The liquidators of a company failed in a claim for a sum of money and interest thereon against the executor of the deceased’s estate arising from an alleged loan by the company to the deceased (who was a former director of the company) because there was no proof that the deceased agreed to be bound by a loan agreement.

The company had passed a resolution which mandated the deceased and his daughter to have access and signing powers to the Company’s bank account and to have “authority to sign and transact along with [an] existing signatory”. The resolution provided that all transactions required two joint signatures on the bank account. A second resolution was passed wherein the company agreed to lend a sum of money to the deceased, which sum was repayable within twelve months with interest. The authorised signatories of the company’s bank accounts were authorised to make such payments as and when funds became available. The deceased was not a director at the time when the resolutions were passed and did not vote in favour of the resolutions.

The liquidators submitted a schedule of six payments that were made into the deceased’s personal bank account. The liquidators alleged that the resolutions, together with these payments, constituted a loan agreement between the company and the deceased, which loan ought to have been repaid within 12 months from payment of each instalment. These sums were never repaid by the deceased.

The liquidators alleged that either the deceased and/or his daughter, before signing in relation to the company’s bank account, would understand and accept the cause for each payment, and the deceased’s acceptance of the payments into his personal bank account would conclude loan agreement. No evidence was provided to confirm that the deceased was aware of the resolutions, signed for any of the payments, or knew that these payments were being made as a loan or received as a loan. Furthermore, there was no evidence provided to confirm that the deceased agreed with the contents of the resolutions, and it was unclear whether he signed for the payments to his personal bank account.

The court held that any inference that a loan agreement was concluded between the company and the deceased because the deceased was aware of the contents of the resolutions “is not logic or law”. Receipt of payment is not evidence of the conclusion of a loan agreement – there were other possible reasons why the company could make payments to the deceased’s personal bank account.

For an agreement to exist, three basic principles must be met, namely that the parties –

  1. must agree to the consequences they wish to create;
  2. must intend to bind themselves legally; and
  3. must be aware of their agreement.

The passing of a resolution is not in itself sufficient to evidence the conclusion of an agreement. The parties should conclude separate loan agreements which clearly set out the terms of the agreement and evidence the parties’ agreement to be bound thereby. Loan agreements should be concluded to evidence the parties’ agreement before any sums are advanced, to protect the creditor’s right to claim re-payment of such sums. 

The full judgment can be accessed here: Poole N.O and Another v Stanger N.O (2024/064772) [2025] ZAGPJHC 898 (5 September 2025)