Can a seller claim damages?

In the case of Klopper and another v Marais and another, which decided in The High Court of South Africa, Free State Division, the question revolved around whether a seller can claim damages if they manage to sell the immovable property at a lower price after the purchaser/s breached the contract in respect of the initial sale agreement.

Facts of the Case

In March 2016, a Trust (The Seller) sold immovable property to the Purchaser. During the matter, a Mr Delport issued an undertaking to the seller indicating that he would cover the costs / payments for which the purchaser was responsible, in the event that the purchaser failed to perform.

The sale agreement was however subsequently cancelled due to the fact that both the purchaser and Mr Delport failed to honour their obligations towards the seller.

In late 2018 the parties entered into a second sale agreement relating to the same property. Mr Delport once again offered to perform should the purchaser fail to fulfil obligations. They once again failed to perform and were placed in breach. The second agreement was then cancelled.

During this time the seller appointed an estate agent to market and eventually sold the property. The agent had managed to obtain an offer for a lower amount than the initial two sale agreements.  The offer was accepted by the seller and the agent negotiated a commission of 4% on the purchase price.

The trust (seller) thereafter approached the court regarding damages suffered in the amount of R250 000.00 being the difference between the final and initial selling price, plus the amount the seller had to pay in respect of the estate agency commission.

Application of the Law

The court quoted the “Victoria”-case in which it states that a breach of contract requires that the affected party must take reasonable steps to prevent the occurrence of losses and that reasonable expenses incurred in carrying out the mitigating steps may be claimed as damages suffered.  The court noted that the onus of proving that the steps taken and the expenses incurred were unreasonable, rests on the party in breach.

Conclusion

The court held that the seller was entitled to its claim for the difference in the sale price and the commission as the trust tried to mitigate their damages by appointing an estate agent. The court further ordered Mr Delport to perform in terms of the undertaking issued in favour of the trust.

Written by: Micaela Hermans
Moderated and approved by: Clive Smith

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