Held, that before V had signed the document the respondent had substituted himself as the offeror.

Transcription

1 DRIFTWOOD PROPERTIES (PTY) LTD v McLEAN 1971 (3) SA 591 (A) Citation 1971 (3) SA 591 (A) Court Appellate Division Judge van Blerk JA, Holmes JA, Jansen JA, Muller JA and Kotzé AJA Heard May 4, 1971 Judgment May 21, 1971 Annotations Flynote : Sleutelwoorde Sale - Option to purchase - Situation that both parties must sign before a stated date - Parties completing signatures - Signed document not received by seller - Cannot on this ground repudiate document. Headnote : Kopnota A written contract styled "Offer to purchase" and relating to the purchase by one V, acting as a trustee for a company to be formed, of immovable property belonging to the respondent, contained a clause "that this offer is open and binding upon both parties until signature by both parties on or before 17th May, 1969, failing which it shall lapse if only signed by one party". The respondent, the seller, had signed on 30th April, and V had signed on 17th May, The signed document was sent by V to the respondent by post on the following day but was never received by him. The company, on whose behalf V had purchased the property, had unsuccessfully sued the respondent for specific performance. in an appeal, Held, that before V had signed the document the respondent had substituted himself as the offeror. Held, further, that the offer could not lapse because of a failure of communication but because it was not signed. Held, therefore, that this implied that the signature by V on 17th May, 1969, had turned the offer into a binding contract. The decision in the Eastern Cape Division in Driftwood Properties (Pty.) Ltd. v McLean, reversed. Case Information Appeal from a decision in the Eastern Cape Division (EKSTEEN, J., and HART, A.J.). The facts appear from the judgment of VAN BLERK, J.A. S. Kentridge, S.C., (with him P. J. van R. Henning ), for the appellant: (a) If the respondent's

2 signature be regarded as an offer by him, the meaning the effect of clause 7 was that van Aswegen's signature on or before the 17th May would conclude a binding contract; (b) alternatively, clause 7 cannot be construed as requiring that acceptance be communicated by 17th May, and the posting of the letter of acceptance on 18th May constituted a valid acceptance; (c) if actual communication of acceptance was necessary, it took place at a time (27th June) when the respondent had not revoked his offer; nor had it lapsed by effluxion of time; (d) alternatively in all the circumstances the analysis of the transaction into an offer by the respondent is unrealistic. An offer may expressly or impliedly authorise or intimate a particular mode of acceptance. See Dietrichsen v Dietrichsen, 1911 T.P.D. at pp ; R. v Dembovsky, 1918 CPD at p. 241; R. v Nel, 1921 AD at pp. 344, ; McKenzie v Farmers Co-Operative Meat Industries Ltd., 1922 AD at p. 22; Smeiman v Volkersz, 1954 (4) SA at p. 176E - H. Clause 7 indicated and authorised a mode of acceptance, namely signature, Its terms were not those commonly used in options but prescribed the circumstances in which the parties would become bound to each other. The wording is somewhat strange, but the plain intent was that a binding agreement would come into existence provided that van Aswegen signed by 17th May (3) SA p592 It is only if it remained unsigned by both that there would be no binding agreement. Cf. Cullinan v Union Government, 1922 CPD at p. 36. Clause 7 goes much further than the clause interpreted by Lord DENNING, M.R., in Robophone Facilities Ltd. v. Blank, (1966) 1 W.L.R. at p. 1432; (1966) 3 All E.R. at pp See also Bal v van Staden, 1902 T.S. at p The respondent chose to sign the document in the form in which it was presented to him. He thereby agreed that he would be bound if van Aswegen signed by 17th May. Even if it may seem an unusual arrangement to have made, there is no reason not to interpret the clause according to its terms. Scottish Union & National Finance Co. Ltd. v Native Recruiting Corporation Ltd., 1934 AD at p. 465; John H. Pritchard and Associates v Thorny Park Estates, 1967 (2) SA at p. 515A - F. The learned Judge held further that in cases of doubt clause 7 should be interpreted contra proferentem i.e. against the appellant, as the author of the document. Clause 7 does not call for the application of the contra proferentem rule; and if the respondent is to be regarded as the offeror, he was the proferens. Cairns (Pty.) Ltd. v Playdon & Co. Ltd., 1948 (3) SA at pp It is impossible to read clause 7 as providing for communication by 17th May of the fact that the agreement had been signed by that date. This is a further indication that communication of the fact of signature was not required. But, alternatively, even if acceptance had to be communicated, clause 7 requires that signature only had to take placed by 17th May, not communication of the fact of signature. The distinction between acceptance and communication of acceptance is clear. Cf. Malk v Pergiondakis, 1916 W.L.D. 40; Hersch v Nel, 1948 (3) SA at p If communication after signature was necessary, the posting of the letter on 18th May, 1969 was sufficient compliance with the duty of communication. This is a case in which the use of the post was impliedly authorised. An estate agent usually acts as an intermediary between the parties until they are ad idem as regards the terms upon which they are prepared to buy and sell. The agent acts for both parties. The agent usually has no authority to conclude an agreement - he has to negotiate and to report to the parties. De Villiers and Macintosh, The

3 Law of Agency in South Africa, 2nd ed., pp NO particular method of communication was prescribed; therefore the obvious and generally accepted mode of communication would have been to put a letter of acceptance into the post. This mode of acceptance represents a "balance of convenience". See Cheshire and Fifoot, p. 43; Cape Explosive Works Ltd. v S.A. Oil and Fat Industries, 1921 CPD at pp. 260, 266; Williston, A Treatise on the Law of Contract, vol. 1, sec. 83; Smeiman v Volkersz, 1954 (4) SA at p. 179B - D. The principle of constructive knowledge of acceptance has been accepted in our law. Cape Explosive Works Ltd. v S.A. Oil and Fat Industries, supra; Kergeulen Sealing and whaling Co. Ltd. v C.I.R AD at pp ; Smeiman v Volkersz, supra at p. 180A. Cf. sec. 47 (8) of the Bills of Exchange Act, 34 of 1964, as amended. Further, alternatively, communication of the acceptance could be made within a reasonable time. Only after the effluxion of a reasonable time 1971 (3) SA p593 could the offer be said to fall away. Dietrichsen v Dietrichsen, 1911 T.P.D. at p In the case of an offer to sell land a period of six weeks for acceptance is not unreasonable. The respondent put forward no facts to prove that it was, Cf. Owsianick v African Consolidated Theatres (Pty.) Ltd., 1967 SA at p. 319H; Wissekerke en 'n Ander v. Wissekerke, 1970 (2) SA 550. Any purported revocation before 27th June, 1969, by the respondent was not communicated to van Aswegen and was therefore ineffective. Cheshire & Fifoot, Law of Contract, 7th ed., pp ; Wessels on Contract, 2nd ed., paras. 226 and 229; Cape Explosive Works Ltd. v South African Oil & Fat Industries Ltd., supra at p Consequently, insofar as communication was necessary, the oral communication of acceptance on 27th June, 1969 was effective. No formal mode of communication is necessary. See Hersch v Nel, supra at p. 702; Ex parte The Master; In re Niagara Ltd., 1913 T.P.D. at p. 41. It is unnecessary and unrealistic to analyse the transaction as an offer by the respondent and on acceptance by van Aswegen. Most contracts can be analysed into an offer and an acceptance. Reid Bros. (South Africa) Ltd. v Fisher Bearings Co. Ltd., 1943 AD at p. 241; Cheshire & Fifoot, op. cit., pp. 25, 31. In particular, where a written contract is prepared, following on oral agreement, it is unrealistic to regard the first signatory as the offeror and the second as the offeree. Each, whether first or second, signs in the knowledge that his signature binds him. There is no question of communication of acceptance, in such a case. Neither party is the offeror. They are two contracting parties signifying their assent by signature. Pollock on Contracts, 13th ed., p. 5. It is for the first signatory to ascertain as the when he sees fit whether or when the other party signed. Clause 7 in these circumstances must be read as an intimation, agreed to the respondent, that a contract is to come into being provided that both parties have signed by 17th May. D. Reichman, S.C. (with him F. Kroon ), for the respondent: There is nothing in clause 7 which deals expressly with the mode of acceptance. The clause deals only with the offer, its duration and its lapsing. The first part of the clause does not expressly state that the acceptance can be effected by mere signature. Nor can those words be read into that part of the clause. The second part of the clause does not state expressly that acceptance can be accomplished by mere signature. The words used in the clause are obscure, but on a balance of probabilities they were intended to convey no more than that the offer was open until 17th May, and lapsed if not accepted by then. It is by no means clear from the words used that there was any intention

4 to waive communication of acceptance, and the absence of clarity therefore leaves undisturbed the presumption that there will be communication. Cf Robophone Facilities Ltd. v Blank, (1966) 3 All E.R. at pp. 131H - 132C. On communication generally, see Entores Ltd. v Miks Far East Corporation, (1955) 2 All E.R. at pp. 4951, D; Rex v Nel, 1921 AD at pp. 344, If there is a doubt, the presumption is that communication is necessary. Dietrichsen v Dietrichsen, 1911 T.P.D. at pp There are no circumstances suggested which give rise to the implication that McLean waived communication of any acceptance by van Aswegen (3) SA p594 See Carlill v Carbolic Smoke, (1893) 1 Q.B.D. at p. 269; Wessels on the Law of Contract in South Africa, vol. 1, paras. 111, 114, 117, 118 and 119; Corbin on Contracts, vol. 1, sec. 67, pp. 277, 279. The waiver relied upon by the appellant has not been proved. As to implied terms, see. e.g., Barnabas Plein & Co. v Sol Jacobson, 1928 AD 25. The probabilities therefore support the view that communication was not dispensed with. In any event, the author of the words used was either van Aswegen or his agent Whitaker. In the absence of evidence of the surrounding circumstances which could be expected to assist in the interpretation of obscure language, Baragwanath v Olifant's Asbestos, 1951 (3) SA at p. 230, the rule verba fortius accipiuntur contra proferentem should apply; Cairns (Pty.) Ltd. v Playdon and Co. Ltd., 1948 (3) SA at p Since McLean needed to know of the acceptance to determine his subsequent course of action, and since van Aswegen knew or should have known of this, notice of acceptance should have been given. Corbin, Contracts, vol. 1, sec. 67, pp et seq. Cf. Swart v Vosloo, 1965 (1) SA at pp. 105G, 106A - C. Though this case deals with communication of an intention to cancel, the approach to a cancellation is the same as that to an acceptance. The approach to a need to communicate a cancellation is dealt with in Jaffer v Falante, 1959 (4) S.A. at p. 362F - G. The most reasonable approach to the interpretation of clause 7 is that its intention was to confer an option open for acceptance until 17th May. If that is so, the option had to be exercised by not later than that date, and it could be regarded as exercised until its acceptance had been communicated to the offeror. Laws v Rutherfurd, 1924 AD at pp ; Hersch v Nel, 1948 (3) SA at pp Even if the use of the post was impliedly authorised (a contention which is challenged), it was necessary for van Aswegen to post the letter to a place where it could be expected to reach McLean. The South African Courts have not accepted the principle that the mere posting of a letter is sufficient to communicate acceptance, whether or not the letter reaches the offeror. To bring about this state of affairs, the offeror must authorise the use of the post either expressly or by implication. The fact that the parties live at different places some distance apart, although a factor, is not in itself decisive and will not by itself lead to the inference suggested by the appellant. Smeiman v Volkersz, 1954 (4) SA at pp. 179A - D, 177C - D, 177G. The principle contended for by the appellant, namely, that ordinary commercial usage is quite content to transact business through the post office and therefore to authorise the mere posting as sufficient acceptance, although suggested by Cheshire and Fifoot at p. 43 as representing a balance of convenience and by Williston, is not acceptable to South African Courts. See Smeiman v Volkersz, supra. The principle sought to be extracted from Cape Explosive Works Ltd. v S.A. Oil and Fat Industries, 1921 CPD at p. 260; and Kergeulen Sealing and Whaling Co. Ltd. v C.I.R AD 487, namely that the post can be used normally, overlooks the fact that the Cape Explosive Works case qualifies that statement by holding that the post can be used normally, overlooks the fact that the Cape

5 Explosive Works case qualifies that statement by holding that the post can be used if the offer was made through the post. Kergeulen's case, without entering into much discussion, approved the judgment in the Cape Explosive Works case. The broader principle now raised as VAN BLERK JA 1971 (3) SA p595 having been laid down by those two cases is not supported by the judgments. There is no justification for finding that the appellant has proved on a balance of probabilities that van Aswegen was entitled to post the letter, or that he did in fact send it. The Court a quo was correct in finding that the question of interpretation of the contract did not really arise in the present case because, ante omnia, the appellant had to show that there was a binding contract and it had failed to show that. Boerne v Harris, 1949 (1) SA 793, makes it clear that it is for the plaintiff to prove the existence of the contract he relies upon, and that until he proves it interpretation of the contract is not in issue. Thus the Court will not give a final order on application determining the meaning of the contract once and for all where the full facts have not been disclosed or discussed. See Laws v Rutherfurd, supra at p Cf. Hilleke v Levy, 1945 AD at p Kentridge, S.C., in reply. Cur. adv. vult. Postea (May 21st). Judgment VAN BLERK, A.J.: This is an appeal against a decision of the Eastern Cape Division refusing the appellant's application for an order compelling the respondent to cause certain fixed property registered in the latter's name to be transferred to the appellant. The appellant's case is that before its incorporation one van Aswegen as trustee for a company about to be formed - which was eventually incorporated as the appellant company - concluded a written contract of sale with the respondent, the owner of certain portions of farm 314 situate in the Division of East London, whereby these properties were sold to the appellant. Particulars of these properties are set out in the notice of motion to which list of properties the property referred to by the Registrar of Deeds should be added. The written contract on which the appellant relies is a document which is headed: "Offer to Purchase." The portions which are considered relevant for the purposes of this judgment, read as follows: "To: Andrew George McLean (the respondent) the registered owner of the following, whose full and proper description will be reflected in a deed of sale;... I, the undersigned Henning Johannes van Aswegen, in my capacity as a trustee for a company about to be formed do hereby offer to purchase the above-mentioned properties from you upon the following terms and conditions: 1. That the purchase price shall be the sum of fifty thousand (R50 000) rand, payable in cash against transfer. 2...

6 That you shall pay commission That this offer to purchase and the deed of sale is subject to the suspensive condition that the sale only becomes operative and binding upon me on the date on which either the local authority or the Cape Provincial Administration grants to me or the company a certificate of need and desirability in terms of the Townships Ordinance, enabling me to establish a township That this offer is open and binding upon both parties until signature by both parties on or before the 17th May, 1969, failing which it shall lapse if only signed by one party." (The italics are mine.) VAN BLERK JA 1971 (3) SA p596 Van Aswegen, so it would appear, caused this document to be drafted and submitted by one Whitaker, who was a salesman in the employ of a firm of estate agents at East London, to the respondent for his signature. The respondent signed the document on 30th April, 1969, and Whitaker attested his signature. Thereafter, on 17th May, 1969, van Aswegen appended his signature to the document. His signature too was subscribed to by a witness. The next day van Aswegen under cover of a letter forwarded the signed document by post to respondent. The respondent never received this letter, nor did he receive the signed document. He stated that on 27th June, that is about 40 days after van Aswegen had posted the document - he was for the first time told by a representative of the firm, to which Whitaker was attached, that the properties "had been purchased." On 4th July the respondent's attorneys on respondent's instructions to this firm informing them that respondent did not consider that a sale had been entered into and that "the farm has now been sold for R " The defence to the appellant's claim is based on the ground that the unsigned offer to purchase, when presented to the respondent for his signature, was not binding and that by signing the document the respondent gave van Aswegen an option until 17th May, 1969, to purchase the properties, and that no agreement could be concluded unless van Aswegen communicated his acceptance of the respondent's offer to sell by 17th May, 1969, or within a reasonable time thereafter, and as this was not done there was no binding contract. It is clear that the document, unsigned as it was, when presented to the respondent for his signature was not an offer by van Aswegen as it did not comply with the requirement in terms of sec. 1 of the General Law Amendment Act, It should have been signed in order to be capable of resulting in a valid contract from the fact of its acceptance by the respondent; cf. Brandt v Spies, 1960 (4) SA 14 (E) at p. 16. At most the document presented to the respondent was a proposed offer to purchase. In the Court a quo the matter was argued on the common basis that the document, when signed by the respondent, constituted an option to sell. The appellant's argument on this supposition was, as he submitted in this Court, that on a proper construction of clause 7 of the document van Aswegen's signature on 17th May, although not communicated, completed a

7 binding agreement between them. The Court a quo decided the issue raised in this form in favour of the respondent. The Court considered that it was incumbent on van Aswegen to communicate to the respondent on or before 17th May his acceptance of the offer, and that, as he had not done so, no contract resulted from his mere signature. Whitaker in his affidavit in support of the application deposed that he personally negotiated the transaction between van Aswegen and the respondent which eventuated into "a sale" and that the document is a true reflection of a preceding oral agreement. It seems, however, on a proper construction of the document that what van Aswegen and the respondent orally agreed upon was that the terms discussed by them would be incorporated in the document containing the terms of the offer. VAN BLERK JA 1971 (3) SA p597 Although van Aswegen titled the document an "offer to purchase", and addressed it to the respondent as an offer to purchase, the offer, as will appear from clause 7, was open until signature by both parties (i.e. the purchaser and the seller) on or before 17th May, This being so, and if regard is had to the fact that van Aswegen and the respondent had orally agreed to the terms set out in the offer, it seems probable that they intended, and this is evidence by their subsequent conduct, that either of them could have signed first and thereby be bound until the other party to whom the offer was open signed or failed to sign on or before 17th May, This seems to be the only probable meaning of the words "this offer is open and binding upon both parties until signature by both parties". If, therefore, the respondent, the seller, by appending his signature to the document constituted himself the offeror and van Aswegen the offeree then, unless the acceptance of the offer was in terms of the written document conditioned to be made in a particular manner, it is governed by the ordinary principles applicable to acceptance of an offer, which require van Aswegen not only to sign the document, but also to communicate the fact of his having signed it to the respondent on or before 17th May, Only then will there be an acceptance according to law. It is trite that an offeror can indicate the mode of acceptance whereby a vinculum juris will be created, and he can do so expressly or impliedly. It was, however, argued on behalf of the respondent that the words used in the contract are obscure, and that, in the absence of clarity, the presumption that the contract will be completed when the offeror comes to hear of the offeree's acceptance, should prevail. That such a presumption in case of doubt exists appears from the following passage from Grotius, de Jure Pacis ac Belli, Bk. 2, chap. 11. para. 15, cited with approval in Dietrichsen v Dietrichsen, 1911 T.S. 486 at p. 494, namely: "... I may make an offer in two ways. I can either make an offer and say that the contract will be established by your mere acceptance; or I can make the offer and say that the contract will be completed when I come to hear of your acceptance. And if there is a doubt upon the matter, we must always presume that the second was the case..." The contract, however, does not admit of such doubt. It does not contain the ordinary offer

8 which is silent as to the mode of acceptance. The manner in which the contract was to be concluded was prescribed and not left to be governed by the legal principles applicable to acceptance. Although it is clear that the parties were aware of the fact that the contract was to be concluded inter absentes (van Aswegen lived on a farm in the district of Parys and respondent on a farm in the East London district) they, a prospective buyer and a prospective seller respectively, had already agreed as to the stipulated period, and the lapsing of the offer failing signature by both parties on or before 17th May, In these circumstances it can be readily understood why the respondent, as the seller, in good faith and in the expectation that van Aswegen would sign on or before 17th May signed the "offer to purchase" first, before van Aswegen had signed it, thereby substituting himself as the offeror. It follows that he thus manifested his intention VAN BLERK JA to be bound by van Aswegen's signature on 17th May as envisaged by clause (3) SA p598 It is sufficiently clear from clause 7, badly phrased as it is, that failing signature by both parties on or before 17th May 1969, the offer shall lapse if only signed by one party. It shall lapse not because of failure of communication but because it was not signed. This clearly implies that the signature by van Aswegen on 17th May, 1969 turned the offer into a binding contract. The offer which did not then lapse could not have been accepted with any other resultant legal force. If it was the intention that the common law acceptance should have been complied with, it was not necessary to have referred at all to the effect of the signature and the lapsing of the offer. It would have been enough to have said: this offer is open until 17th May, I would allow the appeal. The following order is proposed: The appeal is allowed with costs including those of two counsel and the order by the Court a quo is altered to one granting the application with costs. Case Information HOLMES, J.A., JANSEN, J.A., MULLER, J.A., and KOTZÉ, A.J.A., concurred. Appellant's Attorneys: Couzyn, Hertzog & Horak, Johannesburg; Wheeldon, Rushmere & Cole, Grahamstown; Schuurman & Honey, Bloemfontein. Respondent's Attorneys: Addleson, Shapiro & Kirk, East London; Green & Truter, Grahamstown; S. & V. A. Rosendorff & Venter, Bloemfontein (3) SA p598