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Contractual terms for the exclusive benefit of one party can be waived by that party

It is an elementary principle of law that a contract is brought into existence by offer and acceptance.

It is quite common for a person to offer to purchase property and stipulate that acceptance of that offer will only be valid if such acceptance takes place before a stipulated date. One can see the sense in setting such a deadline - the would-be purchaser wants to have certainty, and doesn't want to have the offer just hanging in the air indefinitely.

Assume therefore that I make you a written offer to purchase your seaside plot for R1 million and my offer says that, "No acceptance of this offer shall be valid unless notified to me by 1 June 2007". What happens if you give me a signed acceptance on 2 June 2007 and I want to go ahead with the contract, despite the late acceptance? Is there a binding contract between us?

This was the essence of the situation that came recently came before the Cape High Court in Manna v Lotter 2007 (4) SA 215.

The law aside, why would a seller want to be technical and reject an offer to purchase at the price he was asking? Very simple- if the property market is rising, the seller may regret having advertised the property for sale at such a low price, and may want to put it back on the market at a higher price.

If an offer, in the terms outlined above were to be interpreted literally, the "late" acceptance would be invalid, and there would be no contract.

However, in Manna v Lotter the court held that the expiry date of the offer had been inserted into the contract for the exclusive benefit of the offeror (the person making the offer), and was a benefit that he was entitled to waive – in other words, he could elect (choose) to treat the late acceptance as valid, thereby bringing a binding contract into existence.

This solution clearly has both common-sense and equity in its favour – why should a person who has professed to accept an offer later than the stipulated expiry date for acceptance be allowed to contend that his acceptance was ineffective, and that a contract did not come into existence? If he did not wish to bring a contract into existence, why did he accept the offer in the first place?

Treating the contract as valid and binding is therefore not unfair to him.

Terms for the exclusive benefit of one party to the contract

This is merely one example of a stipulation in the contract that the law regards as having been included for the exclusive benefit of one of the contracting parties, and which can therefore be waived by that party – in other words, he can choose not to enforce it.

So, for example, if a contract for the purchase of immovable property states (as such contracts often do) that the contract is "subject to the condition that the purchaser obtains a loan of not less than Rx within 21 days of acceptance of this offer", that condition is regarded as being for the exclusive benefit of the purchaser, and can be waived by him. Thus, even if the purchaser has not obtained the envisaged bond within the 21 days, he can nonetheless elect to be bound by the contract, in which event he will of course have to come up with the purchase price from some other source. (See the judgment at [32].)

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