CAN AN OFFER TO PURCHASE BE REVOKED BEFORE THE EXPIRY DATE?

CAN AN OFFER TO PURCHASE BE REVOKED BEFORE THE EXPIRY DATE?

So, you view a property on a beautiful summers day and fall in love with it. You immediately decide to make an offer without further questions and without checking your finances thoroughly. You complete the offer to purchase with the estate agent and sign on the dotted line, leaving the offer open for acceptance by the seller for 3 days.

The following day you look at the property listing again and pick up a few things you didn’t notice at first glance. You crunch some numbers and realise how much pressure this property purchase would place you under financially. Your “cold feet” prompt you to call and email the estate agent to say you would like to revoke your offer as you no longer wish to proceed. 

The estate agent says no! The offer is open for acceptance for the remaining time period before it lapses. Your heart sinks, is this correct? Are you able to revoke your offer?

There is much caselaw and writing on this subject with varying opinions. In Anglo Carpets (Pty) Ltd v Snyman 1978 (3) SA 582 (T) at 585G Judge Coetzee stated-  ‘It is trite that an offer can at any time before acceptance be revoked and that the mere statement that it is irrevocable or not revocable for a certain period is ineffective. 

In contrast the learned author Beinart in Offers Stipulating a Period for Acceptance’ 1964 Acta Juridica  takes the stance that when an offer is made and the person making the offer has undertaken to keep the offer open for a specified period of time, he is bound to keep the offer open ‘It is submitted that there is adequate authority in Roman and Roman-Dutch Law, and in Romanistic jurisprudence generally to support a rule that where a person makes an offer, undertaking to keep it open or not revoke it for a period or until the happening of a certain event a valid option is constituted unless the offeree in fact rejects the option.”

In Phillips v Aida Real Estate (Pty) Ltd 1975 3 SA 198 (A) The Court found that no authority is needed for the statement that an open offer can be withdrawn at any time before acceptance. Hence if no time is fixed and the offeror withdraws his offer before acceptance he has not committed any breach of his undertaking. However, If a date is fixed the undertaking which he breaches by withdrawing the offer before that date is the withdrawal of the offer before he is entitled to do so. A distinction was thus drawn between an offer with no expiry, and an offer with a fixed expiry date.

As there is no lack of conflicting decisions and opinions on the subject, it appears that a definitive answer to the complex act of revocation is not yet clear. We would therefore advise that offers to purchase are only submitted once due and careful consideration of all factors has been given in order to avoid any need to withdraw an offer. Should you require any assistance when preparing your offer to purchase please feel free to contact one of our attorneys for guidance and advice.

 

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Yours in Law

  • On November 24, 2023
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