Contracts for the sale of immovable property
The general rule of our law is that a contract (being a legally binding agreement) need not be in writing in order to be valid and enforceable.
Generally, an oral contract, or even a tacit contract (in which the parties reach agreement without putting it into written or spoken form, for example where you point to an item in a shop and put money on the counter, which the shopkeeper then puts in the till) is no less binding than a written contract.
Of course, a contract that is not in writing may be difficult to prove, but that is a separate issue. In principle, the contract is binding.
Contracts for the sale of immovable property
A notable exception to the rule that a contract need not be in writing is laid down in section 2(1) of the Alienation of Land Act, 1981, which provides that – “No alienation of land … shall … be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto”.
The reference to “land” means all immovable property, whether vacant land or land improved by the erection of a building.
The statute imposes two requirements, firstly that an agreement to alienate (dispose of) immovable property must be in writing, and secondly that it must be signed by all the parties to the agreement. In Samson Buildings (Pty) Ltd v Robert Andrew Beaumont NO and others (case 12069/1999; 15 August 2007; not yet reported) the Cape High Court had to adjudicate on the validity of a contract for the sale of immovable property.
In this case, the purchaser made a written and signed offer to purchase certain property. The seller made some changes to the offer. He initialled the amendments and signed the offer, which he then returned to the purchaser. The purchaser did not initial the changes to the offer that had been made by the seller, but simply gave it to his conveyancer to go ahead with the transfer.
The seller then had second thoughts and did not want to go through with the deal. The purchaser wanted to hold the seller to the deal. The question was whether their agreement, as contained in the document in question – the amended offer – was valid and binding on them, and this depended on whether it
complied with the formalities laid down in section 2(1) of the
Alienation of Land Act.
The agreement was of course in writing, as required by the Act, and
it was also signed by both parties. But subsequent amendments that
had been made had been initialled by the seller, but not signed or
even initialled by the purchaser.
Was the document a valid contract for the sale of land?
Did the document comply with section 2(1) of the Alienation
of Land Act? If not, it was invalid and unenforceable.
The advocate for the purchaser argued that section 2(1) required
only that the contract be “signed” by both parties (which it was)
and did not say that all amendments must be initialled.
The court, however, held that when the would-be seller made amendments
to the offer to purchase, he was making a counter-offer to the would-be
purchaser, and that such counter-offer had to be accepted by the
purchaser in writing in order to comply with section 2(1) of the Act.
It was true that the purchaser had signed the offer to purchase, but he had done so before the seller made amendments to it.
In short: in order for the agreement to be valid and binding in terms of the Act, the purchaser would have had to accept the counter-offer “in writing” (by signing or at least initialling the counter-offer) and this he had not done; see the judgment at [11] and [18].
The court held that the document was invalid for want of compliance with section 2(1) of the Alienation of Land Act.
The Moral of the story
In this case, it is noteworthy that the seller had signed the contract and initialled the changes. At that point he was happy with the contract.
But when he decided to look for some technical point that would allow him to wriggle out of the agreement, he was able to seize on the fact that the purchaser – who was also happy with the contract and wanted to go ahead with it – had omitted to initial the amendments that he, the seller, had made. By this pretext, the seller was able to escape from the contract and (no doubt) sell the property for a better price to someone else.
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