Kovacs Investments 724 (Pty) Ltd v Marais

The parties concluded a written agreement on 29 July 2005 for the sale of the commercial section of an immovable property (SANBEL) for R18 454 041. The agreement was subject to suspensive conditions, including that the purchaser secure a loan of R10 149 722 by 15 August 2005 and obtain investor approval by the same date. The purchaser only obtained a loan of R9 650 000, falling short of the stipulated amount. Despite this, the parties proceeded as if the agreement were operative: the deposit was paid late but accepted, the purchaser took occupation, and rentals were collected. Almost two years later, the seller sought to have the agreement declared void for non-fulfilment of the suspensive conditions. The purchaser contended that the shortfall constituted substantial compliance or that the seller had waived strict compliance or was estopped from relying on non-fulfilment.

The appeal was dismissed with costs, including the costs of two counsel. The order of the High Court declaring the agreement of sale to be of no force and effect was upheld.

The case is important for clarifying the distinction in South African law between waiver and variation in contracts for the sale of land. It reaffirms the strict application of s 2(1) of the Alienation of Land Act and the Shifren principle, confirming that a purported waiver which alters a material term, such as the quantum of a loan in a suspensive condition, is an invalid variation unless reduced to writing.