Sucession by contracts

Question 1

Pactum successorium definintion

Answer 1

A pactum successorium can be defined as a contract in which the parties attempt to regulate
the devolution of the entire or part of the assets of one or both parties.

Question 2

Pacta sucessorium in South African law

Answer 2

Seen as invalid
It is contra bonos mores because it limits the testator’s freedom of testation inter vivos & power to amend or revoke the will and amounts to an attempt to circumvent the formalities necessary for the execution of a valid will.
It is a juridical act that operates succession consequences inter vivos.

Question 3

Two exceptions to why a pactum sucessoria would be invalid when compared to a valid will

Answer 3

1. namely a SUCCESSION CLAUSE EMBODIED IN AN ANTENUPTIAL CONTRACT
2. a DONATIO MORTIS CAUSA executed in compliance with the formalities of a will.

In South Africa, these two
forms of pacta successoria are regarded as valid

Question 4

Origin of the prohibition of the pactum sucessorium

Answer 4

The prohibition of pacta successoria originates in common law.

succession by means of a pactum successorium
was either unknown or not permitted.

In rome, Most juridical acts that could restrict the freedomof testation of the testator inter vivos were treated with suspicion and seen as contra bonos mores.

the pactum successorium was also prohibited because it was feared that such an agreement could cause the desire to bring about the death of the testator who was a contractual party.

It is generally accepted that this objection no longer applies in modern South African law
because someone who caused the death of a deceased will be disinherited as a result of the bloedige hand maxim

Question 5

What is the pactum successoria used for?

Answer 5

he testator uses a
pactum successorium to commit himself or herself during his or her lifetime to give someone else a share of his or
her estate (or part of it) mortis causa (after his or her death).

Question 6

test used for identifying pactum successoria

Answer 6

1. absence of a counterperformance
2. revocability test
3. restriction of freedom of testation
4. vesting test
5. intention test

Question 7

Absence of performance

Answer 7

In Schauer v Schauer,
the Court ruled that an agreement is an invalid pactum successorium unless proof can be
provided that a counterperformance has been given to the promissor.

This judgment has been criticised and it is
generally accepted that giving a counterperformance is not the criterion to establish whether or not an agreement is
a pactum successorium.

Question 8

In Costain and Partners v
Godden (revocability test)

Answer 8

it was decided that an OPTION is a straightforward commercial contract which becomes irrevocable the moment it is entered into.

It was further held that if it is irrevocable, it escapes the stigma of a pactum successorium and it is enforceable.

It is evident that the revocability test was applied incorrectly in Costain and
Partners v Godden
12 – no agreement that is revocable can curtail or restrict the promissor

Question 9

Varkevisser v Varkevisser and

Ex Parte Calderwood: In Re Estate Wixley. as moe suitable examples of revocability test

Answer 9

In both judgments it was decided that the fundamental principle of a pactum
successorium lies in the fact that the promissor has committed him- or herself irrevocably to the agreement.

He or she does not reserve the right to revoke his or her offer. Should the promissor reserve the right to revoke his or
her offer, the agreement will not be contrary to the general rule that succession may only take place ex testamento or ab intestato.

However, the revocability of an agreement cannot always satisfactorily be used as the only
criterion to differentiate between the pactum successorium and other agreements.

Question 10

Restriction of Freedom of testation

Answer 10

It is a basic principle of the South African law of succession that a testator has complete freedom of testation over his or her assets and, with a few exceptions, any agreement that restricts this freedom is null and void.

In practice, the courts have used freedom of testation as a test for determining whether or not an agreement is a pactum successorium.

It is clear from Borman en De Vos v Potgietersrusse Tabakkorporasie that the principle of freedom of testation in South African law enjoys high priority.

Question 11

Vesting of rights

Answer 11

If the rights are vested in the beneficiary inter vivos(immediately, before the giver’s death), even if the execution is thereof postponed until after death, the agreement is not a pactum successorium.

If the right vests after death (mortis causa) = pactum successorium

Question 12

Intent test

Answer 12

A more satisfactory criterion to determine whether an agreement is an invalid pactum successorium or not is the
intention of the parties.

Question 13

McAlpine v McAlpine case (on intention test)

Answer 13

FACTS:
2 brothers had a 50/50 share in a company
They concluded a contract which contained the following clause:
“In the event of either parties death, the other party will get 100% of the shares in the company … in other words, the deceased party’s shareholding will go to the one remaining alive.”
B1, died first
B2, claimed the transfer of B1’s shares
Executor alleged that the above provision = Invalid pactum successorium

Legal question: does the above provision amount to an invalid pactum successorium?

Court held: - minority judgement: (intention test)
the intention of the parties to the contract and not the nature of the right is the dominant feature of an agreement (factual question).
It was clear that the parties did not have the intention of making a will. The agreement did not interfere with the freedom of testation of the two brothers and it was also not an attempt to evade the formalities of the will.
South African law follows the doctrine of stare decisis, thus, the verdict of the majority in McAlpine v McAlpine that if the succession agreement restricts freedom of testation of the testator, it is an invalid pactum successorium is the prevailing law.
minority judgement:. It applied the ‘vesting test’
Clause subject to a suspensive condition
Dies cedit (vesting of right) is postponed until fulfilment of condition (death of first-dying brother)
consequently, right to shares vested in B2, upon death of B1
Therefore, transfer of right = mortis causa = invalid pactum successorium

Question 14

Valid forms of pactum successoria

Answer 14

1. donatio mortis causa
2. succession agreements in an antenuptial contract.

Question 15

donatio mortis causa

Answer 15

A donatio mortis causa is a donation aimed at the death of the donor and must comply with
the formalities laid down for a will.

Question 16

Meyer v Rudolph’s Estate (donatio mortis causa)

Answer 16

T7he deceased wrote a letter to the plaintiff in which she said, among others,
the following:
… I feel very weak and it is quite possible that I will not see you again, for that reason I write you
this. You ask me how it goes with your cattle; do not worry about them; you are entitled to them,
therefore I have thought fit to give you all my cattle and also Boschberg; after my death it belongs
to you….

The Court found the contents of this letter to be a donatio mortis causa which has to comply with the formalities of a will.

Question 17

The characteristics of a donatio mortis causa

Answer 17

1. The death of the donor must be contemplated.
2. The governing motive for the gift must be pure benevolence.
3. The gift may be revoked at any time

Question 18

Differentiating between mortis causa and pactum successorium

Answer 18

Like the pactum successorium, the donatio mortis causa is an agreement with testamentary characteristics.

There is also a handing over of assets to the beneficiary mortis causa but the ground for the invalidity of the agreement, namely irrevocability, is missing.

Since the donatio mortis causa is revocable, the freedom of testation of the testator is not restricted.

For this reason, it is not contra bonos mores and is not invalid. Because a donatio mortis
causa has to comply with testamentary formalities, it can be stated that a donatio mortis causa and a will are essentially one and the same thing

Question 19

A pactum successorium in an antenuptial contract

Answer 19

It is not a will.

Although it has succession implications, it does
not have to comply with testamentary formalities

Question 20

Forms of pactum successorium in an antenuptial contract

Answer 20

1. The spouses benefit each other mutually or the one benefits the other:
   In this case, the agreement can only expressly or by means of inevitable implication be revoked or amended by the spouses’ joint will.
   If the joint will is revoked, the pactum successorium revives.
   Unilateral revoking by one of the spouses by making a new will is not possible.
2. The spouses agree to benefit a third party: In this case, there are two possibilities of revocation.
   If the third party is a party to the agreement, revoking is only possible with his or her permission.
   If the third party is not a party to the agreement, the rules that ordinarily apply to agreements in favour of a third party are applicable.

If the spouses agree to a revoking capacity or where the third party has not yet accepted the benefit, the agreement can be modified by means of a joint will. If the third party has already accepted the benefit, revoking
is only possible with his or her permission.

Question 21

Ex parte Executors Estate Everard (Antenuptial agreement by spouses ito joint will)

Answer 21

the following pactum successorium was taken up in the antenuptial agreement of the spouses:

For and in consideration of the said intended marriage the said husband nominates and appoints the said wife major spinster, to be the soleheiress of one half of his estate, movable and immovable, wherever situate, at the time of his death.
In a later will, the testator effected a disposition of his estate in conflict with the pactum successorium.

The Court
held that such an agreement (the pactum successorium) cannot be revoked by means of a will without the permission of the other party.

Question 22

Ex parte Basillie et Uxor (Antenuptual agreement with involvement of a third paty)

Answer 22

In Ex parte Basillie et Uxor,
a husband and wife executed an antenuptial contract in which the husband
donated a life policy to his wife ‘together with any children which may be born from this marriage’.
The Court held that the husband and wife had stipulated for a benefit in favour of their unborn children.
When the children are in existence and if they accept the benefit in terms of the life policy, their rights cannot be taken away by means of
a later will.
In other words, the husband and wife cannot have a stipulation in their will that excludes the children from the benefits of the life policy

Question 23

Additional formalities to be complied with ito an antenuptial contract

Answer 23

1. The antenuptial contract must be executed by a notary.
2. The antenuptial contract must be signed by both spouses in the presence of the notary and two competent witnesses.
3. The signatures of the spouses must be attested by two competent witnesses.
4. The antenuptial contract must be registered in the office of the registrar of deeds