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Contract Law: Waiver of a right to cancel: Sewpersadh v Dookie [2008] 1 All SA 286 (D)

A sale agreement had been entered into in regards to the purchase of a property. The material terms of the agreement were that the purchase of price would be paid via installments over a 24 month period. The respondent then breached the terms of agreement when he failed to pay the full purchase price. In light of such failure to pay, the applicant sent a letter to the respondent demanding compliance within seven days.

The applicant asked the court for the ejectment of the respondent from the immovable property on the ground that the agreement of sale had been cancelled. The respondent however averred in his defence that the applicant had accepted subsequent instalments from the respondent and that this waived any existing rights with regards to the cancellation of the agreement.

Issues in dispute

  1. Was there a lawful cancellation of the sale agreement?
  2. If the contract had been lawfully cancelled then are the applicant precluded from relying on the prior cancellation?
  3. If the right to cancel had indeed been waived then is the revival of the sale agreement precluded by the terms of the Alienation of the Land Act 68 of 1981?

The parties’ arguments

The respondent’s attorneys argued that the applicant continued to accept payment and that resulted in the waiver of the applicant’s intention to cancel the contract. It was argued that this action resulted in the applicant having acquiesced to the existence of and thus the subsequent enforcement of payment of the purchase price and the sale agreement.

The applicant on the other hand had claimed that on the failure of the respondent to comply with the terms of the agreement of sale this constituted a breach of the agreement. The applicant was thus entitled to the cancellation of the agreement of sale.

Judgment

The court was satisfied that there had been a breach on the part of the respondent on account of his failure to pay the purchase price. The court further agreed that this created a right of cancellation of the contract on the part of the applicant. The question the court however asked was if the cancellation had been valid?

The court stated that this would depend on whether he waived an accrued right to cancel before purporting to do so. However the court pointed out that the question of the waiver of a right to cancel of an agreement will only have a role to play where the right to cancel has not resulted in a valid and lawful cancellation of the agreement. As if there is a valid cancellation then the concept of waiver would not be applicable. The reason for this is that in such a case a new agreement would be required in order to revive the contract.

The court came to the conclusion that there had been a valid cancellation of the contract and therefore waiver could not have found application on the facts.

The court turned to the question of whether the applicant’s conduct resulted in an agreement that served to revive the contract of sale.  It was noted that the issue of wavier does not have application on the set of facts. The applicant’s conduct in accepting the payment and the effect that this had on the respondent’s belief as to the existence of the sale agreement is of significance in the context of the concept of quasi- mutual assent. In terms thereof a conduct by one party creates the reasonable belief on the part of the other party that a certain agreement had come into existence.

The test for such an agreement must be proved on a balance of probabilities. Here the conduct in the circumstances must be so unequivocal that the parties must have been satisfied that they were in agreement. The court believed that such an agreement had indeed been established on the facts. The court pointed to the fact that it was common cause that after the cancellation the applicant requested and received payment of a sum of R30 000 from the respondent. This was enough to prove on a preponderance of probabilities that a tacit contract had been concluded to revive the original agreement.

The next question that the court had to address was if the “revival” of the agreement was precluded by the provisions of the Alienation of Land Act[1]. The court noted here that an agreement to which the Act applies may be revived so long as it does not affect a material term of the original written agreement[2]. The applicant’s attempted to argue that the term originally agreed to was that the purchase price would have been paid by a specific time and that this date had elapsed. The applicant argued that if there was an agreement it could not be valid because it’s purpose was to amend a material term. The court dismissed this and stated that the applicant overlooked the fact that R25 000 was to be paid on signature and the balance was to be paid in instalments of not less than R20 000. The court thus concluded that the time for the full payment of the purchase price was simply an arithmetical deduction from the provisions of the agreement.

In my view there cannot be a waiver of an agreement where there has been a valid cancellation. The only way that a sale agreement can be saved in such a scenario is in those cases where there is a valid agreement to revive the sale agreement. Interestingly this revival is possible only if the material terms of the agreement have not been amended.

Footnotes:

[1] 68 of 1981

[2] Neethling v Klopper en Andere 1967 (4) SA 459 (A)  465H – 466A; Cronje v Tuckers Land and Development corporation  1981 (1) SA 256 (w) at 259F.

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