Republic of South Africa

IN THE HIGH COURT OF SOUTH AFRICA 
WESTERN CAPE HIGH COURT, CAPE TOWN

Case number: A381

In the matter between:

versus

TRADING (PTY) LTD

NDITA, J:

[1]     This is an appeal to the Full Court of this Division against the judgment of Zondi J handed down on 23 February 2010 ordering that the plaintiffs claim be dismissed with costs.
[2]     For the purpose of convenience I will refer to the parties as they were at the trial. The plaintiff, instituted action against the defendant for payment of a sum of €454 953-80 for damages for loss of profit it allegedly suffered as a result of Respondent's breach of contract.

[3]     The plaintiff is a limited company based in the Netherlands, that obtains game meat, more specifically ostrich steaks from various countries for distribution in Europe and is a regular customer of the defendant which supplies such meat.

[5]     After hearing oral evidence, the trial Court, as earlier indicated dismissed the plaintiff's claim. The crisp issue for determination therefore is
whether contract between the parties was for a fixed price subject to the availability of stock.

[6]     The legal principles applicable to the standard terms of the contract are trite. Where a party alleges an agreement, that party bears the onus of proving the terms of the agreement. In the present matter, the determination of the issues is essentially a factual one.

[7]     It is necessary to refer to the pleadings in this appeal because the arguments presented at the hearing bear reference to them. The terms of the contract as pleaded by the plaintiff are as follows:
The plaintiff in its particulars of claim pleaded an oral agreement between the parties on or about June 2003, which agreement was partially confirmed in an email of 18 June 2003. The agreement obliged the defendant to supply to the plaintiff 200 tons of ostrich steaks at an agreed price. The plaintiff further alleged that the contract was concluded on the understanding that the season of the aforesaid supply of meat in South Africa runs from July to June. In addition, according to the plaintiff, both parties understood that the defendant would have sufficient supplies of meat in order to meet the obligation of providing 200 tons of ostrich steaks.

[8]     The defendant on the other hand pleaded that:
"3.1 Op ofongeveer 18 Junie 2003 en te Oudtshoorn, net die partye (JOHAN VAN Leendert namens Eiser, en Nuno Gomes namens Verweerder '/? mondelinge ooreenkom ("die ooreenkoms") met die voigende uitdruklike terme aangegaan:
3.1.1. Dat eiser van tyd tot tyd volstruisvieis van verweerder so aankoop op bestelling, en dat Verweerder oor genoegsame vooraad sou beskik;
3.1.2. Dat elke bestelling onderhewig sou wees aan die heersende pryse (wat weens marktoestande fluktuerend van aard is) tesame met BTW indien betaal is, soos in die gevai van plaaslike bestellings;
3.1.3. Die lewerig sou piasvind soos per eiser se instruksies met elke individuelle bestelling; en
3.1.4. Dat die bettalingswoorwardes met elke individueie I bestelling ooreengekom sou word."

during June 2003, the parties orally agreed that the defendant would supply to the plaintiff 200 tons of Ostrich meat at Euro rate. Mr van Leendert further testified that he took notes of the terms of the agreement as well discussions pertaining thereto. On his return to the Netherlands, he wrote a letter to the plaintiff dated 24 June 2003, confirming what he understood to be the terms of the agreement and stated thus:

I have bought 200 tons of ostrich steak from you of which 160 tons are to be delivered during July- December 2003 and of which the remaining 40 tons are to be delivered during January - April 2004.

The best option to load fresh goods is Wednesday evening, end (sic) or late afternoon, As you mentioned, in that case the truck will be sealed and Normal Certificate of Health will be issued to the Swartland factory.

In case goods are taken by Swartland, then Swartland will take care for the payment and goods have to be invoiced to Swartland at a price mentioned of €4.25 times the spot rate ofAbsa Bank Euro/Rand on Wednesday noon-time.

"We continue to experience a drastic shortage of slaughter birds to meet the normal demand of both fresh and frozen meat orders.

This shortage of slaughter birds is not only experienced by Klein Karoo but also other processors in Southern Africa. Naturally higher prices for slaughter birds are being paid as every role player attempts their normal share of the available birds.
With October slaughtering being only 40% of the allocated slaughtering for the month, we have no doubt that this situation will continue at least until year end and most likely into 2004.

It is for us inevitable to adjust the meat prices accordingly and with effect from 22 September 2003 (consignments arriving from week 14 onwards), the following prices will apply for both fresh and frozen products."

[11]   When asked to comment on the contents of the above letter, Mr Van Leendert testified that the terms of the agreement were not subject to the fluctuation of meat prices or availability of meat. The plaintiff rejected the adjusted meat prices and suggested that tons of steak be reduced from 200 to 160. When the defendant refused to reconsider its decision to increase the prices, the plaintiff referred the matter to his attorney on the basis that the plaintiff had breached the June agreement.

[12]   In cross-examination by Mr Van Riet who represented the plaintiff both at the trial and in the appeal, Mr Van Leendert re-affirmed that the agreement between the parties on the terms he was contending for was reached before the meeting of 18 June 2003. The witness denied that he was advised by the plaintiff's Mr Gomez during that meeting that the defendant was no longer in a position to give to it a fixed price commitment deal.

[13]   The defendant in support of its contentions called Mr Santos Gomez. Mr Gomez sketched the background of ostrich farming and explained that ostrich meat is part of the exotic category and is prone to fluctuations in the market. According to Mr Gomez, some of their transactions may include a package deal at a specific fixed price. However, the offer of a fixed term that was not accepted by the plaintiff, was the very first occasion for the defendant to consider a possibility of a fixed price. Regarding the June meeting with the plaintiff, Mr Gomez testified that he explained to Mr Van Leendert that given the change in the demand for ostrich meat over the preceding few months, as well as the fact that the offer for the fixed price had not been accepted, the defendant was no longer in a position to guarantee the volume initially offered as the demand for slaughter birds had started to increase. In addition, the defendant's ability to deliver the quantities envisaged could only be confirmed on a month to month basis. Mr Gomez further testified that at that meeting, he made it clear to Mr Van Leendert that the defendant would endeavour to deliver the best it could subject to the availability of the birds.

[15]   In a matter such this, in which it is alleged that the trial's court findings are wrong, the powers of a Court of appeal are limited. A trial court has the

[16]   Zondi J in his evaluation of the evidence, inferences from other facts and probabilities commented as follows:

[17] There is no evidence of any kind to contradict Mr Gomez's version that the agreement was subject to the availability of birds for slaughter and that there was no fixed commitment. In order for this Court to reject Mr Gomez's evidence, which was accepted by the trial court, the plaintiff would have to show some basis on which it can be concluded that the trial court erred. The plaintiff has not shown any ground upon which this court should find that Mr Gomez's evidence is unacceptable.

[18]   Because the plaintiffs case is based on earlier discussion between the parties, it is necessary to consider the letters which form the basis of the arguments advanced pertaining thereto. It is not in dispute that the parties as early April held discussion exploring the possibility of a fixed commitment. On 16 April the defendant wrote:

"Kindly note that the price quoted is as currently applicable, subject to change with market fluctuations. Should you prefer a fixed commitment and price for a specific volume over a fixed period, kindly indicate the volume and period so we can quote accordingly."
In a letter dated 22 April 2003 the defendant advised the plaintiff as follows:

"We refer to our telephonic conversation with Nuno regarding the delivery of the 200 tons of steak to Swartland Malmesbury.

We can deliver the steak on a weekly basis to Swartland in Malmesbury over a 1 year period starting in May 2003.

The fixed price for this commitment over this period is Euro 4-35 /kg FOB Malmesbury."
[19]   The question which arises is whether the undertaking contained in the above Setter, arising from negotiations or discussions has been shown to have contractual force. The plaintiff accepted this offer by faxing to the defendant a letter dated 11 June 2003. Responding to the acceptance of the offer, the defendant stated in a letter dated 12 June 2003 that:

"Given the exceptionally late confirmation of this order, since the offer of 23 April 2003, we accept your order on the following basis-

A maximum of 15 tons can be delivered by end June 2003. No deliveries possible during July 2003.
You submit to us immediately your planned monthly requirements from August 2003 onwards...

For the price to hold at Euro 4-35 kg to Swartland until April 2004, 80% (160 tons) will have to be delivered before the end of December 2003. Should the above quantity of 160 tons not be taken between August and December 2003, quantities delivered between January and April 2004 will be subject to a price increase of Euro 0-25 per kg.

The total volume over the period is for 200 tons and will not be reduced or increased without prior agreement and will not be reduced pr increased without prior agreement.

Your acceptance of this Agreement is to be in writing is to be received by later 13 June 2003, together with the delivery forecast per month, in order to validate and confirm this order."

[20]   The above offer was subject to acceptance of the conditions in writing not later than 13 June of the same year. The plaintiff did not accept or react to

"I am not persuaded that the phrase "I have bought 200 tons of ostrich steak from you" as used by the plaintiff in the letter of 24 June 2003 must be looked at in
isolation, nor am I persuaded that when the phrase is looked at in its context that it was used in the sense creating an obligation on the part of the defendant to deliver to the plaintiff a committed quantity of meat over an agreed period at a fixed price. The price description in the second paragraph of exh "A10" does not, it seems to me add any force to the contention advanced on plaintiff's behalf."

The conclusion reached by Zondi J cannot be faulted. When regard is had to the objective facts of this case, the phrase used in the letter is consistent with both versions of the contract. Similarly, the reference to quantity and price, as well as delivery, cannot be said to support particularly the plaintiff's version that the price was fixed. For all it is worth, the phrase referred to is in my view, neutral.

"In matters of contract for instance, it may sometimes be difficult to ascertain precisely the extent to which the evidence is covered by the cause of action made out on the pleadings and there is greater scope for allowances. This to my mind is so because of the technicalities of the contract itself and the shades of thought in the mind of the contract parties which may lead to a genuine dispute in Court of taw."

Under the circumstances, I am of the view that given the fact that the facts that emerged from the evidence are no more than the plaintiff's understanding of the discussions preceding the June agreement, there therefore can be no merit in this contention.

[25] I conclude therefore that the plaintiff failed to prove the contract it had pleaded and that the findings of the court a quo were justified when regard is had to the pleadings, the evidence and the objective facts.

[26]   For all these reasons, I would dismiss the appeal with costs.

NDITA, J

agree.
Cleaver, J
I agree and it is so ordered
Hlophe, JP