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May 2025
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When Does a Property Defect Justify Cancellation? A Costly Case of Buyer’s Remorse
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“Look before you leap.” (Wise old proverb)
Imagine sealing the deal on your dream property, only to wake up at 3 a.m. beset by sudden doubts. Thoughts like “Can we really afford it?” or “How on earth could we have fallen in love with that old dump?” haunt you. You may have a strong urge to back out – but tread very carefully here. Trying to cancel the sale without sound legal grounds will be a big and costly mistake.
A recent High Court case provides the perfect example.
The R135m house and the “defects” that weren’t
Our buyer put in a R135m offer for a luxury three-storey house in Sandhurst. The cancellation clause in his offer document read (emphasis added): “The Purchaser at his own expense will conduct an inspection of the home within (14) fourteen days of acceptance of the offer. Should there be structural defects or defects that are unacceptable to the Purchaser then the Purchaser can at his discretion elect to cancel this agreement.”
The seller accepted the offer with that cancellation clause – deal done. But then, eight days later, the buyer tried to escape the sale with this email from his attorney: “Unfortunately after conducting due diligence, the purchaser hereby elects to cancel the agreement… Good luck with the sale.” The buyer’s remorse in this case turned out to be monetary – he had, he said, overpaid for the property. He then put in a new offer for R100m.
That was a loss the seller wasn’t going to accept, so daggers were drawn, and the fight was on.
The seller hotly denied that the buyer had any right to cancel the sale agreement, and off they went to the High Court. The buyer said that he had “unfettered discretion” to decide whether or not there were defects, and he refused to give the seller any details of them. Only in his court papers did he provide more information, claiming to have noticed cracks on the walls during an inspection. The rest of his “concerns” related to his personal preferences for the house – wanting new paving, widening the driveway, remodelling the kitchen, installing an elevator and the like.
Subjective belief in a defect isn’t enough
The Court had no hesitation in holding that the buyer had not been entitled to withdraw from the sale “based on any minor ‘imperfection’ in the property, because it does not fulfil his personal needs – at his sole discretion and without proof.”
He had failed, as required by law, to exercise his discretion reasonably and to prove the existence of a defect objectively (i.e., based on facts, not personal belief) rather than subjectively (i.e., based on the buyer’s personal opinions or interpretations). His subjective interpretation was irrelevant.
The bottom line: the seller had rightly rejected the buyer’s cancellation, and the buyer remains bound to the sale. To rub salt into his wounds he must now also pay costs on the attorney and client scale – that’s going to be expensive!
What then is a “defect”?
Per the Court, the ordinary meaning of a defect is (emphasis supplied): “an ‘abnormal quality or attribute’ of the property sold that ‘destroys or substantially impairs’ its ‘utility or effectiveness’ for the purpose for which it is generally used or unfit for the special purpose for which it was intended to be used by the purchaser.”
Personal preferences like elevators and revamped kitchens don’t count, and a wall crack justifying a R35m price reduction can’t be superficial!
Look before you leap!
Some final thoughts for property buyers:
- Don’t rush (or be rushed) into buying anything. Take your time, and make sure this really is the property for you and that you can afford it.
- Check the house thoroughly for any potential problems and consider commissioning an independent home inspection to look for any defects that might not be immediately obvious (damp for example). If you are worried about anything in particular, bring in the experts or insist on expert reports from the seller.
- Last (but certainly not least) don’t sign anything without asking us to review all the paperwork for you first!
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BFFs no More: The Verbal Agreement That Cost R1 Million
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“My word is my bond.” (Once the motto of 16th-century merchants, adopted by ’90s hip-hop artists, and now tossed around by duelling politicians)
Many people are unaware that there are just a few types of agreement that are valid only if recorded in writing and signed – most notably contracts for the sale, exchange, or donation of land or of any “interest in land”, ante-nuptial contracts (ANCs), and deeds of suretyship.
Outside of those exceptions, all verbal agreements are as valid and enforceable as written ones. Your word really is your bond! So be careful what you agree to verbally – and stick to written agreements whenever there’s a lot at stake. A recent High Court judgment provides a great practical example of those principles at work.
When friends fall out
It’s 2009, and the MD of a long-established Cape Town freight operation is doing business with another business owner. Their relationship develops from a strictly business one into a personal, “best friend” one.
By 2012, they have agreed verbally that the friend will move to Johannesburg to establish a branch of the freight company there as a new director.
Believing that he will now be given a 5% share in the company and be appointed as a director, the friend pays the company R1m to cover the new branch’s start-up funding. But when he asks for his shares, the MD refuses, denying there was ever any agreement to give him equity and telling him that the R1m was just an “at-risk investment”.
The refusal to give him shares, says the friend, is a repudiation (renunciation) of the oral agreement, and he demands that the company now repay his R1m.
The company, through its MD, refuses – “I’ll see you in court,” he says. In the latest (2025) round of litigation, the Court, without a written agreement before it, has to analyse a litany of contradictory evidence to try and work out what exactly had been verbally agreed by the two ex-friends.
Offer someone a carrot and you’ll have to give it to them
The Court was unimpressed with the MD’s version that his friend’s R1m payment was an “at-risk investment” rather than the agreed purchase price of a 5% shareholding. A major factor in that decision was clearly the director’s 2013 email to his friend which included this: “…I have committed to sell you equity...”, reinforced by his evidence that he only changed his mind about parting with shares in 2014.
The nail in the MD’s coffin was no doubt his admission that that he had held out the prospect of his friend becoming an equity partner as “a carrot”. His friend accepted that offer, their oral agreement became binding, and the company must repay the friend his R1m plus interest and costs.
Offer someone a carrot, and our law will hold you to deliver it!
“The bluntest pencil is better than the sharpest memory”
While it seems justice has been done, both the falling out and the court case could have been avoided altogether.
Had the MD and his friend thought the whole thing through properly back in 2012 and asked a lawyer to draw up a proper written agreement for them, it’s highly unlikely that they would, in 2025, still be fighting their way through the courts. Who knows, they might never have come to blows at all and could still be BFFs!
Don’t rely on a “handshake” agreement, even with the best of friends. When the stakes are high, let us help you put it in writing – clearly, enforceably, and with a minimum of fuss.
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Fixed Term Contracts: A Guide for Employers and Employees
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It’s vital for both employers and employees to understand the practical and legal differences between permanent and fixed term employment arrangements.
What is a fixed term contract?
A fixed term contract is a temporary employment arrangement with a specified start date and an agreed end date. This could be a fixed end date or a reference to a specified task or project reaching completion, or to a specified event. Importantly, you must be able to prove that your employee agreed to the end date.
A standard contract of employment, by contrast, is for an unlimited period and ends only when your employee resigns, or reaches retirement age, or is lawfully dismissed or retrenched by you.
Any employer tempted to misuse a fixed term contract in order to dodge the many legal protections given to a full-time employee should think twice – our courts do not look kindly on attempts to prejudice employees by disguising the true nature of an employment relationship.
The basic requirements
The contract (and any renewal contracts) must be in writing and must state the reasons justifying the stated fixed term.
The protections
The Labour Relations Act (LRA) provides a range of protections to fixed term employees. Let’s address them under two main headings.
Firstly, the “reasonable expectation of renewal” protection that applies to everyone
Simply put, you could face an unfair dismissal claim (with all that that entails) if you give the employee reason to believe that the contract will be renewed or converted to full-time employment.
That’s because – and this applies to all fixed term contracts in that none of the exclusions listed below apply here – the LRA says the termination of a fixed term contract is seen as a “dismissal” if:
- The employee “reasonably expected” you to either renew the fixed term contract on the same or similar terms, or to convert the contract into indefinite employment (again, on the same or similar terms), and you didn’t do so.
Anything could land you in hot water here, with particular risk areas being things like continual renewal of fixed term contracts without justification, verbal or implied reassurances of renewal, a workplace culture of renewing contracts etc. To be on the safe side, consider giving your employee specific written notice of non-renewal in good time. Every scenario will be different here, so in some instances you may be advised that multiple contract renewals are justified, in others that they aren’t – specific legal advice is essential, and the bottom line is that professionally drawn contracts and clear communication are critical.
Secondly, other protections that apply only to certain employees
These additional protections do not apply in any of these exceptions:
- The employee earns more than the earnings threshold set by the Basic Conditions of Employment Act (currently R261,748.45 per year or R21,812.37 per month).
- You employ less than 10 employees.
- You employ less than 50 employees in a business that is less than two years old (and that hasn’t been formed by dividing or dissolving an existing business).
- The fixed term contract is permitted “by any statute, sectoral determination or collective agreement."
The three-month limit, and the need for justification
You can only use a fixed term contract (or successive contracts) for over three months if:
- The work involved is of limited or definite duration, or
- You are able to prove a justifiable reason for fixing the contract’s term, with the LRA specifically mentioning situations such as:
- Covering another employee’s absence (on maternity leave perhaps)
- Addressing a temporary increase in work not expected to last over 12 months
- Providing work experience to students and new graduates
- Specific projects of limited or defined duration
- Seasonal work
- Positions funded externally for a limited period
- An employee who has reached retirement age
This is not an exhaustive list so you may well have other justifiable reasons, such as perhaps needing to establish the viability of a new venture, a new branch, or a new position before committing to long-term employment.
Watch out here! If you employ someone on a fixed term contract for more than three months without complying with the above, the contract is automatically deemed to be a full employment contract of unlimited duration.
Other things to watch
- Equal treatment after three months: Even if you have justification for exceeding the three-month limit, you must then treat the employee no less favourably than a permanent employee in the same position, unless again you have justification for different treatment.
- Right to apply for vacancies: Fixed term employees must have the same access to apply for vacancies as permanent employees.
- Retrenchment pay if a project exceeds 24 months: Any project-specific fixed term employee who is employed for over 24 months must, when the contract ends, be paid a week’s remuneration for every completed year of the contract or offered other employment (with you or another employer) on the same or similar terms.
A properly drawn employment agreement that both protects your interests and complies with the law is essential – and we’re standing by to help you.
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Can a Body Corporate Cut the Power? It’s Complicated
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“A body corporate’s lot is not an easy one.” (With apologies to Gilbert and Sullivan)
One of a body corporate’s core functions is to collect current and outstanding levies. When a section owner becomes uncooperative, recovery can turn into a difficult, costly and lengthy process. Good news for trustees is that it just became a little easier after a recent High Court ruling which authorised a body corporate to cut off an owner’s electricity for failure to pay his consumption charges.
“The pandemic made me do it”
An owner of an apartment in an 86-unit sectional title scheme in Sandton fell into arrears in 2021. Two years later he owed a total of R107,940 … R16,610 of which was for unpaid electricity charges.
The body corporate sued him, asking the High Court not only for a monetary judgment but also for authority to cut off his electricity supply pending payment. It pointed out that the scheme pays Eskom for its electricity and then invoices unit owners for consumption recorded on their individual meters. That put all owners at risk of being cut off by Eskom if the body corporate was unable to pay its monthly account.
The owner admitted owing the amount claimed, which he said had resulted from a loss of income as a result of the Covid-19 pandemic. He offered to pay off the arrears in instalments of R8,000 p.m. and opposed the application to cut his power on constitutional grounds.
The Court authorised the body corporate to disconnect the owner’s electricity supply until he pays the portion of the arrears relating to electricity.
How the body corporate won – follow this recipe
As the Court put it: “There is tension between competing interests in this matter: the right of the Body Corporate to be reimbursed for payments made on behalf of the unit owners and the right of the owner to be supplied electricity.”
In other words, it wasn’t a foregone conclusion that the body corporate would automatically succeed here. So don’t just assume that you now have carte blanche to force payment of arrears by cutting off electricity.
Rather follow the recipe for success that worked for this body corporate:
- Don’t act arbitrarily: The owner relied partially on constitutional protection against “arbitrary deprivation of property”, but the body corporate was able to counter that it wasn’t acting arbitrarily at all. On the contrary, it was asking the Court for permission to disconnect. Arbitrary disconnection not authorised by a court order will in any event put you in the wrong and risk the owner obtaining a “spoliation” order. That would force you to switch the power back on immediately without any investigation into the rights and wrongs of the matter.
- Give proper notice of disconnection: The body corporate had ensured procedural fairness by giving the owner proper notice which spelt out the consequences of non-payment of his levies (including application for a court order to disconnect electricity).
- Make sure all your resolutions are in order: The Court analysed the various resolutions passed by the body corporate in respect of imposition of levies and collection of arrears before confirming that they were enforceable against the owner.
- Proving “prior agreement”: The owner argued that he had never agreed to disconnection on non-payment, but the Court held that there was indeed a tacit (inferred) agreement by him to repay the body corporate for its payments to Eskom, and that he was bound to the scheme’s rules and regulations regarding enforcement. You need to have all your paperwork in order to achieve the same result.
- Balancing competing interests: You will need to persuade the court that your scheme’s interests trump those of the owner. In this case, the scheme’s financial stability was put at risk, exposing all owners to the risk of disconnection – while the defaulting owner continued to benefit from electricity at the expense of the other owners.
An important caveat
Although the body corporate had applied for an order to disconnect electricity until the full judgment amount of almost R108k had been paid in full (i.e. including the levy portion of R91k), the Court limited its disconnection authorisation to recovery of only the arrears for electricity consumption (plus interest). It gave no reasons in its judgment for not linking reconnection to payment of the full R108k – but its comment that the electricity non-payment was the most prejudicial to the scheme suggests that it will always be safest to assume that your rights to disconnect electricity may be similarly limited.
Whether you’re a body corporate or a sectional title owner, navigating situations like this requires carefully ticking all the legal boxes. You know who to call!
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Legal Speak Made Easy
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“Objective” v “Subjective”
You’ll come across these terms most often in civil claims, employment disputes, criminal cases, contracts (including property sale agreements) and constitutional matters. But what do they mean? When our law requires an objective approach, courts assess facts, logical arguments, and impersonal standards, uninfluenced by personal beliefs. But when courts apply a subjective test, they consider an individual’s actual thoughts, beliefs, interpretations or intentions.
For example, if you are suing someone for damages and trying to prove negligence, the court will ask what a reasonable person would have done, or not done, to avoid harming you (an objective, impersonal standard), rather than whether the other person actually intended to cause you harm (a subjective, personal standard).
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