CAN AN OFFER TO PURCHASE BE REVIVED?
Maria Luisa Palma Codevilla v Paula Jane Kennedy-Smith NO and Others (494/2023) [2024] ZASCA 136
In the abovementioned case, the Supreme Court of Appeal (hereinafter ‘SCA’) considered whether an addendum to an offer to purchase (‘OTP’), which had previously lapsed, could amount to a revival of that offer to purchase.
The purchasers (third and fourth respondents) concluded a sale agreement for immovable property on 4 February 2020. The agreement was subject to a suspensive condition being the approval, in writing, of a mortgage bond for the amount of R4 950 000 (Four million nine hundred and fifty thousand Rand). The Purchasers were required to obtain such approval by 14 February 2020. The first addendum to the OTP was concluded on 11 February 2020 which extended the period to 19 February 2020.
Due to Covid-19, the Purchasers were unable to obtain finance to which the Appellant agreed to furnish the funds on behalf of the Purchaser. The Appellant was unable to provide the funds by 20 February 2020, so the Purchasers and the Seller concluded a second addendum on 21 February 2021, after the lapse of the suspensive condition.
The court had to consider whether the second addendum, having been concluded after the lapse of the OTP, amounts to a revival of that OTP. The court relied heavily on McPherson v Khanyise Capital (2009) where the respective court highlighted that:
- A suspensive condition cannot be waived or extended after the time fulfilment of the condition has passed;
- That an agreement which has lapsed because of the non-fulfilment of the condition cannot be revived; and
- That the parties are required to enter into an entirely new agreement, which can be on the same terms and conditions of the old one
The court further relied on the principle in Pangbourne Properties Ltd v Basinview Properties (Pty) Ltd (2011) which has previously been affirmed by the constitutional court, that a contract which has lapsed due to non-fulfilment of a suspensive condition cannot be revived, because there is no longer a right that can be waived. On this basis, the court decided that the second addendum did not amount to a revival of the OTP because there was no right to be waived as the OTP had lapsed and was unenforceable.
Written by: Marc van der Merwe – Associate Conveyancer
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