Klub Lekkerrus/Libertas v Troye Villa (Pty) Ltd and Others

Klub Lekkerrus and Klub Libertas were separate voluntary associations operating as holiday clubs. In 1990, each club entered into separate agreements to purchase shares and loan accounts from Mr van Tonder in companies that owned portions of the farm Welgevonden, on which holiday resorts were operated. The clubs also entered into lease and management agreements relating to these resorts. Purchase prices were to be paid over 60 months based on timeshare sales, with minimum amounts stipulated. In 1991, the two clubs amalgamated to form Klub Lekkerrus/Libertas (the Club). After amalgamation, all parties continued to conduct affairs as if the Club had stepped into the shoes of the original clubs, despite non-variation clauses in the contracts. The 60-month payment period expired in 1995 without full payment, but Mr van Tonder made no demand and continued to accept payments. He died in 1997. His widow and the executor attempted to enter into new share sale agreements, which were void due to price uncertainty. In 2007, after a change in the Club's trustees, the respondents sought to terminate the leases and reclaim the shares, arguing that the original sale agreements had lapsed upon amalgamation.

• Whether the sale agreements entered into by the two constituent clubs survived the amalgamation of the clubs
• Whether tacit new agreements on the same terms were concluded between the Club and Mr van Tonder after amalgamation
• Whether non-variation clauses in the original agreements precluded tacit substitution of the Club as party
• Whether Mr van Tonder elected to keep the agreements alive despite non-payment of the purchase price by the due date
• Whether clause 2.5 of the invalid 1997 agreement was severable and enforceable
• Whether the Club was lawfully entitled to ownership of the shares in the property-owning companies

The appeal was upheld with costs against the first, sixth and seventh respondents jointly and severally, including costs of two counsel. The order of the court below was substituted to declare: (a) that the Club and its members had no rights to certain ancillary properties belonging to the first and fourth plaintiffs from 10 August 2007; (b) the balance of the plaintiffs' claims was dismissed; (c) the Club was declared the sole shareholder of all issued shares in the second and third plaintiffs with the share registers to be rectified accordingly; (d) the balance of the Club's counterclaims was dismissed; and (e) the first, sixth, seventh and eighth plaintiffs were ordered to pay the Club's costs jointly and severally, including costs of two counsel.

When voluntary associations amalgamate by unanimous decision of their members, tacit agreements on the same terms as the original agreements can be concluded between the amalgamated association and the other contracting party, as evidenced by the parties' conduct in continuing to perform under those agreements. Non-variation clauses do not preclude the formation of such tacit new agreements because the general principles of contract law still apply, including the principle that a party may not approbate and reprobate. Where a contracting party continues to accept performance under a contract for an extended period without demanding full payment or threatening cancellation, that party has clearly and unequivocally elected to keep the contract alive despite breach. A clause in an agreement that forms an integral part of the purchase price provision and has no independent consideration is not severable from the rest of the agreement when the agreement itself is void for uncertainty.

The court observed that there was considerable merit in the contention that the Club had on the evidence paid the minimum purchase price for the shares, though no finding was requested on this point. The court also noted that to deny the reality of the tacit agreements after nearly two decades of acceptance by everyone would amount to a travesty of justice, even though neither party had relied in explicit terms on tacit agreements. Additionally, the court noted that Mrs van Tonder apparently believed that as chairman she could enter into contracts on behalf of the Club as she wished, but the Club's constitution provided otherwise, and absent proof of authority from the board of trustees, she could not bind the Club.

This case is significant for establishing important principles in South African contract law and the law of voluntary associations: (1) It clarifies that when voluntary associations amalgamate by unanimous decision of their members, the successor association steps into the shoes of its predecessors. (2) It affirms that tacit agreements can replace prior written agreements, and that such tacit agreements can be inferred from the parties' conduct over an extended period. (3) It confirms that non-variation clauses do not create an absolute straitjacket and do not preclude the formation of new tacit agreements on the same terms. (4) It reinforces the principle that parties cannot approbate and reprobate - they cannot simultaneously rely on contractual provisions while acting inconsistently with the contract. (5) It demonstrates the application of election in the context of breach of contract, showing that acceptance of partial performance over many years without demanding full payment or threatening cancellation constitutes a clear election to keep the contract alive. The case is also important for its treatment of the severability of contractual clauses and the requirements for authority to bind voluntary associations.