The importance of a signed OTP

The Alienation of Land Act (ALA) clearly states that the validity of an Offer to Purchase (OTP) depends on the contract for the sale of immovable property being in writing and signed by the concerned parties or their authorised representatives acting on their written instruction. And the importance of signatures on an agreement of sale has once again been highlighted by a recent decision handed down by the Gauteng Local Division of the High Court in Johannesburg.

September 28, 2021

A closer look at the case

The property in question was bought on auction and the contract was subsequently signed by the buyer’s husband. The buyer did not sign the agreement herself and the seller was not initially aware of her existence. As the buyer then took considerable time to comply with the terms of the agreement, the seller put her on terms. In response, the buyer then made an application to the High Court to enforce the agreement.

The court felt the issue was the factual question of whether the written agreement was concluded between the buyer and the seller or between the buyer’s husband and the seller. Was the buyer’s husband acting as an agent and not in his own capacity when executing the written agreement? It appeared that the buyer’s husband only inserted the fact that he was acting for and on his wife’s behalf into the agreement at a later stage. It also appeared that he had no written authority to act on her behalf.

The court’s finding

The court therefore found that the claim for specific performance failed on several grounds, including the following.

  • Over and above the requirements of the ALA mentioned above, any introduction of the buyer would have required a written amendment of the agreement due to its terms. The contract clearly stipulated that express written consent was required in the case of session or delegation.
  • The claim further failed as no case had been made that the seller authorised the substitution of the buyer’s husband with the buyer. The seller contended that they never agreed to any substitution, which proved to be the case, and there was no evidence of any ratification by the seller.

As this case demonstrates, any party to an agreement must make sure that they personally sign the agreement in their capacity or provide written authority to an agent to sign on their behalf. It’s also clear that should an authority to sign be granted by ratification, the other party to the agreement must consent in writing.

A note on electronic signatures

The wording of the ALA as it currently reads does not allow for electronic signatures. This was, however, questioned in a recent decision by the Eastern Cape Local Division of the High Court, which found an electronically signed OTP to be valid. This decision must, however, be read and interpreted with great caution, as it will not be binding in any other division until the Supreme Court of Appeal sanctions this finding. The specific merit of the case must also be considered when an argument for the validity of electronic signatures is made.

Written by Wessel de Kock

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