MISREPRESENTATION - EXCUSE TO CANCEL A CONTRACT?

Sale agreements of land, almost without exception, contain clauses such as the voetstoots clause, protecting the seller against any defects to the property and usually covering anything that might potentially diminish the value of a property.

Most sale agreements also contain a clause specifically excluding liability on the part of the seller or his or her agent, in relation to any representations made with regard to the property sold.

It has always been a case of buyer beware!

The courts have now shifted emphasis and in the matter of Morgan Air Cargo (Pty) Ltd v Sim Road Investments CC and Another (22024/06) [2009] ZAGPPHC 36 (29 April 2009) the court found in favour of a purchaser, and allowed a purchaser to cancel a contract notwithstanding these clauses in the sale agreement.

In this matter, a property was auctioned and neither the seller nor the auctioneers paid particular attention to the zoning of the property.

The property was advertised as a commercial property, but after the sale it became clear to the buyer that the land was in fact zoned agricultural and that it was unlikely that the land could be rezoned.

The buyer was not able to prove a fraudulent misrepresentation (in other words, that the seller or his agents had knowingly misled him) but the court still found in his favour.

The court took note of the the nature and the quality of the error and came to the conclusion that there was, in these circumstances, no consensus between the parties with regard to the nature of what was sold.

In a nuthsell, the seller advertised commercial land but what they had actually sold was agricultural land.

There was accordingly no consensus between the parties and the entire agreement became tainted as a result, including the voetstoots clause and the clause exempting the seller from liability for misrepresentations made by him or his agent.

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