Validity of a Deed of Sale Accepted After the Offer Had Lapsed

The Court had to decide whether there was a binding agreement even though the seller accepted the offer late (i.e. after the date provided for in the offer).

MANNA v LOTTER AND ANOTHER 2007 (4) SA 315 (C)

THE FACTS
The seller, Mrs. Lotter placed her property on the market for sale. The Estate Agent found a willing buyer who made an offer to purchase. The offer contained a clause which stated that the offer was:

“irrevocable and expires at noon on the 8th day of November 2003 and on acceptance shall become a binding agreement of sale irrespective of whether the purchaser has been notified of such acceptance or not………….”

The offer to purchase was accepted on 12 November 2003 which was after the date that the offer was open to be accepted. The seller subsequently refused to sign the transfer documents. The purchaser approached the High Court to compel the seller to sign the transfer documents to allow for transfer to be registered.

THE LAW
The Court had to decide whether there was a binding agreement even though the seller accepted the offer late (i.e. after the date provided for in the offer). The question was whether the seller’s acceptance of the offer was binding even though the offer had expired.

The Court found that there were no precedents in South African case law and thus looked to various local and foreign authors for the answer.

The Court considered but rejected the argument that the late acceptance constituted a counter offer by the seller. The Court however found that in our law (Section 2(1) of the Alienation of Land Act) such counter offer would have to be accepted in writing and thus acceptance by conduct was not enough.
The Court decided that the expiry date in the offer to purchase was a stipulation that was inserted for the exclusive benefit of the purchaser, who was entitled to waive that benefit. In other words the purchaser could choose to waive the expiry date and proceed with the sale even though the seller had accepted the offer after the expiry date.

The Court further decided that the waiver could be communicated to the seller by doing whatever needed to be done from the purchaser in terms of the agreement of sale, i.e. signing documents, presenting guarantees or paying costs etc.

WHAT THE COURT HELD
The Court held that the purchaser had waived the expiry date in the agreement by proceeding with the transfer, and as such the agreement of sale was binding on the parties.

CONCLUSION
The cautionary note raised by this case is that one must ensure that agreements are accepted within the correct time periods.

If the seller accepts an offer to purchase after the offer to purchase expiry date has lapsed, the purchaser should thereafter either reject the “irregular offer”, or, if he chooses to accept it, should sign the seller’s late acceptance.

In this case the court also held that the bond clause was for the benefit of the purchaser and was therefore capable of unilateral waiver provided that the bond clause was waived before the date for the fulfillment of the bond condition.

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