THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case No: 372/08

JAN ABRAHAM DU PLESSIS N O                            First Appellant

NICOLAAS JOHANNES SMITH N O

Second Appellant

and

GOLDCO MOTOR & CYCLE SUPPLIES (PTY) LTD    Respondent

Neutral citation: Du Plessis & Smith NNO v Goldco Motor & Cycle
Supplies (372/2008) [2009] ZASCA 62 (29 May
2009)

Coram:
NAVSA, LEWIS and SNYDERS JJA and
KROON and GRIESEL AJJA

Heard:
18 May  2009
Delivered:
29 May 2009

Summary:
Option to purchase immovable property deemed to have
been
exercised
by
purchaser
where
seller
has
deliberately frustrated exercise in prescribed mode.

_____________________________________________________

ORDER

On appeal from: Free State High Court (Kruger J sitting as court of first
instance).

The appeal is dismissed with costs, save that the order of the high court is
altered to read:
‘(a) The option for the purchase by the applicant of Shop 1, Prosperitas
Gebou, 133D Jan Hofmeyr Road, Welkom, from the first and second
respondents, in their capacities as trustees of the Prosperitas Trust, for the
price of R4 840 000 plus 14 per cent VAT, in terms of clause 5 of the
agreement of lease between the parties, dated 10 March 2005, is deemed to
have been exercised.
(b) The first and second respondents are ordered to take all necessary steps
to transfer the property described in (a) to the applicant against payment of
R4 840 000 plus VAT.
(c) The first and second respondents are ordered, jointly and severally, to pay
the costs of the application.’

JUDGMENTS

LEWIS JA (NAVSA and SNYDERS JJA and KROON AJA concurring)

[1] At issue in this appeal is the validity and enforceability of an option to
purchase immovable property. The appellants are trustees of a trust
(Prosperitas) which owns immovable property in Welkom. The respondent,
Goldco Motor & Cycle Supplies (Pty) Ltd (Goldco), is a company that hired
premises in a building constructed on property owned by the trust. The
premises were constructed in accordance with the specifications of Goldco’s
chairperson, Mr Boyd Cooper.

[2] The background to the matter is briefly this. Towards the end of 2004
the first appellant, Mr Jan du Plessis, approached Cooper and suggested that
Goldco take premises in a building that the trust proposed to construct in
Welkom. Goldco’s premises in Welkom had recently burned down. A week
later Cooper visited the site and considered it to be suitable. Du Plessis
offered to build premises that would be suitable for the business, and to sell
the building to Goldco. Subsequently it was agreed that Goldco would hire
only a section of the building and that a sectional title register would be
opened in respect of the building: Goldco would then purchase a unit rather
than the entire building.  It was also agreed that Goldco would occupy the
premises as lessee before the sectional title register was opened.

[3] Accordingly, a lease was prepared by the trust’s attorney, Mr F
Rossouw of Rossouw & Vennote Ing (Rossouws) and was signed by Cooper
on 14 March 2005.  The lease was for a period of five years since the parties
were not sure how long it would take for the sectional title register to be
opened such that the premises could be sold and transferred to Goldco. The
premises to be let were described as follows:
‘’n Perseel in die gebou, wat deur die verhuurder opgerig word te Erf 10671/A, Jan
Hofmeyrweg 133D, Welkom, soos uitgewys deur die verhuurder aan die huurder,
groot ongeveer 1331 . . . vierkante meter’.
The lease elaborated on the description by stating that the premises would be
known as ‘winkel nommer 1, Prosperitas gebou, Jan Hofmeyerweg 133D,
Welkom’. I shall revert to the description of the premises in considering the
enforceability of the option to purchase.

[4] Clause 5 of the lease reads:
‘Opsie om perseel te koop:
Die verhuurder verleen hiermee ‘n opsie aan die huurder om die perseel te koop teen
‘n koopsom van R4,000,000.00 (vier miljoen rand) plus BTW, welke koopprys sal
styg teen 10% (tien persent) per jaar vanaf 1 April 2005.
Hierdie opsie is onderworpe daaraan:

(a) dat die deeltitelregister ten opsigte van die grond en gebou waarin die perseel
geleë is, geopen word binne 24 (vier en twintig) maande na datum van
ondertekening van hierdie huurkontrak deur die verhuurder;
(b) dat die huurder hierdie opsie uitoefen deur ‘n skriftelike koopkontrak, opgestel
te word deur Mnre Rossouw & Vennote Ing van Stateway 352, Welkom,
9459, by hulle kantore te onderteken binne 24 (vier en twintig) maande na
datum van ondertekening van hierdie huurkontrak deur die verhuurder;
(c) dat die gemelde koopkontrak opgestel sal word nadat die goedgekeurde
deelplan deur die Landmeters aan Rossouw & Vennote Ing gelewer is en die
koopsaak sal omskryf word as ‘n deeltiteleenheid waarvan die deel
ooreenkom met die perseel wat verhuur word.’
I shall refer to this provision of the lease as ‘the option clause’ even though it
is contended by the trust that it did not confer an option at all – a question to
which I shall revert.

[5] The dispute between the parties arises from the failure by Rossouws to
draw up the contract for the sale of the premises envisaged in the option
clause within the stipulated period (that is, before March 2007), despite
Cooper’s timeous intimation that Goldco wished to exercise the option and
despite the receipt by Rossouws of an approved sectional plan. Moreover, the
trust subsequently refused to sell the premises to Goldco at the price that had
been agreed in the option clause. Goldco applied to the Free State High Court
for an order compelling the trust and Rossouw to draw up a written contract
pursuant to the option, tendering payment of the purchase price which had
escalated, in terms of an escalation clause, to R4 840 000. Rossouws was
cited as the third respondent in the court below. No order was made against it
and it is not a party to this appeal. The high court found for Goldco, ordering
that the written contract envisaged in the option clause be drafted and that
steps be taken by the trust to transfer the premises against payment of the
agreed price. The trust appeals with the leave of the high court.

[6] The high court accepted Goldco’s version that Cooper had advised
Rossouw several times before March 2007 that it wished to exercise the
option, but that Rossouw ignored the requests. It also accepted the argument

that the trust, through its attorney and agent, had thus deliberately frustrated
performance under the contract, and should be compelled to perform.

[7] The factual background that emerges from the founding affidavit of
Cooper, and which is uncontested, is that after the lease containing the option
clause was concluded, Cooper applied to the Standard Bank, Welkom for
finance for the purchase of the premises. The application was granted,
subject to the conditions (inter alia) that the written contract prescribed in the
option clause be drawn up and that a sectional title register be opened for the
property. (The document approving the loan anticipated that the premises
would be bought in the name of another company – a shelf company of which
Cooper was a director, but nothing turns on this since it is Goldco that seeks
relief and an order that the premises be sold and transferred to it.) Goldco in
fact took occupation of part of the premises before the lease commencement
date (1 May 2005).

[8] When approval of financing was given by the bank, Cooper took the
documentation to Rossouws. He pointed out to Rossouw that the financing
was dependent on the fulfilment of certain conditions such as the opening of
the sectional title register. Rossouw explained that he could not yet draft the
contract because the land surveyors had not provided a sectional plan,
required for the opening of a sectional title register.

[9] Cooper then visited the land surveyors in question, and the plan was
completed by 28 July 2005 and approved by the Surveyor General on 24
August 2005. The plan was sent by the land surveyors to Rossouw shortly
afterwards. Rossouw’s brother, Roelie Rossouw (R Rossouw), also an
attorney but with a practice in Bloemfontein, was mandated to see to the
opening of the sectional title register. Cooper visited him too to ensure the
opening of the register. R Rossouw explained that he could not proceed
without an instruction from the trust. Cooper was assured by Du Plessis and
both Rossouw brothers that the process of opening the register would be
expedited. Cooper considered that there was nothing further that he needed

to do. The trust denies that R Rossouw was instructed to attend to the
opening of the sectional title register.

[10] It was only in July 2006, at a function arranged by Standard Bank, that
officials of the bank asked why the transaction was taking so long to
complete. Rossouw was present, as was Cooper. The bank officials asked
about the apparent delay in the opening of the sectional title register.
Rossouw remained silent. And Cooper began to worry. The price was
escalating. He went to visit Rossouw to ask about the delay, but was advised
to speak to his own attorney.

[11] Rossouw did not depose to an affidavit and so we have no knowledge
of his version of events. Du Plessis responded that he had asked Rossouw
about the request made by Cooper: the visit had taken place, he was told,
after the option period had expired. That remains the trust’s position: the
option was not exercised timeously. In fact, even Cooper does not contend
that it was exercised in the prescribed mode timeously.

[12] Although Goldco claimed in the court below that the option had been
exercised timeously, it is clear that no written contract, as contemplated in the
option clause, had been drawn up by Rossouws and signed by the parties.
Goldco thus did not exercise the option in the manner prescribed in the option
clause. But Goldco contends, and the high court found, that Rossouw
deliberately failed to draw up the written contract timeously, and that
‘performance’ can be deemed to have occurred by virtue of the doctrine of
fictional fulfilment. It is not entirely clear to me what the high court meant
when it concluded that performance was deemed to have been made, but I
shall revert to this issue later in the judgment when dealing with fictional
fulfilment.

[13] The trust contends that the option was not exercised and that the
decision of the court below is incorrect. It raises several arguments in this
regard: that the option clause did not in fact constitute an option – a right to
purchase the premises simply by indicating acceptance in writing – but was

merely an agreement to agree; that even if it was an option it would not have
resulted in a binding contract because the description of the premises was
inadequate (an argument not made to the court below and raised at the last
minute before the hearing of the appeal by counsel for the trust); that
Rossouw was Goldco’s agent for the purpose of drafting the contract for the
sale of the land; and that there was no deliberate failure to perform. I shall
deal with each contention separately.

An option or an agreement to agree?
[14] The trust contends that because the option clause required that a
written contract for the purchase of the premises be drawn by Rossouws and
signed by the parties within 24 months of the date of the lease in order to
exercise the option, no right was actually conferred on Goldco. Goldco could
not, it was argued, bind the trust simply by advising it that the option was
being exercised. The contention that there was no option at all lacks merit.

[15] The essence of an option is that it is binding on the option grantor. It is
an offer, in this case to sell property, which cannot be revoked. It is the option
holder that has the choice whether to exercise its right.1 The principle is put
thus by R H Christie:2
‘To understand the true nature of an option it is best to analyse it into two parts – an
offer to enter into the main contract together with a concluded subsidiary contract
(the contract of option) binding the offeror to keep that offer open for a certain period.
On this analysis it is easy to see that the offeror is contractually bound to keep his
offer open, and if he breaks this contract of option by disabling himself from
performing it or by expressly or impliedly repudiating it he will be liable for damages
for breach of contract.’

[16] Could the trust with impunity have advised Goldco, within the 24-month
period, that it was not going to sell the premises to Goldco on the terms set
out in the option clause? The answer must be no: that if it did refuse to comply

1 Cairns (Pty) Ltd v Playdon 1947 EDL 145.
2 The Law of Contract in South Africa 5 ed p 54.

with its undertaking it would be guilty of breach of contract and liable to an
order for specific performance or damages.

[17] The fact that Goldco’s right could not be exercised simply by notifying
the trust (in writing) does not mean that there was no right conferred on
Goldco. The written contract envisaged in the option clause was, in my view,
no more than a prescribed mode of acceptance: the conclusion of a written
contract, drafted by Rossouws, and signed by the parties.3 That of course
raises the question what the content of the written contract envisaged by the
parties would be. Usually an option will reflect all the material terms of the
contract. Indeed, the option clause did reflect the essential terms of a contract
of sale of immovable property: the merx (whether the description is adequate
is a matter to which I shall return) and the price. What other terms would the
additional contract contain?

[18] In my view it is not necessary to answer the question, since I do not
believe that it is necessary for the parties now to enter into the agreement
originally envisaged. But this does not mean that the trust is not bound by its
undertaking to sell the premises at the price agreed. If the trust (through its
agent) deliberately frustrated the exercise of the option in the prescribed
mode, the position is not that the option falls away, but that the prescribed
mode of acceptance ceases to be such. And since the option clause
embodies all the essential terms of a contract of sale it must be enforced on
those terms.

Is the description of the premises sufficient?
[19] Shortly before the hearing the trust filed supplementary heads of
argument in which counsel argued that the premises could not be identified
without reference to the negotiations between the parties, and their conduct,
before the lease was concluded. The argument stems from the description of
the property (set out above) as premises in the building to be erected by the

3 See Driftwood Properties v McLean 1971 (3) SA 591 (A), and, most recently, Withok Small
Farms (Pty) Ltd v Amber Sunrise Properties Ltd [2008] ZASCA 131 (21 November 2008);
2009 (2) SA 504 (SCA) and Pillay v Shaik [2008] ZASCA159 (27 November 2008); [2009] 2
All SA 65 (SCA).

trust as pointed out by the trust to Goldco. Of course, in order for a contract
for the sale of land to comply with s 2(1) of the Alienation of Land Act 68 of
1981, the property sold must be identifiable from the description in the
contract itself. But it has long been settled law that objective evidence may be
adduced to identify the property. These principles relate also to options:
Hirschowitz v Moolman.4  This court has often reiterated the principle that
regard may be had to objective evidence to correlate the description in the
document with the actual property sold. In Vermeulen v Goose Valley
Investments (Pty) Ltd 5  Marais JA said:
‘What requires to be emphasised yet again is that evidence going to facilitation of the
task of relating the description of the res vendita given by the parties in their written
agreement to an area on the ground is not objectionable provided that it does not
relate to the negotiations between the parties or an ex post facto attempt to discover
their consensus, and provided further that no breach of the parol evidence rule is
involved. As long ago as 1948 this Court in Van Wyk v Rottcher’s Saw Mills (Pty)
Ltd6. . . recognised that a statutory provision that a contract of sale of land must be in
writing “cannot mean that the only evidence by which the property can be identified
must be contained in the writing . . .‘ . 7

[20] There is no need, in ascertaining precisely what and where the
premises are, to resort to the negotiations between the parties. There is clear
objective evidence. Goldco had in fact occupied the premises pursuant to the
lease. Moreover, the premises are described also as Shop 1, Prosperitas
Building, and the street address is also set out. As Goldco submits, the merx
is determinable simply by having regard to the building plan. There can be no
uncertainty as to what the merx was. This contention must thus fail.

Was Rossouw the trust’s agent?
[21] This question is germane to the application of ‘fictional fulfilment’. The
high court found that Rossouw was the trust’s agent, and that his failure to

4 1985 (3) SA 739 (A) at 765F-H and 767E-G.
5 2001 (3) SA 986 (SCA) para 14.
6 1948 (1) SA 983 (A) at 990.
7 See also, for example, Headermans (Vryburg) (Pty) Ltd v Ping Bai 1997 (3) SA 1004 (SCA)
and J R 209 Investments v Pine Villa Estates; Pine Villa Estates v J R 209 Investments [2009]
ZASCA 3 (26 February 2009); [2009] 3 All SA 32 (SCA) para 19.

draw up the written contract was attributable to the trust. The trust denied that
Rossouw was required to act as its attorney and agent. On the contrary, it
asserted, he was Goldco’s agent since only Goldco could give him the
instruction to draft the contract.  The facts do not support the argument. It is
clear that Rossouw acted on behalf of the trust, and on its instructions, in
drafting the lease agreement. It was the contract prepared by him that
provided that the mode of exercising the option was through the signature of a
written contract signed by the parties. And, importantly and understandably,
subclause (c) of the option clause provided that the contract would be
prepared after the sectional title plan had been delivered to Rossouws by the
land surveyors. Throughout, it was clearly envisaged that Rossouws were the
agent of the trust, and in correspondence Rossouw referred to the trust as his
client. Indeed, Goldco could not exercise the option without the cooperation of
Rossouws. The court below thus correctly found that Rossouws was the
agent, as the attorney, of the trust.

Fictional fulfilment: frustration of the exercise of a right
[22] That brings me to the question whether the court was correct in finding
that the doctrine of fictional fulfilment was applicable. The high court found
that where a contract is subject to a condition that both parties sign it, one
party cannot escape the contract by making it impossible for the other to
sign.8 In such a case, it held, it would be assumed that the party refusing to
comply had in fact performed.

[23] It is important to understand, however, that the drafting of a written
contract to be signed by the trust and Goldco was not a condition in the true
sense. A condition is an uncertain future event. On fulfilment, a contract may
come into operation (in which case the condition is termed suspensive) or it
may be terminated (a resolutive condition). In this case the exercise of the
option was subject to one condition – the opening of the sectional title
register. It was also dependent on the performance by the trust of an

8Relying on First National Bank Ltd v Avtjoglou 2000 (1) SA 989 (C), confirmed in this respect
on appeal to the full court in Avtjoglou v First National Bank of Southern Africa Ltd [2002] 2 All
SA 1 (C). This court found that that decision, which granted provisional sentence, was not
appealable: 2004 (2) SA 453 (SCA).

obligation: procuring a written contract, on the terms set out in the option
itself, drawn by Rossouws, to be signed by the parties. But that is not a true
condition. Thus once Goldco intimated to the trust or its attorney that it wished
to exercise the option, and once the approved sectional plan was provided by
the land surveyors to Rossouws, there was an obligation imposed on the trust
to ensure that the written contract was prepared and signed by it. If anything
was then frustrated it was Goldco’s right to exercise the option, which was
rendered impossible by the failure of the trust to ensure that the prescribed
mode of exercise was available to Goldco in the agreed period.

[24] There is ample authority for the extension of the doctrine of fictional
fulfilment of conditions to the situation where there is deliberate frustration of
contractual performance. In Koenig v Johnson9 the payment of the balance of
the price of shares in a company by the purchaser was to be made on the
delivery to it of two patents. Delivery could not be made without signatures to
certain documents. The company that could procure signature refused to do
so because it believed that the patents were invalid. Wessels CJ held that
although the company genuinely believed this to be the case, the ‘condition’ of
signature should be deemed to have occurred. Although the court used the
word ‘condition’ it is clear that what was referred to was an obligation to
ensure signature.10

[25] Similarly, in East Asiatic Co Ltd v Hansen11 the court found that where
a buyer prevented a seller from performing a term of their contract of sale, on
which payment of the price was dependent, the seller was deemed to have
performed.12 Hathorn J said that both the doctrine of fictional fulfilment and
that of deemed performance spring from what Kotze JA described in MacDuff
& Co Ltd v Johannesburg Consolidated Investment Co Ltd 13 as ‘a branch of

9 1935 AD 262.
10 See in this regard Van Heerden v Hermann 1953 (3) SA 180 (T) at 187, where
Ramsbottom J said that the delivery of the patent in Koenig was not a ‘condition properly so
called’.
11 1933 NPD 297.
12 At 302.
13 1924 AD 573 at 611.

the broad equitable rule of our law that no one can take advantage of his own
wrong, for it is unjust and contrary to good faith that he should do so’.

[26] Thus although there is a distinction between a refusal to perform an
obligation upon which another party’s performance is dependent, and which
amounts to a breach of contract such that performance can be compelled (or
damages awarded), on the one hand, and the fulfilment of a condition, on the
other, in some cases, because of the deliberate frustration by a party of the
other’s right, performance will be deemed to have occurred or performance
will be ordered by a court.14 Christie15 suggests that the doctrine of fictional
fulfilment applicable to conditions has breached the division between
fulfilment of a condition and performance of a term because ‘the facts
sometimes call for the doctrine to be applied when what has not been fulfilled,
due to the deliberate action or inaction of one party, is really a term of the
contract’.

[27] Christie concludes that the doctrine of fictional fulfilment
‘ . . . applies equally to true conditions precedent and to terms of the contract that
operate as conditions precedent; that in either case it will apply when there has been
bad faith; it will also apply when there has been deliberate intention no matter the
motive, unless the terms of the contract and the surrounding circumstances indicate
to the contrary; . . . and at all levels no distinction is drawn between acts and
omissions’.

[28] Had Goldco sued the trust to compel performance before the expiry of
the option period there is no doubt that the court would have compelled the
trust to ensure compliance with the option clause. But it did not do so, and its
efforts to ensure compliance were thwarted by Rossouw, the trusts’s agent.
In my view, it would be inequitable to allow the trust to escape its obligation
through deliberately frustrating Goldco’s right to exercise the option. The trust
was in a position to ensure that the written contract, a ‘condition’ precedent to
the exercise of the option, was prepared by Rossouws and signed by it. The

14 See Scott v Poupard 1971(2) SA 373 (A) at 378H.
15 Op cit p 150.

deliberate frustration of the exercise by Goldco of its right in the prescribed
mode requires that Goldco be deemed to have done so. The effect of the
application of fictional fulfilment is thus to bind the trust after the expiry of the
option period because of its frustration of the right to exercise the option
timeously.

[29] I accordingly conclude that the court below was correct in finding that
this was a case where the doctrine of fictional fulfilment is applicable. On the
undisputed facts Goldco timeously attempted to exercise its option. It is only
because Rossouw, acting as the trust’s agent and attorney, deliberately
frustrated Goldco’s attempt to exercise its right that there was not compliance
with the option clause before its expiry. The trust cannot rely on the deliberate
failure of its agent to draw up a written contract for the sale of the premises in
order to escape its obligation to sell the premises to Goldco.16

[30] But nor, in my view, can the court order (as the high court did) that the
parties enter into the written agreement envisaged in the option clause,
because it cannot compel agreement on terms to be negotiated subsequently.
As I see the position, as indicated earlier, the prescribed mode of exercise of
the option – the signing by both parties of a written contract drafted by
Rossouws – is effectively dispensed with (or, to put the same notion
differently, deemed to have been complied with) as a result of the trust’s
frustration of the exercise of the option in that mode within the agreed time.

[31] The result is that the terms of the sale of the premises are to be found
in the option clause itself, as well, of course, as in the common law rules
governing sales. It follows that the appeal must be dismissed, but the order of
the high court changed to reflect the findings of this court.

[32] The appeal is dismissed with costs, save that the order of the high
court is altered to read:

16 Scott v Poupard  at 378G-H.

‘(a) The option for the purchase by the applicant of Shop 1, Prosperitas
Gebou, 133D Jan Hofmeyr Road, Welkom, from the first and second
respondents, in their capacities as trustees of the Prosperitas Trust, for the
price of R4 840 000 plus 14 per cent VAT, in terms of clause 5 of the
agreement of lease between the parties, dated 10 March 2005, is deemed to
have been exercised.
(b) The first and second respondents are ordered to take all necessary steps
to transfer the property described in (a) to the applicant against payment of
R4 840 000 plus VAT.
(c) The first and second respondents are ordered, jointly and severally, to pay
the costs of the application.’

-------------------------
C H Lewis
Judge of Appeal

GRIESEL AJA (dissenting)

[33] I have had the advantage of reading the judgment of my colleague
Lewis JA but respectfully disagree with her conclusion that the appeal should
fail.

[34] Where I differ from my colleague is with regard to the validity of the
option clause in question.17 In order to be enforceable, an option must be
such that the substantive contract – whether sale, lease, or some other form
of contract – comes into existence without more by mere acceptance of the
offer; that is, by exercise of the option by the grantee.18 As stated in Brandt v
Spies:19

17 Quoted in para 4 above.
18 Hirschowitz v Moolman & others 1985 (3) SA 739 (A) at 767F. See also Van der Merwe et
al Contract: General Principles 3ed (2007) p 80.
19 1960 (4) SA 14 (E) at 16F–G, quoted with approval in Venter v Birchholtz 1972 (1) SA 276
(A) at 284A.

‘Through the option the grantee acquires the right to accept the offer to sell at any
time during the stipulated period; and if this right is exercised a contract of purchase
and sale is immediately brought into being. It follows that the offer must be one which
is capable of resulting in a valid contract of sale from the fact of acceptance by the
person to whom the offer is made.’

[35] It is not open to dispute that the option clause in this case contains all
the essentialia of a contract of sale. My colleague appears to regard this as
sufficient whereas I respectfully hold a different view. It is settled law that, in
order to comply with the provisions of s 2(1) of the Alienation of Land Act 68
of 1981, ‘the whole contract of sale, or at any rate all the material terms
thereof’ must be in writing.20 As explained by Corbett JA in Johnston v Leal:21
‘The material terms of the contract are not confined to those prescribing the
essentialia of a contract of sale, viz the parties to the contact, the merx and the
pretium, but include, in addition, all other material terms…. It is not easy to define
what constitutes a material term.’
What emerges clearly from the cases, though, is that ‘a material term is not
necessarily one of the essentials – parties, property and price – of a contract
of sale’.22

[36] It follows that, in order to serve as the basis for a valid contract of
sale, an option to buy land must not only contain all the essentialia of a deed
of sale; it must also contain all the other material terms thereof. I accordingly
agree with my colleague that ‘[u]sually an option will reflect all the material
terms of the contract’23 – as indeed it should. It is with the next part of her
reasoning that I have a difficulty. After pointing out that ‘the option clause did
reflect the essential terms of a contract of sale of immovable property’, my
colleague asks rhetorically: ‘What other terms would the additional contract
contain?’ In my view, it is not necessary for us to speculate as to what those
other terms might be. It was for Goldco, as applicant in the court below, to

20 Johnston v Leal 1980 (3) SA 927 (A) at 937G and the cases referred to therein.
21 At 937H.
22 Meyer v Kirner 1974 (4) SA 90 (N) at 98D, cited with approval in Johnston v Leal at 937G–
H.
23 Para 17 above.

prove the contract which it seeks to enforce.24 This means that it had to satisfy
the court that the parties had intended that the further written contract would
in fact not contain anything more than what is already contained in the lease,
ie the bare essentialia.

[37] In my view, Goldco has failed to discharge that onus. First, the
interpretation that no further material terms were necessary would make a
further written agreement completely superfluous. Second, such an inter-
pretation is contradicted by the background circumstances. It appears from a
letter dated 1 December 2004 attached to the founding affidavit that the trust
at that stage offered to sell a portion of the property – identified with reference
to erf number, surface area, dimensions and street frontage – to Goldco at a
stipulated price of R2,45 million excluding VAT and on certain further
conditions outlined in the letter. The trust described this offer as ‘ons
skriftelike aanbod in konsep vir verkoop’ of the property (emphasis added).
Significantly, the penultimate paragraph of the letter reads as follows:
‘Indien hierdie hoofbeginsels aanvaarbaar is, sal die partye toetree tot [’n] kontrak
met volle detail soos opgestel deur die oordragprokureurs Rossouw & Vennote
Welkom.’ (Emphasis added).

[38] Those ‘hoofbeginsels’ were indeed acceptable to Goldco. However,
instead of the detailed contract of sale envisaged in the letter, the parties
some 3½ months later entered into the lease, containing the option clause in
question. Having regard to these background circumstances, there can be
little doubt that the ‘skriftelike kontrak’ contemplated by the option clause is
the same as the ‘kontrak met volle detail’ referred to in the letter of 1
December 2004. The inference is irresistible that further material terms and
conditions, in addition to the essentialia already agreed upon, had indeed
been contemplated by the parties when the lease was signed. In these
circumstances, it is insufficient to hold, as my colleague does: ‘And since the
option clause embodies all the essential terms of a contract of sale it must be

24 This is a question which, according to Christie op cit p 154, ‘must now be regarded as
settled’.

enforced on those terms’.25 The question to be answered is a different one,
namely whether the option clause in fact embodies all the material terms of
the contemplated contract of sale; not just the essentialia. To my mind, the
answer to this question is no.

[39] For these reasons I am, with respect, unable to agree with my
colleague’s further statement that ‘the written contract envisaged in the option
clause was . . . no more than a prescribed mode of acceptance’.26 It is true
that clause 5(b) tends to create that impression, but then it should
immediately be pointed out that the clause is notable for its ineptitude rather
than its precision. Before acceptance can take place in the manner prescribed
by the option clause, a further written contract between the parties was
required, with neither guidelines as to the content of such contract nor any
deadlock-breaking mechanism in the event of deadlock between the parties.
In these circumstances, the option granted in terms of clause 5(b) is, in my
view, nothing more than an agreement to agree, which is insufficient to serve
as the basis for a binding agreement of sale. Put differently, the option is not
of such a nature that it is capable of resulting in a valid contract of sale from
the mere fact of acceptance thereof. All of these features, in my view, are
entirely destructive of a valid and binding option.27

[40] Had it not been for the provisions of clause 5(b), I would have had
little hesitation in holding that a valid option had been granted in favour of
Goldco. Clause 5(b), however, makes it clear that the offer to sell, as it
stands, does not purport to contain the entire offer by the offeror. Without a
complete offer, it is impossible to have a valid contract of sale complying with
the provisions of Act 68 of 1981. For these reasons I conclude that the option
in question is unenforceable.

25 Para 18 above.
26 Para 17 above.
27 Compare Letaba Sawmills (Edms) Bpk v Majovi (Edms) Bpk 1993 (1) SA 768 (A) at 773I–
774A; Namibian Minerals Corporation Ltd v Benguela Concessions Ltd 1997 (2) SA 548 (A)
at 567A–C; Premier, Free State and others v Firechem Free State (Pty) Ltd 2000 (4) SA 413
(SCA) paras 35–36.

[41] Having said that, I now wish to deal briefly with the relief claimed in
prayer 1 of the notice of motion, as ordered by the court a quo. It reads as
follows:
‘[D]at die respondente gelas word om binne tien (10) dae na datum van die verlening
van hierdie bevel ’n skriftelike koopkontrak ter uitvoering van die opsie soos
beliggaam in klousule 5 van die huurkontrak tussen die partye . . . aan [die
respondent] voor te lê vir ondertekening teen ’n koopprys van R4 840 000 plus 14%
BTW’.

[42] My colleague, with respect rightly, recoils from the prospect of
compelling agreement ‘on terms to be negotiated subsequently’.28 Her
suggested solution, as contained in para (a) of the proposed order, is,
however, equally unpalatable. Leaving aside the question whether this Court
should, in the exercise of its powers on appeal,29 mero motu amend in any
material way the relief claimed and granted in the court below, the proposed
order seeks to dispense with the peremptory requirement of a written
acceptance of the option.30 Moreover, the proposed order seeks to impose
upon the parties a written contract containing only the essentialia of a contract
of sale whereas the evidence reveals, on a balance of probability, that further
material terms were contemplated.

[43] In these circumstances, I would respectfully echo the words of
Botha JA in his minority judgment in Soteriou v Retco Poyntons (Pty) Ltd:31
‘No doubt the parties intended the clause to have business efficacy. But then, they no
doubt did not realise that an agreement to agree was devoid of legal effect. The
Court is powerless to correct their error for them. While the Court will strive not to be
a destroyer of bargains, it can never be the creator of them.’

[44] For these reasons, I would uphold the appeal, set aside the order of
the court below and substitute it with the following:
‘The application is dismissed with costs.’

28 Para 30 above.
29 Section 22 of the Supreme Court Act 59 of 1959.
30 Hirschowitz v Moolman, n 2 above, at 766D; Van der Merwe et al op cit p 83–84.
31 1985 (2) SA 922 (A) at 936I–J.

----------------------
B M Griesel
Acting Judge of Appeal

NAVSA JA (LEWIS and SNYDERS JJA and KROON AJA concurring)

[45] I have had the benefit of reading the judgments of my colleagues Lewis
JA and Griesel AJA. I agree with the reasoning and conclusions reached by
the former and I am in respectful disagreement with the latter. I am
constrained to add the comments that follow.

[46] First, it is important to note that up until the present appeal Prosperitas
had not contended that there were any terms, over and above those
contained in the option, which still had to be agreed upon. It is clear, both from
the founding and answering affidavits, that it was envisaged that it would take
up to 18 months for the sectional title register to be opened to enable a deed
of sale to be completed and that the parties provided a 24-month period to
that end. Factually, the only defence presented in the answering affidavit is
that the option had not been properly exercised by Goldco and that it was
solely to blame.

[47] Second, and perhaps more importantly, the agreement which this court
in Driftwood, referred to in para 17 by Lewis JA, held to be enforceable was in
similar terms to the option in the present case.32 The differences relate to
commission, a suspensive condition relating to the establishment of a
township and, that the purchase price was payable upon registration. The first
two aspects are inapplicable and the latter is in any event the position at
common law.

[48] Third, other than the question of the description of land which is dealt
with by Lewis JA, it was never suggested that the contents of the option would

32 At 595F-H.

otherwise not be in compliance with the provisions of the Alienation of Land
Act 68 of 1981.

[49] Fourth, Griesel AJA, in para 37 above, in interpreting the option had
regard to ‘background circumstances’. In particular, he had regard to
correspondence preceding the conclusion of the lease. It is clear that the
lease signed on 14 March 2005 superseded all prior negotiations and
agreements. It is the option contained in the lease that has to be interpreted
and applied. The option is, in my view, clear and unambiguous. It is to be
given its grammatical and ordinary meaning unless this would result in
absurdity, repugnancy or inconsistency with the rest of the document. The
circumstances in the present case are not such as to exclude the rule against
extrinsic evidence in aid of interpretation.33 The question we were called upon
to decide is whether the option was an agreement to conclude an agreement.
Lewis JA had regard to the terms of the option and in my view correctly
concluded that it did not.

[50] For all these reasons I concur in the judgment of Lewis JA.

--------------------
M S Navsa
Judge of Appeal

33 See R H Christie (op cit) p 204 and the discussion of Coopers & Lybrand v Bryant 1995 (3)
SA 761 (A) at p 205.

Appearances:

For the Appellant:

M H WESSELS SC

Instructed by:

Rosendorff, Reitz & Barry

Bloemfontein

For the Respondent:
C Ploos van Amstel SC
Instructed by:

Vermaak & Dennis

Bloemfontein
SUPREME COURT OF APPEAL OF SOUTH AFRICA

PRESS RELEASE

29 May 2009
STATUS: Immediate

Du Plessis & Smith NNO v Goldco Motor & Cycle Supplies (372/2008)
[2009] ZASCA x (29 May 2009)

Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal today dismissed an appeal against the order of
the Free State High Court that an option for the purchase of premises as a
sectional title unit was deemed to have been exercised.

The appellants, trustees of a trust that owns immovable property in Welkom,
had erected a building and built shop premises in it to Goldco’s specifications.
Goldco hired the premises, and in terms of the agreement of lease, the trust
gave Goldco an option to purchase the premises within two years of the
commencement of the lease, at a stipulated price, which would escalate over
time. The grant of the option was made subject to the condition that a
sectional title register be opened. The option clause provided also that the
option be exercised by the signing of a contract of sale, to be drafted by the
trust’s attorney, by the trust and Goldco.

Goldco had intimated to the attorney that it wished to exercise the option
within the stipulated time period. The attorney had failed to draw up the
contract within the two-year time period, despite Goldco’s requests. The high
court found that the trust had deliberately frustrated the exercise of the option.
It thus ordered the trust to ensure that the contract envisaged in the option
clause be drafted and signed.

On appeal, the majority of the SCA found that the trust had deliberately
frustrated the exercise of the option in the mode prescribed, and that the
option was thus deemed to have been exercised. Since the essential terms of
a contract of sale of land were set out in the option clause the sale was held
to be immediately enforceable and the court ordered the trust to take steps to
transfer the premises to Goldco.

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