Private Sales – Beware before you buy!

Everyone is aware of the Consumer Protection Act and the protection it offers us as consumers against nefarious suppliers. But what protection do consumers have in private sales? Does the Consumer Protection Act apply?

Unfortunately, not. The Consumer Protection Act applies to sales in which the supply of goods or services is done in the ordinary course of business. Therefore, any private sales, whether it be for a car or a property, are not ordinarily covered by the Consumer Protection Act.

So, what protections do consumers have in private sales?

Consumers are offered protection under the common law only. What is the common law? The common law is the law which has been decided and passed down by judges through case law and the court system.

Under the common law, consumer have three possible remedies. Save for getting into a discussion on Latin terms we all won’t remember; the three remedies available are:

1. Payment of damages;
2. Repayment of the purchase price; and
3. Reduction in the purchase price.

Damages

Damages can be claimed by a purchaser where there has been a breach of the contract between the parties or fraud on the part of the selling party. The purchaser will have to allege and prove not only that the object purchased had a defect that was latent (not immediately visible) but also one of the following:

1. that the seller warranted (as a term of the contract of sale) that the object was free of defects or that the object had qualities or characteristics that were not present;
2. that the seller was a supplier or dealer who publicly professed to have skills and expert knowledge in relation to the kind of thing which was sold or was a manufacturing seller; and
3. that the seller knowingly hid defects, or knowingly represented that there were none.

Repayment of the purchase price

This form of relief seeks to restore the parties to the position they were in immediately before concluding the agreement.

It normally entails the repayment of the purchase price; interest on the purchase price from the time of the payment; and the return of the purchased item.

A purchaser may claim repayment of the purchase price and interest thereon but in order to be successful with a claim, the purchaser will have to show:

1. that the object sold had a defect which, viewed objectively, substantially impaired the object’s utility or effectiveness for the purpose for which it was sold or for which it was commonly used;
2. that the defect existed at the time of the sale;
3. that the defect was latent in that it was not discoverable upon inspection;
4. that the purchaser was unaware of the defect;
5. that the purchaser would not have purchased the object had they known of the defect; and
6. that the purchaser is willing and able to effect the restoration.

Reduction in the Purchase Price

A reduction in the purchase price may be claimed where there is:

1. a false pre-contractual statement made by the seller which has a bearing on the quality of the object sold;
2. a latent defect that is not so material so as to entitle a purchaser to cancel the sale; or
3. a material latent defect but the purchaser chooses to abide by the contract.

A reduction in the purchase price is calculated from the difference between the purchase price paid and the actual value of the property sold either without the false qualities stated by the seller or the defects present.

How do these remedies work in practice?

These remedies are all subject to the dispute being decided by judge through litigation. Without litigating the dispute there is no way to enforce a purchaser’s rights against a seller.

Conclusion – Things to consider before concluding an agreement

Try and have the object inspected thoroughly or professionally. Ask the private seller if they are open to the object being thoroughly tested to see if there are any latent defeats which could creep up. A seller that is hesitant to a thorough inspection is normally an indication that the seller has something to hide.

Secondly, where a private seller insists on a “voetstoots” clause (that the sale be “as is”), a purchaser can in turn ask that the seller clearly specify in writing all the known defects of the objects. Lastly, always do your due diligence before concluding the purchase to save yourself the administrative costs of fighting with an elusive seller who is not interested in paying anything back.

– Lauren van der Byl

Have any questions? Drop us a message below and we’ll be in touch!

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