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In this week’s article, we will discuss a court case where the court discussed the efficacy of the acceptance of the buyer’s offer after the date for acceptance of the offer to purchase had lapsed and concluded that the seller was bound by such acceptance.
It is the case of EP Manna V JM Lotter (CPD) 9708/04. Mrs X, a Welsh lady, placed her property in Sedgefield, Western Cape, on the market via a local estate agent in October 2003. The estate agent found a willing buyer who signed an offer to purchase on November 6, 2003.
The offer stated that it was irrevocable and would expire at noon on November 8, 2003, however, the estate agent only faxed the offer to the seller on November 9.
The seller then signed (and thereby indicated her acceptance of) the offer – the exact date is not known – and faxed it back on November 12.
The conveyancer dealing with the transfer then tried to reach the seller to sign the necessary documentation but to no avail. The seller simply refused to sign the documents and wouldn’t answer any calls or respond to any messages.
It appeared that given the skyrocketing prices of properties in the area, the seller must have realised that she could have obtained a far higher price if she had just hung on to the property a few months more, the typical seller’s remorse.
The buyer then launched an application in the Cape High Court to compel the seller to sign the necessary documents, so that transfer could be registered. The seller opposed the application on the basis that because she accepted the offer after it had already lapsed, there was, in fact, no binding agreement meaning that you cannot accept an offer that “no longer exists”.
The judge immediately drew the following distinction in his judgement: If an offer is accepted by a seller before the time to accept it has lapsed, then the buyer, who made the offer, is undoubtedly bound to the agreement.
But what is the situation where the seller accepts the offer, after it has lapsed, and the buyer then still wants to proceed? Can the seller then escape the agreement by relying on the fact that the offer lapsed before she accepted it?
Interestingly, there are no precedents in South African law and hence the court was compelled to look at foreign law and views expressed by respected authors.
After analysing the possibilities, one being that the late acceptance was a “counteroffer”, which was not accepted by the court, the court held that the best way to approach this type of scenario would be to regard the expiry date as a stipulation that was inserted solely for the benefit of the buyer, which benefit he could elect to waive.
As such, the buyer would then be entitled to accept (or reject) the “irregular” acceptance of his initial offer. Naturally, this election of the buyer would have to be communicated to the seller within a reasonable time, depending on the circumstances.
In this case the buyer, upon receipt of the signed offer to purchase, immediately proceeded with doing whatever he needed to from his side, to give effect to the agreement.
It is to be remembered that the buyer only became aware that the offer had only been accepted after its expiry date, once he received the seller’s affidavit in opposition to his application, almost two years later. Until then, the seller had remained silent.
On this basis, the court held that notwithstanding a late acceptance of the buyer’s offer, the fact that the buyer had elected to proceed afterward indicated his willingness to accept the irregular acceptance and as such the agreement remained valid and binding.
Should you have any questions regarding property law, or the transfer of immovable property, kindly direct them to rayno@sjbothaattorneys.co.za
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