The appellant municipality failed to prove that a tacit term should be included in a land sale contract that a closure and rezoning had to be successfully finalised within a reasonable time after the sale. The court found that it was not a term necessary to give business efficacy to the contract.

A tacit term is an unexpressed provision of a contract that is inferred primarily from the express terms and the admissible evidence regarding context.  A court will not readily infer a tacit term, because the court may not make a contract for the parties.  The inference must be a necessary one namely that the parties necessarily would have agreed to the suggested term had the point been raised.  The bystander test is applied by asking whether each of the parties would inevitably have provided the same answer to the question by a hypothetical bystander as to what the parties meant.  There was no such proof that both parties would have agreed to the term proposed.  It is a notorious fact that closure and re-zoning processes are often beset with difficulties and delays.  There were also provisions in the contract leaving the time periods open-ended rather than requiring performance in a specific or reasonable time.

The judgment also reminds us of the distinction between a suspensive condition and a resolutive condition.  A suspension condition suspends the operation of the obligations to which it relates until the occurrence of a future uncertain event.  A resolutive condition generally terminates the obligations flowing from the contract after the occurrence of a future uncertain event.

The court also found that a paragraph beginning with the words “provided that” was not a true proviso but an independent provision.  The clause did not qualify or limit the principal matter in the preceding paragraph. This is worth remembering when drafting or interpreting a contract.

The court rejected a defence of prescription because the right to seek the closure and re-zoning of the properties was not a “debt” within the meaning of the Prescription Act, 1969.  It has repeatedly been decided that a debt in this context is an obligation to make payment, deliver goods or render services.

City of Tshwane Metropolitan Municipality v Brooklyn Edge (Pty) Ltd and Another [2022] ZASCA 23 (1 March 2022)