Legal Aspects

UNISA CENTRE FOR BUSINESS MANAGEMENT

PROGRAMME IN PURCHASING AND SUPPLY MANAGEMENT

STUDY GUIDE FOR

LEGAL ASPECTS OF PURCHASING
PPSM049

© 2008 University of South Africa All rights reserved University of South Africa Muckleneuk Pretoria

Original: Ms I Fourie Revised by: Ms Rene Swart Assisted by: Prof JA Badenhorst

LEGAL ASPECTS OF PURCHASING
STUDY UNIT 1 1.1 1.2 1.3 General principles of the law of contract p1

Introduction General principles of the law of contract Requirements for the formation of a legally binding contract Consensus p6

STUDY UNIT 2

2.1 The concept of consensus 2.2 General principles of consensus 2.3 Offer and acceptance 2.3.1 The offer 2.3.2 Lapsing of the offer 2.3.3 The acceptance 2.4 The moment and place of formation of a contract 2.4.1 The moment 2.4.2 The place 2.5 Lack of consensus (mistake or error) 2.5.1 Mistake or error 2.5.2 Essential mistake 2.5.3 Non-essential mistake 2.6 Improper obtaining of consensus 2.6.1 Misrepresentation 2.6.2 Duress 2.6.3 Undue influence 2.7 Standard contracts and contract forms 2.8 Amendment of a contract Conclusion 2.9 STUDY UNIT 3 Contracts of sale p19

3.1 Introduction 3.2 Defining a contract of purchase and sale 3.3 Requirements for the creation of a contract of purchase and sale 3.4 The seller’s obligation 3.4.1 The seller’s duty to protect i

3.4.2 The seller’s duty to deliver 3.4.3 The seller’s liability for latent defects 3.4.4 The manufacturer’s and dealer’s liability for latent defects 3.4.5 Liability on grounds of dicta et promissa of the seller 3.4.6 The seller’s liability for eviction 3.5 The purchaser’s obligation 3.5.1 The purchaser’s obligation to pay the purchase price 3.5.2 The purchaser must take possession of the delivered merx 3.6 Risk for damage in a contract of sale 3.6.1 General principles 3.6.2 The requirements of a purchase to be perfecta and the influence on risk 3.6.3 The influence of mora (breach) on the risk 3.7 The passing of ownership 3.7.1

References: Badenhorst–Weiss, JA., Hugo, WMJ., Fourie, I., 2003. Empowering Disadvantaged Businesses through Procurement: Justification for and Problems Experienced in South Africa. International Academy of African Business and Development (IAABD) Conference Proceedings, London, United Kingdom, 9-12 April 2003. Black Economic Empowerment Commission., 2001. Black economic empowerment report. Available: http://www.capegateway.gov.za/Text/2004/5/beecomreport.pdf (accessed on 20/8/2004). Brichi, AE., 2004. An Inclusive Supply Chain - Competitive Advantage Strategies for Minority and Women Business Sourcing. 89th Annual International Supply Management (ISM) Conference Proceedings: Philadelphia, United States of America, 25 – 28 April 2004. Broad-Based Black Economic Empowerment Act (Act 53 of 2003). 2003. Available: http://www.labour.gov.za/download/9478/Act%20-%20Broadbased%20Black%20Economic %20Empowerment%20-%202003.pdf (accessed on 20/8/2004). Broad-based Socio-economic Empowerment Charter for the South African Mining Industry., 2002. Available: http:www.dme.gov.za/minerals/mining_charter.htm (accessed on 17/8/2004). Burt, DN., Dobler, DW., Starling, SL., 2003. Word Class Supply Management – The Key to Supply Chain Management. 7th ed. McGrawHill/Irwin, New York, United States of America. Carter, CR., Auskalnis, RJ., Ketchum, CL., 1999. Purchasing from Minority Business Enterprises: Key Success Factors. Journal of Supply Chain Management, Winter, p.28. Chonco, N., 2002. Measuring the Change to BEE. Purchasing Digest, p. 46. Department of Trade and Industry., 2003. South Africa’s Economic Transformation: A Strategy for Broad-Based Black Economic Empowerment. Available: http://www.dti.gov.za/bee/complete.pdf (accessed on 1/10/2004). Constitution of South Africa (Act 108 of 1996). 1996. Available from: http://www.polity.org.za/html/govdocs/constitution/saconst.html?rebook mark=1 (accessed on 17/8/2005). Dolan, T., Fedele, KM., 2004. Strategic Sourcing: Reducing Costs and Supporting Diversity Goals. 89th Annual International Supply Management (ISM) Conference Proceedings: Philadelphia, United States 110 of America, 25 – 28 April 2004. Duffy, RJ., 2004. Being Diverse, Within and Throughout the Chain. Inside Supply Management, 7(15), p.20. Fee, R., Erridge, A. Hennigan, S. 2001. SMES and Government Purchasing in Northern Ireland: Problems and Opportunities. 10th Annual International Purchasing and Supply Education and Research Association (IPSERA) Conference Proceedings: Jonkoping, Sweden, 8 – 11 April 2001. Jonck, M., Van Averbeke, N., Harding, AJ., Duval, JAG., Mwape, P., Perold, JW. (Ed. by), 2003. South Africa’s Mineral Industry - 2002/2003. 20th ed. Department of Minerals and Energy, Pretoria, South Africa. Khan, AE., 2002. Defining a Diversity Initiative. Available: http://www.ism.ws/products/ legacy/password/guides/guide5/DefiningDiversityInitiative (accessed on 26/01/2005). Le Roux, PAK., 2004. The Broad-based Socio-economic Empowerment Charter of the South African Mining Industry: A Discussion. Black Economic Empowerment and Commercial Law Workshop, 26 August 2004, Sandton, South Africa. Mthembu, L., 2002. Improving your Bid by Complying with the Preferential Procurement Policy Framework Act. 10th Annual Government Tendering Conference Proceedings, Midrand, South Africa,10 – 13 September 2002. Potgieter, H., 2004. Lumus Project: A National Initiative to Develop BEE into the Mainstream Supply Chain on a Sustainable Basis. IQPC Affirmative Procurement Conference Proceedings. Date, Sandton, South Africa. Preferential Procurement Policy Framework (Act 5 of 2000). 2000. Available: http://www.acts.co.za/pppf_act/ (accessed on 18/8/2004). Ramaphosa, C., 2002. Background to Black Economic Empowerment in South Africa. Purchasing Digest, p. 58-59. Roth, G. & Hernàndez, RJ., 2001. Supplier Diversity Issues within Supply Management Department. Available: http://www.ism.ws/ResourceArticles/2001/IE020107.cfm (accessed on 24/01/2005). Schiewe, J., 2002. Supplier enablement: maximising ROI with supplier relationships. Available from: [e-mail] (accessed on 1/5/2004). Scorecard for the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry. 2003. Available from: http://www.capegateway.gov.za/Text/2004/5/miningscorecard.pdf (accessed on 20/8/2004). Van Zyl, M., 2004. BEE Procurement: A Tool for Business Development. 2nd Annual IQPC Affirmative Procurement Conference 111 Proceedings, Sandton, South Africa, 28 – 30 September 2004. Yuva, J., 2003. Essential Factors to a Successful Supplier Diversity Initiative. Inside Supply Management, 14(3), p. 8. ASSESSMENT 1 Explain the implications of the legal framework from a practitioner-in-purchasing-and-supply’s point of view. 112