Transcript Formation of the Contract of Lease

Formation of the Contract of
Lease
Legislative Scheme
Rental Housing Act 50 of 1999 [RHA]
• To give effect to the right to adequate housing
in terms of s 26 of the Constitution.
• Rental Housing Tribunals to deal with
complains concerning unfair practice.
• It applicable to residential leases.
Legislative Framework
• CPA & RHA where applicable impacts
significantly on the common law lease.
• CPA applies both to residential & commercial
leases.
Definition
• A lease is a reciprocal agreement in terms of
which the lessor undertakes to confer upon
the lessee, the temporary use & enjoyment of
a particular thing (res) in exchange of counterperformance.
Gen Requirement for Conclusion of
the Lease
• CPA – s8 protects consumers against
discriminatory marketing & provides that a
lessor mayn’t unfairly discriminate against
prospective lessee on grounds listed in s 9 of
the Constitution.
S29 of CPA Consumer’s right to fair &
responsible marketing:
S 40 unconscionable conduct of the
part of the lessor
• Lease agreement vitiated by unconscionable
conduct will be void.
Formalities
• S 5 of RHA confirms principle that leas
agreement need not be in writing.
Essentialia of the Contract of Lease
1. Leased property
2. Use and enjoyment of such property
3. Nature & extent of counter performance
delivered.
Incidentalia of the contract of lease
• S 49 of the CPA places additional duties on a
lessor at the time of formation of contract of
leas where certain terms are included.
Unfair unreasonable or unjust contract
terms
• S48 prohibits lessor from including in an
agreement terms that unfair ...
Notice required for certain terms &
conditions – s49
a) Limits the risk or liability of the lessor
b) Constitute assumption of risk or liability by
the lessee
c) Imposed obligation on the lessee to indemnify
the lessor
d) Constitute an acknowledgement of any fact
by the lessee.
Powers of court to ensure fair & just
conduct, terms & conditions
• S 52 Court empowered to maker various
orders.
The common law duties of the lessor
1. Delivery of the leased property
• She must put lessee in use & occupation.
• In terms of s 54 of CPA is the right of the
consumer to demand quality service
The common law duties of the lessor
2. Maintenance of the leased property
• Lessor is not obliged to repair damage caused
by the lessee.
Lessee’s Remedies
• Specific performance, rescission and damages
• Further remedies: reduction of rent, &
undertaking the repairs herself & recovering
the cost from the lessor.
Arnold v Viljoen 1954 3 SA 322 (C)
• Test for tenant’s liability for rent is whether
he was in occupation of the premises “and
whether such occupation was beneficial or
not”
Steynberg v Kruger 1981 3 SA 473 (O)
• Dispute fitness of leased property,
maintenance of property in such suitable state
& whether lessee is entitled to reduction of
rent where the lessor had been in breach.
Steynberg v Kruger 1981 3 SA 473 (O)
• Court didn’t approved of decision in Arnold &
refused to grant summary judgement against
K for his failure to pay rent in the above
circumstances.
• See also Thompson v Scholtz [1998] 4 All SA
526 (SCA)
The common law duties of the lessor
3. Providing undisturbed use and enjoyment
• Lessor himself mayn’t disturb the lessee’ use
& enjoyment; &
• Has to guarantee that no third party with a
better title will disturb the lessee in his use &
enjoyment.
Disturbance by Lessor
• Lessee’s entitled to contractual remedies for
breach: specific performance, rescission
and/or a claim for damages.
Specific can effect in two ways:
1. Prohibitive interdict
2. Spoliation order – an order which obliges
lessor to restore the lessee to his occupation.
3. Under certain circumstances, she is entitled
to a reduction in the rent.
Disturbance by third parties
• Lessee can put up vigorous defence if the third
party claim appears to be indisputable.
• He is entitled to claim damages from the
lessor
The common law duties of the lessee
1. She is entitled to payment of the rent by the
lessee
• Lessee falls into arrears with his rent,
landlord acquires hypothec over all movable
situated on the property.
Assets on leased premises but belonging
to third parties subject to hypothec
a) Lessor is unaware of the fact that the assets
don’t belong to the lessee
b) Impression is created that assets belong to
the lessee.
c) Assets where brought onto the premises with
the intention to hold them permanently.
d)Assets brought onto premises use by the
lessee.
Proper use of the property
• Lessee is obliged to use the leased property as
a reasonable person would use & care for his
own property.
Remedies
• Damage or alterations made without lessor’s
approval, specific performance in the form of
interdict.
• Material breach, lessor may cancel the lease
Return of the property on termination
of lease
• Lessor’s Remedies
• Onus of proving damage to the property
wasn’t caused by the lessee’s action rests on
the lessee.
Lessor’s Remedies
• Lessor’s right to evict lessee may be impaired
by s26(3) of the Constitution
• Prevention of Illegal Eviction & Unlawful
Occupation of Land Act 19 of 1998
• Land Reform (Labour Tenants) Act 3 of 1996
• Extension of Security of Tenure Act 62 of 1997
Glen Elgin Trust v Titus [2001] 2 All SA
86 (LCC)
• Held Constitution was to lease agreements &
that a court, before ordering that a lessee be
evicted, has to adhere to s26(3)
Rights and Duties Imposed by RHA 50 of 1999
• S 5(4) makes it clear that neither lessee nor
lessor may waive any of the provisions.
Sundry Aspects of Law of Lease
• Sub-letting, cession and assignment
Sub-lease
• Like the original lease, a sub-lease is a
reciprocal agreement in terms of which one
party the sub-lessor, undertakes to confer
upon another party, the sub-lessee, the
temporary use & enjoyment of the thing in
exchange for counter-performance.
Spies v Lombard 1950 3 SA 469 (A)
Sublease could possibly be to the lessor’s
detriment because the sub lessee:
• Could fail to make proper use of the property;
or
• Be in breach of other contractual duties.
Cession
• Where the lessee (the cedent) transfers his
rights against the lessor to a third party (the
cessionary).
• The original lessee then falls away as creditor
since the cessionary steps into her shoes.
Delegation & Assignment
• Delegation requires the consent of the original
debtor, the creditor & the new debtor.
• When both rights & obligations are
transferred, assignment occurred.
• A second lease is not formed, but the third
party takes over the rights & obligations of the
original lessee
Huur gaat voor koop – hire takes
precedence over sale