession of the thing at stake, it is a good illustration of the nature of delivery with the short hand. The case also underscores the difficulties that maybe encountered in an attempt to determine whether, in the case of hire-purchase or credit transactions, ownership is normally transferred through delivery by the short hand. Difficulties in this regard have not been alleviated by the newly enacted National Credit Act 34 of 2005. In this Act, an “installment agreement” is defined as a sale of movable property in terms of which all or part of the price is deferred and is to be paid by periodic payments and possession and use of property is transferred to the consumer; whilst ownership of the property may pass to the consumer: (i) either once the agreement is “fully complied with” ;or (ii) immediately, subject to a right of the credit provider to repossess the property if the consumer fails to satisfy all of the financial obligations under the agreement. Uncertainty as to the form that such a transfer of ownership should take, is thus perpetuated.
Earlier case law did not provide clear guidelines in this respect either. In Pennefather v Gokuf, the consequences of the hire-purchase agreement in as a far as the position of the parties in property law is concerned, were held to entail a conditional delivery of the thing, subject to the provision of the agreement. It was held that either of two possible explanations could then be advanced. For one it could it could be said that the condition to which delivery was made subject is fulfilled upon payment of the last installment, at which ownership would be transferred to the transferee. Alternatively, it was indicated, one could regard the original conditional delivery to be converted on payment of the full purchase price into traditio brevu mani resulting in the transfer of ownership. A third possible explanation was advanced in Forsdick Motors Ltd v Lauritzen and Another. This entails that the original handing over of the thing is not assumed to bring about anything other than detention (holdership) for the prospective owner, since the parties at this point have not yet formed the intention to transfer ownership. For ownership to pass, a further act of delivery is necessary, according to this approach. This act is primarily aimed at establishing the intentions of the parties to transfer ownership of the thing, and presumably take place upon payment of final installment, through traditio brevu mani
Constitutum possessorium
Delivery by constutum possessorium denotes a form of delivery in which the transferor retains physical control over the thing in which he or she has agreed to transfer ownership or another real right including a pledge to the transferee, and only his or her mental attitude towards it undergoes a change. The thing remains with the transferor who acknowledges that it will henceforth be owned by the transferee and that he or she will keep it on behalf of the latter, in general as a bailee or lessee. Delivery by constutum possessorium is therefore the reverse of the process which delivery with short hand involves. This kind of delivery is subject to the following conditions a) If ownership is transferred, the transferor must be owner and in possession of the relevant thing at the moment of transfer b) The transferor must cease to possess in his or her own name and begin to possess for the transferee. c) The transferee must consent that the transferor retains possession d) There must be distinct causa detentionis. This requires that there must be a clear contractual relationship under which the transferor becomes the detentor of the purchaser.
In the process of transferring a thing from the transferor to the transferee, the thing which is the subject of the transfer may be exposed to various kinds of risks. The key question now is, at what stage does the risk passes to the transferee. A considerable number of transfers of property from the transferor to the transferee are pursuant to a contract of sale between the two parties. According to Treasurer General v Lippert a sale is a contract in which one person (the seller or vendor) promises to deliver a thing to another (the buyer or emptor), the latter agreeing to pay a certain price. It is worth mentioning therefore that it is by agreement alone which constitute the sale, neither the delivery nor the payment being necessary before the sale is concluded. Upon conclusion of the sale agreement by the parties involved, legal rights and duties immediately accrue on either of the parties.
Obligations of the Seller
Once the contract of sale is concluded between the seller and the buyer, the seller has a duty to take care of the thing sold. The seller is responsible for any loss caused to the thing sold by his negligence but not for accidental damage caused quite independently of any negligence on his part. The risk of accidental loss is carried by the buyer from the moment the contract is concluded but the seller remains responsible for the care of the thing sold until delivery.
The seller is also under obligation to deliver the thing sold. In a contract of sale, it is essential that the seller should undertake to deliver the subject matter of the sale to the buyer. He does not necessarily undertake to make the buyer the owner but undertakes to give him vacua possessio. Delivery can be effected in many ways as explained above depending on the agreement between the parties and the nature of the thing sold ie whether the thing is movable or immovable.
Obligations of Buyer
The vast majority of contracts are terminated by the performance of the reciprocal obligations of the parties. The buyer is obliged to pay the price agreed upon by the two parties in the contract of sale. In the contract of sale, the contract is terminated once the seller has performed by making delivery and the buyer by paying the price. It is essential that the performance must not be defective. According to Vivian v Woodburn, if all the terms of the agreement are not met, the contract will not be discharged. The relationship between the parties will continue and therefore, the normal contractual remedies will still be available.
The buyer is also obliged to pay the seller’s necessary expenses in maintaining the article sold until delivery. This obligation corresponds with the seller’s duty to take care of the thing sold until delivery. Should he incur necessary expenses in doing so, the buyer is obliged to reimburse him for expenses. Thirdly, the buyer is obliged to accept delivery of the article sold.
The Passing of Risk
The transfer of risk in the contract of sale is a question of great practical significance because of its potential for harsh consequences, which has intrigued numerous jurists, judges, and practitioners since the Roman period. As a consequence of attracting so much attention, different theories about it have been developed and it is clear that there is more than one approach to the problem.
In an ‘ideal’ contract of sale the parties conclude the contract and simultaneously perform their contractual obligations, e.g. where a consumer buys widgets from a supermarket. Nevertheless, in international transactions where the seller and buyer are situated in different states and the object of the sale is often of great value, between the time a contract is formed (quite often by exchange of telex or fax messages) and the time the buyer receives the goods, many unfortunate events may occur that affect the goods. These events may occur during loading at the seller’s premises, in a vessel during ocean transit, during inland transit, or during unloading at the destination.
We may first ask what is the effect in law of the transfer of risk. Risk of loss rules establish whether (a) the seller may still recover the price of the goods, and (b) whether the buyer must pay for the goods and take delivery. Any harsh effects are mitigated by the fact that loss or damage to goods is normally covered by insurance. Nevertheless, it should be kept in mind that sometimes insurance coverage is absent or the party bearing the risk has the burden of pressing a claim against the insurer, the burden the risk has the burden of pressing a claim against the insurer, the burden of waiting for a settlement with its attendant strain on current assets, and the responsibility for salvaging and marketing damaged goods.
Immediately the contract of sale has come into existence by acceptance of the offer the risk of accidental damage to the thing sold passes to the buyer unless there has been an express agreement varying this rule. This may arise where the article sold has not been delivered and accordingly is still the property of the seller, the buyer must suffer any loss caused accidentally to the article. Even if the article is totally destroyed before delivery and the buyer can never become the owner of it he must none the less pay the purchase price. The risk which passes is risk of accidental loss, which is loss caused otherwise than as a result of the default of the seller. If the loss is caused by the willful or negligent action a third party, the loss is not strictly speaking, accidental at all. But the risk, in accordance with this rule, is nevertheless borne by the buyer. The buyer still has remedy and as such may recover compensation from the third party; of course subject to the condition that he has taken cession of action from the seller. In Grobbelaar v Van Heerden, H, the owner of a motor car, concluded a binding agreement of sale of the car to F, delivery to be made two days later against payment of the purchase price. Later that day H was driving the same car when it was involved in a collision with a car driven by V and there was no dispute as to the fact that the collision was attributable solely to the negligence of V. The court held that although the risk had passed to F, V remained liable to H as owner of the car, there having no cession of action to F.
According to Meintjies v Manley, at the same time as the risk passes to the buyer, the right to any profits which may arise or accrue from the property sold passes to him providing that such profits are such as might normally be expected, and not purely adventurous.
There are exceptions to the rule that the risk passes to the buyer immediately after the conclusion of the contract of sale between the buyer and the seller. Where there has been an express or implied agreement varying the rule risk cannot immediately pass to the buyer. In certain circumstances, agreements to vary the rule may be implied on the facts. The general rule may be dispensed with when the sale is subject to a suspensive condition. Where there is a suspensive condition, the operation and the consequence of the contract, or some of them, are suspended until the happening of an uncertain future event. In the case of a sale subject to a suspensive condition, one of the conditions which is suspended is the passing of risk. The risk therefore remains with the seller until the condition is fulfilled. In Jacobs v Pertesen & another, J sold and delivered a horse and cart to P to be Paid in installments. The agreement was subject to a condition that ownership of the horse and cart was not to pass on delivery, but only after the purchase price had been paid in full. P paid the first installment, but the horse died thereafter. The court held that Loubser v Vos the risk remained with J and he could not succeed in an action for the balance of the purchase price.
According to, once the condition has been fulfilled, however, the obligations of the buyer and the seller, which till then have been suspended, becomes as binding as if there had been no condition and the buyer and the seller are deemed to have acquired such obligations at the time of the original agreement.
The practical effect of these rules is that where two parties to a sale agree that the sale will be subject to a suspensive condition; if the article sold is totally destroyed before the fulfillment of the condition, the sale becomes a nullity and the seller is not entitled to the price. Secondly, if the article is damaged before the fulfillment of the condition, the risk is the seller’s if the condition is never fulfilled but it is the buyer’s if fulfillment takes place for upon fulfillment, the risk is deemed to have passed to the buyer at the time of the agreement. According to MacDuff &Co v Johannesburg Consolidated Investment Co, where the buyer designedly prevents the fulfillment of the condition, the doctrine of fictional fulfillment will apply and the condition will be deemed to have been fulfilled. The risk therefore will be his.
Thirdly, in sale of goods or articles requiring counting, weighing or measuring, the risk may not immediately pass to the buyer as per the general rule. Here a distinction has to be drawn between sales admensuram and sales of fungibles, the former requiring counting in order to fix the price, the latter requiring counting in order to separate the material bought from a greater quantity of the same material in the seller’s possession. Here the risk does not pass to the buyer on the conclusion of the contract, but remains with the seller until the counting, measuring or weighing, as the case may be, is complete. Only at this stage, when the price or merx has been finally determined, does the risk pass to the buyer.
The last exception to the general rule is where there is default on the part to the seller to make delivery. In such circumstances, the risk which passed to the buyer immediately on the conclusion of the contract returns to the seller. However, the risk borne by the seller is not full risk of the thing sold but rather a presumption that any damage cause to the article after default is due to the negligence of the seller. In order to rebut this presumption, the seller has to show that the damage would have resulted in any event if delivery had been made at the proper time.

CHAPTER THREE
The Roman-Dutch Position Compared with English Law
De Zulueta has spoken of “the wide variations in the conception of sale during the course of legal history, in the various legal systems, and even in the branches of the same system.” But even without attempting to discount the important effects of history upon the development of the most universal transactions, it is remarkable that so little agreement exists upon one of its more fundamental incidents, namely the passing of property. Some legal systems, such as German law, adopt the rule that ownership together with the risk of accidental loss or destruction of the subject matter, is not transferred until delivery. Others, such as English law, select the first possible moment at which to effectuate the agreement, and accordingly vest the property and risk in the buyer as soon as the contract is concluded.
The Roman-Dutch law of South Africa, following in uncodified form the Roman law in this respect, chooses a position midway these two by accepting what is the English rule for the passing of risk, and the German rule for the transfer of ownership.
In England, a sale is defined as a contract by which “the property in the goods is transferred from the seller to the buyer.” If the passing of property is postponed to a future date or until the fulfillment of a condition, then the contract is not a sale but an agreement to sell, and, as such, will become a sale only when the property is transferred. The decisive test is therefore, whether or not the property passes by virtue alone of making of the contract; as Tucker J. once put it, “I think that everything in the Sale of Goods Act goes to show that the words ‘sale’ or ‘sell’ when contrasted with the words ‘agree to sell’ or ‘agreement to sell,’ necessarily involve something under which the property in the goods has been made to pass.”
Section 20 (1) of the Sale of Goods Act 1979 (‘SGA’) connects risk with passing of property. If the sale does not involve carriage of goods the main rules as to the passing of property (therefore risk) may be summarized as follows: If the goods are specific (I sell you my horse called ‘Quick’) the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred (SGA section 17 (1)). The intention of the parties is to be ascertained with reference to the terms of the contract, the conduct of the parties and the circumstances of the case (SGA section 17 (2)).
Section 18 sets out five rules for ascertaining the intention of the parties: In the case of unconditional sale of specific goods the presumed intention of the parties is that property (and consequently risk) passes to the buyer when the contract is concluded, and it is immaterial whether the time of payment or the time of delivery or both, be postponed (section 18 rule 1). In the case of sale of unascertained generic goods (e.g. ‘100 bags of sugar’) the starting point will be that the property cannot pass (with the exception of the sale where the goods constitute an undifferentiated part of indentified bulk) until the goods are ascertained: section 16.
Goods are ascertained when they are unconditionally appropriated to the contract by one party with the assent of the other. Goods are unconditionally appropriated to the contract when one party irrevocably indicates his intention to use those goods in performance of the contract, so that those goods are irrevocably ‘earmarked’ for the contract and the seller might not be reasonably expected to change his mind. Once ascertainment has taken place, the passing of property depends on the intention of the parties and the circumstances of the case (SGA, section 17).
As the intention of the parties is a vague concept, rule 5 (1) of section 18 provides that the above ‘unconditional appropriation’ is the usual method by which the property will pass. The most common and simple way for goods to become unconditionally appropriated to the contract is by delivery of goods answering the contract description to the buyer at the correct destination. Furthermore, rule 5(2) provides that, where in pursuance of the contract, the seller delivers the goods to the buyer, or to a carrier or other bailee… for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is to be taken to have unconditionally appropriated the goods to the contract. But if the seller delivers the goods to a carrier still mixed with other goods no property can pass, because the goods are still unascertained, despite what would otherwise amount to an unconditional appropriation.
A common problem that used to cause difficulty was the passing of property when the goods constituted an undifferentiated part of identified bulk (e.g. 500 bales of cotton forming part of the 1000 bales already shipped in the komninos S). nevertheless, this problem no longer exists as a buyer who has paid for some or all of goods forming part of an identified bulk becomes the owner in common of the bulk (sale of Goods (Amendment Act 1995). The problems related to the passing of property in bulk cargo are of no importance for the transfer of risk since in international sales risk is not strictly attached to property. In CIF contracts risk passes on shipment or as from shipment and is commonly separated from property, as property (a) may not pass before appropriation and in many cases appropriation takes place on dispatch of notice of appropriation or on arrival of the ship or (b) may pass on tender of the shipping documents. Similarly, in FOB contracts property is separated from risk.
A problem still remains however in cases where the bulk has deteriorated or been destroyed only in part after the risk has passed to the buyer, since a pro rata division does not offer a satisfactory solution in a case where parts of a large bulk consignment has been deteriorated. It would be unreasonable to impose duty to apportion to the carrier especially if the shortage did not become apparent until the last delivery was made. It would seem that the person to whom deteriorated goods are delivered by the carrier must accept them: His remedy would lie on the contract of carriage or the insurance. Unless the seller has clearly appropriated the goods to a particular buyer, any buyer must accept what the carrier does.
From the foregoing analysis it seems that English law is a system which is governed by the rule that risk passes when the contracting parties intend it to pass. If, however, the intention of the parties is not clear then the judge will resort to criteria interpretative of the parties’ intention. According to these criteria English law appears to be a mixed system not strictly following the res perit domino rule: (a) in the case of unconditional sale of specific goods, property and thus risk will pass presumably at the time the contract was concluded; (b) in the sale of unascertained generic goods property and thus risk will pass when the goods are unconditionally appropriated to the contract and this event will often occur when the seller delivers goods answering the contract description to the buyer or to a carrier for transmission to the buyer (however, in the sale of goods forming an undifferentiated part of an identified bulk, risk passes on shipment irrespective of property).
The word ‘risk’ in the sale involving carriage of goods seems in English law to cover casual physical loss, damage to or deterioration of the goods. A survey of the leading commentaries and cases suggests that the rules on risk would govern loss or damage caused by sinking or stranding of the ship or other vehicle used for transport, loss of goods in a warehouse fire, damage to the goods by a stranger, adulteration of spirit by admixture of inferior liquid, mixing the oil carried by a vessel with oil of inferior quality, deterioration of the goods due to delay in their arrival (without fault), confusion of the goods sold with other goods, loss of weight due to heat, deterioration of corn due to moisture, loss of goods by theft, emergency unloading, negligent act or omission by the carrier or his employees during loading or transit, rough cargo handling or improper stowage, or deterioration of the goods due to the fact that they had been left outside a cold store. Although risk as a rule covers casual loss or damage using transit, it has also been suggested that it covers wrongful delivery of goods to another person.
From the foregoing analysis it can be concluded as a general rule common to the legal system that every casual event operating on the goods which renders the buyer’s position more disadvantageous should be considered as an event regulated by the rules related to risk. Nevertheless, the word risk has many other applications and is not necessarily related to the contract of sale. Reference can be made to his contractual obligations through insolvency, default or repudiation of the contract, and insurance risk. We may also refer to political risk, that is the danger that political decisions and upheavals will disrupt normal transactions. The most common political risks are blockage of funds, restrictions on the transfer of foreign currency earnings, cancellation of import licenses, war and revolution.
A matter of a great importance which appears to be controversial, however, is whether or not the normal risk rules cover acts of state or international relations. An obvious example is the seller’s inability to deliver the goods due to their confiscation, arrest of the ship or export or import bans. It seems that as a general rule these acts are not covered by the rules on risk. Similarly, it has been decided by the Arbitration Court attached to the Hungarian Chamber of Commerce that loss caused by the UN embargo on the former Yugoslavia had to be borne by the buyer since the risk had passed to him.
In this case a Yugoslav company sold and delivered caviar to a Hungarian company. The contract provided that the buyer had to pick up the goods had to go outside the bonded warehouse area and the buyer could not take delivery of them, nor clear them through the customs (thus not obtaining ownership or possession) nor return them to the sellers. The buyer declined to pay on the basis that the UN embargo was force majeure. The arbitration court held that the buyer was obliged to pay the price of the delivered goods with interest as the damage caused by force majeure had to be borne by the party to whom the risk had passed. The result of this award, if it is correct, is that an embargo resulting in import and export bans is to be included in the concept of risk as opposed to a cause of frustration of the contract. It is however, suggested that this award is wrong for two reasons: (1) the arbitrators classified the embargo as a force majeure event; however, an event that constitutes force majeure cannot by its own nature be governed by the rules related to risk; and (2) such an interpretation would cause unjust results, as acts of state or international organizations quite often cannot be insured against, with the result that the buyer will have no claim against an insurer. Consequently, the buyer would suffer non-recoverable economic loss, whereas the seller’s loss could be justified on the ground that, for example in the case of confiscation, he will be the owner of the goods. Furthermore, at least acts of state can be contested in the courts by the party concerned (though this is not the case in the case of acts of international organizations as they cannot usually be contested in courts).
Cases where the goods are confiscated or destroyed during wartime (e.g. sinking, capture, seizure, arrest, restraint or detainment of a vessel or confiscation of the goods by any hostile act by belligerent power) may however be considered as within the risk rules. The basic policy justifying this result is the fact that the buyer may insure the goods against war risks (i.e. Institute War Clauses, All Risks Clauses). If the goods are lost, his economic loss may be recovered as he will have rights against the insurer. There is, however, a problematic marginal situation where the buyer, due to the sudden and unexpected outbreak of war, had not insured the goods for war risks. This problem was faced in some English cases during the First World war where ships were lost with their cargo by action of enemy forces and the buyer could not recover the loss as the insurance policy did not provide for war risks.
This problem has considerable contemporary importance. There are still dangers that vessels, aircraft or land vehicles may be lost due to hostile acts (e.g. recently in the Persian Gulf or in Yugoslavia, and in the case of pirate attacks in the High Seas). It is more reasonable for the traders who bear the transit risk to insure the goods against such risks.

REFERENCES 1. D E Goodfriend, ‘After the Damage is Done: Risk of Loss under the United Nations Convention on Contracts for the International Sale of Goods’ (1984) 22 Col. J Trans’l Law, 577. 2. L S Sealy, ‘Risk in the Law of Sale’ [1972] B CLJ 225, 229. 3. J T R Gibson, “South African Mercantile and Company Law”, 6th edition, 1988. 4. Silberberg and Schoeman, “The Law of Property”, 5th edition, 2006. 5. Papanikolaou, Sale and Exchange of Goods (1950), Article 524, para.59.