Construction Law

Topics: Contract, Common law, Sales Pages: 5 (1803 words) Published: February 14, 2013
Department of Quantity Surveying
Faculty of the Built Environment
Msc Construction project Management
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.

N011 2574D
17 August, 2012
The legal principle applicable in this question is contract of sale. 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). 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, 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. 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, Anneliese Seymour 2009). Entering into a contract alone does not cause ownership to pass, delivery seals ownership. 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. The passing of risk is a different legal concept. The passing of risk means that the risk of loss or damage to the hardware is transferred from the transferor to the transferee. As of 15th December, 2010, Mthabisi was now the owner of the 200 bags of cement through derivative methods of acquiring ownership and this method applies to movables. In this instance Cement Wholesalers Limited the transferor, transfered ownership to Mthabisi the transferee. It is a Derivative method because transferee acquires his ownership from transferor.

Mthabisi become the owner through delivery which was done on the 15th December, 2010 through: 1. Delivery through marking
Delivery took place by marking the cement with his name.
2. Delivery with long hand
Delivery took place in that the cement was pointed out by Cement Wholesalers Limited to Mthabisi with the intention that ownership passes. The cement was shown to him by the salesman on the 15th December, 2010. 

The General Rule is that the...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Construction Management Essay
  • Risk Management in Construction Essay
  • Construction Contract Essay
  • Abandoned Construction Project Essay
  • Relationship Between Procurement Routes and Construction Contract Types Essay
  • Essay about construction
  • Essay about Construction
  • Risk Management in Construction Projects Research Paper

Become a StudyMode Member

Sign Up - It's Free