“Words are loaded pistols.” (Jean-Paul Sartre)
In June 2018 a couple agreed to buy a house for R1.95 million. The sale was subject to two conditions: that they sell another property within ninety days and obtain a bond for the full purchase price.
The other property was sold, but the bank approved a bond for less than the amount required. The agreement allowed the seller to accept the lower bond and regard the condition as fulfilled. It was common cause that both conditions had been met and that the sale was unconditional.
The transfer then ran into trouble. While the documents were being prepared, the Deeds Office established that one of the buyers was an unrehabilitated insolvent. The bank withdrew the bond.
The seller did not cancel at that point. She agreed to a memorandum giving the buyers several ways to resolve the problem. They could apply for the buyer’s rehabilitation, seek a bond in the other buyer’s name, or wait until the end of May 2019, when he would have been rehabilitated. None of these options were pursued.
In April 2019 one of the buyers emailed the conveyancer. He said there was no point applying for another bond until an alleged defect had been addressed. He wanted the seller to repair it or agree to a lower price, after which the buyers would apply for the bond. If she would not consider this, they would have to look at other options.
The seller treated the email as a repudiation, accepted it, and cancelled the sale.
Asking is allowed. Insisting is the problem
Repudiation occurs when one party, without lawful grounds, shows through words or conduct that they no longer intend to perform the contract. The other party may then insist that the contract be honoured or accept the repudiation and cancel.
The buyers were entitled to ask whether the seller would repair the alleged defect or consider a lower price. She was equally entitled to refuse. Unless both sides agreed to an amendment, the signed agreement remained binding.
This email went further than a request. It made the bond application dependent on the seller repairing the defect or accepting a lower price. The buyers were not offering to proceed under the existing agreement while discussing a possible change. They were saying that they would proceed only on different terms.
The Court accepted that the buyers may still have wanted the property. That did not decide the matter because repudiation is judged objectively. The question was how a reasonable person in the seller’s position would understand the email, not what its writer privately intended.
A reasonable reader would have understood that the buyers were no longer prepared to perform under the agreement as it stood. The High Court therefore found that the seller had validly cancelled the sale.
What did the cancellation cost the buyers?
The agreement allowed the seller to keep the money already paid if the sale was cancelled in these circumstances. This is sometimes referred to as rouwkoop. The Magistrates’ Court had ordered that the money be returned, but the High Court reversed that order.
The buyers also became liable under the estate agent’s commission clause because the sale had been cancelled due to their conduct. A further financial judgment was granted against them, together with interest and legal costs.
One email had therefore cost the buyers the sale, the money already paid, and a substantial additional amount (almost R150,000.00).
How can you ask for a change safely?
Make it clear that you are proposing an amendment rather than refusing to honour the existing agreement.
Asking, “Would the seller consider reducing the price?” opens a negotiation. Saying, “We will not proceed unless the price is reduced,” may allow the seller to cancel. No particular wording guarantees safety because the communication will be read as a whole and in the context of the parties’ conduct.
Deal with the price, finance, defects, and other material terms before signing wherever possible. If a problem arises after the agreement becomes binding, obtain legal advice before sending a message that could be understood as a refusal to perform.
Buying or selling property, or stuck in a transfer that has gone wrong? Speak to us before you put anything in writing.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.
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