This article considers the application of the voetstoets
principle under the law of insolvency, particularly in the light of
the Consumer Protection Act 68 of 2008 (CPA).
A voetstoets clause in a sale agreement effectively declares to the
purchaser of goods that the goods are to be sold "as is"
and without any undertaking of quality. The voetstoets clause will
protect a seller who knows of a latent defect in the merx but does
not disclose it, unless he concealed it with the intention of
defrauding the buyer (Van der Merwe v Meades 1991 (2) SA 1).
Section 55(2)(b) of the CPA provides that the consumer has a right
to receive goods that are of good quality, in good working order
and free from any defects. This section is not applicable to a
transaction if the consumer expressly agreed to accept the goods in
that condition and knowingly acted in a manner consistent with
accepting the goods in that condition. In short, the voetstoots
rule will in most cases not be applicable to sale and purchase
In terms of the Insolvency Act 24 of 1936 and the Companies Act 61
of 1973, the functions of a trustee and of liquidator are
essentially to control and administer the property and affairs of
the insolvent estate, and to realise the estate's assets for
the benefit of the general body of creditors. Section 391 of the
Companies Act 61 of 1973 describes the liquidator's general
duties as to proceed forthwith to recover and reduce into
possession all the assets and property of the company, movable and
immovable, to apply the same, so far as they extend in satisfaction
of the costs of the winding-up and the claims of creditors, and to
distribute the balance among those who are entitled thereto.
Liquidators and trustees have powers to sell any movable and
immovable property of the company by public auction, public tender
or private contract and to give delivery thereof.
In terms of section 82(1) of the Insolvency Act 24 of 1936 a sale
by public auction or public tender must be after notice in the
Gazette and after any other notice, which the Master may direct
and, in the absence of directions from creditors as to the
conditions of sale, upon such conditions as he may direct.
The question then arises as the extent to which the protections
afforded to consumers by section 55(2) of the CPA are applicable to
purchasers of goods from trustees and liquidators.
First, the CPA does not exempt liquidators or trustees from its
application, and the definition of "supplier" in section
1 thereof would, on the face of it, include a supply by a
liquidator of goods belonging to an insolvent company to a
The second point of reference is that section 55(1) of the CPA
provides that section 55(2) does not apply to goods bought at an
auction. Auctions are dealt with in section 45 of the CPA and
include a sale in execution pursuant to a court order. Although not
expressly stated by the CPA, it can safely be assumed that an
"auction" under the CPA would include a public auction of
goods belonging to a liquidated company. It follows that the
liquidators and trustees are likely to be protected from the ambit
of the CPA were they do sell the estate's assets by public
However, where a decision is taken to sell the goods by private
treaty – often a sensible route where a higher price is
likely to be obtained – the liquidator/trustee is
potentially at risk under the CPA. In short, despite the
liquidator's/trustee's relative lack of knowledge of the
goods in question, they may still be held by a purchaser to the
strict requirements of section 55(2) of the CPA.
Against this background it is essential for liquidators and
trustees to ensure that the contracts, which they use for private
sales, contain a voetstoots clause and, more importantly, that the
purchaser/consumer expressly acknowledges that the goods are
received in that condition. In order to achieve this it may well be
prudent for liquidators/trustees to insist on purchasers conducting
a detailed inspection of the goods before they are allowed to buy
the item in question.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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