Theme 1: Introduction and essentialia

INTRODUCTION

 Definition of lease
o Reciprocal agreement ito which one party. Lessor, undertakes to confer
upon another party, the temporary use and enjoyment of a particular thing
in exchange for counter performance
 Steps
o Is there a valid contract? (general requirements)
o What kind of contract? Is it a lessee (essentialia)
o If yes, what are the rights and duties (and remedies) of the parties?
(naturalia) and is there relevant legislation?
o Are there any extra terms/amendments of naturalia? (incidentalia)
 Parties
o Lessor/landlord
o Lessee/tenant

SOURCES OF LAW
v Common law (Roman and Roman-Dutch) – see 16.01
§ Three times of lease agreements:
1) Letting and hiring of things (lease)
2) Letting and hiring of work (contractor: Unit 5)
3) Letting and hiring of service (employee: Labour Law)
v Impact of modern legislation: - see 16.02
§ Pre-2000: Rent Control Act
1) Restrictions on rental; limited grounds for eviction
§ Rental Housing Act (RHA)
1) Regulations to enforce amendments in terms of RHAA 2014
already published for public comment (watch this space!)
§ Consumer Protection Act (CPA)
1) May impact aspects of relationship between a lessor/landlord and
the lessee/tenant
§ Prevention of Illegal Eviction from and Unlawful Occupation of Land Act
(PIE)
Constitution, especially s 26.
RENTAL HOUSING ACT
q See 16.02-16.10 and 16.12
v Application:
§ Definition of “lease”
Ø “an agreement of lease concluded between a tenant and a landlord
in respect of a dwelling for housing purposes”
§ Definition of “dwelling”
Ø includes any house, hostel room, hut, shack, flat, apartment, room,
outbuilding, garage or similar structure which is leased...
v Thus, whenever the leased property is residential in nature, the RHA will apply to
the relationship between the lessor and lessee.
v See copy of RHA on ClickUP: read through it
v Purpose of RHA: see 16.03-16.04
§ regulate relationship between lessor and lessee
§ Give effect to right to housing in s 26 of Constitution (preamble)
§ See later slides for how RHA impacts rights/duties of parties

v Rental Housing Tribunal

§ Any party can lodge complaint about “unfair practice” – see 16.05
Ø Any act/omission that contravenes RHA or a practice prescribed as
a practice unreasonably prejudicing the right or interests of the
tenant or landlord
§ Complaints procedure:
Ø Tribunal will investigate whether the dispute relates to an unfair
practice
Ø Appoint mediator where applicable
 Ø Tribunal will conduct hearing if mediation not
appropriate/unsuccessful
Ø Decision by tribunal can include stopping:
v Overcrowding
v Unacceptable living conditions
v Exploitative rentals
v Lack of maintenance
Ø Where person does not comply with ruling criminal action may be
instituted and a fine or imprisonment not exceeding 2 years ay be
imposed
v NB: Maphango case: meaning of “unfair practice”
§ SCA: not isolated incident; must be incessant/systemic
§ CC: can be single act, e.g. terminating lease contrary to RHA
CONSUMER PROTECTION ACT
q See 16.02, 16.09, 16.13
§ CPA in general: covered in VBB 220
v “Service”
§ Includes: providing access to / use of premises / property i.t.o. rental
v “Rental”: wide enough to include residential/commercial lease
v If lessor qualifies as “supplier”
§ i.e. supplies service “in ordinary course of business”
v And if lessee qualifies as “consumer”
§ Natural persons plus juristic persons below threshold
v Then: in principle, CPA applies to lease agreement
§ Implications? See VBB 220, some references in later slides
HOW TO CONCLUDE A LEASE
v Comply with general requirements for valid contract
§ Where the CPA is applicable it applies to:
Ø The lease agreement
Ø Services provided by the lessor under the lease agreement
Ø Applies prior to the conclusion of the agreement
§ S8 – provisions aimed at the protection of the consumers against
discriminatory marketing
Ø May not unfairly discriminate when assessing lessee’s ability to pay
rent, determining the amount of the rent or other costs, proposing
the agreeing terms and conditions
Ø Reasonable grounds for differential treatment in S9
§ In relation to the marketing of services the lessor is not allowed to
Ø Directly/indirectly express or imply a false, misleading or deceptive
representation concerning a material fact to a lessee
Ø Use exaggeration, innuendo or ambiguity as to a material fact or fail
to disclose a material fact
 Ø Fail to correct an apparent misapprehension on the part of the
lessee where such failure amounts to false representation
§ S29 – giving effect to the consumers right to fair and responsible
marketing
Ø May not market in any way that could be misleading or false in
respect of
Ø

§ S40 – unconscionable conduct on the part of suppliers

Ø 40(1) – a lessor or the agent of the lessor may not use physical
force, undue influence, coercion against the lessee or similar
conduct in connection with:
Ø

Ø S40(3)
§ Read 16.15 to 16.25 for special application of general rules to lease
v NB: are there formality requirements for lease contracts?
§ See 16.26-16.29
§ General rule: no formalities, unless legislation or agreement.
§ Common law: no general requirement that it must be in writing
§ CPA: Minister can prescribe writing requirement for types of contract (has
not done so yet)
§ RHA: tenant may request written contract from landlord
§ RHA, when 2014 Amendment Act becomes operative:
Ø Lease of dwelling: must be in writing
 Ø Must include certain info: see 16.28
FORMALITIES IN CASE OF LONG-TERM LEASE
v What is a long-term lease?
§ For ten years or longer
§ Includes leases that are renewable for period which, together with first
period, is ten years or longer
v Can be registered in the Deeds Office
§ Upon registration:
Ø grants lessee a limited real right in the land
Ø not just a personal right against the lessor
q See also the summary in 17.32 (in the context of “huur gaat voor koop”)
ESSENTIALIA OF LEASE
q See 16.31-16.44
v Parties must have consensus on:
1) The leased property
2) Temporary transfer of use and enjoyment of property
3) Nature and extent of counter-performance (rent payable)
v Why is presence of essentialia important?
1) Common law rights, duties and remedies become automatically applicable
(naturalia) – see Themes 2 and 3
2) Legislation like RHA and CPA might become applicable
Ø If contract falls in scope of application (see later slides)
1. LEASED PROPERTY
q See 16.33-16.35
v Type?
§ Movable, immovable, corporeal, incorporeal
§ Res in commercium (anything in the commercial realm)
v NB: identified or identifiable, e.g.:
§ Specific number of units
§ A specifically described object
§ Part of property, e.g. a room
§ If property not identified or identifiable: contract void for vagueness.
v Urban versus rural land (why important? See later)
§ Purpose of land, not location
§ Rural: agricultural purpose
§ Urban: residential, business, industrial, mining etc.
2. TEMPORARY TRANSFER OF USE AND ENJOYMENT
 See 16.36-16.38
 Lessee gets right to use and enjoy: not consume and destroy
 Must be temporary
 Why? If leased permanently or in perpetuity, then not lease but possibly sale
 Ways in which term of lease can be described:
 From specific date to specific date
 From specific date, for specific period
 From event, for specific period or until future event
 For as long as either party desires
 Periodic: day-to-day, month-to-month, year-to-year
 Periodic lease can be implied, if e.g. nothing said about duration
 Implications of s 14 of CPA? See 16.38 and later slides
3. COUNTER-PERFORMANCE
q See 16.39-16.43
v Must it be in money?
§ Can it be something else: like improvements to land, portion of produce,
rendering a service, etc.?
§ Case law confirms: although archaic rule, it must be money
Ø Question: what about crypto currency like Bitcoin?
v Methods of describing / calculating rental:
§ Specific amount, e.g. per month
§ Fixed according to a formula (i.e. determinable)
§ Third person(s) will determine rental
Ø Objective standard
Ø Court can be asked to intervene
Ø One party may not have absolute discretion
v Increase of rental?
§ As stipulated in contract
§ Discretion for one party to increase rental?
 § E.g. unilateral increase by the lessor?
v Benlou case – [65] in casebook
§ Rental must be determined or determinable
§ In this case: lessor had discretion to increase rental if his expenses
increased
§ Cannot be left to discretion of only one of parties
§ In this case: lessor did not have unqualified discretion to increase rental
§ Agreement contained objective standard for increase of rental under these
circumstances
IMPORTANCE OF ESSENTIALIA : EXAMPLE
v Ferndale Crossroads case – [64] in casebook
§ Rule in a statute: If City of Joburg wants to conclude lease agreement with
a lessee, this must be advertised first
§ In this case: lease was concluded without advertising
§ Argument: lease void
§ Counter-argument: this was not a lease and therefore it was not
necessary to advertise. The lease-like aspects of the contract were merely
incidental.
§ Court considered essentialia of lease and found that the core of this
contract was a lease
§ Therefore: lease was void because no advertisement
§ See casebook for more detail