"Rouwkoop"

Mostly found in property sale agreements, a “rouwkoop” (literally, “regret-purchase”) clause sets out how much a party who wants to pull out of the agreement without breaching it agrees to pay the other for the privilege. The concept is sometimes confused with that of a “forfeiture of deposit” or “penalty” clause which applies only if the sale agreement is breached. The distinction is subtle but if you see the word “rouwkoop” in an agreement, be on your guard. Whilst only penalties that are proportional to the loss suffered are allowed by our law, you could inadvertently be agreeing to something you will regret later on.

Provided by Anthony Whatmore & Company

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