Understanding the Timing of Prescription in Contracts with Suspensive Conditions
In South African contract law, few issues create more confusion than the intersection between prescription and suspensive conditions. When parties sign an agreement that is subject to a future condition, does the clock for prescription start ticking on the day of signature, or only once that condition has been fulfilled?
The Supreme Court of Appeal has now settled this question in the landmark case of Tight Business Enterprise CC v Petrus Johannes Lordan NO and Others (356/24) [2025] ZASCA 133, delivered on 17 September 2025. The judgment provides long-awaited clarity for commercial practitioners and litigants navigating contracts that hinge on future events.
The Background
On 5 January 2009, the Johan Lordan Trust sold a parcel of immovable property to Tight Business Enterprise (TBE). The sale agreement included a suspensive condition requiring ministerial approval for the subdivision and separate transfer of the property by 30 June 2009. That approval, according to TBE, was granted on 4 June 2009.
Years later, on 6 March 2021, TBE instituted proceedings for specific performance after the Trust failed to honour the sale. The Trust raised a special plea of prescription, arguing that the claim had prescribed three years after the contract’s signature date in January 2009.
The High Court initially dismissed the plea, finding that prescription only commenced once the suspensive condition was met. The Full Court, however, reversed that decision, holding that prescription began on the date of signature. TBE then took the matter to the Supreme Court of Appeal.
The Legal Framework: Suspensive Conditions and Prescription
A suspensive condition temporarily suspends the enforceability of a contractual obligation until the occurrence of a specified future event. The contract exists in law, but the parties’ rights and duties remain dormant until the condition is fulfilled. Once fulfilled, the agreement becomes fully enforceable; if not, it lapses according to its terms.
The Prescription Act 68 of 1969 regulates how and when debts prescribe. Section 11(d) provides that most contractual debts prescribe after three years, while section 12(1) states that prescription only begins to run when the debt is due.
South African courts have consistently interpreted “when the debt is due” to mean the moment a creditor can lawfully demand performance and institute legal action. Decisions such as Umgeni Water v Mshengu [2010] 2 All SA 505 (SCA) and Van Deventer v Ivory Sun Trading 77 (Pty) Ltd confirm that prescription cannot start until a claim becomes enforceable.
What the Court Decided
The Supreme Court of Appeal drew a crucial distinction between the existence of a contract and the enforceability of contractual rights. While a contract may be binding from the date it is signed, a creditor’s right to demand performance under a suspensive condition arises only once that condition has been met.
The Court reaffirmed that a debt is due only when it is immediately claimable. In this case, since the minister’s consent was obtained on 4 June 2009, prescription could not start earlier. The clock therefore began to run on that date, and TBE’s summons, issued in March 2012, was within the three-year limitation period.
The ruling confirms that the running of prescription is postponed until a suspensive condition is fulfilled.
Why the Judgment Matters
From both a commercial and fairness perspective, the Court’s reasoning ensures justice and consistency. If prescription were to start from the signature date, a creditor’s claim could expire before it even became enforceable, an outcome that would be both illogical and unfair.
By aligning the law of contract with the law of prescription, the Supreme Court of Appeal avoided this unfairness and reinforced the principle that legal rights only prescribe once they are capable of enforcement.
Key Takeaways for Lawyers and Businesses
- Prescription begins when a debt becomes enforceable, not when the contract is signed.
- Fulfilment of a suspensive condition marks the point at which the creditor may act.
- The date of fulfilment is therefore the operative date for calculating prescription periods.
- Contracts should always specify when and how suspensive conditions are deemed fulfilled to avoid later disputes.
Conclusion
The decision in Tight Business Enterprise is a vital clarification for South African contract law. It reaffirms that in agreements subject to suspensive conditions, the prescription period begins only upon fulfilment of the condition, not at signature.
For transactional lawyers, litigators, and businesses alike, the message is clear: understanding when a claim becomes due is essential for protecting contractual rights and managing litigation risk.
