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Court approves rectification of property sale agreement

Rectification of property sale agreement 

Rectification serves as a remedy for parties whose written agreement does not reflect their common intention at the time the agreement was concluded. 

Rectification of Property Sale Agreement

However, can the remedy come into effect if the agreement contained a non-variation clause or if a purchaser claims that  agreement was made null and void due to non-compliance with a suspensive condition which the seller seeks rectification of? 

In the case of Jacobs v Southey and Others (724/14) [2015] ZANCHC 12 (24 April 2015), Southey (seller) sold her property to Jacobs (purchaser) for R750,000. 

Suspensive Condition and Non-Variation Clause

This was subject to the suspensive condition that the purchaser obtains a bond in an amount of R750,000 by a certain date. This sale agreement also contained a non-variation clause. 

The parties orally agreed to reduce the purchase prices because of the fact that Jacobs could only get a bond for R675,000. It was reduced to R650,000, leaving R25,000 for payment of the transfer and bond registration costs. 

The Transfer of the property into Jacob's’ name was put into effect and a bond was registered in favour of Standard Bank. 

After the transaction was finalised, Jacobs sought an order for the transfer of the property back to Southey against payment of the R675,000 to Standard Bank, and claimed that the agreement was invalid because of the non-compliance with the suspensive condition.

Southey made counterclaim, and advised the court that because both parties had orally agreed to reducing the purchase price to R650,000, the signed agreement therefore didn’t reflect the true intention of the parties and sought an order so as to rectify the agreement. 

The oral agreement was concluded after the written one, however it was never put in writing as a result of a common mistake between the parties. 

Jacobs alleged that rectification cannot be claimed after the date of conclusion of an agreement which is subject to a non-variation clause. 

This was because he felt that an amendment of the agreement was not allowed as it didn’t comply with the suspensive condition and breached the non-variation clause. 

And so due to the non-compliance with the suspensive condition, the agreement had lapsed and was void. 

Claim for rectification

In order to succeed with a claim for rectification, a party must prove that an agreement had been concluded and reduced to writing and that the written document does not reflect the true intention of the parties. 

They also have to prove that there was an intention by both parties to put the agreement in writing. 

If applicable, that because of a mistake, intentional or unintentional, the agreement was never put down in writing. The wording of the actual agreement would also need to be proved.

In a situation where both parties to a written agreement are unaware when they signed the contract, and a condition that had formed part of this written contract was not included in writing, then it is within the defendant’s right, despite the non-variation clause being in effect, to rectify the contract.

In this matter, both parties were aware that the loan for a lesson amount was approved for instead of the amount that was initially stipulated. 

Jacobs then proceeded to pay the reduced amount Southey, which showed her acceptance of the offer. 

Both parties ignored the non-variation clause. Jacobs signed the documentation pertaining to transfer and paid the bond costs and as a result the property was registered in his name. 

The conduct of both parties was consistent with the oral agreement referred to by Southey, and so the court granted the order sought the seller, that of the rectification of the original agreement. 

However, Jacobs was unsuccessful in proving that the agreement was null and void.

Van Deventer & Van Deventer Incorporated - Sandton Attorneys

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