Common law principle of voetstoots
Under our common law, when a buyer buys goods there is an implied warranty that the seller sells the goods free from any defects. But if the goods are sold voetstoots, it means that the buyer takes delivery of the goods “as is” and without warranty. If goods are sold voetstoots and the buyer later finds out that there is a defect with them, the buyer would have no recourse against the seller.
The exception to this is where the defect existed at the time of sale, and the seller knew about the defect but failed to tell the buyer about it. The inclusion of a voetstoots clause in a contract of sale would not protect a seller who knew about the defect but failed to disclose it, knowing that if the buyer had known of the defect the sale may have fallen through, or the buyer would probably have negotiated a lower price. In due course, when the buyer eventually finds out about the defect, the buyer would have recourse against the seller to either cancel the sale and reclaim the purpose price, or to claim a reduction in the price.
Consumer Protection Act
We now have the CPA, which protects the customer by providing that goods sold must be free from defects. The CPA also requires goods sold to be reasonably suitable for their intended purpose and in good working order at the time of the sale.
The introduction of the CPA to the South African legal landscape raises some interesting questions. What is the impact of the CPA on the voetstoots clause? Is the voetstoots clause still legal? And how would a seller go about selling goods that are defective in some way? Such as “seconds” or damaged stock? What about selling used goods? Second-hand items by their nature can be sub-standard or have defects. Or goods that by their inherent nature carry risks, such as livestock or works of art?
It is important to note that the CPA doesn’t prohibit the sale of damaged or defective stock. But what it does do is impose an obligation on the seller to disclose all known defects or risks of defects in the goods. And where the goods are second-hand / used / factory-soiled or “seconds” the seller must disclose this to the buyer so that the buyer can decide whether to accept the risks inherent in buying these products. The seller must ensure that any material information pertaining to the goods is communicated to the customer before the sale is concluded.
A seller can reduce the risk of being responsible for defects by informing the buyer that the goods are being offered in a particular condition, or by their nature they inherently contain risks. Some examples include:
- a house that was built in the early 1900s and is in need of a lot of maintenance to restore it to its former glory;
- a 20-year old car with high mileage that may be prone to breaking down at any moment;
- commissioned goods that are hand-made or works of art that may contain variances or inherent risk of “defects” in the final products;
- livestock by their nature can fall prey to injury or disease;
- products that have a ‘shelf-life’ or expiry date.
The prudent seller would detail the condition of the goods, preferably in writing, and require the buyer to accept all the risks that go with buying such an item. Ideally, every defect or risk should be expressly stated in a written Sale Agreement. By expressly agreeing to take the goods knowing their condition and inherent risks, and nevertheless agreeing to purchase them voetstoots despite this knowledge, the buyer would be buying the goods warts and all, and would be responsible for any defects that may arise. Of course, if the seller knew of any problems or potential problems and failed to disclose them, the buyer would still have recourse against the seller.
Where the seller is selling pre-manufactured goods that are brand-new, there is far less chance of the seller being able to shift the burden of risk in the defects, and in such sales the buyer would generally have recourse against the seller if the goods transpire to be defective.
If a defect comes to light within six months after the sale, and provided that the buyer has not accepted the risk of the defect, the CPA provides the buyer with the right to return the goods to the seller for a refund, exchange or repair (whichever option the buyer chooses).
Thus the CPA doesn’t prohibit the voetstoots clause, and there appears to still be a place for the voetstoots clause in the terms of sale for certain categories of goods and products. But what the CPA does is restrict usage of the voetstoots clause by placing an increased onus of disclosure on the seller at the time of the sale. Before the seller is able to shift the burden of any defects the seller must first ensure that full disclosure has been made. Preferably, a Sale Agreement can be used to disclose any defects in writing.
Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.