Namibia: High Court Main Division

You are here:  SAFLII >> Databases >> Namibia: High Court Main Division >> 2015 >> [2015] NAHCMD 40

| Noteup | LawCite

National Cold Storage a Division of Matador Enterprise (Pty) Ltd v Namibia Poultry Industries (Pty) Ltd (A 286/2014) [2015] NAHCMD 40 (3 March 2015)

Download original files

PDF format

RTF format

Bookmark/share this page

Bookmark and Share

REPUBLIC OF NAMIBIA

HIGH COURT OF NAMIBIA MAIN DIVISION, WINDHOEK

JUDGMENT

Case No: A 286/2014

DATE: 03 MARCH 2015

In the matter between:

NATIONAL COLD STORAGE

A DIVISION OF MATADOR ENTERPRISE (PTY) LTD.............................................APPLICANT

AND

NAMIBIA POULTRY INDUSTRIES (PTY) LTD.......................................................RESPONDENT

Neutral citation National Cold Storage v Namibia Poultry Industries (Pty) Ltd (A 286/2014) [2014] NAHCMD 40 (03 March 2014)

Coram: UEITELE, J

Heard: 12 November 2014

Delivered: 03 March 2015

Flynote: Contract Formation of — Consensus — Tacit Agreement — Proof of —

Contract Specific performance - Discretion of Court to refuse - Discretion not confined to specific cases - Nor circumscribed by rigid rules - Each case to be judged in light of own circumstances.

Summary: During October 2010 Mr. Brink (acting on behalf of applicant) and Mr. White (acting on behalf of respondent) had certain discussions regarding the poultry market in Namibia. A period of approximately twelve months passed by without the parties following up on the discussions or taking any action in respect of the discussions they had during October 2010.

On 14 October 2011, the respondent’s Mr. White send an email correspondence to the applicant’s Mr. Brink to which was attached a letter which sets out the respondent’s intent to engage the applicant with regard to the sale and distribution of the respondent’s frozen products. In the letter of intent the respondent sets out the areas and aspects around which the respondent wished to engage the applicant.  And it also attached a draft “non-disclosure agreement” which would form the basis of the negotiations and discussions in respect of the engagement. Pursuant to the letter of intent the parties commenced with negotiations (between October 2011 and December 2011) to enter into a contract.

The negotiations culminated in the respondent sending, during April 2012, to the applicant a draft “Distribution Agreement.” The applicant did not sign the draft agreement which was sent to it, but it made certain changes to the draft agreement and send it back to the respondent. Respondent made further changes and send the draft agreement back to applicant, who kept quiet and did not reply to respondent. The parties were, however, doing business with each other. They continued  to do business for a period of more than eighteen months (i.e. between September 2012 and June 2014) when the respondent informed applicant that it is withdrawing the offer it made to applicant. Applicant maintained that the offer was tacitly accepted and a binding agreement concluded. Respondent disputes the existence of a tacit agreement.  Applicant than instituted these proceedings.

Held, that the Distribution Agreement annexed to the applicant’s affidavit in support of its claim constituted a firm and unequivocal offer by the respondent to the applicant.

Held further that the applicant had an obligation in the circumstances of this matter to communicate its rejection or acceptance of the offer to the respondent. The applicants silence or failure to inform the respondent whether it accepts or rejects the offer amounted to an acceptance of the offer by acquiescence.

Held, furthermore that since the respondent’s only ground for resisting an order of specific performance is the fact the applicant can be compensated with damages, the Court should avoid becoming supine and spineless in dealing with the offending contract breaker, by giving him the benefit of paying damages rather than being compelled to perform that which he had undertaken to perform and which, when he was called upon to perform by summons, and he chose to defy the claim of the plaintiff.

ORDER

1. The applicant’s non-compliance with the rules of court is hereby condoned and this application is heard on an urgent basis as envisaged in Rule 73 (3).

2. It is declared that a binding tacit agreement exists between the applicant and respondent in terms set out in ‘JJ B20’.

3 The respondent is ordered to comply with its obligations contained in the Distribution Agreement (Annexure ‘JJ B20’) in particular clause 3.3.

4 The respondent must pay the applicant’s costs of suit, such cost to include the cost of one instructing and one instructed counsel.

JUDGMENT

UEITELE, J

Introduction

[1] The applicant is a company with limited liability and it is engaged in the distribution of fast moving consumer goods, (such as poultry, fish and eggs) of locally produced products as well as the importation of fast moving consumer goods from South Africa into and around Namibia.  The respondent is also a company with limited liability and it is the only major producer trading in the broiler industry in Namibia.

[2] During October 2014 the applicant gave notice, by way of a Notice of Motion, to the respondent that it intends to apply to this court on Friday 14 November 2014 for an order in the following terms; (I quote verbatim from the applicant’s Notice of Motion).

1. Condoning the applicants non-compliance with the rules of court and hearing this application on an urgent basis as envisaged in rule 73 (3).

2. Granting a rule nisi, calling the respondent to show cause on 09 January 2015 at 10h00 alternatively on a date to be determined by this court why the following orders should not be made final.

2.1 an order declaring that a binding tacit agreement exists between the applicant and respondent in terms set out in annexure “JJ B20” for the following affidavit;

2.2 an order that the respondent complies with the obligations contained in the aforesaid agreement, in particular clause 3.3 thereof.

3. Ordering the respondent to pay the applicants costs of suit, such cost to include the cost of one instructed counsel, should it possible oppose the relief sought.

4 Ordering that the relief sought in paragraph 2.2 hereof shall operate as an interim interdict pending the return day of the rule nisi.

5 Further and/or alternative relief. ’

[3] The respondent did, as it was called upon to do, give notice that it will oppose the orders sought by the applicant and it also filed its answering affidavit setting out the basis and grounds on which it opposed the applicant’s claims. I find it appropriate to first give the background to the applicant’s claim before I set out the grounds or basis upon which the claim is based and the grounds or basis on which it is opposed.

Background to the claim

[4] During the period between October 2010 and September 2014 the applicant had as its chief executive officer a certain Mr. Jan Johannes Brink, and he is the person who deposed to the affidavit supporting the applicant’s claim.  The respondent had a certain Mr. Gys Jacques White as its Managing Director for the period 01 March 2010 to 30 April 2013. Mr. White is the person who deposed to the respondent’s opposing affidavit.

[5] During October 2010 Mr. Brink and Mr. White had certain discussions regarding the poultry market in Namibia. A period of approximately twelve months passed by without the parties following up on the discussions or taking any action in respect of the discussions they had during October 2010, but on 14 October 2011, the respondent’s Mr. White send an email correspondence to the applicant’s Mr. Brink to which was attached a letter which sets out the respondent’s intent to engage the applicant with regard to the sale and distribution of the respondent’s frozen products. In the letter of intent the respondent sets out the areas and aspects around which the respondent wished to engage the applicant.  And it also attached a draft “non-disclosure agreement” which would form the basis of the negotiations and discussions in respect of the engagement.

[6] In response to the letter of 14 October 2011 and on 20 October 2011 Mr. Brink, Mr. King (from the applicant’s holding company) and Mr. White (from the respondent company) had an introductory meeting.  At the introductory meeting the respondent confirmed its intentions to trade in frozen poultry products and its wish to make use of the applicant’s service in its pursuit to trade in frozen poultry products. A follow up meeting[1] was held on 08 November 2011, where a detailed discussion took place. The minutes of that meeting were attached and they reveal that discussions took place around a range of issues but what was particularly discussed is the marketing, sales and distribution of the respondent’s frozen poultry products.

[7] The parties had another meeting on 02 December 2011[2].  At the meeting of 02 December 2011, the respondent indicated that it intends to start trading in the frozen poultry products as from April 2012. On 26 March 2012, Mr. White send an e-mail to Mr. Brink, to the email was attached a draft “distribution agreement” and he asked Mr. Brink for his input into the draft agreement.  On 05 April 2012, Mr. White send an email to Mr. Brink to which was attached an updated price list according to which, the respondent was prepared to trade with the applicant in terms of the draft Distribution Agreement. During April 2012, Mr. Brink made his comments and inputs to the draft agreement and, per email, forwarded the comments to Mr. White on 20 April 2012. In the email Mr. Brink stated that Mr. White should let him know whether there was anything to be discussed with respect to the changes which he made.  Mr. White did not, for a period of five months respond to the changes made to the draft Distribution Agreement by Mr. Brink or to his (Mr. Brink’s) email. On the 26th April 2012 the applicant placed its first purchase order. In terms of the purchase order the respondent had to deliver a mixed portion of 1.5kg bags of frozen chicken brand “Country Choice” to the applicant’s business in Windhoek.  The delivery date was set at 30 April 2012 and the quantity ordered was 1300 bags at a unit price of N$150.40 per bag. On 02 May 2012 the respondent delivered the mixed portions of chicken which were ordered, but on 30 April 2012 the respondent issued its first tax invoice to the applicant for this sale.

[8] Between May 2012 and September 2012 the applicant and the respondent continued on that basis, the applicant would place an order for the frozen poultry products (specifically the frozen chicken brand “Country Choice”). Respondent would deliver, the applicant will then distribute the goods to its customers and the respondent would invoice the applicant for the goods delivered to it. On 12 September 2012 (i.e. approximately five months after the parties started doing business with each other) Mr. White send an e-mail to Mr. Brink, to which he had attached an amended draft of the “Distribution Agreement” forwarded to him earlier (i.e. on 20 April 2012) by Mr. Brink. Mr. Brink alleges in his supporting affidavit that he did not formally respond to Mr. White’s email of 12 September 2012 for the simple reason that the applicant and the respondent already, on 26 April 2012, started trading on the basis set out in the Distribution Agreement.

[9] Between 20 September 2012 and 30 June 2014 (that is for a period of twenty months) the parties continued to do business on the basis that they started to trade with each other on 26 April 2012, save that on 01 November 2012 Mr. White addressed an e-mail to Mr. Brink in which email Mr. White asked whether they (that is, the applicant) had any feedback as regards the Distribution Agreement. Brink did not reply to that e-mail. As I indicated above between 12 September 2012 and 30 June 2014 the parties continued to do business on the same basis that they commenced on 26 April 2012, but on 30 June 2014 the respondent addressed a letter to the applicant in which letter it stated the following: (I quote verbatim from the letter).

We need to inform you that our offer to enter into a long term distribution agreement with yourselves is withdrawn.

We regret to inform you that the current arrangement in terms of which you distribute our chicken products is terminated with effect on 31 August 2014.

Be assured that you will however in future be free to purchase chicken products from us for on sale to your customers.’

[10] On 09 July 2014 the applicant’s legal practitioner (on instruction by the applicant) responded to the respondent’s letter dated 30 June 2014. In that letter (i.e. the letter of 09 July 201) the applicant indicated the following to the respondent:

That although the distribution agreement send to the applicant on 12 September 2012, was not signed the parties proceeded to act according to the terms and conditions on the draft agreement.

That the applicant has been providing the respondent with distribution services as from 12 May 2012, in accordance with the draft agreement specifically schedules 1 and 2 to the draft agreement.

That since a valid distribution agreement, albeit verbal exists between the parties, the respondent could not withdraw thereafter.

That the termination is not in line with what the parties have agreed.  The appellant further stated that in terms of the agreement as reflected in the unsigned draft Distribution Agreement the parties agreed to a one year termination notice which may not be given prior to 07 May 2015.

[11] The respondent did not timeously reply to the applicant’s letters, necessitating the applicant to put it (the respondent) on terms to reply within a specific time frame. Despite the fact that the respondent did not timeously respond to the applicant’s letter of 09 July the parties conducted meetings aimed at resolving the termination issue. The meetings took place on 21 July 2014, 09 August 2014, 08 September 2014 and 18 September 2014 (during this period the parties were still trading and doing business with each other). At all these meetings the parties mooted the idea of finding an alternative way in which they would do business. On 24 September 2014, a further meeting was held between the applicant and the respondent’s representatives. At the meeting of 24 September 2014 the respondent’s representatives informed the applicant’s representatives that the possibilities of a new contractual relationship were no longer an option for the respondent and stated that, the ‘arrangement’ between the parties will terminate on 30 September 2014. The applicant’s representatives requested the respondent to place the oral termination in writing. As from 30 September 2014 the respondent did not make use of the applicant’s services. On 22 October 2014 the applicant launched this application on an urgent basis.

[12] As I have indicated above the respondent opposed the orders sought by the applicant. The grounds on which the respondent opposes the application are that:

3.2 …the Applicant is, in effect, seeking specific performance and in substance and effect, final relief, in circumstances where such relief ought not to be granted;

3.2.1 in the face of factual disputes;

3.2.2 with the availability of an alternative remedy;

3.2.2 bearing in mind the this Honourable Court may excise in deciding  whether or not an order of specific performance should be granted;

3.3 on the relevant facts it is clear,…, that the parties had agreed that no agreement would be enforceable unless and until to writing and signed by both sides;

3.4 the actual conduct of the parties over the period of time relied upon by the Applicant is in direct conflict with the material terms of the Draft agreement and such conduct therefore operates to destroy the very agreement relied upon, alternatively such conduct fails to prove consensus between the parties on an essential term, namely, price.

3.5 having regard to the totality of circumstances referred to and the availability of an effective alternative remedy of damages, there is every reason for this Honourable Court, in any event to refuse interim relief in the exercise of its discretion;

3.6 in the alternative and if the draft agreement was adopted, which is denied:

3.6.1 it is not open to the Applicant to avoid the compulsory arbitration clause  contained in the draft agreement relied upon (annexure “JB20”) (the draft) by … labeling the relief sough as interim relief;

3.6.2 the applicant is precluded from claiming  specific performance by the very draft relied upon since it has failed to 21 days’ written notice to remedy  the breach relied upon, as contemplated in clause 14;

3.6.3 it is unenforceable since it contains a pactum de contrahendo in respect of an essential term, namely price.

4 On the merits the Respondent maintains that the Draft was intentionally never finalized and that the parties, by their conduct simply implemented a different and independent contractual arrangement in terms of which the Respondent sold product to the Applicant instead of engaging the services of the Applicant  against payment of a fee as contemplated in the Draft.’



[13] From the above background facts it is clear that, the dispute between the parties in this case is whether an agreement came into being as a result of the conduct of the parties and whether the applicant can on the basis of the evidence before court obtain the remedy (particularly the remedy of specific performance) it seeks from the Court.

The legal principles relating to the formation of contracts

[14] A contract is often defined merely as an agreement made between two or more parties with the intention of creating an obligation or obligations.[3] In order to decide whether a contract exists, one looks first for the agreement by consent of the two or more parties. Professor Christie[4] opines that the most common and normally the most helpful technique, for ascertaining whether there has been an agreement, true or based on quasi mutual assent, is to look for an offer and acceptance. In the case of Estate Breet v Peri-Urban Areas Health Board[5] Van den Heever, JA said consensus is normally evidenced by offer and acceptance.

[15] Professor Christie[6] further argues that a person is said to make an offer when he puts forward a proposal with the intention that by its mere acceptance, without more, a contract should be formed. In the matter of Wasmuth v Jacobs[7]  Levy, J said:

It is fundamental to the nature of any offer that it should be certain and definite in its terms. It must be firm, that is, made with the intention that when it is accepted it will bind the offeror.’

[16] It thus follows that for a contract to come into existence the offer must be accepted. In the matter of Boerne v Harris[8] Schreiner, JA said that for an acceptance to be effective it must be clear and unequivocal or unambiguous. One aspect of the rule that acceptance must be clear and unequivocal or unambiguous is that acceptance must exactly correspond with the offer. This principle has been stated as follows by Nestadt J in the matter of JRM Furniture Holdings v Cowlin.[9]

‘…acceptance must be absolute, unconditional and identical with the offer. Failing this, there is no consensus and therefore no contract. (Wessels Law of Contract in South Africa 2nd ed vol I para 165 et seq.) Wille Principles of South African Law 7th ed at 310 states the principle thus:


"The person to whom the offer is made can only convert it into a contract by accepting, as they stand, the terms offered; he cannot vary them by omitting or altering any of the terms or by adding proposals of his own. It follows that if the acceptance is not unconditional but is coupled with some variation or modification of the terms offered no contract is constituted..."  ’


[17] In the matter of Driftwood Properties (Pty) Ltd v McLean[10] Van Blerk, AJ said ‘It is trite that an offeror can indicate the mode of acceptance whereby a vinculum juris will be created, and he can do so expressly or impliedly.[11] It is now well established that the offer or acceptance may be inferred from the conduct of the parties[12]. In the case of Reid Bros (SA) Ltd v Fischer Bearing Co Ltd[13] Watermeyer, ACJ said:

 

Now a binding contract is as a rule constituted by the acceptance of offer, and an offer can be accepted by conduct indicating acceptance, as well as by words expressing acceptance. Generally it can be stated that what is required in order to create a binding contract is that acceptance of an offer should be made manifest by some unequivocal act from which the inference of acceptance can logically be drawn.’


[18] It thus follows that because it is possible to accept an offer by ones conduct thereby creating a legally binding contract, the contract which flows from the acceptance by conduct is a contract by conduct or a tacit contract.  This is made clear in the case of Frame v Palmer[14] where Van Zyl, J said:

At the outset it must be remembered that an implied or tacit contract differs from an express contract only in the manner in which the offer or acceptance is made, namely, it is not expressed in words, gesture or writing but is implied from all the circumstances and the actions of the parties.’


[19] Van Zyl, J proceeded to explain that the Court, in order to establish a tacit contract, must come to the conclusion that there was an implied offer and implied acceptance and that the parties intended to contract with each other; in other words that from the circumstances and by their actions the parties in fact intended that a binding contract should come into being. There are currently different guiding principles which the courts have developed to assist with the process of inferring from the proven facts whether a tacit contract exists.The first guidelines were set out in the case of Standard Bank of SA Ltd and Others v Ocean Commodities Inc and Others[15] where Corbett, JA said:

In order to establish a tacit contract it is necessary to show, by a preponderance of probabilities, unequivocal conduct which is capable of no other reasonable interpretation than that the parties intended to, and did in fact, contract on the terms alleged. It must be proved that there was in fact consensus ad idem.’[16]

But in the matter of Plum v Mazista Ltd[17] Wessels, JA held that:

‘…court may hold that a tacit contract has been established where, by a process of inference, it concludes that the most plausible probable conclusion from all the relevant proved facts and circumstances is that a contract (being offer, acceptance and consensus) came into existence.’[18]

Christie[19] proposes the following test:

In order to establish a tacit contract it is necessary to prove, by a preponderance of probabilities, conduct and circumstances which are so unequivocal that the parties must have been satisfied that that they were in agreement.’

The application of the legal principles to the facts

[20] Before I turn to the application of the legal principles enunciated above, I pause and observe that, I do not consider this as the occasion to resolve the question whether there is a real difference, if any between the tests enunciated in the matters of Standard Bank of SA Ltd and Others v Ocean Commodities Inc and Others and Joel Melamed and Hurwitz v Vorner Investments (Pty) Ltd or to express a preference for one or the other because that point was not argued.

[21] I have indicated above that the respondent opposes the relief sought by the applicant on, amongst others, that:

(a) The parties allegedly agreed that no agreement would be enforceable unless reduced to writing and signed by both sides;

(b) The draft was intentionally never finalized and the parties implemented a different and independent contractual relationship;

(c) The relationship between the parties during 2012 to 2014 is that of purchaser and seller;

(d) The conduct between the parties fails to prove consensus between the parties on an essential term, namely price, and instead the conduct evinces an agreement to agree;

(e) The Applicant is, in effect, seeking specific performance and in substance and effect, final relief, in circumstances where such relief ought not to be granted in the face of factual disputes and the fact an alternative remedy is available for the plaintiff.

[22] In view of the approach that I have taken in this matter, I am of the view that, even if there are disputes of facts on the papers, I do not regard it necessary to resolve those disputes of facts. The only dispute of fact that may be worth resolving is the dispute as to whether the parties did set out the formalities (i.e. that the agreement must first be signed before it becomes binding on the parties) that must be complied with before a binding agreement comes in to operation. It is true that in motion proceedings a dispute of facts may arise on the papers. The legal position on how to resolve a dispute of facts which arises in motion proceedings (where a final relief is sought) has been set out as follows in the case Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd[20] which case has been approved by the Supreme Court of Namibia:

It is obvious that a claimant who elects to proceed by motion runs the risk that a dispute of fact may be shown to exist. In that event (as is indicated infra) the Court has a discretion as to the future course of the proceedings. If it does not consider the case such that the dispute of fact can properly be determined by calling viva voce evidence under Rule 9, the parties may be sent to trial in the ordinary way, either on the affidavits as constituting the pleadings, or with a direction that pleadings are to be filed. Or the application may even be dismissed with costs, particularly when the applicant should have realized when launching his application that a serious dispute of fact was bound to develop. It is certainly not proper that an applicant should commence proceedings by motion with knowledge of the probability of a protracted enquiry into disputed facts not capable of easy ascertainment, but in the hope of inducing the Court to apply Rule 9 to what is essentially the subject of an ordinary trial action.’

[23] From the above statement of the law, the crucial question is always whether there is a serious/real dispute of fact. How does a serious or real dispute of fact arise? In the Room Hire Co case[21], Murray, AJP stated thus:

It may be desirable to indicate the principal ways in which a dispute of fact arises. The clearest instance is, of course, (a) when the respondent denies all the material allegations made by the various deponents on the applicant's behalf, and produces or will produce, positive evidence by deponents or witnesses to the contrary. He may have witnesses who are not presently available or who, though adverse to making an affidavit, would give evidence viva voce if subpoenaed. There are however other cases to consider. The respondent may (b) admit the applicant's affidavit evidence but allege other facts which the applicant disputes. Or (c) he may concede that he has no knowledge of the main facts stated by the applicant, but may deny them, putting the applicant to the proof ...’ Italicized and underlined for emphasis.

[24] The respondent’s Mr. White maintains (in the opposing affidavit) that he made it quite clear ( to the applicant’s Mr. Brink) that the parties would not go into a business relationship without a contract and that it was self-evident to all concerned that he had a signed agreement in mind and that the drafts were work in progress. This is an appropriate place to repeat what Wessels JA said in the case of SAR & H v National Bank of SA Ltd[22] that ‘the law does not concern itself with the working of the minds of parties to a contract but with the external manifestation of their minds.’ I perused the minutes of the meeting of 08 November 2011 and those minutes were distributed to the respondent and there is nothing in the minutes indicating that signature of the Distribution Agreement was a condition precedent for the coming into force of that Distribution Agreement. Except for Mr. White’s say so, the respondent has not produce any positive evidence to contradict the applicant’s Mr. Brink’s assertions. I therefore find that the assertions by the respondent are farfetched and clearly untenable that I can safely reject them on the papers.

[25] I now turn to the application of the legal principles to the facts of this matter. In the present matter the facts which are common cause are that during October 2011, the respondent expressed its desire to engage the services of the applicant in its quest to trade in frozen poultry products. I interpret the expression of the desire by the respondent to do business with the applicant as an ‘invitation to treat’.  It is further common cause that after the respondent indicated its desire to do business with the applicant the parties commenced with negotiations (between October 2011 and December 2011) to enter into a contract. The negotiations culminated in the respondent sending, during April 2012, to the applicant a draft “Distribution Agreement.” I construe the draft “Distribution Agreement” as the offer from the respondent to the applicant. The applicant did not sign the draft agreement which was sent to it, but it made certain changes to the draft agreement. From the legal principles enunciated above it is clear that when the applicant made changes to the draft agreement it did not accept the offer made to it by the respondent but made a counter offer. It must be remembered that in the matter of Collen v Rietfontein Engineering Works[23] it was held that a counter-offer is in general equivalent to a refusal of an offer and that thereafter the original offer is dead and cannot be accepted unless revived.

[26] Despite the fact that no agreement was reached by the parties they started (during May 2012) doing business with each other. The respondent did not sign the amended draft agreement forwarded to it by the applicant (meaning that it also did not accept the counter offer made by the applicant) it also effected certain changes to the amended draft agreement that was forwarded to it by the applicant and send (during September 2012) that further amended draft agreement (this further amended draft agreement was attached to the Notice of Motion and the supporting affidavit as Annexure ‘JJB 20’ (I will in this judgment refer to the further amended draft agreement as ‘JJB 20’) to the applicant for applicant’s consideration. I construe JJB 20 as a fresh or new offer by the respondent to the applicant. The applicant did not sign ‘JJB 20’ or inform the respondent whether it accepts or reject the ‘new offer’, the parties simply continued to do business for a period of approximately twenty four months (that is between September 2012 and September  2014) on the same basis that they started in May 2012. It is only in June 2014 that the respondent advised the applicant that the offer which it (the respondent) made to the applicant has been withdrawn and the respondent stopped doing business with the applicant on 30 September 2014.

[27] Does the applicant’s failure to sign ‘JJB 20’ or its failure to inform the respondent that it has accepted the terms set out in ‘JJB 20’ require me to draw any inference (positive or negative) from such silence or failure to communicate? In the Collen v Rietfontein[24] matter it has been held that where there is an unambiguous offer, failure to communicate may where the conduct of the one party amounts to an unequivocal indication to the other party of such acceptance constitute acceptance of the offer.

[28] The respondent repeatedly received orders from the applicant in respect of the respondent’s frozen chicken products and it supplied the products to the applicant without alerting the applicant that the supply was not being made in terms of what the parties had intended to contract but on a different basis. Where one person receives goods from another with whom he has no dealings, he may be under no duty to communicate with such person or to repudiate liability. But where that person is receiving the goods in anticipation of the parties expressed desire to conclude a valid agreement and where a firm and unequivocal offer has been made, it seems to me that the person has a clear duty to inform the sender of the goods whether or not he accepts liability in respect of the goods. A failure to do so can only be interpreted as an acceptance of liability by acquiescence.

[29] I am of the further view that, in this matter, the supply of the frozen chicken products does not fall within in the category supply of unsolicited goods thus absolving the recipient from the obligation to inform the sender of his or her acceptance of liability. In this matter the goods were supplied after the parties expressed their intention to contract with each and after a firm offer was made by the respondent to the applicant. Ordinary commercial practice and human expectation demands that in such circumstances the offeree or recipient of the goods communicate its acceptance of the offer. The offeree’s silence and inaction can only be taken to constitute an acceptance of the offer. In all the circumstances (in this matter the circumstances include the fact that the parties clearly intended to contract with each other; a firm and unequivocal offer  was made to the applicant, the parties continued to deal with each other for a period of twenty four months), I am satisfied that the applicant’s silence and continued request and receipt of the respondent’s frozen chicken products goes to establish that he accepted the offer by the respondent and that a binding agreement contained in JJB 20 was concluded on 12 September 2012.

[30] The next question that needs to be answered is whether, I can order the respondent to comply with its obligations as contained in JJB 20, in particular clause 3.3 of that agreement. Mr.  Marais who appeared on behalf of the respondent argued that, I must exercise my discretion and refused to grant the remedy of specific performance because the applicant has an effective alternative remedy, being, a straight forward damages claim. Ms. Schimming-Chase who appeared for the applicant on the other hand argued that the circumstance of this case do not preclude me from exercising my discretion in favour  of granting the remedy  of specific performance.

[31] In the matter of Haynes v Kingwilliamstown Municipality[25] De Villiers, AJA held that in our law a plaintiff has the right of election whether to hold a defendant to his contract and claim performance by him of precisely what he had bound himself to do, or to claim damages for the breach and that this right of choice a defendant does not enjoy; he cannot claim to be allowed to pay damages instead of having an order for specific performance entered against him. He further stated that:

It is, however, equally settled law with us that although the Court will as far as possible give effect to a plaintiff's choice to claim specific performance it has a discretion in a fitting case to refuse to decree specific performance and leave the plaintiff to claim and prove his id quod interest. The discretion which a Court enjoys although it must be exercised judicially is not confined to specific types of cases, nor is it circumscribed by rigid rules. Each case must be judged in the light of its own circumstances.’

[32] Although the court has a discretion as to when it will order or not order specific performance, the courts have develop some guidelines indicating when it will not order specific performance: They were set out  as follows in the Haynes v Kingwilliamstown Municipality matter:

(a) Where damages would adequately compensate the plaintiff; but in the matter of Industrial & Mercantile Corporation v Anastassiou Brothers[26] Davidson, J said:

It seems to me that a Court should avoid becoming supine and spineless in dealing with the offending contract breaker, by giving him the benefit of paying damages rather than being compelled to perform that which he had undertaken to perform and which, when he was called upon to perform by summons, and he chose to defy the claim of the plaintiff. He went to the extent of engaging another person to supply the same services for him, almost immediately. This is to my mind not a case where it can be said to be impossible to perform either at the time when the summons was issued, when he engaged the other supplier to install his equipment or even at the later stages, during the trial of the action. That it would be inconvenient for him is likely, that he will suffer some financial loss is likely, but that he has brought on himself by an arrogant denial of his commitments and I do not believe he should earn particular sympathy for that.’

(b) where it would be difficult for the Court to enforce its decree; This ground has been articulated as follows in in Shakinovsky v Lawson and Smulowitz[27] as follows:

'Now a plaintiff has always the right to claim specific performance of a contract which the defendant has refused to carry out, but it is in the discretion of the Court either to grant such an order or not. It will certainly not decree specific performance where  the subject-matter has been disposed of to a bona fide purchaser, or where it is impossible for specific performance to be effected; in such cases it will allow an alternative of damages.'

(c) where the thing claimed can readily be bought anywhere;

(d) where specific performance entails the rendering of services of a personal nature.

(e) where it would operate unreasonably hardly on the defendant, or where the agreement giving rise to the claim is unreasonable, or where the decree would produce injustice, or would be inequitable under all the circumstances.

[33] The respondent has advanced no ground, other than that the applicant can be compensated with damages, why the court should exercise its discretion and refuse the order of specific performance. I associate myself with the comment of Davidson, J when he said a Court should avoid becoming supine and spineless in dealing with the offending contract breaker, by giving him the benefit of paying damages rather than being compelled to perform that which he had undertaken to perform and which, when he was called upon to perform by summons, and he chose to defy the claim of the plaintiff. I accordingly conclude that the respondent did not discharge the onus of establishing any ground why the Court must exercise its discretion and refuse to grand an order of specific performance.

[34] It follows that the applicant is in my view entitled to specific performance and that the respondent must comply with its obligations contained in the Distribution Agreement (in particular clause 3.3) The plaintiff is also entitled to the costs of this application.

[35] I accordingly make the following order:

1. The applicant’s non-compliance with the rules of court is hereby condoned and this application is heard on an urgent basis as envisaged in Rule 73 (3).

2. It is declared that a binding tacit agreement exists between the applicant and respondent in terms set out in ‘JJ B20’.

3 The respondent is ordered to comply with its obligations contained in the Distribution Agreement (Annexure ‘JJ B20’) in particular clause 3.3.

4 The respondent must pay the applicant’s costs of suit, such cost to include the cost of one instructing and one instructed counsel.

S F I UEITELE

Judge

APPEARANCES

APPLICANT E M SCHIMMING-CHASE


Instructed by KOEP & PARTNERS


RESPONDENTJ MARAIS SC



Instructed by THEUNISSEN, LOUW & PARTNERS

[1]     The persons present at that meeting were Messrs. Brink and King from the applicant and Mr. White from the respondent.

[2]     The persons present at the meeting of 02 December 2011 were Messrs. Brink from the applicant and Mr. White from the respondent and a certain Mr. Koos Ferreira from Namib Mills (the holding company of the respondent).

 

[3]     See LAWSA Vol 5 at para124.

[4]     Christie R H: The Law of Contract in South Africa : 5th Edition LexisNexis Butterworths p 28.

[5]     1955 (3) SA 523 (A) at 532.

[6]     Supra footnote No 4 at 29.

[7]     1987 (3) SA 629 (SWA) at 633.

[8]     1949 (1) SA 793 (A).

[9]     1983 (4) SA 541 (W) at 544.

[10]    1971 (3) SA 591 (A).

[11]    Also see Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd 1986 (2) SA 555 (A).

[12]    In the matter of Timoney King v King 1920 AD 133 at 144 Innes CJ said ‘An acceptance may be inferred from conduct’.

[13]    1943 AD 232 at 241.

[14]    1950 (3) SA 340 (C) at 345.

[15]    1984 (3) SA 15 (A).

[16]    See generally Festus v Worcester Municipality 1945 CPD 186 at 192 - 3; City of Cape Town v Abelsohn's Estate 1947 (3) SA 315 (C)  at 327 - 8; Parsons v Langemann and Others 1948 (4) SA 258 (C) at 263; Big Dutchman (South Africa) (Pty) Ltd v Barclays National Bank Ltd 1979 (3) SA 267 (W) at 281E - F; Muhlmann v Muhlmann 1981 (4) SA 632 (W) at 635B - D).

[17]    1981 (3) SA 152 (A) at 163 – 4.

[18]    Also see; Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd [1984] ZASCA 4; 1984 (3) SA 155 (A); Joel Melamed and Hurwitz v Vorner Investments (Pty) Ltd [1984] ZASCA 4; 1984 (3) SA 155 (A); Spes Bona Bank Ltd v Portals Water Treatment South Africa (Pty) Ltd 1983 (1) SA 978 (A) at 981A - D).

[19]    Supra footnote 4 at 85.

[20]    1949 (3) SA 1155 (T) at 1162.

[21]    Supra at 1163.

[22]    1924 AD 704 at  715

[23]    1948 (1) SA 413 (A).

[24]    Supra.

[25] 1951 (2) SA 371 (A) Also see the case of Ashipala v Nashilongo and Another 2011 (2) NR 740 (HC) where the principles set out in the Haynes v Kingwilliamstown Municipality have accepted and followed.

[26] 1973 (2) SA 601 (W) at 609.

[27] 1904 TS 326 at 330, per Innes, CJ, Solomon and Wessels, JJ concurring. See also Rissik v Pretoria Municipal Council 1907 TS 1024 at 1037, per Wessels, J (with specific reference to the sale of property belonging to another), Tamarillo (Pty) Ltd v B N Aitken (Pty) Ltd 1982 (1) SA 398 (A) at 441D - 443F, per Miller, JA, and Benson v SA Mutual Life Assurance Society 1986 (1) SA 776 (A) at 783E - G, per Hefer, JA.