Basic requirements for a valid agreement and a valid offer and acceptance

Private Property South Africa
Property Power

What makes a valid agreement?

  • All parties concerned must reach a consensus.

  • The parties concerned must have legal contractual capacities.

  • Possibility of delivery - the seller must be able to deliver the property that has been sold to the buyer.

  • Essential elements of an agreement of sale of immovable property are: parties (buyer & seller); price (purchase price); subject of sale (immovable property); prescribed formalities (agreement must be in writing and signed by the parties).

  • A contract of sale need not be embodied in a single formal document. It can consist of two documents, the written & signed offer and the written & signed acceptance (as long as, in both documents, one refers to the other).

  • There is no legal prohibition on concluding a contract of sale of immovable property on a Sunday.

  • In South Africa, once you have signed an agreement to purchase a property, you cannot lose the property to a better offer made by someone else before registration takes place, unless the deal falls through due to non-compliance with the clauses set out in the agreement. In some other countries you need to take out 'title insurance' to protect your rights of ownership against the rights of other parties. However, do watch out for a sellers "escape" clause.

  • No stamp duty is payable on an agreement of sale of land.

What makes a valid offer?

  • Blank spaces must be completed correctly and where they are not applicable they must be deleted.

  • If some material terms are left, to be discussed later, the proposal is not a complete offer, and acceptance does not create a contract, unless it is clear that the matters still to be discussed are in fact immaterial to the contract.

  • A letter to a seller from a prospective purchaser, stating that he would like to purchase the seller's property at a particular price is not a valid offer. (Neither is an invite with certain basic terms from a seller to a prospective purchaser, on which the purchaser comments or 'favourably considers' the proposal.)

  • An offer to purchase document must be signed by the purchaser.

  • The offer must be brought to the offeree's (seller's) attention, either personally, telephonically, by fax or by post.

What makes a valid acceptance?

  • The acceptance of an offer to purchase must be in writing and signed by the seller or his estate agent acting on his written authority.

  • Acceptance must be clear and unambiguous (not have two possible meanings).

  • The offeree's (seller's) acceptance must be communicated to the offeror (purchaser) to conclude a valid contract.

  • Once the seller has signed the offer to purchase document, it is a legal and binding contract and the purchaser need not be informed of the seller's acceptance, for the document to be valid.

  • The offer can only be accepted by the person to whom the offer is addressed, or his duly authorised estate agent.

This article originally appeared in Property Power 11th Edition Magazine. To order your copy at the discounted price of R120 click here.

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