In this matter, the parties concluded a sale of property agreement in respect of four erven. One of the erven included in the sale was a road erf which provided access to various other neighbouring properties.

Several months after the sale agreement was concluded, and upon further investigation by the purchaser in the transaction, it transpired that part of the road erf extended into the adjacent nature reserve and, therefore, would vest in the purchaser if it were transferred to it. It was suggested that the road erf be subdivided so that the road portion that extended to the adjacent nature reserve be excluded from the sale. The negotiations might or might not have resulted in an informal arrangement or even an oral agreement, but no formal written agreement or addendum was ever concluded and signed by or on behalf of the parties regarding the subdivision of the road erf.

Several years later, the purchaser failed to meet its obligations in terms of the sale agreement (including the subdivision of the road erf) and the seller proceeded to cancel the sale so that it could sell to a third party. It was argued that the seller intended to sell the entire road erf; whereas the purchaser only intended to purchase the subdivided portion of the road erf.

The court considered the provisions of section 2(1) of the Alienation of Land Act 68 of 1981 (Act). Section 2(1) requires the whole contract, including the material terms of a contract of sale, to be reduced to writing signed by or on behalf of the parties. The material terms of the contract are not confined to those prescribing the essentialia of a contract of sale, namely the parties to the contract, the merx (i.e. the subject matter) and the purchase price, but also any other material terms of the contract. Whether a term constitutes a material term is determined with reference to its effect on the rights and obligations of the parties. In this case, it was held that the contemplated subdivision materially affected the rights and obligations of the parties and should have been reduced to writing and signed by the parties. The agreement lacked any reference to subdivision (or related issues such as which party would be liable for the costs of subdivision, which party would attend to the subdivision process, and so on).

As such, the court held that the written sale of land agreement concluded between the parties was void ab initio due to non-compliance with section 2(1) of the Act and for lack of consensus between the parties in respect of material terms.

This case is a reminder to go back to basics and reduce all material terms to writing and have the parties sign them.