Emerging Precedence on Reinstatement and/or Revival of Lapsed Agreements
Emerging Precedence on Reinstatement and/or Revival of Lapsed Agreements
Commercial agreements commonly include suspensive conditions, which delay the effectiveness and operation of an agreement until specified conditions are fulfilled. This allows parties to agree upfront on the commercial terms of a transaction, while making the agreement’s operation conditional upon certain events occurring by a specified cutoff date or period (“Fulfilment Date”).
Where suspensive conditions are fulfilled or waived by the Fulfilment Date, the agreement comes into force and becomes fully effective. Conversely, if the suspensive conditions are not fulfilled or waived by the Fulfilment Date, the agreement does not become operative and is rendered ineffective, in which case any provisions that, whether in operation from signature date or intended to operate only once the agreement became effective, similarly fall away.
It is common practice for parties to ‘revive’ or ‘ reinstate’ agreements that had failed to become effective due to the non‑fulfilment of suspensive conditions. However, recent judgements of the South African Supreme Court of Appeal, have set out the legal limits of this approach.
This note considers the relevant legal principles governing the reinstatement or revival of lapsed agreements, with a particular emphasis on the critical distinction between:
- agreements that lapse before ever coming into operation, most commonly due to the non‑fulfilment of suspensive conditions (“Lapsed Agreements”); and
- agreements that terminate after having been validly in force, whether through effluxion of time, termination in accordance with its terms, mutual agreement, or lawful cancellation following breach (“Terminated Agreements”).
Lapsed Agreements
Where an agreement is subject to suspensive conditions and those conditions are not fulfilled or waived within the stipulated timeframe, the agreement lapses automatically and never comes into force. This is so regardless of the parties’ intentions or their subsequent conduct, as reaffirmed by the South African Supreme Court of Appeal.
In Codevilla v Kennedy-Smith NO and Others 2025 (2) SA 42 (SCA), the South African Supreme Court of Appeal considered whether an addendum signed after an agreement had lapsed, due to the failure to fulfil suspensive conditions, could revive the lapsed agreement.
The minority in Codevilla held that, notwithstanding the lapse of the original agreement, the parties had, by concluding a subsequent addendum, achieved a revival of the agreement. Applying a contextual and purposive interpretation, the minority found that the true intention of the parties was to continue with the transaction on substantially the same terms as the lapsed agreement, subject to specific variations contained in the addendum (including an extended timeframe for fulfilment of the relevant condition). On this basis, the minority concluded that the lapsed agreement had been validly revived. The majority, however, adopted a stricter approach. It held that once the suspensive condition had failed, the agreement lapsed and became unenforceable, leaving nothing capable of revival. The majority rejected the application of interpretative principles aimed at achieving commercial sense, holding that such principles apply only to valid agreements, not to agreements that are void as a matter of law. On this basis, the majority concluded that the purported addendum could not revive the lapsed agreement. The Court further held that any attempt to extend, amend, or waive the suspensive condition after the expiry of the agreed timeframe is legally ineffective. In such circumstances, the only legally competent mechanism by which the parties may proceed is to conclude a new agreement, even if the terms mirror those of the lapsed arrangement.
In the case of Vantage Goldfields SA (Pty) Ltd v Siyakhula Sonke Empowerment Corporation (Pty) Ltd and Another 2025 (2) SA 436 (SCA) an agreement lapsed due to the non‑fulfilment of a suspensive condition relating to payment of a deposit by a specified date. A series of subsequent addenda purporting to extend other conditions, were concluded, but did not address the condition that had caused the initial lapse. The Court followed a different approach and held that the parties could conclude a new agreement on the same conditions as those contained in the lapsed agreement or by incorporating those terms provided that the parties eliminate or amend the suspensive condition (or Fulfilment Date) that caused the original agreement to lapse. Absent such amendment, any new agreement incorporating the same defective condition would immediately “self‑destruct”. The court appears to have proceeded from the assumption that the parties could revive a lapsed agreement.
Terminated Agreements
Although the cases of Codevilla and Vantage Goldfields dealt specifically with agreements that lapsed due to the failure of suspensive conditions, the reasoning in those cases reflects a broader judicial insistence that the legal requirements for a binding agreement must be properly satisfied whenever parties seek to restore contractual arrangements.
Where an agreement has been validly concluded and implemented, and subsequently terminates, the parties’ rights and obligations generally fall away from the date of termination. Importantly, however, the agreement existed as a matter of law during its period of operation, unlike a Lapsed Agreement, which never came into force at all.
In Sewpersadh and Another v Dookie 2009 (6) SA 611 (SCA), it was held that ‘an agreement to revive requires a fresh meeting and concurrence of the minds of the parties to restore the status quo ante’. This means that the parties must actively and expressly agree to restore their contractual relationship through fresh consensus. In practice, this involves a new offer and acceptance, a mutual intention to be legally bound, and agreement on the essential terms.
The Court used the phrase “restore the status quo ante”, meaning restoring the legal position that existed before the agreement terminated. Such restoration does not occur automatically, and fresh consensus, through a new agreement, typically recorded in a reinstatement and amendment agreement of the Terminated Agreement or a new agreement incorporating the original or similar terms, as the case may be.
Conclusion
Although a Lapsed Agreement is rendered void ab initio, this does not preclude the parties from regulating their relationship anew by way of fresh consensus based on the Lapsed Agreement. As illustrated by the reasoning in Vantage Goldfields, parties who are cognisant of the lapse may validly conclude a new agreement which incorporates, by reference, the provisions of the lapsed agreement, provided that the cause of the original lapse is addressed and removed.
In this context, a reinstatement and amendment agreement properly characterised as a new agreement may serve as an effective mechanism to continue the contractual relationship under a Lapsed Agreement, on substantially the same or identical terms. To achieve this, the agreement must clearly acknowledge the lapse of the original agreement, incorporate its relevant provisions by reference, and exclude or amend those clauses, particularly suspensive conditions and automatic lapse provisions, that rendered the original agreement ineffective.
In preparing agreements, a more prudent approach would be to avoid automatic termination altogether, by rather providing that termination will occur only upon notice by either party following non‑fulfilment of the suspensive conditions or to provide for an automatic extension of the Fulfilment Date, subject to certain conditions. When structured in this manner, it avoids the risk of immediate invalidity and gives effect to the parties’ commercial intentions in a manner consistent with prevailing authority and established principles of contract law.
