{"id":10981,"date":"2025-04-23T11:13:31","date_gmt":"2025-04-23T09:13:31","guid":{"rendered":"https:\/\/dotnewsconnect.co.za\/law\/?p=10981"},"modified":"2025-04-23T11:33:35","modified_gmt":"2025-04-23T09:33:35","slug":"bffs-no-more-the-verbal-agreement-that-cost-r1-million","status":"publish","type":"post","link":"https:\/\/dotnewsconnect.co.za\/law\/2025\/bffs-no-more-the-verbal-agreement-that-cost-r1-million\/","title":{"rendered":"BFFs no More: The Verbal Agreement That Cost R1 Million"},"content":{"rendered":"\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\">\u201cMy word is my bond.\u201d (Once the motto of 16th-century merchants, adopted by \u201990s hip-hop artists, and now tossed around by duelling politicians)<\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">Many people are unaware that there are just a few types of agreement that are valid only if recorded in writing and signed \u2013 most notably contracts for the sale, exchange, or donation of land or of any \u201cinterest in land\u201d, ante-nuptial contracts (ANCs), and deeds of suretyship.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Outside of those exceptions, all verbal agreements are as valid and enforceable as written ones. Your word really is your bond! So be careful what you agree to verbally \u2013 and stick to written agreements whenever there\u2019s a lot at stake. A recent High Court judgment provides a great practical example of those principles at work.<\/p>\n\n\n\n<h6 class=\"wp-block-heading\"><strong>When friends fall o<\/strong>u<strong>t<\/strong><\/h6>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s 2009, and the MD of a long-established Cape Town freight operation is doing business with another business owner. Their relationship develops from a strictly business one into a personal, \u201cbest friend\u201d one.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">By 2012, they have agreed verbally that the friend will move to Johannesburg to establish a branch of the freight company there as a new director.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Believing that he will now be given a 5% share in the company and be appointed as a director, the friend pays the company R1m to cover the new branch\u2019s start-up funding. But when he asks for his shares, the MD refuses, denying there was ever any agreement to give him equity and telling him that the R1m was just an \u201cat-risk investment\u201d.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The refusal to give him shares, says the friend, is a repudiation (renunciation) of the oral agreement, and he demands that the company now repay his R1m.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The company, through its MD, refuses \u2013 \u201cI\u2019ll see you in court,\u201d he says. In the latest (2025) round of litigation, the Court, without a written agreement before it, has to analyse a litany of contradictory evidence to try and work out what exactly had been verbally agreed by the two ex-friends.<\/p>\n\n\n\n<h6 class=\"wp-block-heading\">Offer someone a carrot and you\u2019ll have to give it to them<\/h6>\n\n\n\n<p class=\"wp-block-paragraph\">The Court was unimpressed with the MD\u2019s version that his friend\u2019s R1m payment was an \u201cat-risk investment\u201d rather than the agreed purchase price of a 5% shareholding. A major factor in that decision was clearly the director\u2019s 2013 email to his friend which included this: \u201c\u2026I have committed to sell you equity&#8230;\u201d, reinforced by his evidence that he only changed his mind about parting with shares in 2014.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The nail in the MD\u2019s coffin was no doubt his admission that that he had held out the prospect of his friend becoming an equity partner as \u201ca carrot\u201d. His friend accepted that offer, their oral agreement became binding, and the company must repay the friend his R1m plus interest and costs.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Offer someone a carrot, and our law will hold you to deliver it!<\/p>\n\n\n\n<h6 class=\"wp-block-heading\">\u201cThe bluntest pencil is better than the sharpest memory\u201d<\/h6>\n\n\n\n<p class=\"wp-block-paragraph\">While it seems justice has been done, both the falling out and the court case could have been avoided altogether.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Had the MD and his friend thought the whole thing through properly back in 2012 and asked a lawyer to draw up a proper written agreement for them, it\u2019s highly unlikely that they would, in 2025, still be fighting their way through the courts. Who knows, they might never have come to blows at all and could still be BFFs!<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Don\u2019t rely on a \u201chandshake\u201d agreement, even with the best of friends. When the stakes are high, let us help you put it in writing \u2013 clearly, enforceably, and with a minimum of fuss.<\/strong><\/p>\n\n\n\n<p style=\"border-top: 1px solid #dedfe0!important;padding-top: 20px!important;margin-top: 20px!important\">Disclaimer:\u00a0The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.<\/p>\n<p style=\"text-align: right\">\u00a9 LawDotNews<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cMy word is my bond.\u201d (Once the motto of 16th-century merchants, adopted by \u201990s hip-hop artists, and now tossed around by duelling politicians) Many people are unaware that there are just a few types of agreement that are valid only if recorded in writing and signed \u2013 most notably contracts for the sale, exchange, or [&hellip;]<\/p>\n","protected":false},"author":101014,"featured_media":10982,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[29],"tags":[],"class_list":["post-10981","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-contract"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>BFFs no More: The Verbal Agreement That Cost R1 Million &#8226; 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