Act aims to strike a balance

2019-02-06 06:00
Ilze Strydom

Ilze Strydom

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Question:

My mother and father were married in community of property. They often joked by saying that they could get out of any contract if one of them signed because the law required that both must always sign. As a business owner, I have always wondered whether this is correct and how careful a business needs to be when dealing with couples married in community of property?

Answer:

In a marriage in community of property, South African law determines that spouses has one joint estate and each party to the marriage has the right to perform juristic acts regarding the joint estate as they are equal managers of the joint estate.

This does not, however, mean that a spouse can do as he or she pleases when it comes to transactions that involve the joint estate.

The rights of spouses married in community of property to enter into transactions relating to their joint estate is governed by Section 15 of the Matrimonial Property Act 88 of 1984 (the “Act”).

Although in general, a spouse may perform any juristic act in respect of the joint estate without the consent of the other, there are a few transactions listed in the Act that require the consent of the other spouse.

For a few of these trans­actions, consent can be obtained after the act to ratify the transaction, provi­ded such consent is obtained within a reasonable period after the transaction.

Such ratification is not possible with all transactions, such as with the sale of immovable property or the entering into a contract of surety, understandably given the important consequences for the joint estate.

It is also clear from the Act that spouses married in community of property are required to comply and ensure that the necessary consents and formalities are met.

Where does this leave a third party contracting with a spouse married in community of property?

The Act regulates this position by determining that when a spouse enters into a transaction with a third party without the necessary consent and the third party does not know (or cannot reasonably know) that the necessary consent has not been obtained, it is deemed that the necessary consent has been given.

This entails a consideration of the interests of the parties and the weighing up of the interests of the innocent spouse against the prejudice the third party would suffer should the transaction be set aside or continue.

To benefit from the presumption provided for in the Act, the actions of the third party are relevant. In instances where the third party knew that the spouse who entered into the transaction did not act with consent or should have reasonably known such, the third party will not be able to enjoy the protection of the presumption and the transaction may be invalid for lack of consent.

This translates into a duty of enquiry for businesses – making it a prudent business practice for any business that concludes transactions where consent would typically be required to ensure that the necessary spousal consents have been obtained.

It does not mean that spouses married in community of property can “get out of any contract”, as the Act is clear in expecting such spouses to meet the letter of the law, but it does at the same time not blindly protect a third party that should “have known better” at the cost of the innocent spouse.

Ilze Strydom, director, Phatshoane Henney Attorneys

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