Doctrine Of Fictional Fulfillment

When entering into a contract for the acquisition of immovable property, and where such

an agreement is subject to the Purchaser/s obtaining bond finance, Purchasers must be

aware that they have an obligation to apply for such bond and provide the financial

institution with all required documents to set the approval in motion.

In the event of a Purchaser failing to oblige in terms of the bond clause, it can have

serious repercussions for the Purchaser which entitles the Seller to enforce the sale

agreement with no suspensive conditions.

If a party to a contract which is subject to a suspensive condition deliberately prevents

fulfilment of the condition to avoid being bound by the contract, the condition may be

deemed to have been fulfilled.

The doctrine of fictional fulfilment reinforces the proposition that where an agreement is

subject to a suspensive condition, the party in whose favour the suspensive condition is

framed is obliged to take all reasonable steps to fulfil that suspensive condition.

 

Where a contract for the sale of immovable property is subject to a suspensive condition

that the purchaser must obtain a mortgage bond by a certain date, the purchaser is

obliged to take all reasonable steps to obtain such a bond.  The purchaser is thus obliged

to take active steps to apply for the bond within a reasonable time and submit all relevant

and required documents to the financial institution.  The purchaser is also obliged to

provide accurate information such that the financial institution can make a proper

determination as to whether or not to grant the bond.

If the purchaser deliberately fails to apply to a financial institution for the bond within the

specified time, does not submit the relevant documentation or supplies false information,

then according to the doctrine of fictional fulfilment the suspensive condition can be

deemed to have been fulfilled and the contract will in this way come into existence and be

binding on the purchaser despite the purchaser's efforts to prevent it from doing so.

The doctrine would also apply to any suspensive condition in an agreement of sale and

not only to a mortgage bond.

 

The doctrine does not only take effect when the other party to the contract acts

fraudulently or without good faith, but rather it includes any deliberate or calculated

action to prevent the fulfilment of the condition.

 

Where a contracting party acts negligently and in so doing fails to apply for a mortgage

bond or negligently fails to take steps to fulfil a suspensive condition, the doctrine of

fictional fulfilment can be used.

In the matter of Scott and Another v Poupard and Another, Holmes JA set out what a

plaintiff must prove to successfully invoke the doctrine of fictional fulfilment. These are:

(a)        non-fulfilment of the condition

(b)        the defendant's breach of his duty with an intention to frustrate the fulfilment, and

(c)         a causal link between (a) and (b).

 

The question here is whether a reasonable person in the position of the defaulting party

would have taken the necessary steps to fulfil the suspensive condition. If the reasonable

person in the same position as the defaulting party would have taken such steps, then

the doctrine will be applicable.

The doctrine thus applies where a party prevents the coming into existence of a contract

by intentionally taking steps to frustrate the fulfilment of a suspensive condition or where

he negligently fails to take the steps necessary to fulfil same.

The doctrine ensures that where two or more persons enter into a contract with the

intention to create legal obligations, the innocent party's hope that the contract will

become legally enforceable will not be frustrated due to the defaulting party either

intentionally or even negligently not performing his side of the bargain.