The act of donating something is filled with benevolence and good intentions, it is often an act of charity, love or both. Nevertheless, donations must adhere to certain legal requirements to be considered valid and enforceable. This article delves into the legal framework surrounding donations, highlighting key elements, formal requirements, and enforceability considerations.

What is a donation?

A donation is a contract in which a party known as the donor transfers ownership of property to another party known as the donee without the expectation of receiving anything in return. Donations can be made between living persons (donations inter vivos) or in contemplation of death (donations mortis causa). Donation can also be conditional, that is the completion of the donation is subject to the occurrence of certain event, given that said conditions are lawful, possible and not contrary to public policy.

Legal framework

Donations are governed by common law, legislation and judicial precedent. Under common law, a donation is defined by three essential elements, which are: the donor must have the intention to donate; there must be a transfer or delivery of the donated item or right; and the donee must accept the donation. As such, should the donor revoke the donation before acceptance by the donee, the donation becomes unenforceable.  If the donee accepts the donation before revocation, the doner shall be compelled to deliver the donated property.

There are various statutes that impact the validity and enforcement of donations. In terms of section 5 of the General Law Amendment Act 50 of 1956, no executory contract of donation shall be valid unless the terms thereof are embodied in a written document signed by the donor or their duly authorised agent, and that no donation concluded after the commencement of the Act shall be invalid merely because the contract of donation is not registered or notarially executed.

Section 15(2)(c) of the Matrimonial Property Act 88 of 1984 states that spouses married in community of property need each other’s consent to make donations involving an immovable property that forms part of their joint estate. Section 15(3)(c) the Matrimonial Property Act states that a spouse married in community of property shall not, without the consent of the other spouse, donate any asset that forms part of a joint estate or alienate such an asset without value, to the exclusion of an asset which its donation or alienation does not and will probably not unreasonably prejudice the other spouse.

Donations inter vivos

Donations inter vivos are made during the lifetime of the donor and are irrevocable once completed.

The donor must have the legal capacity to contract, which excludes minors, persons with mental incapacities and insolvent persons without the necessary authorisation. The donor must have a clear intention to donate the property, free from cohesion or duress. As per the General Law Amendment Act, donation in respect of immovable property should comprise of a written agreement. However, for movable property, verbal agreements may suffice, even though written agreements are preferable for

evidentiary purposes.

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Donations mortis causa

Donations mortis causa are made in contemplation of the death of the donor, similar to a testamentary disposition. This type of donation must comply with the formalities outlined in the Wills Act 7 of 1953. A donation mortis causa must be in writing, signed by the donor and two witnesses. The donee must accept the donation before the death of the donor for it to be enforceable, and the donation remains revocable by the donor at any time prior to his or her death.

Enforceability

To enforce a donation, the donee must prove that compliance with the formalities of a donation have been met, that is all statutory and common law requirements have been met. Further, the donee must have accepted the donation, which may be proven by conduct of the donee such as maintenance of donated property, or written acknowledgement or acceptance of the donation. Lastly, the property donated or the right thereof must be transferred or capable of being transferred to the donee.

Donations are generally irrevocable, however, the are specific grounds that may permit same, including non-fulfilment of the conditions attached to the donation, and the procurement of the donation was through fraudulent means or under duress.

Tax implications

The Income Tax Act 58 of 1962 imposes donations tax, payable by the donor on the value of the donated property. Donation tax shall be payable within three months from date upon which the donation takes effect. In terms section 59 of the Income Tax Act, if the donor fails to pay donation tax within the stipulated time, then the donor and the donee shall become jointly and severally liable.

Section 56 of the Income Tax Act provides for exemptions to donation tax, which, inter alia, include a donation made to a spouse, an approved public benefit organisation or any sphere of government, a donation mortis causa, a donation that is cancelled within six (6) months from the date that it took effect, any bona fide contribution made by the donor towards the maintenance of any person.

Conclusion

Donations, whether inter vivos or mortis causa necessitate strict adherence to legal formalities to ensure their validity and enforceability. Understanding the nuances of donation law not only safeguards the interests of the donor and donee but also upholds the integrity of the contractual law. It is advisable for individuals considering significant donations to seek legal counsel to ensure compliance with all legal stipulations, thereby mitigating potential disputes and ensuring the enforceability of the donation.

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