Whenever a legally binding agreement has come about and a party does not perform as agreed in terms of an agreement or unilaterally withdraws from it, the defaulting party is considered to be in breach of the contract.
An offer to purchase generally includes a clause that allows the property practitioner (PP) to receive their commission if the contract is breached. In the recent case of Naidoo and Another v Wakefields Real Estate (Pty) Limited, the buyers informed the PP that they are no longer interested in proceeding with the purchase, after they signed the agreement. They then claimed they were unaware of the clause that allowed the agent to claim commission. However, the High Court ruled that all the requirements for a valid contract had been met and applied the principle of caveat subscriptor . This principle means that by signing a written contract, a party agrees to all its terms, even if the terms are unfavorable to them. The responsibility lies with the party entering into the contract to ensure they understand all the terms before signing. The Court concluded that the buyers had adequate opportunity to review the offer and therefore accepted its terms by signing it.
As a result of this decision, a PP can seek compensation from the party in breach, whether it be the seller or the buyer, if the contract is considered legally binding and all its conditions have been met in full.
