COUNTER-OFFER MUST BE ACCEPTED IN WRITING
TO CONSTITUTE VALID SALE
Cowley and Another v Lai Thom and Another (1117/2010) [2012]
ZAECPEHC 70 (25 September 2012)
The Court was asked in this matter to determine whether a valid sale agreement was
constituted where a seller accepted a buyer’s counter-offer verbally, and then instructing
his conveyancer to notify the buyer accordingly. This was answered in the negative, as
the Alienation of Land Act’s requirements for validity of a sale agreement were not met
thereby.
The Judgment can be viewed here.
FACTS
Mr and Mrs Cowley, whilst living in the UK, sought to purchase a property in Port
Elizabeth. With the assistance of an estate agent, they made an offer to purchase Mr
Thom's property. Thom accepted the offer on 15 April 2007 and the Cowleys paid the
deposit to the estate agent‟s trust account on 25 April 2007. The offer made by the
Cowleys indicated, however, that it would expire on 7 April 2007. At the time of paying the
deposit, the Cowleys were unaware of the late acceptance of their offer.
For a while after payment of the deposit, all was well. In May 2007, the conveyancers
called for a bank guarantee from the Cowleys in respect of the balance of the purchase
price. To this the Cowleys responded that they had made arrangements for their funds to
be available on 22 August 2007 only, as they had been advised by the estate agent that
the balance would be payable on registration of transfer. The sale agreement did
stipulate that transfer would be effected on 22 August 2007 or as soon as possible
thereafter. However, it also provided that the balance of the purchase price “shall be paid
to the Seller‟s conveyancers ... against transfer. When requested by the conveyancers,
the Purchaser shall furnish a guarantee/s by a financial institution ... „‟.
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A flurry of emails between the Cowleys and the conveyancer followed. In this
correspondence the conveyancer essentially insisted that the Cowleys furnish a
guarantee as provided for in the offer to purchase, and the Cowleys maintained that their
understanding was that the clause relating to earlier demand for the purchase price was
not applicable as they were informed by the estate agent that the balance of the purchase
price was only to be paid on the transfer date. They also stated that they noted that Thom
did not comply with the expiry date of the offer. They however confirmed their good faith
and intention to keep the agreement in place and asked the conveyancer to convey their
proposal that the guarantee requirement be dropped from the agreement to Thom. The
reason for this request was that their funds were tied up until the beginning of August.
This appears to have settled the issue as the conveyancer thereafter wrote to the Cowleys
confirming that Thom had agreed that the guarantee requirements be put on hold until the
middle of or late August 2007, when the Cowleys‟ funds would be available.
By 24 August 2007 registration of transfer had not occurred yet, although the transfer
documents were lodged in the deeds office. This was because the Cowleys had still not
paid the balance of the purchase price. The conveyancers then placed them on terms in a
letter of demand, and the agreement was thereafter cancelled quoting the Cowleys‟
default as the cause. On cancellation, the deposit was applied to pay the estate agent‟s
commission, the balance going to Thom (presumably as contractually agreed damages,
although this was not mentioned in the judgment itself).
The Cowleys responded to the cancellation and mentioned that they noted that the
agreement was accepted after its expiry date and that therefore they were not in breach
as there was no proper agreement. They requested that a further document be
concluded, correcting this. They were still eager to keep the sale „alive‟ and their e-mail
ended with the words: “...notwithstanding the above points, it is still our desire and
intention to complete the purchase once the appropriate agreement has been properly
documented.”
The parties did not manage to resolve these issues and ultimately the Cowleys
approached the Court for an order declaring that there is no binding agreement of sale
between them and Thom, and that the deposit must be refunded to them. Thom defended
the matter and argued that the Cowleys were in breach; that their conduct, after being
aware of the irregularity regarding the acceptance of the offer, constituted a waiver of their
right to elect not to be bound by the agreement and that they, in fact, accepted the
existence of a valid contract.
HELD:
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
It is a general principle in the law of contract that where acceptance of an offer is
stipulated to be made within a specified time, the offer expires at the end of the
prescribed time and is no longer open for acceptance.

In Christie‟s The Law of Contract in South Africa, it is stated that “if the offeree
purports to accept an offer after the fixed time has expired, the offeror is not bound
to a contract and the proper way to interpret the late “acceptance” is as a counteroffer which the original offeror can accept or reject as he wishes.”

As such, the late signing by Thom constituted a counter-offer. This, the evidence
suggests, was accepted by the Cowleys in that they continuously sought to maintain
the contract, despite the late signature. Their conduct never conveyed or constituted
a repudiation of the agreement.

However, the facts show that the Cowleys then sought to make yet a further
counter-offer of their own, by negotiating to continue with the transaction on the
terms set out in the original offer to purchase made by them, save that there would
be no requirement that they furnish a guarantee before the transfer date. This was
agreed upon, as the conveyancer confirmed in an e-mail to the Cowleys that Thom
was happy that the transaction proceed on the terms suggested by them (the
Cowleys) and no further demands were made by Thom for a guarantee.

The sequence of events therefore shows that, after the Cowleys became aware of
Thom‟s counter-offer (signing their offer after the date on which it would lapse), the
Cowleys made their own counter-offer to Thom, amending the guarantee
requirements. This counter offer was accepted as the evidence shows that Thom
made no further demands for the guarantee after the latter had been conveyed to
him.

The question that then arises is whether this subsequent agreement of minds
constituted a valid agreement of sale. This has to be answered in the negative as:
o
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o
o

Section 2 of the Alienation of Land Act 68 of 1981 („the ALA‟) requires that
the sale agreement of immovable property must be contained in a deed of
alienation signed by the parties thereto or their agents acting on their
written authority.
The evidence was that Thom‟s instruction to the conveyancer to accept
the Cowleys‟ counter-offer was made telephonically. The Conveyancer
communicated the acceptance of the counter-offer in an e-mail to the
Cowleys, in which e-mail the conveyancer referred to a telephonic
conversation with Thom.
The aforementioned does not constitute compliance with the ALA as the
requirement that the contract be „signed‟ is not fulfilled by a written offer
verbally accepted.
For these reasons, the second attempt by the parties to conclude an agreement of
sale failed, and therefore no agreement of sale was ever concluded by the parties.
As a result, the Court concluded that the Cowleys were entitled to a refund of the
R115,000.00 paid by them as deposit.
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