Wording vital in sales documents
A KWAZULU-NATAL High Court ruling indicates the importance of property description in a sales document and of ensuring signatories are authorised to act.
The decision by the South African Revenue Services to allow individuals to take possession of property previously held by trusts, close corporations and companies without paying transfer duties (provided they act before the end of 2011) has resulted in a flurry of transfer activities – and some of these have already gone through ahead of the initial projected date.
So far so good. However, Lanice Steward, managing director of Anne Porter Knight Frank, has drawn attention to a court case reported in Milton Matsemela’s latest Legal Newsletter.
This case related to the sale of a property in a close corporation, and Steward says it shows the importance of describing properties fully and completely in legal documents, and ensuring that the parties who sign the agreements have full authority to do so.
“The High Court questioned the meaning of certain terms (including the actual word “certain” when applied without further qualification to properties) and ruled that the wording was ambiguous,” says Steward. “It also ruled that the sale contract was not binding because it had been signed by only one member of the close corporation.
“In South African law it is accepted that a single director of a firm may sign on behalf of that company. However, the court found that a similar provision does not apply to close corporations or trusts.”