CONCLUDING THE PURCHASE OF PROPERTY: HOW TO COMMUNICATE (PART 2/2)

In a previous entry we discussed the necessity for an acceptance of an offer to purchase to be communicated by the Seller (offeree). Now attorney Jason de Mink concludes with an in-depth look at what is needed to communicate acceptance.

Let’s start with a definition: Acceptance is a statement of intention in which the Seller confirms approval and acceptance of the proposal(s) set out in the offer. The Seller is setting out his intention to bind himself to the terms of the contract.

A statement of intention will only qualify as an acceptance if it meets the following requirements:
(a) It must be unconditional (“no strings attached”) – otherwise it is a counter-offer.
(b) It must be accepted by the person to whom it was made.
(c) It must be in response to the offer.
(d) It must be in the form and manner as set out in the contract.

If we proceed on the basis that (a) to (c) are fulfilled, we need to establish whether (d) has been complied with. The actual agreement between the parties, which is the basis of a contract (known in Latin as consensus), cannot exist until the Purchaser knows that the offer has been accepted by the Seller.

Therefore, the contract can only come into existence when the Seller makes the Purchaser aware of his acceptance. This is known as the “information theory”.

The general rule is that the acceptance must be in the form as required by the contract. Some contracts will provide that acceptance is upon signature and no further communication is required. Failure to communicate acceptance would not, in such a case, affect the validity of the agreement.

Contracts: our research
As an exercise we conducted a survey of various sale contracts from various agencies, big and small, this week. We found that most did not address this issue at all. Some contracts provided for the agent to be nominated to receive communication of acceptance but did not specify how such communication was to take place.

One notable exception specified both the manner of communication (“in writing”) and the person to who it should be communicated (“the agent or the Purchaser”). This clearly sets out how to proceed without any danger of misinterpretation.

However, most contracts did not make specific provision for how acceptance must be communicated, merely that it must be effected by a certain time and date, whereafter the offer will lapse. In such cases, the acceptance will need to be communicated.

Communication can be fraught with dangers and hidden pitfalls. If, for example, the Seller was required to communicate acceptance in writing and does so by posting a letter, all manner of complications may arise.

The rule is that the contract comes into existence at the moment when the letter of acceptance is posted. This sounds logical but can be problematic in a case where the letter is never delivered and clearly removes any chance the Seller may have to retract acceptance, for instance by making use of a faster means of communication to inform the Purchaser to ignore the letter of acceptance.

Other methods of communication
Direct verbal communication of acceptance would be satisfactory and use of the telephone is still ubiquitous as an instantaneous method of acceptance but there is the problem of a lack of proof due to the fact that neither are in writing.
Telex, telegram or telefacsimile transmission are instantaneous methods of written acceptance but given that there are simpler, more convenient methods have fallen into disuse.

Best advice: Electronic Acceptance of the Offer to Purchase
Given the fact that many contracts will not set out how acceptance is to take place, the best advice, if you as Seller want to make sure that all parties are aware of your acceptance, would be to use electronic media such as email or SMS. These have the added advantage of being both instantaneous and in writing.

These types of messages are regarded as having been received by the addressee at his or her usual place of business or residence when the complete data message enters an information system designated or used for that purpose by the addressee and is capable of being retrieved and processed by him or her. So again, actual delivery is not required.

Case Study:
In a recent case Jafta v Ezemvelo KZN Wildlife (2008) JOL 22096 (LC), the court found that “An sms is as effective a mode of communication as an e-mail or a written document.”

The relevant legisaltion is the Electronic Communications and Transactions Act 25 of 2002 (The Act) and the case revolved around the acceptance of an offer of employment.

This does not mean that agreements for the sale of land or immovable property can now be concluded by means of an sms communication or other electronic communication, as the Act specifically excludes sale agreements of land and immovable property in its application. An offer to purchase land or immovable property must still be recorded in writing and signed by both parties in order to be valid.

As there is a further obligation on a party accepting an offer to purchase to communicate such acceptance to the other party. It is quite in order to communicate such acceptance by means of an sms, a verbal communication (for example a phone call) or by means of electronic mail, after the agreement has been properly signed.

Make sure that, as the Seller, you have informed the agent of your acceptance, together with clear instructions that this be passed on to the Purchaser.

– Jason de Mink
BA LLB LLM (UCT)
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