Monthly Archives: May 2015

What does a suspensive condition in a contract really mean?

A2bMost people that have bought a property may have noticed a clause dealing with suspensive conditions in the contract of sale. Usually these conditions relate to deposits that need to be paid, financing that has to be procured and/or another property that needs to be sold before the sale can be confirmed. The interpretation appears straightforward enough – meet the requirements, and the contract is valid; fail to meet the requirements and the contract is invalid. But is it really that straightforward? And what are the consequences of non-compliance?
In layman’s terms a condition contained in a contract can be described as a provision that defers the obligation(s) of a party in the contract to the occurrence of some future uncertain event. This is usually termed a ‘suspensive condition’ or a ‘condition precedent’.

Legally a suspensive condition can be described as a condition, which suspends the operation or effect of one, or some, or all, of the obligations under a contract until the condition is fulfilled. If the condition is not fulfilled then no contract comes into existence. Once the condition is fulfilled, the contract and the mutual rights of the parties relate back to, and are deemed to have been in force from, the date of the signature of the agreement and not the date of the fulfilment of the condition.

The Supreme Court of Appeal recently confirmed that where a suspensive condition is not fulfilled timeously it lapses and the parties are not bound by it, even though one party has performed fully.

In the matter of Africast (Pty) Limited v Pangbourne Properties Limited the parties concluded a contract for the development of commercial property in an area in Gauteng. One of the suspensive conditions in the contract was that Pangbourne’s board of directors had to approve the contract and written approval had to be presented to Africast within seven working days from the date of conclusion of the contract. The contract was signed on 11 April 2007 and Pangbourne’s board of directors approved the contract on 20 April 2007, however the written approval was only provided on 25 April 2007 to Africast, which was after the required seven-day period. Pangbourne decided after 18 months that since the suspensive condition had not been met within the stipulated period, it was not bound by the contract and refused to deliver the required guarantees. At that stage buildings had already been constructed by Africast in terms of the agreement.

The Court confirmed Pangbourne’s view that since the suspensive condition in the contract had not been fulfilled timeously no contract had come into existence and that the contract had lapsed due to non-fulfilment of the suspensive condition. The Court came to this conclusion notwithstanding the fact that both parties had performed in terms of the agreement for some 18 months.

The most common appearance of suspensive conditions is in contracts involving the sale of immovable property such as a house, flat, plot, or farm. The conditions that are generally encountered in the contract of sale is that the sale is subject to the purchaser obtaining a bond from a financial institution and/or that the sale is subject to the purchaser selling his existing property within a certain period.

It is important to bear in mind that suspensive conditions are usually inserted in a contract for the benefit of one of the parties to the contract. In the abovementioned scenario, the suspensive conditions are included for the protection of the purchaser. Should the purchaser fail to obtain a bond and/or sell his existing property within the required period, the contract would not have any force or effect and the purchaser will not be bound to the terms and conditions of the contract. Non-fulfilment of a suspensive condition renders the contract void and should the parties still wish to continue with the sale, a new contract of sale must be concluded.

If a suspensive condition is included for the benefit of a particular party to a contract, such suspensive condition can be waived at any time prior to the lapsing of the time for the fulfilment of the suspensive condition by the party for whose benefit the condition was included. Having regard to the scenarios mentioned above, the purchaser may accordingly at any time before the lapsing of the period of the suspensive condition, inform the seller that he waives the suspensive condition and the contract is no longer subject thereto. This will then make the contract unconditional and the purchaser and seller will be bound to the terms of the contract.

It is always prudent to tread carefully when entering into a contract that is subject to a suspensive condition. Be aware of the stipulated periods for compliance, for whose benefit the conditions are inserted and the requirements to prove compliance. If necessary, ensure you seek legal advice before you sign the contract and obtain advice before you waive any conditions that have been inserted for your benefit.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice

Is it beneficial to create a trust?

A3bA Trust can be described as a legal relationship which has been created by the founder, who places assets under the control of Trustees. This either happens during the founder’s lifetime (inter vivos trust) or at the death of the founder (testamentary trust). This article will focus on the advantages and disadvantages of an inter vivos trust.

The advantage of a trust is firstly, that inter vivos trusts can be used to minimise estate duty. No estate duty should be payable on assets owned by the Trust as a Trust does not terminate or come to an end, since it has perpetual succession. Estate duty is currently taxed at 20% of the gross estate value. This saving in estate duty can be substantially large, especially for high net worth individuals who are worth millions of rands. Secondly, as the Trust’s assets are not owned by the beneficiaries, the creditors of the beneficiaries do not have a claim regarding the assets of the Trust. This advantage is especially important for people who are exposed to potential liability. Companies as well as individuals are able to transfer assets to Trusts. Lastly, because Trusts have perpetual succession, beneficiaries will be able to continue enjoying the benefit of the Trust assets even if one of the Trustees were to pass away.

The disadvantages are firstly, the costs of setting up a Trust, which can be high. It may cost up to R 20 000 to set up a Trust. If immovable property is transferred to the Trust then transfer duty needs to be paid. The founders of the Trust may also be liable to pay Donations tax, which is taxable at 20% of the value of the assets transferred to the Trust. Transfer duty is taxed according to a sliding scale. Secondly, Trustees could find themselves personally liable for losses suffered by the Trust if it can be proven that they did not act with care, diligence and skill in terms of section 9 of the Trust Property Control Act. It is important to note that “skill” requires more than just acting in good faith. Trustees may be proven to be negligent not only if they invested in risky investments, but also if they invested capital too conservatively, causing the capital not to grow sufficiently. Trustees also need to be aware of the fact that they can still be held liable if only one Trustee has signing power on behalf of the Trust and he/she makes a poor decision that holds all the Trustees liable for his negligence.

The founder of the Trust needs to recognise that the assets in the Trust do not belong to him/her anymore. The assets belong to the Trust. Should this loss of control (from founder to Trust) not occur, the Trust may be seen as an alter ego of the founder, which could result in the assets being included in creditors’ claims as well as having estate duty consequences.

The earnings from the assets in the Trust are taxed at 40%, and interest exemptions do not apply to Trusts. Also, the inclusion rate for Capital Gains tax for an inter vivos trust is 66.6% whereas the inclusion rate for individuals is 33.3%. Lastly, as we can see from the above, a Trust is not for everyone.

It is important to weigh up the advantages and disadvantages before deciding whether to go ahead or not. The best decision would be to speak to a certified financial planner or attorney who can assist you in making the correct decision regarding your personal situation.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice

Ware Liefde, of Maklike Geld?

A4bOpsomming:
Die kwessies wat ons in hierdie artikel hanteer is of ‘n persoon onderhoud kan vra van hul gewese man / vrou as hul al in ‘n nuwe verhouding is en saam die man / vrou bly, by wie hulle reeds finansiele ondersteuning ontvang. Ons sal na regspraak en die Onderhouds Wet 99 van 1998 kyk.

Jou ex-vrou het aanbeweeg en is nou gelukkig saam met ‘n nuwe man. Hulle is in ‘n stabiele, ondersteunende verhouding en haar nuwe maat lyk nie kort van kontant nie. Almal is gelukkig in hul lewe, so hoekom moet jy onderhoud betaal aan jou ex-vrou?

Die uitspraak van Harlech-Jones v Harlech-Jones [2012]ZASCA 19 het betrekking. Die probleem in hierdie geval is of ‘n man verplig is om onderhoud te betaal aan sy gewese vrou wat betrokke is in ‘n verhouding met ‘n ander man, na die egskeiding.

Die plig van ondersteuning
Geen persoon het ‘n statutêre reg op die tipe onderhoud nie. Die taal in die Wet op Egskeiding is duidelik diskresionêr en ‘n ex-eggenoot wat opsoek is na ‘n toekenning vir onderhoud het geen reg as sodanig nie. Die Hof sal die volgende faktore in ag neem voordat die besluit geneem kan word vir onderhoud:

  1. Die bestaande of verwagte vermoëns van elkeen
  2. Die onderskeie verdienvermoëns van elkeen
  3. Hulle onderskeie behoeftes en verpligtinge
  4. Hul ouderdom
  5. Die tydperk van die huwelik
  6. Hul lewenstandaard voor die egskeiding
  7. Hul optrede, indien relevant, tot die verbrokkeling van die huwelik
  8. ‘n Bevel vir die verdeling van bates
  9. Enige ander faktor wat in die Hof se mening in ag geneem moet word.

Die diskresionêre bevoegdheid van die Hof om ‘n onderhoud toekenning te maak sluit ook in die krag om geen toekenning te maak. Ons reg gunstig die “skoon breek” beginsel, wat basies beteken dat na die egskeiding moet altwee partye so gou as moontlik ekonomies onafhanklik van mekaar af wees.

Harlech-Jones v Harlech-Jones [2012] ZASCA 19

Na aanleiding van menigte sake wat eksklusief met tussentydse onderhoud handel, het dit gebruiklik geword om nie onderhoud aan ‘n eggenoot wat in ‘n permanente verhouding is met ‘n ander persoon, toe te ken nie.

Soos hierbo genoem, het die Appèlhof ‘n interessante uitspraak gegee in die saak van Harlech-Jones v Harlech-Jones. Die vraag in hierdie saak was, onder andere, of dit teen die openbare beleid sou wees vir ‘n man om onderhoud aan sy ex-vrou te betaal terwyl sy saam met ‘n ander man bly.

Die partye, wat in Desember 1972 getrou het, het in Januarie 2011 geskei. In terme van die finale egskeidingsbevel, moes die Appellant (die gewese man) die Respondent (die gewese vrou) ‘n bedrag van R2 000.00 per maand betaal vir onderhoud van die begin van Februarie 2011 af. Met verlof van die Hooggeregshof, het die Appellant slegs ten opsigte van die onderhoudsbevel geappelleer na die Appèlhof.

Teen die tyd dat die finale egskeidingsbevel toegestaan is, het albei partye ander verhoudings aangeknoop. Die Respondent het saam met haar nuwe maat ingetrek en haar ten volle en onvoorwaardelik finansieel in stand gehou het.

In die uitsprake van Dodo v Dodo 1990 (2) SA 77 (W) op 89G; Carstens v Carstens 1985 (2) SA 351 (SE) op 353F; SP v HP 2009 (5) Sa 223 (0), is dit geargumenteer dat dit teen openbare beleid sou wees vir ‘n vrou om deur twee verskeie mans op dieselfde tyd ondersteun te word.

Die Hof was van mening dat terwyl daar geen twyfel was dat lede van die gemeenskap daardie uitkyk sal endosseer nie, verwys dit eerder na waardes van die verlede, en die Hof was van mening dat in die moderne, meer liberale era waarin ons leef, vereis openbare beleid dat ‘n persoon wat saam met ‘n ander maat lewe, nie vir daardie rede alleen verbied moet word om onderhoud te eis van sy of haar eggenoot nie.

In die lig van die feite van die huidige saak, waar die Respondent deur haar nuwe maat onderhou word en vir jare in ‘n permanente verhouding is met hom, het die Respondent versuim om te wys dat sy op onderhoud van haar ex-man geregtig is. Die Appèl het dus geslaag, en die onderhoudsbevel was tersyde gestel.

Daarom, as jy voel dat jy tans onderhoud betaal wat jy dink jou gewese man / vrou nie verdien nie, kontak jou regsverteenwoordiger en neem terug die geld wat aan jou behoort waarvoor jy so hard gewerk het!

Hierdie artikel is ‘n algemene inligtingstuk en moet nie gebruik of staatgemaak word op as professionele advies nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of vir enige verlies of skade wat voortspruit uit vertroue op enige inligting hierin nie. Kontak atyd jou regsadviseur vir spesifieke en gedetailleerde advies.