A Property24 reader asks:
A Property24 reader says he signed an offer to purchase with a buyer and then lost his job, so wants to cancel the sale of his property. Is this possible?
I signed an offer to purchase from a buyer but two weeks down the line I was retrenched, so I called the buyer to discuss with him that I wished to cancel the deal because I won't be able to get a bond and that I would rather take my pension payout and use it to settle my existing bond, and that I'm prepared to cover his legal fees. There was no agent involved, I advertised privately.
I would like to know if I'm allowed to do this and what legal action can be taken against me for breach of contract. This all happened one month ago.
Jaco Rademeyer, from Jaco Rademeyer Estates, responds:
The contract is perfecta, or in other words complete in all forms.
The first step would be to read all the terms of the contract, in this case the offer to purchase. In some instances the contract may deal specifically with issues such as this one.
Firstly, should the contract deal with the manner and consequences of cancellation by the seller, you will be bound by it and you will have to follow the procedure as described in the contract.
Secondly, should the contract not deal with the cancellation thereof by the seller, the common law will regulate the position as follows:
Repudiation without a valid ground constitutes breach of contract. Retrenchment is, unfortunately, not a valid ground for the repudiation of a contract. Legal action for breach of contract and damages may be instituted against you. The breach of contract will be the repudiation and the purpose of damages in this instance is placing the purchaser in the position that he or she would have been had the repudiation not taken place. This is known as positive interest damages.
Alternatively, a claim for specific performance and damages may be instituted. Specific performance is a claim that renders the seller with no other option but to comply with the agreement. The damages in such a claim will be for anything which the purchaser has not received, but which he or she should have received.
Parties to a contract may come to an agreement that the contract is cancelled and restitution be performed. Restitution means to place the parties in the position that they were before commencement of the agreement.
If you can reach an agreement as to cancellation, put it in writing and have it signed before witnesses. The agreement may include, in addition to the cancellation, a clause relating to liability of legal fees.
In conclusion, should the purchaser feel that he or she cannot agree to the cancellation, the legal action relating to repudiation that may be taken by the purchaser is either one of the following:
- Institute action for specific performance and damages; or
- Institute action for breach of contract and damages.
The most viable option will be to attempt to reach an agreement with the purchaser as to the cancellation of the agreement.
Readers may submit questions to Property24’s Guest Expert panel and/or comment below. We may not be able to answer all questions received, but all will be considered.
Print
