If the purchaser is unable to obtain the loan, the contract is then rendered void ab initio (as if it never existed). For example, the contract may provide that the validity of the deed of sale is dependent on the purchaser obtaining a home loan by a certain date. The deed of sale is usually subject to a suspensive condition. If a party can prove that they are cancelling the contract in accordance with this clause, the cancellation would then be legally valid.

The said clause can stipulate under which circumstances either party can cancel the contract. A general cancellation clause The deed of sale can be cancelled based on a clause contained in the agreement.Clauses that may provide for cancellation.In determining whether a deed of sale has been validly cancelled, the legal analysis should therefore, remain grounded within the specific terms of the deed of sale: This principle provides that all legal contracts which are freely and fairly concluded should be upheld and enforced. This is in accordance with one of the foundational principles of South African contract law, pacta sunt servanda (the sanctity of contracts).

While the government has introduced a number of regulations relating to managing the spread of COVID-19, none of these measures automatically render legal contracts void. This is discussed in further detail in the Suspensive Conditions section below. While the Deeds office has since re-opened under the level 4 lockdown regulations, the office is under significant pressure to catch up on the resultant backlog.Ĭlients should therefore be warned that this backlog could have an impact on specific time limits within a deed of sale. The government’s lockdown regulations have furthermore, disrupted business and resulted in the closure of the Deeds Office. This is due to the pandemic being an unforeseen event caused by an external force. The COVID-19 pandemic has been recognised as an example of a vis major. Within a contract, the force majeure clause sets out the procedure to be followed if one or both of the parties are unable to perform due to an unforeseen and irresistible event. Vis major, on the other hand, is a South African common law principle.Ī vis major refers to an extraordinary event or an irresistible force beyond the control of the parties, including a so-called “act of God”. Force majeure is a section (clause) that is found in certain contracts. It is important to distinguish between force majeure and vis major.

The common law provisions pertaining to supervening impossibility.

Whether COVID-19 is a force majeure or vis major event that justifies cancellation.

'It must be emphasised that this opinion outlines the general rules that are applicable.' Dr Tarryn Bannister of HVR attorneys shares the following legal opinion within the context of the COVID-19 pandemic stating, 'the application of the rules will always depend on the terms of the deed of sale and the specific facts of the case'.

Cancellation due to acts of god