Tight Business Enterprises CC v Petrus Johannes Lordan NO and Others

On 5 January 2009 Tight Business Enterprises CC (TBE) and the Johan Lordan Trust concluded a written agreement for the sale of immovable property. The agreement was subject to a suspensive condition requiring ministerial consent, by 30 June 2009, for the separate transfer of the property. TBE alleged that the required consent was obtained on 4 June 2009. The trust allegedly failed to perform its obligations, and TBE instituted a claim for specific performance on 6 March 2012. The trustees raised a special plea of prescription, contending that the three-year prescription period began running on the date of signature of the agreement and had expired before summons was issued. TBE contended that prescription only commenced once the suspensive condition was fulfilled.

The appeal was upheld with costs. The order of the high court was set aside and replaced with an order dismissing the special plea of prescription with costs. The matter was remitted to the high court for determination of the merits of the claim.

The case clarifies South African law on the interaction between suspensive conditions in contracts and prescription. It authoritatively confirms that, notwithstanding the validity of an agreement from signature, prescription does not begin to run until the suspensive condition is fulfilled and the debt becomes enforceable. The judgment reinforces the distinction between the existence of a contract and the enforceability of obligations for purposes of the Prescription Act.