Legal Articles

Contracts of sale of Immovable property

When a contract is subject to a suspensive condition then this contract only comes into effect once the condition has been met. 

This can be done through a future event such as a deposit payment, securing a loan or even conditions such as graduating from university to receive a bonus payment.

Fulfilment of the suspensive condition

As was the case in the judgement ruling between the Mia v Verimark Holdings (Pty) Ltd in 18 September 2009, the fulfilment of the suspensive condition is a prerequisite for a contract to come into force and effect.

Requirements for a binding contract 

However there are a number of requirements that need to be fulfilled:

• These requirements include consensus between the parties involved and the genuine simultaneous intention to follow through with the agreement. 
• Both parties need to be legally capable of concluding a binding contract, and so must be over the age of 18 and of sound mind and able to pay back their debt. 
• The contract must be legal and may not contradict any statutory or common law rule. 
• All agreed to actions need to be determinable and possible at the time of conclusion. 
• And the contract must abide by any formalities set by the law or by the parties involved.

As previously mentioned the suspensive conditions made in the contract must be fulfilled in addition to the requirements. If the contract is breached it cannot be enforced and, as a result, damages often cannot be claimed.

Fictional fulfillment & common law

With regards to common law principles, when a party willfully prevents a suspensive condition from being fulfilled, then the aggrieved party may rely on the doctrine of fictional fulfillment to remedy the situation. 

So the defaulting party will have to perform their obligations as if the suspensive condition had been fulfilled. 

Thus, they will be liable for the damages resulting from the breach of contract if said obligations aren’t fulfilled. This was relied on in the case of Du Plessis & Smith NNO v Goldco Motor & Cycle Supplies, 2008.

Sometimes the purchaser can waive the suspensive condition thus eliminating the need to fulfil it and the contract is thus made legally valid and enforceable. 

This was clearly shown in the case of Abraham Willem Adriaan Coetzee v Anna Catharina Van Der Walt, 2000. 

In this case, the parties entered into an “Offer to Purchase” of a fixed property. 

The respondent alleged that the contract had lapsed, whilst the applicant disputed this allegation and sought an order to declare the contract as valid and binding. 

The suspensive condition of the contract involved the payment of the deposit. However, no deposit, nor the full purchase price, was paid into the trust account of the transferring attorney. 

Referring to the two cases, the court spoke of when the purchaser should waive the protection, as well as, who is meant to be protected by the suspensive condition in question. 

This purchaser would have had a claim had he fulfilled the suspensive condition before the cut-off period as stipulated in the contract. 

As this was not the case, the contracted lapsed and was thus declared legally invalid and unenforceable. 

Trustees acting on behalf of a trust, can only do so once the trust has been registered.

Trusts - Letter of Authority 

They will also have to have been authorised to conclude such agreements in writing by the Master of the High Court, who will issue the trustee with a letter of authority. 

This agreement will be invalid and lacking in legality if it is entered into by a person who is a trustee, or a trust yet to be formed. 

This will also be the case if the trustee or trust which is formed aren’t in possession of a letter of authority. This agreement could however pose as a suspensive condition similar to pre-incorporation contracts found in company law.

Van Deventers & Van Deventers Incorporated -  contract lawyers

Undertaking contracts of sale of immovable property isn’t a simple process and so you should acquire the services of an attorney, even if this means just getting them to review the contract before signing.

Contact us for legal advice