Home
/
Our Insights
/
Article Detail
/
Home
/
Home
|
Login
Our Team
Our Expertise
Our Insights
BOOK CONSULTATION
SUBSCRIBE
Our Team
Our Expertise
Our Insights
You can share this article in the following networks2:
Forgotten to include a cancellation clause? What to do.
14 August 2019
333
"My business entered into an agreement some time ago to have certain goods manufactured for us. Unfortunately, the agreement was drawn up in haste, and now that we want to look at other manufacturers, we have realised it does not have a fixed contract period or cancellation clause. Are we now stuck with this manufacturer till the end of time?"
To answer your question, it is useful to refer to the matter of
Plaaskem (Pty) Ltd v Nippon Africa Chemicals (Pty) Ltd
where the parties concluded an agreement which was silent as to its duration (i.e. a contract in perpetuity or of unspecified duration).
In the case, after one of the parties gave notice to cancel the agreement, the parties approached the High Court to determine whether the agreement had a tacit, alternatively implied term that the agreement was terminable on reasonable notice to the other party, alternatively whether the agreement, properly construed, was terminable on reasonable notice. The High Court found that there was no tacit or implied or other clause in the contract, to the effect that the contract may be cancelled and held that the notice of cancellation of the agreement was invalid and of no effect.
On appeal, the Supreme Court of Appeal (SCA) had to decide whether the contract between the parties contained a tacit term to the effect that the contract was terminable by either party on reasonable notice. The SCA considered four factors when deciding whether or not such a tacit term can be included, namely -
the language used by the parties (i.e. the express terms of the contract);
the intention of the parties;
the nature of the relationship between the parties; and
the surrounding circumstances when the agreement was entered into.
In this specific case, the SCA found that it is necessary that a tacit term be imported, allowing termination on reasonable notice by either party. The court however warned that a tacit term cannot be imported into an agreement where it will be contradicted by an express term. Therefore, for a tacit term to be included it must be capable of a clear formulation even though the formulation does not have to be concise.
In your situation it would be advisable to have your attorney review your contract to determine whether there are any grounds for cancellation or termination of the agreement or whether there are merits in approaching the court to have the agreement cancelled.
Previous
Revised Accountancy Profession BEE Charter emphasises skills development
Next
How is the maintenance amount for minor children determined by the Courts and who is responsible to pay maintenance?
Share:
Talk to us
Get in touch with us to discuss how we can help you with your challenges
Get in touch
Related Insights
Small Credit Agreements - What are they and what interest can be charged
Debt Collection
Default Judgment? What should I do to clear my Credit Record?
Popular Insights
Dont' lose your Title Deed
Does your husband’s Nyatsi qualify to be a beneficiary in terms of Section 37C of the Pension Fund Act?
Who inherits under a Deceased Estate when there is no Will?
Recent Insights
The purpose behind the path of law
The furtherance of justice, a historic view
Small Credit Agreements - What are they and what interest can be charged
You can share this article in the following networks:
Offices
+27 57 916 6666
Back to top