January 2025 saw the Supreme Court of Appeal (SCA) reaffirming a key principle of contract law: An agreement that lapses due to the failure to fulfil suspensive conditions cannot be revived through amendments or addenda. Instead, the parties must enter into a new agreement. This case involved the sale of shares and related disputes between Vantage Goldfields SA (Pty) Ltd (Goldfields), Flaming Silver Trading 373 (Pty) Ltd (Flaming Silver), and Siyakhula Sonke Empowerment Corporation (Pty) Ltd (Siyakhula). The court examined the validity of addenda that purported to amend a lapsed agreement, the consequences of unmet suspensive conditions and the recovery of payments made under a void agreement.
Background
On 1 November 2017, Goldfields and Flaming Silver entered into a sale of shares agreement (principal agreement) for R310 million. The agreement pertained to the sale of shares and claims in Goldfields’ subsidiaries. It included three key suspensive conditions that had to be fulfilled by specified deadlines:
- Clause 3.1.1: Flaming Silver was required to secure financing for the transaction.
- Clause 3.1.2: A payment of R10 million had to be deposited into a designated trust account.
- Clause 3.1.3: Ministerial consent under the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) and other regulatory approvals were to be obtained.
The principal agreement explicitly stated that if the suspensive conditions were not fulfilled by their respective deadlines, the agreement would lapse and be of no force or effect. Clause 3.2 of the agreement further stipulated that any extensions to the deadlines must be agreed on in writing before the conditions expired.
Subsequent addenda
After entering into the principal agreement, the parties executed four addenda, attempting to address delays in fulfilling the suspensive conditions. These addenda were:
- First Addendum dated 21 December 2017: Extended the deadlines for securing financing and regulatory approvals to 31 March 2018. However, it did not alter the deadline for the R10 million payment, which remained unmet.
- Second Addendum dated 3 May 2018: Deemed the financing and payment conditions fulfilled as of 31 March 2018 and introduced new terms for fulfilling the regulatory approval condition.
- Third Addendum dated 2 August 2018: Further extended the deadline for regulatory approvals to 31 October 2018 and introduced additional obligations for the parties.
- Fourth Addendum dated 31 October 2018: Claimed that all suspensive conditions had been fulfilled, despite the absence of ministerial consent. However, this addendum was later deemed unauthorised and invalid by the Mbombela High Court in separate proceedings.
High Court findings
The Mbombela High Court ruled in 2022 that the principal agreement lapsed on 31 January 2018, or at the latest on 31 March 2018, due to the non-fulfilment of the suspensive conditions. Consequently, the addenda were declared void ab initio (invalid from the outset) because they sought to amend an agreement that no longer existed.
The High Court also found that the R1 million paid by Siyakhula to Goldfields under the third addendum was recoverable as an enrichment remedy since it was made without a valid underlying agreement. Goldfields was ordered to repay this amount, along with costs.
Appeal to the SCA
Goldfields appealed the High Court’s decision, arguing that the principal agreement was validly amended and revived through the second and third addenda. Goldfields contended that:
- A lapsed agreement can be revived by mutual agreement, particularly if the suspensive condition causing the lapse is subsequently amended.
- The second and third addenda reflected the parties’ consensus to keep the principal agreement operational.
- Case law supports the principle that a lapsed agreement can be revived if its conditions are suitably varied.
Flaming Silver and Siyakhula countered that:
- Clause 3.2 of the principal agreement required any extension of deadlines to be agreed on in writing before the lapse of the agreement. This was not done.
- The addenda did not explicitly revive the lapsed agreement, nor could they do so retrospectively.
- The suspensive conditions, particularly ministerial consent, remained unmet by the deadlines set in the addenda, rendering the entire agreement void.
SCA findings
The SCA dismissed Goldfields’ appeal and upheld the High Court’s ruling. The court’s key findings were as follows:
- Suspensive conditions and lapse of contract: The principal agreement’s terms were clear – Failure to fulfil the suspensive conditions by the specified deadlines would cause the agreement to lapse automatically. Clause 3.2 required extensions to be agreed on in writing before the deadlines expired. This did not occur.
- Invalidity of addenda: While the first addendum validly extended certain deadlines, subsequent addenda were ineffective. The second addendum attempted to deem unfulfilled conditions as fulfilled, but this was inconsistent with the requirements of the principal agreement. Similarly, the third addendum’s amendments were ineffective because the regulatory approval condition was not met by the extended deadline.
- Irrevocable lapse: Even if it were assumed that the addenda temporarily revived the agreement, the failure to meet the suspensive conditions by the extended deadlines caused the entire agreement, including the addenda, to lapse.
- Recovery of payment: The R1 million payment made under the lapsed agreement was recoverable based on the principles of unjustified enrichment. Since there was no valid agreement supporting the payment, Goldfields was obligated to return the funds to Siyakhula.
Key legal principles affirmed
The SCA’s decision reinforced the following principles of contract law:
- Time limits and suspensive conditions: If an agreement includes a time limit for fulfilling suspensive conditions, failure to meet those conditions by the deadline renders the agreement void. Any extension must be explicitly agreed on before the lapse.
- Revival of lapsed agreements: While some case law suggests that a lapsed agreement can be revived through mutual agreement, this is only possible if the revival is clearly expressed and supported by the terms of the agreement. In this case, there was no evidence that the parties intended to revive the principal agreement after it lapsed.
- Amendments before lapse: Parties can amend or vary obligations up to the point of lapse but cannot amend an agreement that has already ceased to exist. Attempting to revive such an agreement through addenda is legally ineffective.
- Unjustified enrichment: Payments made under a lapsed or void agreement are recoverable as unjust enrichment. Contracting parties must ensure that their agreements are valid and enforceable before accepting or making payments.
Considerations
The SCA’s judgment underscores the importance of adhering to the terms of a contract, particularly with respect to suspensive conditions and deadlines. Contracting parties should:
- Monitor deadlines: Ensure that suspensive conditions are fulfilled or validly extended before the deadlines expire.
- Formalise extensions: Any amendments or extensions to deadlines must be documented in writing and signed by all parties before the agreement lapses.
- Avoid ambiguity: Clearly express any intention to revive a lapsed agreement in a new agreement, rather than relying on amendments to a void contract.
- Recover payments promptly: If payments are made under an invalid agreement, seek recovery through legal remedies such as unjustified enrichment.
The SCA’s decision in Goldfields v Siyakhula provides valuable guidance on the treatment of lapsed agreements and the limitations of attempting to revive such agreements through amendments. It emphasises the need for contracting parties to exercise diligence in meeting contractual obligations and highlights the risks of relying on invalid agreements. Ultimately, the judgment serves as a reminder that starting anew with a fresh agreement is often the best course of action when contractual relationships face significant challenges such as these.
Sherianne Pillay-Booysen LLM (Commercial and Business Law) (Wits) Legal Counsel at Capital Legacy in Johannesburg.
This article was first published in De Rebus in 2025 (March) DR 51.
