SUMMARY
| This case dealt with an application for the restoration of a clothing and shoe retail store (the “Business”) to the original owner, Osman Asmall (the “Applicant”). The Business was sold to Tornotrim (Pty) Ltd (the “Respondent”) by way of a partly written and partly oral sale of business agreement (the “Agreement”) which was later cancelled on notice by the Applicant. The issue before the court was whether the Agreement was validly terminated by the Applicant. During June 2017, Asmall sold the Business to the Respondent in terms of the Agreement. The written part of the Agreement provided for a purchase price of R2 500 000.00, payable by deposit of R300 000.00; in 38 months’ instalment; and a final instalment of R110 000.00. On the signature date, a representative of the Respondent and the Applicant orally agreed that the Respondent would advance an additional payment of R2 000 000.00 with a deposit of R300 000.00 and the balance payable in monthly instalments of R50 000. At the end of June 2017, the deposit was paid and as such, the Business was handed over to the Respondent. During July 2017, the Respondent raised concerned with regard to the Business, following which a written addendum to the Agreement was signed wherein the purchased price and the instalments were reduced by R250 000.00 and R50 000.00, respectively. The Parties amended the Agreement further in terms of which the Respondent undertook to pay 20 monthly instalments of R50 000.00 from 31 July 2017, and a final instalment of R25 000.00 payable on 31 March 2019, together with 35 monthly instalments of R55 000 and a last instalment of R25 000.00 payable on 30 June 2020. At the end of February 2018, the Respondent defaulted. It attempted to raise complaints with regard to the Business and attempted to obtain a further reduction in the purchase price, however, the Applicant refused to entertain same. On 13 March 2018, the Applicant’s attorney delivered a written breach notice to the Respondent requesting the Respondent to remedy its breach within 14 days thereof, failing which the Agreement would be terminated. The Respondent failed to make payment and on 6 April 2018, the Applicant delivered notice of termination of the Agreement. The Respondent submitted that the Applicant was not entitled to terminate the Agreement given that the Respondent had paid all of its instalments to date in terms of the written part of the Agreement, and that the Applicant was precluded from relying on the oral part of the Agreement in that the written Agreement constituted a whole and final Agreement between the Parties. It was common cause that the purchase price consisted of the amount referred to in the written part of the Agreement together with the amount agreed to orally, and both Parties contracted on that basis. Accordingly, it would have been unreasonable for the court to permit the Respondent to escape liability in respect of the oral part of the Agreement, which it admitted existed, on the basis that the Agreement was recorded in writing and purported to be a whole agreement between the Parties. The Respondent further submitted that it was entitled to terminate the monthly instalments after discovering that certain inventory had been unlawfully removed from the store prior to the handover of the Business. However, when the Respondent made the aforesaid discovery, it, to its own prejudice, did not act on said discovery by either terminating the Agreement or claiming damages. The court found that the Respondent was not entitled to stop payment on that basis after it continued abiding by the Agreement, and as such its failure to pay the instalments constituted a breach. Accordingly, the Respondent’s failure to remedy the breach entitled the Applicant to terminate the Agreement. The Applicant sought an order directing the Respondent to restore the Business back to the Applicant, however, the Applicant did not tender to reimburse payments received from the Respondent in terms of the Agreement. |
HELD
| In conclusion, the Court held that the Respondent’s challenge as to the termination of the Agreement lacked substance. Accordingly, the Court declared the Agreement validly terminated. |
The Respondent was ordered to restore the Business to the Applicant against return of all payments made by the Respondent to the Applicant in respect of the purchase price. The Applicant was further entitled to claim further restitution from the Respondent insofar as he would be able to prove.
VALUE
| A party cannot be allowed to escape liability in respect of a partly written and partly oral agreement, which it admitted, on the basis that the agreement was recorded in the writing and constituted and entire agreement between the parties. |
A party is not entitled to stop payment in terms of an agreement on other grounds when it was previously entitled to terminate the entire agreement. Should a party fail to terminate an agreement on reasonable grounds where a breach exists, it must comply with the terms of the agreement, failing which the other party may deliver a breach notice and lawfully terminate the agreement upon failure to remedy the breach.
Written by Mohau Ledwaba and supervised by Jasvir Sewnarain, 08 March 2019
