McAninch v Maisiri & Anor

The appellant sold immovable property to the respondents on 25 November 1999 for $2,300,000, with the purchase price to be paid by 6 December 1999. The contract contained a clause stating that if the full purchase price was not paid by 6 December 1999, "the agreement will be cancelled on the 7th December 1999." The contract also contained a general provision allowing the innocent party to cancel upon material breach after giving fourteen days' written notice. The respondents paid $1 million on 6 December 1999 and assessed costs of $160,000 on 17 December 1999, but failed to pay the full purchase price by the stipulated date. After the deadline, the appellant's sister (acting under power of attorney) agreed with CABS to invest $1,300,000 in paid up permanent shares to facilitate the loan to the respondents. CABS offered the loan on 25 February 2000, which the respondents accepted. During January-March 2000, the appellant's legal practitioners took steps to proceed with transfer, including requesting the agreement, having respondents sign declarations, and forwarding transfer fees. On 10 March 2000, the appellant purported to cancel the agreement. The respondents applied for an order declaring the agreement valid and directing transfer.

• Whether the clause requiring payment by 6 December 1999 failing which the contract would be cancelled on 7 December 1999 constituted a resolutive condition resulting in automatic cancellation
• Whether the contract was cancelled on 7 December 1999 or remained valid thereafter
• Whether the appellant's conduct after 7 December 1999 constituted a waiver of his right to cancel the contract
• Whether the 'no variation except in writing' clause precluded reliance on waiver based on the parties' conduct after the deadline
• Whether the appellant could cancel the contract on 10 March 2000 without prior written notice

The appeal was dismissed with costs. The High Court order declaring the agreement of sale valid and enforceable and directing the appellant to take steps to transfer the property to the respondents was upheld.

A contract clause stating that an agreement 'will be cancelled' upon non-performance by a certain date is not a resolutive condition causing automatic termination, but rather requires a deliberate act of cancellation by the innocent party. The use of words such as 'deemed' or 'considered' cancelled would be necessary to create automatic termination. Where a party fails to exercise a right to cancel immediately upon breach, they may only cancel thereafter by giving the notice required under the general breach provisions of the contract. A 'no variation except in writing' clause does not preclude a party from relying on the other party's waiver of an accrued right to cancel. Voluntary forbearance to enforce strict contractual rights (giving time without binding oneself to give time) does not constitute a variation of the contract and therefore does not require compliance with non-variation clauses. Conduct demonstrating continued performance under the original contract after the date for cancellation evidences an election to affirm the contract and constitutes waiver of the right to cancel for the earlier breach.

The Court noted the distinction, derived from English authorities, between waiting without binding oneself to wait (mere forbearance) and making a fresh binding agreement to give time. The latter would release a surety, while the former would not. The Court observed that the appellant would not have purported to cancel the agreement on 10 March 2000 if he genuinely believed it had already been cancelled on 7 December 1999, indicating his own understanding that the contract remained alive. The Court also noted that by 10 March 2000, the respondents had in fact completed the contract and were not in breach, making any cancellation inappropriate in any event.

This case is significant in South African and Zimbabwean contract law for clarifying the distinction between resolutive conditions (which terminate contracts automatically) and cancellation clauses requiring positive acts. It establishes important principles regarding: (1) the interpretation of cancellation clauses and the requirement for clear language to create automatic termination; (2) the distinction between contractual variations (which require compliance with non-variation clauses) and waiver of accrued rights (which do not); (3) the doctrine of voluntary forbearance, whereby a party may give time for performance without binding themselves contractually; and (4) how a party's conduct after a breach can demonstrate election to affirm the contract rather than cancel it. The case reinforces that non-variation clauses do not prevent parties from waiving accrued rights through their conduct, an important protection for parties who rely on such forbearance.