November 2010 - The Bad Bond Clause That Sank The Sale!
With property sales regularly falling through when the bank turns down the buyer's application for a bond, don't be tempted to word your bond clause too widely.
The danger of doing so is clearly illustrated in a matter recently before the High Court, where a developer had worded its sale agreement in such a way as to allow it to extend ("in its absolute discretion", and with neither notice to, nor permission from, the buyer) the time within which the buyer had to obtain a bond.
In effect, it depended "entirely on the will" of the seller to determine whether or not the buyer had performed in terms of the bond clause; and that, held the Court, rendered it "void for vagueness".
The buyer accordingly escaped from the sale.
The danger of doing so is clearly illustrated in a matter recently before the High Court, where a developer had worded its sale agreement in such a way as to allow it to extend ("in its absolute discretion", and with neither notice to, nor permission from, the buyer) the time within which the buyer had to obtain a bond.
In effect, it depended "entirely on the will" of the seller to determine whether or not the buyer had performed in terms of the bond clause; and that, held the Court, rendered it "void for vagueness".
The buyer accordingly escaped from the sale.