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An executory contract of donation must be in writing, signed and witnessed

The legal formalities required for a valid donation

The litigation between the erstwhile Scholtz spouses turned on the enforceability or otherwise of a contract of donation, in which the then husband had donated his undivided half share of certain property to his then spouse. This was recorded in a written agreement of donation, as required by section 5 of the General Laws Amendment Act which provides that -

'[N]o executory contract of donation ... shall be valid unless the terms thereof are embodied in a written document signed by the donor or by a person acting on his written authority granted by him in the presence of two witnesses.'

An executory contract of donation is one which is to be carried into effect in the future. Thus, an agreement to make a donation that is carried into effect there and then is valid, even though not in writing. But an agreement to donate, that is to be put into effect at some point in the future must comply with the statutory formalities set out in this provision.

In this particular litigation, the erstwhile husband averred that the agreement of donation was invalid, in that the property in question was, at the time, encumbered by a mortgage bond in favour of a bank, and that the written agreement was silent as to whether the agreement was being donated free of the mortgage (in other words, that the husband would pay the balance of the mortgage bond) or whether the wife would take over liability for the balance of the mortgage. The husband argued that an essential term of the executory contract of donation was thus not recorded in writing, that the contract therefore failed to satisfy the statutory requirement that it be in writing, and that it was consequently invalid and unenforceable.

This argument found favour with the High Court, which - in a preliminary ruling and before the leading of any evidence - held that the contract of donation was invalid for non-compliance with the requisite statutory formalities.

On further appeal, the Supreme Court of Appeal (in Scholtz v Scholtz [2012] ZASCA 9) took a different view, set aside the judgment of the High Court, and ruled that the 'missing term' in the deed of donation was, in principle, capable of being supplied, either on an interpretation of the express terms or by way of a tacit term. The court said in this regard that -

the legislature's intention with the prescription of formalities for certain contracts could hardly have been to eliminate all disputes with regard to the terms of these contracts. It therefore stands to reason that a subsequent dispute about the terms of the contract, in itself, cannot render the agreement void ab initio. The court will simply have to determine the dispute. Once the facts of this case have been determined on the pleadings or by the court it may emerge that the donation is indeed invalid because the deed omitted to record a material term.

In effect, therefore, the Supreme Court of Appeal ruled that the question whether or not this particular contract of donation was invalid for non-compliance with the requisite statutory formalities could not be determined at this preliminary stage of the litigation. The trial would thus have to continue in the High Court, for the leading of evidence.

In principle, therefore, the Supreme Court of Appeal took the view that, even though this particular term of the contract of donation had not been reduced to writing, it was in principle possible that the contract was valid and enforceable.

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