Options
The essence of an option is that it is binding on the grantor. It is an offer to the option holder who has the choice whether or not to exercise it. An option may be limited in time and there may be other terms and conditions attached to it by agreement between the parties. On exercise a contract is concluded on the terms and conditions contained in the option.
Anyone who intends to get an option to purchase a particular asset, usually a property, should ensure that its terms are such that the grantor is not able to prevent its exercise.
In a reported judgment of the SCA the holder of an option had to spend a huge amount of money to enforce compliance by the grantor.
The court found that the grantor's agent had deliberately prevented the grantee from exercising the option. It said that it would be inequitable to allow the grantor to escape its obligation through the deliberate frustration of the grantee's right to exercise the option. The conclusion was that the grantor could not escape the contract by making it impossible for the grantee to exercise it. The option would, in appropriate circumstances, be deemed to have been exercised.
It is a good idea to provide for a simple and legally effective method of exercise.
Source: Evesheds , October 2009
Eversheds is one of the leading full-service law firms in South Africa. Our large property and real estate practice has extensive experience and can assist with any type of property transaction. As part of Eversheds International the firm can provide clients with the same high standard of legal expertise in 47 offices worldwide, with access to over 3500 legal and business advisors in 29 jurisdictions.
***SkyRise specializes in the sale of both commercial property and industrial property. We also focus on ; developments, land , business and residential property for sale
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