Fairoaks

Before: Streicher, Mthiyane, Ponnan JJA, Hurt and Kgomo AJJA
Heard: 11 March 2008
Delivered: 28 March 2008

Summary: Sale of land - agreement of sale lapsed because of non-fulfilment of suspensive condition - agreement to revive agreement of sale with amendments has to comply with provisions of Act 68 of 1981.

Neutral citation: Fairoaks Investment v S Oliver (268/07) [2008] ZASCA 41 (28 March 2008)

Briefly Fairoaks concerns the revival of an agreement of sale of land which had lapsed because of the non-fulfilment of a suspensive condition. The SCA per Streicher JA held that an agreement to revive such an agreement with an amendment of the suspensive condition which caused the agreement of sale to lapse, had to comply with the formalities prescribed for agreements of sale of land. The following extracts are worth highlighting:

[14] Counsel for the appellants submitted that it was held in Neethling v Klopper and Others² that a contract for the sale of land which had been cancelled could be revived by waiver of the rights created by the cancellation of the agreement and that an agreement to do so does not constitute a fresh agreement of sale which has to comply with the formalities prescribed by s 2(1) of the Act. He submitted that the same principle is applicable in a case where the contract of sale lapsed through the non-fulfilment of a condition. The parties could likewise agree to waive the rights created by the lapsing of the agreement and such agreement would not constitute a fresh agreement of sale which had to comply with the formalities. In this regard he relied on the judgment in D S Enterprises (Pty) Ltd v Northcliff Townships (Pty) Ltd.³

After analysing Steyn CJ's reasoning in Neethling and its applicability to this case Streicher JA said:
at [19]:
I do not think that Steyn CJ's concluding words were intended to be read in isolation. It is in my view clear from his reasoning that in order to determine whether an agreement should comply with the prescribed formalities one has to determine what the intention of the parties was....
In each case the true nature of the transaction will have to be investigated in order to determine whether it constitutes an agreement of purchase and sale. If the intention was to buy and sell ie to enter into a new contract on the same terms as the cancelled contract, the agreement will have to comply with the prescribed formalities even though the mechanism employed to give effect to that intention was the withdrawal of the cancellation.

And at [21]: The contract which had lapsed because of the non-fulfilment of the condition had become, as a result of the amendment, subject to a new material condition, the time for fulfilment of which had not been stipulated. It follows that the parties by agreeing to revive the lapsed agreement with amendments, entered into an agreement to buy and sell on terms different from the terms previously agreed to. Such an agreement has to comply with the provisions of s 2(1) of the Act. Even if the amendment had been agreed to prior to the lapsing of the agreement of sale it would, in order to be valid, have had to comply with the provisions of s 2(1) of the Act.⁴