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Renegotiating an offer that has lapsed

Matthysen v Stoney Ruver Properties 53 CC (2011 JDR 1866 (GNP)) (22 December 2011)

This recent Court case illustrates the inherent risks associated with parties renegotiating an offer that has lapsed.

On 1 September 2010 the purchaser purchased a commercial property at a public auction. The conditions of sale signed by the purchaser stated that the offer would be open for acceptance by the seller until 18h00 on 2 September 2010. In accordance with the conditions of sale the purchaser made payment of the auctioneer’s commission as well as a deposit of 5%.

The seller failed to accept the offer by 18h00 on 2 September as required in the conditions of sale and as a result the offer lapsed.

The purchaser was, however, still interested in the property and there were various negotiations between the parties. On 8 September 2010 the seller signed the original conditions of sale that was signed by the purchaser at the auction. No alterations or amendments were made to the conditions of sale and the parties accepted this as the purchaser’s written offer to purchase the property.

The purchaser attempted to use the agreement to obtain financing, which application was rejected by the banks. This prompted the purchaser to approach his attorneys who advised him that the agreement was in fact invalid. The purchaser then approached the Court and claimed repayment of all amounts paid by him to the seller.

The Court held that the negotiations held on 8 September were separate from the auction on 1 September, therefore both parties would need to sign the ‘new’ agreement to indicate that it was in fact a new offer and acceptance. The original offer had lapsed and needed to be revived.

The Court held further that a lapsed offer is incapable of revival by simply accepting it after the due date. The ‘new’ agreement needed to comply with Alienation of Land Act and therefore had to be signed by both parties. The purchaser had only signed at the auction on 1 September and that offer had lapsed. The ‘new’ agreement was accordingly declared invalid and the purchaser’s claim for repayment of the commission and deposit was upheld.

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