I3. Parties to the Contract

It is not only essential to ensure that both parties sign a contract but also that the correct parties do so. The following are the essential features of any contract of sale to make it valid.

  • Both the Seller and the Buyer must be clearly identified, and both must sign the contract.
  • The Contact must clearly state the Purchase Price to be paid by the Buyer to the Seller.
  • The Property sold to the Buyer must clearly be identified.
  • The Date of Signature of the contract by both parties respectively must be stated on the contract.

It will interest you to know that no further formalities have to be complied with for the contract to be valid. If no details are provided regarding the terms of payment of the purchase price it is presumed that the price will be paid in cash against registration of transfer. Likewise, if no mention is made of occupation or possession it is presumed that both will pass on registration or, if registration is unduly delayed, within a reasonable period. Nevertheless, the inclusion of each of the above four formalities is essential to make the contract valid. Omission or a defective statement of any of them will render the whole contract invalid.

To prove agents commission, it is important to include this in writing in the contract, otherwise, a dispute can arise. The agent must sign the contract to accept the benefit conferred on it, otherwise, the Agent cannot enforce any clause in the contract awarding commission to it. The undertaking to pay Agent’s commission becomes purely a term of the agreement between the Seller and Buyer alone. A mandate signed prior to the sale inclusive of commission payable by the Seller would, however, suffice to prove the amount or percentage of commission due to the Agent.

It is absolutely essential to establish who the actual Sellers and Buyers of a property are – especially the Sellers. Only the following people can sign a contract of sale or offer to purchase on behalf of the Seller:

  1. The Owner/s of the property,
  2. Any person who has acquired the property from the owner and has the right to resell it, namely the holder of a right to take transfer into his own name – this includes any heir in a deceased estate, donation, subsequent purchaser, etc.
  • A nominee duly authorised by a resolution for an existing juristic person or on behalf of a juristic person still to be formed; likewise any person acting under a power of attorney actually signed in his favour by the actual Seller.
  1. A Trustee, Executor, or another person duly appointed to act in his fiduciary capacity as such. Note well – such a person cannot sign until officially appointed. It does not help if an executor has been appointed in a will – Letters of Executorship must have been issued before the executor can sign.

It is essential to establish the actual parties. If the Seller states he is the owner of a property, you need to know exactly who the owner really is. This can be established by accessing Deeds Office records showing precisely who the actual owners are. This will also show how many bonds are registered against the property, what interdicts or attachments may be recorded against it, and when the transfer took place plus the original purchase price.

If your Seller says he is not the registered owner of the property but is entitled to resell it because he purchased it from the owner or acquired it in some other way, make sure you get proof from him of his right to the property. You can be in trouble with your buyers if your Seller is not actually authorised or entitled to sell it. The same goes for Trusts, Deceased Estates, Companies, and CCs – get copies of the Trust Deeds, Letters of Executorship, Articles, or Founding Statements respectively to ascertain who can sign either the contract or a resolution appointing the actual signatory.

Finally, make sure the person who signs the contract is the same as the person mentioned by name as the Seller or Buyer. A recent case will show you the need to be cautious here.

The Buyer was named as a particular single woman, but her father signed the contract because he was putting up the money for it. The Seller in the meantime wanted to get out of the contract and, on discovering his good fortune, did so because the signatory was not the Buyer named in the contract. Caution and preciseness here are essential.

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