RELIANCE, FORMALITIES AND THE MODE OF ACCEPTANCE OF AN OFFER Pillay v Shaik 2009 4 SA 74 (SCA)

Abstract

In Pillay v Shaik (2009 4 SA 74 (SCA)), the Supreme Court of Appeal was confronted with a situation which tends to feature in the law reports more frequently than one would expect, and that is where a party to a transaction involving the sale of immovable property reneges on an apparent agreement by invoking some form of technicality (in casu the lack of a signature on a contractual document) as a bar to the proper conclusion of the contract. Usually, where immovable property is sold directly to a purchaser, section 2(1) of the
Alienation of Land Act 68 of 1981 applies and provides that no alienation of land will be of any force or effect unless contained in a deed of alienation signed by the parties, or by their agents acting on their written authority. Failure to comply with this provision renders an alienation of land void. Where, however, immovable property is held in the name of a close corporation or private company merely the members’ interests or shares are transferred to the purchaser, but the purchaser still indirectly gains control over the property owned by the juridical entity. The present matter dealt with the latter type of situation and the legal question was whether the sellers had accepted a signed, written offer made by the purchasers despite the fact that the sellers had not in turn signed the contractual documents. The Natal Provincial Division (Shaik v Pillay 2008 3 SA 59 (N)) found that contractual liability did not lie for want of compliance with a party-imposed signature formality, whereas the Supreme Court of Appeal applied the reliance theory to reach the opposite conclusion in the circumstances. The respective approaches of these two courts are diametrically opposed giving rise to some interesting issues on doctrinal as well as policy levels.