Suspensive conditions

Contracts for the sale of immovable property will very often contain suspensive conditions. One of the most common types of suspensive conditions is bond approval. 

The ins and outs of subject to bond approval clauses

As can be seen in other cases we’ve covered, if the purchaser is not able to obtain bond approval at a certain date, as specified in the condition, then the contract will become null and void ab initio – “ab initio” meaning that the agreement is void from its inception. This implies that if the condition isn’t met, it would be the same as if the contract never existed. 

These clauses often reiterate the legal position that, as a result of non-fulfillment, the parties do not have any claims against each other. And due to the agreement being void ab initio, there are no agents’ commission and conveyancing fees payable. 

The above general principle was clearly articulated by Wallis AJA in Mia v Verimark Holdings (Pty) Ltd:

“No action lies to compel a party to fulfil a suspensive condition. If it is not fulfilled the contract falls away and no claim for damages flows from its failure. In the absence of a stipulation to the contrary in the contract itself, the only exception to that is where the party has designedly prevented the fulfilment of the condition”.

It appears from the above that, should a purchaser deliberately frustrate or obstruct the process of bond approval to get out of the contract, the courts will consider deemed or fictional fulfillment of the agreement, which means that all the terms of the agreement can be enforced. 

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Suspensive conditions

Contracts for the sale of immovable property will very often contain suspensive conditions. One of the most common types of suspensive conditions is bond approval. 

The ins and outs of subject to bond approval clauses

As can be seen in other cases we’ve covered, if the purchaser is not able to obtain bond approval at a certain date, as specified in the condition, then the contract will become null and void ab initio – “ab initio” meaning that the agreement is void from its inception. This implies that if the condition isn’t met, it would be the same as if the contract never existed. 

These clauses often reiterate the legal position that, as a result of non-fulfillment, the parties do not have any claims against each other. And due to the agreement being void ab initio, there are no agents’ commission and conveyancing fees payable. 

The above general principle was clearly articulated by Wallis AJA in Mia v Verimark Holdings (Pty) Ltd:

“No action lies to compel a party to fulfil a suspensive condition. If it is not fulfilled the contract falls away and no claim for damages flows from its failure. In the absence of a stipulation to the contrary in the contract itself, the only exception to that is where the party has designedly prevented the fulfilment of the condition”.

It appears from the above that, should a purchaser deliberately frustrate or obstruct the process of bond approval to get out of the contract, the courts will consider deemed or fictional fulfillment of the agreement, which means that all the terms of the agreement can be enforced.