|As movie mogul Samuel Goldwyn is said to have put it “A verbal contract isn’t worth the paper it’s written on”. The problem with oral agreements is that they are open to misinterpretation, doubt, dispute and outright fraudulent denial. Rather record and sign everything even when (as is the case with most contracts in South Africa) verbal contracts are every bit as binding as written ones.
Sometimes however verbal contracts aren’t just a bad idea, they aren’t valid at all – for example an oral contract for the sale, exchange or donation of land, or of any “interest in land”, is invalid. We address the danger of overlooking that requirement in the context of a recent High Court dispute over a “right of way” agreement.
“A verbal contract isn’t worth the paper it’s written on” (Samuel Goldwyn)
Verbal agreements in South Africa are generally as binding and valid as written ones. Of course not recording your agreements in writing is a bad idea – oral agreements are a recipe for doubt and dispute, and proving the exact terms agreed on will be challenging if not impossible.
Moreover certain types of contract have to be in writing, and signed by all parties, to be valid at all. For example in South Africa an oral contract for the sale, exchange or donation of land, or of any “interest in land”, is unenforceable.
A recent High Court case shows the danger of overlooking this requirement…
Two properties, no right of way access
- The buyer of two properties intended to build two new houses on them.
- He orally agreed with one of the sellers “to right of access (right of way) for both new second dwellings through his property” and “to provide and sign all necessary documents for effecting the agreed upon right of way through his property”. The right of way was supposedly a 3m wide corridor for vehicle access across the property.
- However the sale agreement itself made no mention of this arrangement which accordingly remained verbal only.
- When a series of disputes arose (involving amongst other things hotly-denied allegations of forgery, breach of contract and cancellation of the deed of sale), the buyer asked the High Court to declare the right of way servitude agreement “valid and in full force”, and to order the seller to sign the documentation for its registration.
- The Court refused, holding that “the right of way in issue in this matter constitutes an ‘alienation ‘ of an ‘Interest in land’”. In other words, it was a “servitude” (simply put, a right given to A over B’s property – such as to live on it or to gain access to another property through it) and had to be in writing to be valid and binding.
The bottom line
As always, when buying or selling property take legal advice before you sign anything, and remember to tell your attorney about any verbal agreements you have made. In this case, the oral right of way agreement should have been recorded in the written and signed agreement of sale, then registered against the title deeds in the Deeds Office to ensure its enforceability “against the world” (thus including subsequent owners of the other property).