Legal Articles

For those who have visited the desert and experienced sand dunes, you have probably seen how quickly their shape changes as the wind blows over them. Some of you have been to the beach and probably written names of your loved ones in the sand along the shoreline, only to have them washed away by an incoming wave. In both cases, what was written or seen is no more.

Welcome, this is the risk of a verbal contract.

Are Verbal Contracts Legal in South Africa?

Under South African law, verbal contracts are binding and effective.

However, the challenge remains in proving the existence of the verbal contract, its terms and conditions, in times of dispute.

Just like in any dispute, the opposing sides will be arguing their case from a pedestal and angle that puts them at an advantage over the other side. Unfortunately, the biggest loser in this scenario is the truth, and the Courts have a torrid time in determining the true state of affairs.

At the end of the day, the party who will walk away in triumph is the one who would have argued the most probable sequence of events.

What Contracts can be executed Verbally?

There are, however some contracts which may not be executed verbally under the law. This is done to avoid malpractice, disputes and uncertainty. The Alienation of Land Act 68 of 1981 provides in Section 2 (1);

No alienation of land after the commencement of this section shall, subject to the provisions of section 28, be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on their written authority.”

There are three principles that are to be deduced from here;

1. The deed of alienation (Offer to Purchase) must be in writing;
2. Signed by the parties;
3. If signed by their agents, the agents must have written authority.

In the case of Thorpe v Trittenwein [2006] SCA 30 the Supreme Court of Appeal upheld that a Trustee who had signed a deed of transfer without written authority by way of resolution from other Trustees, was therefore not an authorised agent. This is despite the fact that the Resolution had been executed later to authorise the Trustee to sign on behalf of the Trust. Therefore, the three requirements as mentioned above must be manifest at the time of the signing of the agreement.

Despite other types of contracts being valid even if executed verbally, we strong advise parties to reduce their agreements into writing and retain copies of each. In times of dispute documentary evidence holds more weight and does not easily run the risk of being misrepresented.

Van Deventer & Van Deventer -  Your Contract Attorneys in South Africa

We assist with a wide array of contracts from Commercial Contracts, Lease Agreements as well as Offers to Purchase amongst others. Our Litigation Department is manned by lawyers who have extensive experience in Contract Law.

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