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[2012] ZAKZDHC 36
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Mediterranean Textiles Mills (Pty) Ltd v Marburg Manufacturers (Pty) Ltd (3116/2011) [2012] ZAKZDHC 36 (8 June 2012)
IN THE
KWAZULU-NATAL HIGH COURT, DURBAN REPUBLIC OF SOUTH AFRICA
CASE
NO: 3116/2011
In
the matter between:
MEDITERRANEAN
TEXTILE MILLS (PTY) LTD
…..............................................
Plaintiff
and
MARBURG
MANUFACTURERS (PTY) LTD
….....................................................
Defendant
JUDGMENT
KOEN
J
:
INTRODUCTION
:
[1]
This matter has come before me as an action in which the Plaintiff
claims:
(a)
payment of R2 150 045.68;
(b)
interest on the sum of R3 588 286.83 at the rate of 15.5% per annum
from 1 December 2010 to 19 May 2011, both dates inclusive;
(c)
interest on R2 150 045.68 at the rate of 15.5% per annum from 20 May
2011 to date of payment;
(d)
costs of suit, including, where employed, the costs of two Counsel,
on the scale as between attorney and client.
The
Defendant counterclaims for payment of the sum of R2 305 080.00,
interest thereon and costs.
[2]
The quantum of the Plaintiffs claim, should liability be established,
is agreed.
[3]
The Plaintiffs claim is in respect of the balance of the purchase
price of certain fabric referred to as 12C97
1
sold
and delivered during the period April 2010 to August 2010. The
Defendant maintains that the fabric supplied by the Plaintiff
was
unfit for use in the production of work wear garments and, as a
result, that it has suffered damages in the sum of R2 305 080.00.
THE PLEADINGS:
[4]
Briefly stated, the Plaintiff avers that:
(a)
On or about 25 November 2004 and at Durban it and the Defendant
concluded a written contract comprising the 'Credit Application
and
Standard Trading Terms Agreement annexed as annexure 'A'to the
Particulars of Claim.
(b)
This agreement incorporates the Plaintiffs 'Conditions of Sale'.
(c)
Subsequently, during the period April 2010 to August 2010 and
pursuant to that agreement, the Plaintiff sold and delivered the
fabric to the Defendant for agreed prices alternatively Plaintiffs
usual price in the sum of R5 401 992.83.
[5]
The essence of the Defendants case is that the fabric was sold
pursuant to a partly written and partly oral agreement concluded
during or about December 2009, the written portions comprising two
emails, namely one from the sales director of the Plaintiff,
Mr
Lindsay Meyer, to the managing director of the Defendant, Mr Leon
Raubenheimer dated 11 November 2009 and Mr Raubenheimer's
reply dated
12 November 2009. It pleads that the parties were represented, in the
case of the Plaintiff by Mr Varoli
2
and/or
Mr Meyer and/or Mr Broughton
3
,
and the Defendant by Mr Raubenheimer. In terms of this agreement 60
000 meters of the fabric was to be supplied and it was to
be
identical to and have all the qualities of a fabric manufactured by
Berg River Textiles using the fabric code T006 of which
a sample was
provided to the Plaintiff. The Defendant would pay the Plaintiffs
agreed price for such fabric within 90 days of delivery.
It was
further pleaded that at the time that the agreement was concluded the
parties were aware that the fabric would be used by
the Plaintiff in
the production of certain work wear garments which were to be
exported by the Defendant to a company known as
Wenaas in the United
Kingdom, which would in turn supply the garments to BP for use by the
tatter's employees, and that if,- for
any reason, the garments were
not suitable, the garments would be rejected and Wenaas would refuse
to pay the Defendant and/or
claim compensation from the Defendant.
The Defendant pleads that the fabric manufactured and supplied by the
Plaintiff pursuant
to the agreement pleaded by it, was unfit for use
in the production of garments in that it shrank and frayed after
washing.
THE
ISSUE SEPARATED FOR DETERMINATION
:
[6]
At the commencement of the action and on the application of the
Plaintiff, agreed to by the Defendant, I granted an order in
terms of
rule 33 (4) separating for determination, prior to all other issues,
the question whether the Plaintiffs' Conditions of
Sale', attached to
annexure 'A to the Plaintiffs Particulars of Claim, were applicable
to the sale of the 12C97 fabric. The respective
contentions of the
parties in regard thereto were identified as those arising from
paragraphs 3 to 7 of the Particulars of Claim,
paragraphs 3 to 11, 15
and 17 to 29 of the Defendants plea and paragraphs 2 to 4, 9, 12 to
17 of the Plaintiffs replication.
THE PARTIES'
CONTENTIONS IN RESPECT OF THE ISSUE SEPARATED
[7]
The Defendant raised a number of specific defences to the Plaintiffs
contention that the sale was governed by the Plaintiffs
conditions of
sale. They have been referred to by Mr Smithers SC
4
as
the first, second, third, forth and fifth defences. For the sake of
convenience that designation will also be followed in this
judgment.
Briefly stated, they are as follows:
(a)
A lack of authority on the part of the signatory to the credit
application, Mr Thevan, to have bound the Defendant to the terms
of
the Credit Application
5
;
(b)
Alternatively, the second defence was that:
*
(i)
Mr Raubenheimer, who represented the Defendant in the negotiations
leading up to the conclusion of the agreement for the supply
of the
fabric, was unaware of the existence of annexure 'A;
(ii)
Annexure
'A had been signed five years previously and at a time when
Mr
Raubenheimer had no involvement in the Defendant;
(iii)
The
Plaintiffs representatives, Messrs Varoli, Meyer and Broughton
ought
therefore to have realized that Mr Raubenheimer may be
unaware of the existence of annexure 'A and should therefore have
drawn his
attention thereto and in particular to the conditions of
sale contained therein;
(iv)
They
failed to do so and accordingly the conditions of sale must be deemed
not to apply to the sale of the fabric'
(c)
Alternatively,
the third defence raised is that:
(i)
The
Plaintiffs representatives' failure to draw the existence of the
conditions of sale in annexure 'A to the attention of Mr
Raubenheimer,
amounted to a representation by silence that no
previously agreed conditions of sale would apply to the sale of the
fabric;
(ii)
The
Defendant acted on such representation to its detriment in as
much
as:
(aa)
The conditions of sale are highly detrimental to a purchaser of
fabrics in that they negate the purchases common law rights;
(bb)
Had Raubenheimer been aware that the conditions of sale were to apply
to the purchases of the fabric he would not have caused
the Defendant
to have entered into the transactions;
(iii)
In
the circumstances the Plaintiff is estopped from relying on
the
conditions of sale,
(d)
Alternatively,
the fourth defence is as follows:
(i)
Annexure 'A was signed at a time when the Defendant was purchasing
small amounts of other types of fabric from the Plaintiff
for use in
thedomestic market and when the Defendant required credit facilities
up to a maximum of R300 000.00
6
for
a period of sixty days;
(ii)
Conversely,
when the parties concluded the agreements for the sale of the
fabric,
they intended that, depending upon the delivery rate of the fabric,
the Defendant might enjoy credit facilities up to an
amount of R10
million for a period of ninety days;
(iii)
Furthermore
the parties contemplated that by reason that the garments were to be
exported, if the fabric should prove to be defective,
the Defendant
would not be able to comply with the provisions of paragraph 10.1 and
10.2 specifically of the conditions of sale;
(iv)
Clause
1 of the conditions of sale provides that no variation thereof shall
be binding unless made in writing by the Plaintiff.
No such variation
was made in writing by the Plaintiff to cater for any of the above
changed trading conditions;
(v)
In
the circumstances, the parties could never have intended that the
conditions of sale contained in annexure 'A' would apply to
agreements for the sale of the fabric.
(e)
Finally, the fifth defence advanced is that in the event of it being
held that the conditions of sale did apply to the sale
of the
fabrics, the Defendant pleads as follows:
'(a)
The Defendant has a constitutional right enshrined in s 34 of the
Constitution to have any dispute which might arise between
it and the
Plaintiff determined by application of law in a fair public hearing
before a court;
(b)
Clauses 10.1 and 10.2 of the Conditions of Sale amount to a
limitation of that right;
(c)
The parties were at ali times aware that by the reason of the fact
that the goods were to be exported, the defendant would be
unable to
comply with clauses 10.1 and 10.2 before instituting a claim against
the Plaintiff in a court of law;
(d)
Accordingly, in the circumstances of the case, it is unreasonable and
unconstitutional for the Plaintiff to seek to enforce
clauses 10.1
and 10.2, and therefore may not do so.'
THE FIRST
DEFENCE:
[8]
In paragraph 3 of its Plea the Defendant denied the enforceability
and validity of the original agreement concluded during November
2004. In amplification of that denial the Defendant pleaded that the
credit application form was signed by one Suggie Thevan purportedly
on behalf of the Defendant, but that he had neither actual nor
ostensible authority to conclude that agreement on behalf of the
Defendant. This led to a replication by the Plaintiff persisting with
its original averments, but replicating further that should
it be
found that Mr Thevan was not so authorized, that the Defendant is
estopped from denying his authority for a number of reasons,
which
need not be detailed herein. At the conclusion of the trial the
Defendant conceded that it was unable to gainsay the Plaintiffs
contentions that Mr Thevan had been ostensibly authorized to conclude
the agreement, but cautioned that such concession was not
to be
construed as an admission that the Plaintiffs standard trading
conditions applied to the transaction giving rise to the present
proceedings.
RELEVANT
FACTUAL BACKGROUND:
[9]
In the light of the concession by the Defendant, it became common
cause that an enforceable and binding agreement was concluded
between
the Plaintiff and the
Defendant
on 25 November 2004 incorporating
inter
alia
the
following material terms of the Plaintiffs standard conditions of
sale as they would apply to the Defendant:
(a)
The particulars of the particular sale read with the Plaintiffs
standard conditions would constitute the agreement of sale between
the parties and in the case of any inconsistency with and any form of
contract sent by the Defendant to the Plaintiff
7
the
terms of the confirmation shall prevail. No variation of the terms of
the contract shall be binding unless made in writing by
the
Plaintiff;
8
(b)
In executing orders to the Defendants requirements, the Plaintiff
shall be entitled to exceed, or deliver less than the quantity
ordered by not more than 10 per cent in respect of yarn and cloth.
Weight and width, shall be subject to a tolerance of 5 per cent,
provided that cloth manufactured to a South African Bureau of
Standards specification shall comply with the tolerances prescribed
therein;
9
(c)
The delivery date specified in the contract shall be the date on
which the goods are ready for dispatch by carrier from the
Plaintiffs
premises;
10
(d)
The Plaintiff does not guarantee delivery on any specified date, but
will endeavour to make delivery within the reasonable time
of the
dates mentioned in the order confirmation. The Plaintiff shall not be
liable for any damages suffered by the buyer as a
result of the
failure of the Plaintiff to make timeous delivery;
11
(e)
Should the Plaintiff be prevented by any cause whatsoever from
delivering the goods at the time specified, then the time for
delivery shall be extended until the operation of the cause
preventing delivery has ceased, or this contract, may at the
Plaintiffs
sole option be cancelled either wholly or in part. The
Plaintiff shall not be liable for any loss or damages that the
Defendant
may thereby suffer;
12
(f)
If the full manufacturing specifications on all goods ordered are not
contained in the order or in this document, the Defendant
shall
furnish such specifications in writing to the Plaintiff as soon as
possible but not later than three months before the agreed
delivery
dates. Failing receipt of the complete specifications for the whole
order within such period, the delivery date shall
be deemed to be
postponed to a date acceptable to the Plaintiff without minimizing
the purchases obligations under the order or,
alternatively, the
Plaintiff shall at its option be entitled to cancel any unspecified
portion of the order or to deliver such
portion as nearly as possible
in accordance with any specifications received; failing such receipt
of any specifications the Plaintiff
shall be entitled to deliver
against such manufacturing specifications as the Plaintiff in its
sole discretion may deem fit.
13
(g)
The full purchase price is payable within 60 days from date of
statement. A 1.25 per cent discount on the purchase price is
allowed
if settlement is received within 30 days from date of statement.
14
(i)
Each delivery is to be considered as a separate contract on the
Plaintiffs standard terms and conditions of sale and the price
is
payable accordingly.
15
(j)
All goods sold shall remain the property of the Plaintiff until
payment thereof has been made in full notwithstanding that the
delivery of the goods may have been made.
16
(k)
In the event of any yarn, materials or other goods hereby sold being
used in the manufacture of any material or articles, such
material or
articles shall be the sole property of the Plaintiff until all yarn,
materials and other goods purchased by the Defendant
from the
Plaintiff have been paid for.
17
(I)
All future sales entered into between the Defendant and the Plaintiff
shall be concluded
mutatis
mutandis
on
the terms and conditions herein set out, until such time as the
Plaintiff amends his standard conditions of sale.
18
(m)
The Defendant shall within 21 days from the date of delivery of the
goods give written notice to the Plaintiff of the particulars
of any
matter or thing by reason whereof he may allege that the goods are
not in accordance with the contract. If the Defendant
fails to give
such notice the goods shall be deemed to be in accordance with the
contract in all respects and it shall thereafter
not be open to the
Defendant to allege that the goods are not in accordance with the
contract.
19
(n)
Notwithstanding the aforegoing, the Defendant shall have no claim
whatsoever in respect of goods which have been cut or processed
by
the buyer. The Defendant shall furthermore have no claim in respect
of unprocessed goods, nor may these be returned to the Plaintiff
without the latter first being given an opportunity to inspect and
analyze same.
20
(o)
In no circumstances will the Plaintiff be liable for consequential
loss of any kind howsoever caused.
21
(p)
The Defendant agrees to pay all costs incurred by the Plaintiff as
between attorney and client including collection commission
in the
event of any amount being handed over for collection or in the event
of the Plaintiff consulting an attorney arising out
of any breach of
the agreement by the Defendant.
22
[10]
It is common cause that subsequent to November 2004, the Defendant
purchased goods from the Plaintiff sporadically on the following
dates, per the following invoice numbers and for the under-mentioned
amounts:
25
January 2005
Invoice
No 86772
R123
455.96
10
June 2005
Invoice
No 87265
R123
492,55
19
July 2007
Invoice
No 90260
R
72 005,21
25
September 2009
Invoice
No 94077
R
57 569.95
[11]
The exact circumstances and terms and conditions relating to these
further transactions were not investigated in any detail
during the
evidence.
[12]
Mr Raubenheimer had some dealings with the Plaintiff while he was
still with Breslin during the late 1990s. He became involved
with the
business of the Defendant from September 2005 following an
amalgamation of businesses. He became the managing director.
The
Defendant previously had three directors. Of these a Mr Steven
Bernstein
remains the sales director to this day although he does not live in
the Republic of South Africa. Mr Daryl Aaron also
does not live in
the Republic of South Africa but remains a director with the
designation 'joint managing director" of the
Defendant with Mr
Raubenheimer
[13]
The Defendant used to obtain its supply of a fire retardant fabric
referred to as T006 from the Frame Group and after its closure,
from
a 'sister company, Berg River Textiles. Certain problems regarding
deliveries from that supplier were experienced. During
September 2009
it was suggested to the Defendant that consideration be given to
securing that kind of fabric from the Plaintiff.
In an email from one
Bruce to Mr Raubenheimer dated 3 September 2009 the author indicated
that'a swatch of the T006 fabric to work
on" had been provided
to Mr Lindsay Meyer of the Plaintiff. This resulted in a follow up
negations relating to the acquisition
of the fabric.
[14]
The T006 fabric sample was analyzed by the Plaintiff and its
equivalent, being not a product with specifications prescribed
by the
South African Bureau of Standards or any similar authority,
duplicated under the designation 12C97
[15]
The Plaintiff maintains that a sample of this newly developed fabric
was sent to the Defendant on or about 18 November 2009.
This sample,
grey in colour, was delivered by Mr Broughton on behalf of the
Plaintiff, to the Defendants preferred transporter,
Zultrans, for
delivery to it in Port Shepstone. Mr Raubenheimer testified that he
personally had no recollection of the receipt
of such a sample,
although he could not dispute that it could have been received by the
Defendant. Mr Raubenheimer is however not
present at the premises of
the Defendant every day. Nothing much however appears to turn on this
aspect.
[16]
Negotiations ensued during November not only in respect of the 12C97
fabric but also J54 and D59 fabric.
23
In
issue was the price and final colour of the fabric, terms of payment,
and a rebate.
24
[17]
On 17 November 2009 and as part of the ongoing negotiations Mr Meyer
wrote to Mr Raubenheimer that Defendant could give 90
days terms for
payment. The issue of a rebate and the amount thereof was still in
dispute. Counter proposals were made and exchanged.
These
negotiations do not suggest anything other than two contracting
parties of equal or very near equal bargaining power driving
at the
best possible financial bargain, the Plaintiff wanting to achieve a
sale and the Defendant wanting to secure the fabric
on the best terms
to it.
[18]
On 9 December 2009 the Defendants order number 25412 was faxed to the
email address of Mr Broughton on behalf of the Plaintiff,
requesting
the supply of 59 000 meters of 12C97 white width 150 centimeters at
R30.00 for supply and to 'charge to (the Defendants)
account. The
first delivery was to be on 25 January 2010 with three further weekly
deliveries thereafter. As regards the colour,
the order recorded that
the Plaintiff Will send you a sample of the shade of white we
require'. This order was signed on behalf
of the Defendant
25
by
a Mr Naidoo and co-initialled by Mr Thevan.
26
Although
Mr Raubenheimer testified that Mr Naidoo and Mr Thevan did not have
authority to place orders on their own and that he
decides on all
purchase requirements of the Defendant, it is clear from their
signature to the order that they were authorized
by him, and viz a
viz third parties would appear to be authorized to place the order on
behalf of the Defendant.
[19]
On 11 December 2009, two days after the order was placed and in an
email from Mr Raubenheimer to Mr Meyer, Mr Raubenheimer
indicated
that he had spoken to his partners' and that he would motivate that
they accept an annual rebate of 1.75 per cent. He
proposed that Mr
Meyer obtain a similar mandate from the Plaintiff.
[20]
Although there is no email or other documentation confirming the 90
day term for payment contended for by the Defendant, or
an annual
rebate of 1,75 per cent, the parties are
ad
idem
that
these were subsequently agreed.
[21]
When the sample relating to the shade of white was received by the
Plaintiff, it was noted that it was an 'optical white' that
was
required. This entailed a further process and an increase in price
from R30 to R31.00 per meter.
[22]
The Plaintiffs factory closed over the 2009 festive season reopening
early, around or about the 11
th
January
2012. The price of R31 per meter was agreed.
[23]
On 20 January 2010 the Plaintiff issued its first confirmation note
number D 1461, which was sent to the Defendant per post
indicating as
the "scheduled delivery" the 12 February 2010 . The
quantity of 12C97 optical white was stated to be 15
000 meters at a
price of R31.00 per meter excluding VAT. The confirmation note
furthermore recorded terms 1.25% disc for payment
within 30 days FRM
DTE of statement strictly 60 days net - subject to available CJIC
cover
1
.
At the bottom of the confirmation note it records 'REFER TO
CONDITIONS OF SALE OVERLEAF. These conditions whichappear overleaf,
and which per a specimen example of a confirmation note which became
exhibit 'B, appear even when viewed from the front as the
printing is
on flimsy paper, repeat the Plaintiffs conditions of sale.
[24]
Although, in the experience of Mr Varoli the confirmation notes are
not normally signed and returned by South African purchasers,
the
purpose thereof was explained to be confirmation/ acceptance of the
order, price, delivery date and of the terms upon which
the supply
would occur.
27
The
evidence was that confirmation notes, of which the aforesaid one was
the first in the series, are sent by post. This evidence,
and with it
the implication that it would in the ordinary course have been
received by the Defendant, could not be disputed by
Mr Raubenheimer
28
His
version however was that as the managing director, confirmation notes
would not come to his attention.
29
[25]
Garments were thereafter made up by the Defendant from the fabric and
the first batch shipped on the 16 March 2010 and received
by Wenaas
on 26 March 2010.
30
[26]
On the 9 July 2010 an email was sent by Mr Raubenheimer to Mr Meyer
in which he stated that he had received the odd report
of shrinkage'.
It also recorded that following a meeting between the Defendants
country manager in the UK and a senior executive
of the Defendants
client, the problem appeared a lot more serious.
[27]
Thereafter followed a period during which discussions took place,
emails were exchanged expressing various levels of frustration,
but
all seemingly aimed at trying to achieve a practical business
resolution to the complaints of alleged shrinkage. Tests were
being
conducted and a report was compiled by Mr Broughton which suggests
high levels, if not unacceptable levels, of shrinkage
and exploring
possibilities to correct same by introducing a different suitable
sanforising chemical agent and replacing the sanforising
belt. Offers
were also made to give a credit for the purchase price of the fabric.
Ultimately, however, these discussions came
to naught. That such
negotiations would ensue appears to be a feature of this industry. It
is consistent with Mr Raubenheimer's
evidence that when in the past
he had problems regarding the quality of fabrics supplied, the
parties have always resolved it through
negotiations and that he has
never had the terms of any standard terms and conditions "raised
against him'. That, of course,
would not necessarily mean that
standard terms and conditions might not have applied in respect of
other contracts for the supply
of fabric he might previously have
concluded whether on behalf of the Defendant or Beslin with other
textile suppliers.
[28]
During September 2010 and later that year, the Plaintiff had agreed
to take back 10 000 meters of fabric. When the fabric was
collected,
a quantity of only just over 5 000 meters was available, the rest
having been cut up for the manufacture of garments.
The evidence on
this aspect is inconclusive. The suggestion by the Plaintiff is that
this would show that the fabric was in fact
not defective in the
respects contended for by the Defendant, whereas the Defendant
maintains that it still was, but that garments
were cut two sizes
larger. Whether the fabric was defective or unfit for the purpose
supplied is irrelevant at this stage of the
proceedings. The issue is
simply whether the standard conditions applied to the sale of the
fabric.
DISCUSSION
:
[29]
The concession of Mr Thevan's authority means that the Plaintiffs
standard conditions applied to the 2004 sale. But it goes
beyond
that. Unless varied in writing by the Plaintiff
31
and
even if any subsequent document is sent by the Defendant to the
Plaintiff, whatever the date i.e. including subsequent orders,
the
conditions of sale would apply.
32
Further,
all future sales entered into between the Defendant and the Plaintiff
would be concluded
mutatis
mutandis
on
the terms and conditions set out in the conditions of sale, until
such time as the seller amends his standard conditions of sale
(clause 9), which amendment could either be an amendment of the
conditions of sale
in
toto
or
stipulating a term pertaining to a particular transaction which
amends or varies his standard conditions of sale'.
[30]
I accordingly have no hesitation in concluding that in the ordinary
course, the conditions of sale which pertain to the transaction
in
November 2004 would
mutatis
mutandis
have
applied to the subsequent sales on the 25 January 2005, the 10 June
2005, the 19 July 2007 and the 25 September 2009 save and
insofar as
the Plaintiff may have stipulated in writing, for example in the form
of a confirmation note that a discount rate different
to that
stipulated in clause 6 might apply, or any other term of the contract
might have been amended.
[31]
The negotiations pertaining to the supply of the 12C97 fabric and the
conclusion of the agreement pursuant thereto, must be
viewed against
the background of that simply being 'a future sale entered into
between the buyer and the seller", on terms
some of which now
vary from those originally agreed in the 2004 insofar as the
particular fabric, price, quantity, colour, delivery
date(s), terms
of payment
33
and
a annual rebateannual rebate of 1.75 per cent (which is not normally
provided for) may require, but in all other respects
mutatis
mutandis
save
insofar as peculiar to that particular sale subject to the Plaintiffs
conditions of sale. Accordingly, if the Defendant did
not avail
itself of the 90 day term for payment but elected to make payment
within 30 days, then a discount of 1.25 per cent would
have applied.
The variation to the term of 90
34
days
was one made in writing by the seller in an email of 17 November
2009. However, even if not reduced to writing, just as the
final
agreement regarding the annual rebate of 1,75 per cent apparently
never was reduced to writing by the Plaintiff, the Defendant
would
probably be entitled to hold the Plaintiff to the actual terms
agreed. The Plaintiff would not, in my view, be allowed to
defeat the
effect of the true agreement between the parties, by relying on the
non-variation provision. That would be unfair and
unconstitutional
and contrary to the good faith which underlies our law of contract.
It would be an appropriate instance where
a party would be allowed to
escape the effect of such a Shifren
35
clause
which might otherwise apply, just as an exception was also made in
Nyandeni
Local Municipality v Hlazo
2010
(4) SA 261
(ECM).
[32]
Unless excluded or rendered unenforceable in terms of the second to
fifth defences raised, clause 10.1 and 10.2 of the conditions
of sale
would therefore apply to the sale of the fabric.
[33]
The aforesaid legal interpretation also appears consistent with Mr
Raubenheimer's factual understanding as testified to in
the
Defendant's first affidavit opposing summary judgment. In paragraph 5
thereof he implicitly accepted that the standard conditions
would
apply to the transaction, by stating that they 'had been amended as
new terms of trade had been negotiated with the Plaintiff.
His
attempt in his evidence to draw some distinction between 'amend' in a
wide and narrow sense is futile. An 'amendment presupposes
the
existence of something which requires to be changed. What was to be
changed were some of the terms of the standard conditions
as affected
by the negotiations, either by the variation or addition of terms. If
he was totally unaware of the standard conditions,
then his simple
response would have been not to refer to an amendment of those
conditions, but to say that they didnt apply at
all and that he was
not aware thereof. His attempts in a further 'Supplementary Affidavit
to try and explain away the application
of clauses 10.1, 10.2 and
10.3 of the standard conditions on the basis that he had not
previously appreciated the significance'
thereof, is highly
improbable. His first reaction was that the standard conditions had
been amended to the extent stated in paragraph
5 of his first
affidavit opposing summary judgment. He did not say that clause 10 of
those conditions was amended by the deletion
thereof. Appreciating
the significance of those clauses does not come into play at all if
his state of mind was that he did not
know they existed. The second
affidavit was tendered on the basis that Mr Raubenheimer wanted to
include 'some factual matters
which ought to have been included in
[the first] affidavit and which will indicate that the Defendant
indeed has a
bona
fide
defence
to the Plaintiffs claim'. However, the second affidavit did not
supplement the first so as to 'include' matters which had
been
omitted from the first affidavit. It proceeded on a different premise
altogether. Whereas the first affidavit accepted that
the conditions
of sale were applicable, the second affidavit was devoted in its
entirety to an endeavour to exclude the conditions
of sale, and then
on alleged facts which were within the knowledge of Mr Raubenheimer
at the time he signed the first summary judgment
answering affidavit
when he would have realized their relevance to the Defendants
defences. In evidence his version was that when
contracting, the
conditions of sale were never in his mind and that he had never
intended to include them. However, if that was
so, then the
insurmountable hurdle remaining is why he did not say so in his first
affidavit. The only inference is that the Defendant
knew that the
conditions of sale were applicable, but possibly had not realized at
that time that they could defeat the Defendants
defence and claim in
reconvention.
[34]
i agree with the submission by the Plaintiff that the effect of the
concession of authority on the part of Mr Thevan necessarily
means
that:
(a)
The Plaintiffs conditions of sale would apply and be binding on the
Defendant in respect of all future transactions until varied
in
writing by the seller or it is recorded in writing not to apply;
(b)
The conditions of sale together with the particulars of sale
appearing on any confirmation would constitute the contract of
sale.
(c)
No variation of the terms of the contract would be binding unless
made in writing by the Plaintiff.
[35]
The situation is not one in which the doctrine of quasi-mutual
assent
36
would
find application. The conditions of sale applied. However, even if I
was wrong in that regard and the doctrine of quasi-mutual
assent
found application requiring, as the Defendant contended, that the
Plaintiff would have to demonstrate that it was actually
misled by
the Defendant into believing that the Defendant contracted with the
Plaintiff on the basis of including the standard
conditions, a
reasonable man having regard to the terms of the conditions of sale
could not have concluded otherwise than that
this was just a future
sale'. This position is not changed by the fact that the parties were
embarking on a new venture, with potential
volumes far in excess of
what their previous transactions entailed, with negotiations even
being conducted between them at managing
director level. The
conditions of sale set out the basis upon which a credit line had
been opened for the Defendant with the Plaintiff
as long ago as 2004
and it would continue to apply according to its terms,
notwithstanding any changes in management, until amended
or otherwise
varied in terms thereof. To arrive at a different conclusion would
mean that changes in board management of a corporate
structure could
be used to escape binding legal obligations to which that corporate
entity, properly authorized but with different
directors had
previously lawfully bound itself to set up a credit line or other
continuous basis for management. That would be
an untenable
situation. If that is the kind of situation that is sought to be
avoided, then business entities should not arrange
themselves in a
corporate structure of any nature but trade as either sole
proprietorships or partnerships. Arranging one's affairs
in a
corporate structure or carrying on business in such a structure
carries with it the obligation for management to familiarize
itself
with exactly what standard conditions govern any relationship,
particularly an existing relationship between it and any
supplier, or
alternatively then at the very least to stipulate, preferably in
writing, that no conditions other than those expressly
agreed upon in
respect of a particular transaction were to apply, thereby excluding
the possible application of any other terms
or conditions. This the
Defendant did not do.
[36]
That the standard conditions were practically unworkable would also
not be of any assistance. There is no express contractual
requirement
that the Defendant should have tested the fabric it received for any
shrinkage. But that is not the issue. The reality
is that the
Defendant could have tested the fabric, even simply by way of a
domestic wash of part of the fabric as a test sample,
or
alternatively by more advance laboratory testing, to determine any
possible shrinkage. The evidence is that such testing could
comfortably have been done within 21 days. Accordingly, the 21 day
period within which notice was required to be given, could
practically have been complied with before any garments were made up
or while they were made up. Objectively, it is not a practically
unworkable situation.
[37]
I turn then to the specific defences.
THE
SECOND OFFENCE:
[38]
I agree with the Plaintiffs submission that it is difficult to fathom
the basis of the second defence. Mr Raubenheimer testified
that he
was unaware of the existence of annexure 'A'. That is inconsistent
with what he said in his first affidavit opposing summary
judgment.
Granted, he does not specifically say that he was aware of the
existence of annexure 'A, but his allegation that the
standard
conditions were amended is inconsistent with the notion that he was
unaware thereof. Against that background it is all
the more difficult
to understand on what basis the Plaintiffs representatives then ought
to have realized that Mr Raubenheimer
may be unaware of the existence
of annexure 'A and therefore to have drawn his attention thereto. The
failure to draw attention
to any particular state of affairs normally
only give rise to any action in law if there was a duty on the part
of the Plaintiff
to draw attention to the true state of affairs. The
Plaintiff is correct in saying that if this defence is founded in
delict, that
it is bad in law because it makes not attempt to
establish any legal duty on the part of the Plaintiff which would
suggest unlawfulness
in the event of a breach thereof, it makes no
allegation of any fault on the part of the Plaintiff in the form of
intention or
negligence, it fails to establish the causation
requirement for delictual liability, and it fails to establish or
allege any loss
on the part of the Defendant.
[39]
Indeed it would more likely amount to an inversion of the South
African Law of Agency and Company Law because the effect thereof
would be that a principal
37
with
knowledge of a contract to which it previously committed itself, can
escape the contract on the basis of ignorance on the part
of its
agent. The principles of the Law of Agency also govern the
representation of companies.
38
[40]
As a director, Mr Raubenheimer was also under a fiduciary duty to act
with reasonable care and skill. He had a statutory right
of access to
all the books and records of the Defendant in terms of section 284
(3) of the Companies Act 1973, being the applicable
Companies Act at
the time. In those circumstances he as a director cannot escape
liability based on his alleged ignorance.
[41]
The judgment in
D
& H Piping Systems (Pty) Ltd v Trans Hex Group Ltd and Another
39
which
the defendant relied upon must be understood in the context of the
facts of that case.
[42]
The decision in
Durban
Water Wonderland (Pty) Ltd v Botha and Another
40
also
does not find application. The present is not an instance where the
question is whether the Plaintiff did what was reasonably
sufficient
to give the Defendant notice of a term.
41
The
conditions of sale are contractual conditions to which the Defendant
had previously bound itself to apply also in respect of
all future
transactions. When it requested that the order be charged to its
account, it clearly intended to refer to the line of
credit
previously established and which it enjoyed with the Plaintiff. In
any event, the application of the standard conditions
was again drawn
to the attention of the Defendant in the confirmation notes which
served to confirm the order placed by the Defendant.
The fact that
the Defendant might have styled its internal management in such a way
that Mr Naidoo/Mr Thevan may place orders on
behalf of the Defendant
also entitles the Plaintiff to confirm its terms of acceptance of any
such order to those officials and
level of management. That is the
management style which Mr Raubenheimer has elected to follow and he
cannot be heard to complain
if the confirmation note did not come to
hispersonal attention. There was no evidence that Mr Naidoo and/or Mr
Thevan had not received
the confirmation note preceding the first
delivery on the 12 February 2010.
THIRD
DEFENCE
:
[43]
The third defence of an estoppel based on a representation by silence
must fail for similar reasons. Silence can only be actionable
if it
follows in circumstances where there was a duty to speak. The
Defendant had previously during 2004 committed itself to an
agreement
that provided that the standard conditions of sale were to be
applicable to ail future transactions between the Plaintiff
and the
Defendant without variation, or only subject to limited variation as
provided for in terms of the standard conditions.
[44]
Spencer-Bower
42
states:
‘
75
The main condition subject to which alone silence or inaction amounts
to a representation is that at a legal (not a mere moral
or social)
duty shall have been owed by the representor to the representee to
make the disclosure, or take the steps, the omission
of which is
relied upon as creating the estoppel.'
[45]
The present is not an instance where the Plaintiff had exclusive
knowledge of the standard conditions and that such conditions
were
inaccessible to Mr Raubenheimer, on behalf of the Defendant, to the
point that the result is an involuntary reliance on the
Plaintiff-see
Absa
Bank Ltd v Fouche
2003
(1) SA 176
(SCA) par [1] - [5]. Mr Raubenheimer was not so reliant.
He could have ascertained the basis upon which a credit line was open
for the Defendant with the Plaintiff from the Defendants
documentation.
[46]
Even if the Defendant was reliant on the representation,
43
it
cannot in my view said to be reasonable. No person in the position of
Mr Raubenheimer could reasonably have thought that a supplier
in the
textile industry would contract on common law terms with no standard
conditions to protect the supplier. Mr Raubenheimer
was aware of and
accepted that De Gama, Berg River Textiles and formerly Frame and SBH
all have standard terms and conditions and
would contract thereon,
even if they would not necessarily be enforced in the interest of
promoting sound business relationships.
Mr Varoli had testified that
such conditions exist in respect of these other entities and that
they contract on the basis thereof.
All Mr Varoli conceded was that
he could not of his own knowledge say that the Defendant and or-Mr
Raubenheimer had contracted
on the basis of such conditions with
those entities
THE FOURTH
DEFENCE:
[47]
The fact that annexure 'A to the Particulars of Claim was signed at a
time when the Defendant was purchasing smaller quantities
of fabric
other than the 12C97 fabric, that facilities which might extend to an
amount to R10 million for a period of 90 days were
not previously
required, and that it might not previously have been contemplated
that fabric would be used in the manufacture of
garments for export,
is neither here not there.
44
[48]
The credit application form expressly provided that the Defendant:
'....accepted] the
Standard Trading Terms appearing herein, which I/We have read and
understood shall apply and be binding on [the
Defendant] in respect
of all transactions.'
[49]
There is no provision in the conditions of sale that if the
approximate credit limit applied for initially would be exceeded,
that the sale conditions would no longer be applicable. Indeed such a
contention would be absurd because it would enable a delinquent
debtor to circumvent the sale conditions by exceeding its credit
limit.
[50]
Where the credit application expressly provided that it would apply
in respect of 'all transactions', it would apply irrespective
of
value. The increase in the credit limit was in any event a purely
administrative matter to be taken care of by an increased
facility
being arranged with Credit Guarantee Insurance Corporation. The
parties had accepted that procuring an increase in the
guarantee
facility would in any event not stand in the way of the Plaintiff
fulfilling the 12C97 order
THE
FIFTH DEFENCE
:
[51]
The fifth defence entails this court being persuaded that it would be
'unreasonable and unconstitutional for the Plaintiff
to seek to
enforce Clauses 10.1 and 10.2.
[52]
In
Barkhuizen
v Napier
45
the
Constitutional Court per Ngcobo J expressed: 'grave doubt on the
appropriateness of testing the constitutionality of a contractual
term directly against a provision in the Bill of Rights', in this
instance, section 34 of the Constitution enshrining the
constitutional
right to have any dispute which might arise determined
by application of law in a fair public hearing before a court or
other tribunal.
[53]
The Constitutional Court divided any such inquiry into two questions
namely:
(a)
Is the clause itself unreasonable;
(b)
If the clause is reasonable, whether it should be enforced in the
light of the circumstances.
46
The
first question requires that two considerations to be weighed up
against each other, namely
pacta
sunt servanda
and
the right to seek judicial redress.
47
The
test to be employed is an objective one. If objectively, the terms
are not inconsistent with public policy, the question arises
whether
the clause is nevertheless contrary to public policy in the light of
the 'relative situation' of the parties, on which
issue a relevant
factor would, for example, be unequal bargaining power.
48
In
casu,
of
course, there was no material unequal bargaining power, if there was
unequal bargaining power at all.
[54]
It has always been a trite principle of our law, long before the
decision in
Barkhuizen
v Napier
that
a clause in a contract
49
which
is
contra
bonos mores,
is
unenforceable. Barkhuizen's case went further only in that it, with
respect correctly, found that the
mores
of
society had to be judged against the values and entrenched in the
Bill of Rights.
50
That
is consistent also with section 39 of the Constitution. It was held
that public policy takes into account the necessity to
do simple
justice between individuals.
51
Accordingly,
it was found to be contrary to public policy to enforce a
timelimitation clause that does not afford the person bound
by it an
adequate and fair opportunity to seek judicial redress.
52
[55]
In
casu,
the
Defendant relies on the second of the two questions posed to
determine fairness, namely, accepting that clauses 10.1 and 10.2
are
reasonable, whether they should be enforced in the light of the
circumstances of this particular case. Specifically, the question
becomes whether there was good reason why the Defendant could not
comply with clauses 10.1 and 10.2 of the sale conditions. In
support
of this contention the Defendant relied not only upon the judgment in
Barkhuizen
but
also of that in
Brummer
v Minister for Social Development and others
53
where
the time limitation of 30 days notice required in terms of the
Promotion of Access to Information Act 2 of 2000
were held to be
unreasonable and unconstitutional.
[56]
The only reason advanced by the Defendant as a reason why it could
not comply with clauses 10.1 and 10.2 of the standard conditions
is
that the parties were at all times aware that 'by reason of the fact
that the goods were to be exported, the Defendant would
be unable to
comply with clauses 10.1 and 10.2 before instituting a claim against
the Plaintiff in a court of law, hence, the Defendant
pleads that 'it
is unreasonable and unconstitutional for the Plaintiff to seek to
enforce clauses 10.1 and 10.2. The alleged unreasonableness
and
unconstitutionality is sought only with reference to
section 34
of
the constitution. There is no specific separate reliance on 'public
policy".
[57]
'Unreasonableness' and 'unconstitutionality are two different
concepts with different pedigrees, different applicability and
different consequences. The Defendant did not make much of that
distinction but simply emphasized that like the Plaintiff
itultimately
concludes with the issue whether there was a good reason
for the Defendants failure to comply with clauses 10.1 and 10.2.
[58]
The precise ambit of reasonableness and fairness has not been dealt
with definitively by the Constitutional Court. In
EverFresh
Market Virginia (Pty) Ltd v Shoprite Checkers
54
Moseneke
DCJ delivering the majority judgment held that had the case been
properly pleaded, it would have raised a number of interlinking
constitutional values which would inform the development of the
common law relating to contract. He said
55
that
'indeed, it is highly desirable and in fact necessary to infuse the
law of contract with constitutional values, including values
of
ubuntu which inspire much of our constitutional compact Further on
56
he
held that 'contracting parties certainly need to relate to each other
in good faith'. The minority judgment of Yacoob J in the
same matter
reaffirmed the general principle that: 'a court should always be
alive to the possibility of the development of the
common law in the
light of the spirit, purport and objects of the Bill of Rights. The
development of the common law would otherwise
be no more than a
distant dream. A court should always be at pains to discover whether
the development of the common law is implicit
in a case.
57
[59]
In
Maphango
and Others vAengus Lifestyle Properties
[20121
ZACC 2 Zondo AJ in a minority judgment referred to the Barkhuizen
judgment but found that the conduct complained of did not
amount to
an unfair practice. In a minority but concurring judgment Froneman J
(with Yacoob J concurring) stated that 'under the
constitution all
law is, or needs to be, infused by constitutional values
58
and
that 'interpretation andapplication of the law under the Constitution
is never a mechanical application of rules, it always
involves a
value judgment. Our Constitution and law are infused with moral
values. The days of denying the value - laden content
of law are long
gone'.
59
Froneman
J further held that 'courts deciding constitutional matters may, and
at some circumstances are obliged to, make an order
that is just and
equitable'. He concluded however that 'determining the true ambit of
Barkhuizen
must
wait for another day.
60
[60]
Until 'another day I can only be guided, but more importantly am
bound by the pronouncements of the Supreme Court of Appeal
on this
issue.
[61]
Dealing firstly with the issue of unreasonableness as distinct from
'unconstitutionality, it was held in
South
African Forestry Co Ltd v York Timbers Ltd
61
that
abstract values such as good faith, reasonableness and fairness are
fundamental to the law of contract, but they do not constitute
independent substantive rules that courts can employ to intervene in
contractual relationships.
62
It
follows that courts will not deviate from parties' intention, as
determined by the interpretation of their contract, because
it may be
regarded as unfair to one of them.
63
The
position is different when a contract is ambiguous as all contracts
are governed by good faith and the intention of the parties
then
falls to be determined on the basis that they negotiated with one
another in good faith.
64
[62]
In
casu,
there
was nothing ambiguous about the conditions of sale. Indeed the
conditions were clearly stated that they would relate to 'all
future
sales'.
[63]
The aforesaid principles were reaffirmed in
Bredenkamp
and Others v Standard Bank of SA Ltd
65
where
it was held that fairness is not a freestanding requirement for the
exercise of a contractual right.
[64]
In
Maphango
and Others v Aengus LifeStyle Properties (Pty) Ltd
66
it
was held under the heading of 'reasonableness and fairness' with
reference to the decision of the constitutional court in
Barkhuizen
that
the contention that as a matter of public policy courts will not give
effect to the implementation of a contractual provision
that is
unreasonable and unfair that:
67
'I
believe that the argument is fundamentally flawed because the
proposition on which it relies is not supported by the decision
of
the constitutional court in
Barkhuizen,
nor
does it reflect the principles of our law of contract as they stand.
Reasonableness and fairness are not freestanding requirements
for the
exercise of a contractual right.'
The
Supreme Court of Appeal stated that:
'unless
and until the constitutional court holds otherwise, the laws
therefore as stated by this court, for example in
South
African Forestry Company, Brisley
and
Bredenkamp.
Accordingly,
a court cannot refuse to give affect to the implementation of the
contract simply because that implementation is regarded
by the
individual judge to be unreasonable and unfair. Strictly speaking the
enquiry into the' reasonableness andfairness of the
respondents
termination of the contract of the leases is therefore unnecessary.
68
.
[65]
The judgment in
Potgieter
and Another v Potgieter NO and Others
69
is
to similar effect.
[66]
On that interpretation to which I am bound, but in any event appears
to me to be an entirely correct statement of the law,
the reliance
upon alleged unreasonableness in the enforcement of clauses 10.1 and
10.2 has no merit and falls to be dismissed.
[67]
I turn next to deal with the question of constitutionality.
[68]
As a starting point and as a general rule, I respectfully concur with
the statement in
Bredenkamp
and Others v Standard Bank of SA Ltd
70
where
after having considered the implications of the judgment in
Barkhuizen
v Napier
it
was held that:
'Public
policy and
boni
mores
are
now deeply rooted in the Constitution and its underlying values. This
does not mean that public policy values cannot be found
elsewhere. A
constitutional principal that tends to be overlooked, when
generalised resort to constitutional values is made, is
the principal
of legality.
Making
rules of law discretionary or subject to value judgments may be
destructive of the rule of law
.'
(my emphasis).
71
Contractual
Autonomy is part of freedom and shorn of its obscene excesses,
contractual autonomy informs also the constitutional
value of
dignity.
72
[69]
Harms DP in
Bredenkamp
further
emphasized that '..if evidence is required to determine whether a
contract is in conflict with public policy or whether
its enforcement
would be so, the party who attacks the clause at either stage must
establish the facts.
73
[70]
Reference has already been made earlier to the statement by Ngcobo J
in
Barkhuizen
expressing
'grave doubt on the appropriateness of testing the constitutionality
of a contractual term directly against a provision
in the Bill of
Rights'. The judgment in
Barkhuizen
held
that there is no reason why public policy would not tolerate time
limit or time limitation clauses and contracts, subject to
the
consideration of reasonableness and fairness.
[71]
The parties are
ad
idem
that
the issue confronting this court is whether the Defendant had an
adequate and fair opportunity to seek judicial redress.
74
[72]
It has always been a principle of our law that:
'the
power to declare contracts contrary to public policy should, however,
be exercised sparingly and only in the clearest of cases,
lest
uncertainty as to the validity of contracts result from an arbitrary
and indiscriminate use of the power. One must be careful
not to
conclude that
a
contract is contrary to public policy merely because its terms (or
some of them) offend ones individual sense of propriety and
fairness'
75
[73]
Reduced to its essentials, the enquiry is whether the Defendant has
shown that in the circumstances of this case it was unreasonable
for
it to have determined that the fabric supplied was unfit within the
21 day time period stipulated in clause 10.1 and before
it started
cutting the fabric to manufacture garments, as per clause 10.2.
[74]
The Plaintiff maintains that:
(a)
The clauses complained of are not unreasonable having been entered
into freely and voluntarily between parties enjoying at least
equal
bargaining power, as is evident from the negotiations relating to the
annual rebate which culminated in agreement at exactly
one half of
that originally contended for by the Defendant and the increase in
the credit term from 60 to 90 days at the instance
of the Defendant;
(b)
The clauses do not in any way limit the right to seek judicial
redress. All they do is require the Defendant to give notice
to the
Plaintiff that the fabric received was not in accordance with the
order within 21 days of receipt and to preclude any claim
by the
Defendant after the goods have been cut or processed;
(c)
That the single circumstance peculiar to this case, namely that the
goods were to be exported, which Mr Varoli conceded he knew
by
February 2010, is irrelevant as the Defendant has not established
that a customer locally or in an export country would be better
placed to ascertain the fact that the fabric in the garments was
defective within a period of 21 days from receipt of the fabric
at
the Defendants factory; ■
(d)
There was no reason that could be advanced by the Defendants witness
Mr Raubenheimer, indeed he conceded that there was no reason
why the
Defendant could not have carried out a test to establish whether the
fabric supplied was in compliance with that required,
within a matter
of days after receipt of each load of fabric,. The Defendant might
not necessarily have had sophisticated testing
facilities available
to it, but all it had to do was to subject the fabric or a portion
thereof and/or the made up garments to
a simple stability test, such
as a domestic washing test, which would have entailed laying out a
suitable size square of the fabric,
marking a particular length on
it, washing the fabric, and then re-measuring the points marked on
the fabric which would reveal
whether or not the fabric shrinks and
if so to what extent. There was no reason advanced why the Defendant
could not have performed
such tests.
[75]
The Defendant contends for a finding that it was unreasonable to
expect of the Defendant to have complied with the clauses
in question
in the light of the following facts:
(a)
Mr Raubenheimer was unaware of the existence of the standard trading
conditions;
(b)
The parties were aware that the fabric was to be used in the
manufacture of garments which were to be exported;
(c)
The manufacturing process obviously required the cutting of the
fabric;
(d)
If the fabric contained any latent
76
defect,
because the garments were to be exported, such defect would only
become apparent well after the 21 day limit referred to
in clauses
10.1 as 10.2 had expired;
(e)
That in view of the existing common law that if goods are ordered for
a particular purpose there is an implied warranty that
they are fit
for that purpose and that if a manufacturer is bound to supply goods
corresponding exactly to the description ordered,
then they must
comply, that it could not be said that it was incumbent upon the
Defendant to have tested the fabric;
(f)
That the Defendant was entitled to assume that the 12C97 fabric
supplied complied with the sample of T006 it had obtained from
Berg
River Textiles and which was given to the Plaintiff to duplicate.
[76]
Whether Mr Raubenheimer was aware of the existence of the standard
conditions, is of no consequence. The Defendant was aware
of the
standard conditions and that it would apply to all future sales as
well until amended. In any event, it is doubtful that
Mr Raubenheimer
was not aware of the standard conditions, particularly in the light
of his response in the first affidavit opposing
summary judgment. His
attempts during evidence to explain the wording of paragraph 6 of the
first opposing affidavit was improbable.
[77]
That the defendant would have certain implied warranties and common
law in respect of the fabric supplied is also not of consequences.
If
the fabric supplied did not comply with any such implied common law
warranties, it would afford the Defendant certain remedies.
The
existence of those remedies is not affected by clause 10.1 or 10.2.
It is merely the notice requirement, that the Plaintiff
be given
within 21 days andthat the fabric not be cut, which limits the
exercise of any remedies arising from the common law implied
warranties. That such implied warranties exist is therefore not of
any decisive importance. Ultimately the issue is still the
reasonableness of the limitation imposed by clauses 10.1 and 10.2.
[78]
Whether the parties were aware that the fabric was to be used in the
manufacture of garments which were to be exported, is
also not
decisive. Provided some form of test
could
be
conducted comfortably within that time, from which any alleged
'defect would be detected, the period would be reasonable (unlike
the
clauses in
Barkhuizen
and
Swinburne
v Newbee Investments (Pty) Ltd.
77
Obviously
the time limitation cannot be seen in isolation but must be adjudged
in the light of the facts and circumstances relating
to each case.
Although clauses 10.1 and 10.2 were contained in what might otherwise
be referred to as Tine print, they were contained
in the original
credit application form which clearly referred to the conditions of
sale. Subsequent confirmation notes also referred
to such conditions
of sale which appeared overleaf. Furthermore, such conditions, if
regard is had to the specimen exhibit 'B,
are clearly visible on the
flimsy paper even from the front of that paper. The Defendants
representative at the time that the original
agreement was concluded
was alive to the conditions and clearly had perused them attentively
as he deleted clause 17 thereof which
otherwise would have held him
liable as surety.
[79]
The time limitation is not contrary to the Defendants common law
rights or any implied warranties. It does not exclude the
Defendants
rights to have disputes decided by a court of law or appropriate
tribunal as guaranteed in terms of section 34 but merely
places a
limitation on the period within which written notice of an intention
to exercise any contractual remedy needs to be given.
Any latent
defect could have been discovered by an appropriate domestic testing
within a matter of days. That evidence was not
contradicted.
[80]
Any Defendant with knowledge of the conditions, as the Defendant in
casu
had,
should, if unhappy with the provisions of clauses 10.1 and 10.2, have
specifically negotiated and concluded an agreement excluding
the
placing of any time limitation on the contractual remedies it would
otherwise have.
[81]
The Defendant has in my view not discharged the onus of showing that
factually there was good reason why the Defendant could
not have
complied with the provisions of clauses 10.1 and 10.2. The true ambit
of
Barkhuizen
must
continue to wait for another day
[82]
That is accordingly the end of the matter as the Defendants plea
discloses no other defence and the Defendants claim in reconvention
is then without merit. I did not understand Defendants
representatives to argue to the contrary, should that be the
conclusion
reached by this court.
[83]
Accordingly:
(a)
Judgment is granted in favour of the Plaintiff for:
(i)
Payment
of the sum of R2 150 045.68;
(ii)
Interest
on R3 588 286.83 at the rate of 15.5% per annum from 1
December
2010 to 19 May 2011, both dates inclusive;
(iii)
Interest
on R2 150 045.68 at the rate of 15.5% per annum from 20
May 2011
to date of payment, both dates inclusive;
(iv)
Costs of suit, including where employed, the costs of two counsel, on
the scale as between attorney and client.
(b)
The Defendants claim in reconvention is dismissed with costs
including where employed, the costs of two counsel.
DATE
OF HEARING: 21-25 MAY 2012
DATE
OF DELIVERY: 18 JUNE 2012
PLAINTIFFS
COUNSEL: ADV. M SMITHERS SC
ADV.
A BOULLE
PLAINTIFFS
ATTORNEYS: MOONEY FORD ATTORNEY
(Ref:
Mr Garland)
Tel:
031-304 9881
DEFENDANTS
COUNSEL: ADV. C J PAMMENTER SC
ADV.
AVVOORMOLEN
DEFENDANTS
ATTORNEYS: LARSON FALCONER INC.
(Ref:
Mr N Kinsley/jd)
Tel:
031-367 1000
1
or
C1297, hereinafter referred to simply as 'the fabric'.
2
the
Plaintiffs Managing Director.
3
a
former employee and later agent of the Plaintiff.
4
with
him Mr Boulle on behalf of the Plaintiff.
5
6
the 'first defence',
6
which
should in fact read R500 000.00.
7
whatever
their respective dates.
8
clause
1.
9
clause
3.1.
10
clause
4.1.
11
clause
5.1.
12
Clause
5.2.
13
clause
5.3.
14
clause
6
15
clause
7
16
clause
8.1.
17
clause
8.2.
18
clause
9.
19
"clause
10.1
20
clause
10.2
21
clause
10.3.
22
clause
12.1.
23
being
fabric referred to in annexures A & B to the Defendant's plea.
They are however irrelevant to the present case.
24
as
opposed to a discount.
25
Referred
to by its trade name Marburg Beslin.
26
The
same Mr Thevan who initially signed the Credit Application in
November 2004 on behalf of the Defendant. Although it was indicated
at one stage that Mr Naidoo might be called to testify, neither he
nor Mr Thevan testified.
27
although
the last purpose only emerged during Mr Varoli's cross-examination.
28
who
was the only witness who testified on behalf of the Defendant.
29
There
was evidence, including a reference to various emails relating to
alleged late delivery and a lack of communication and
feedback but
these are not relevant to this judgment.
30
according
to an email from Bruce Cormie of that date.
31
clause
1.
32
clause
1.
33
90
days as opposed to 60 days.
34
as
opposed to 60.
35
Shifren
and others v SA Sentrale Ko-op Graanmaatskappy Bpk
1964 (2) SA 343
(O).
36
Sonap
Petroleum SA (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v
Pappadogianis
[1992] ZASCA 56
;
1992
(3) SA 234
A at 239F-H and
Piliay
and another v Shaik and Others
2009
(4) SA 74
(SCA) at para 55 and further.
37
the
Defendant.
38
See
Corporate Law: Cilliers, Benade, Henning and du Plessis 3
rd
Edition
para 12.01.
39
38
[2006] ZASCA 29
;
2006 (3) SA 593
(SCA).
40
1999
(1)SA982 SCA.
41
in
that case excluding liability for certain conduct.
42
Estoppel
by Representation pg 60
43
by
silence.
44
The
fabric sold was in fact not for R10 million but for R1,8 million.
45
[2007] ZACC 5
;
2007
(5) SA 323
(CC) at para
[26]
.
46
at
paragraph [56].
47
at
paragraph [57].
48
at
paragraph [59].
49
or
even the whole contract itself.
50
at
paragraph 29.
51
at
paragraph 51
52
at
paragraph 51
53
2009
(6) SA323 (CC).
54
2012
(1)SA 256 CC par [71]
55
at
paragraph 71,
56
at
paragraph 72.
57
At
paragraph [34]
58
at
paragraph 151.
59
at
paragraph 151.
60
Par
[158].
61
2005
(3)SA3213SCA
62
at
paragraph [27].
63
at
paragraph [30].
64
at
paragraph [32].
65
2010(4)
SA 468 SCA.
66
2011
(5) SA 19
SCA.
67
Par
[22],
68
Par
[25]
69
2012
(1) SA 637
(SCA) at [31] to [34].
70
2010
(4) SA468 (SCA).
71
Paragraph
[39],
72
Firstrand
Bank Ltd v Folscher and another, and similar matters
2011
(4) SA 314
(GNP) para [94].
73
At
paragraph [49].
74
as
was also held in Barkhuizen at paragraphs. 51 and 52.
75
Sasfin
v Beukes
1989
(1) SA 1
(A) at 9 B-C quoted in Barkhuizen in a minority judgment of
Sachs J at para 159.
76
as
opposed to patent.
77
2010
(5) SA296 (D)