South African courts have recently sent a firm reminder to businesses: contracts are not guidelines – they are binding rules. Whether it’s missing a deadline, casually drafting an amendment, or assuming that a handshake is good enough, the consequences can be serious. Courts will not step in to rescue parties from sloppy drafting, informal agreements, deadlines, or missed conditions. Contracts are to be respected – form and substance really do matter.
Deadlines are exactly that
In the matter of Vantage Goldfields v Siyakhula Sonke Empowerment Corporation, a R310 million share sale collapsed because the buyer missed a crucial upfront payment deadline of R10 million – a suspensive condition. Once that condition failed, the contract was dead. Efforts to patch it up with multiple addenda were meaningless. Even a so-called “revival agreement” could not succeed unless the missed suspensive condition was properly dealt with.
This example highlights the point that deadlines, especially suspensive conditions, are non-negotiable. Missing one can kill a deal outright.
Agreements can be binding even without a signature
In the Soul Africa Group v Venter Food matter, the parties verbally agreed on a R700 000 settlement and even shook hands on it. Later, Soul Africa’s attorneys suggested different payment terms, but they never signed the draft agreement that was prepared to give effect thereto. When Soul Africa tried to walk away, the court held that their conduct created the objective appearance of agreement and that the settlement was binding.
This demonstrates that a contract does not always require a signature. If your words and actions signal agreement, the law will bind you to it, even if you later deny it.
Non-variation clauses mean what they say
In the matter of Technologies Acceptances Receivables v Pieter Toerien Productions, the parties amended a lease agreement by hand, increasing the rental. Only one party initialled the change, despite a clause requiring written amendments being signed by both parties. The court applied the Shifren principle: because the supplier had not signed, the amendment was invalid.
It’s important to remember that non-variation clauses are strictly enforced. If the contract says both parties must sign an amendment, anything less is meaningless.
What does this all mean for businesses?
These cases collectively highlight a harsh but simple truth: South African courts will hold parties to the form and substance of their agreements.
- Miss a suspensive condition? The deal is dead.
- Act like you’ve agreed? The law may hold you to it.
- Ignore a non-variation clause? Your amendment won’t stand.
The message is clear: respect contracts in both form and substance. Pay attention to deadlines, ensure amendments comply with the agreement, and don’t assume informality will suffice. For high-stakes deals, careful management of suspensive conditions, realistic timelines, and clear extension provisions is essential to avoid costly disputes.
A well-drafted and carefully managed contract is not just paperwork – it is your safeguard against costly disputes and potentially protracted legal proceedings. Contracts are not guidelines; they are rules.
This article was penned by Wildu du Plessis and Kiara Davey.