L5 - Command Protection Services v SA Post Office.ppt

L5 - Command Protection Services v SA Post Office.ppt -...

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Unformatted text preview: Command Protection Services v SA Post Office The essential facts: In Oct 2002 SA Post Office (SAPO) placed an advert inviting tenders for the guarding of post offices in 6 regions. In Nov 2002 Command Protection Services (CPS) submitted tender documents to SAPO (PC2) – an offer. In July 2003 SAPO submitted a letter of acceptance, appointing CPS to supply services (PC3) – acceptance? BUT the appointment was subject to (i) BEE improvement and (ii) “the successful finalization and signing of a formal contract”. CPS started providing services in Sept 2003. The facts (contd) The contract was never finalised, despite four lengthy iterations (drafts). In January 2004 SAPO notified CPS that it will not continue with contractual negotiations and that the interim contractual relationship would end 29 Feb 2004, citing poor conduct of CPS as the reason. CPS regarded this as a repudiation of their agreement, amounting to a breach of contract. CPS claimed about R14 million for damages suffered. SAPO’s defence: denial that the agreement relied upon by CPS ever came into existence. CPS lost in the High Court and appealed to the SCA. The main issues to be determined (issues in dispute) Whether PC3 (the letter from SAPO) constituted an unconditional acceptance of CPS’s offer (tender). Whether or not a binding agreement came into existence as a result. What did the court decide? PC3 did not constitute an unconditional acceptance of the tender contained in PC2. Thus the ‘agreement’ that CPS relied upon never came into existence (no final contract), and the appeal was dismissed. The SCA’s interpretation of PC3: - PC3 was intended by SAPO as a counter-offer. - This counter-offer was accepted by CPS. - The resultant agreement was merely an agreement to negotiate. The reasons for the court’s decision The appointment of CPS was “subject to… [T]he successful finalisation and signing of a formal contract”. “Subject to” is generally understood in the contractual context to introduce a condition. Thus the letter of acceptance did not constitute an unconditional acceptance of the tender, further borne out by the following: - “finalisation” envisages a process (further negotiation) - “successful” suggests awareness that the process might not be successful. - a lengthy process of negotiations and several drafts of a contract ensued in attempting to reach consensus. The relevant law and legal principles Consensus is the basis of every contract: agreement (meeting of the minds) on the creating of obligations, and the content of those obligations. An offer is an invitation to consent to the creation of obligations (the tender by CPS – PC2). An advertisement is not an offer (the advert by SAPO). An acceptance is a declaration that indicates that the offeree accepts the offer. The acceptance must be complete and unequivocal, otherwise it is a counter-offer. Relevant law (contd) When parties leave some outstanding issues for negotiation, two possibilities exist: (i) no consensus (no contract), and (ii) a binding contract, with some issues left to sort out later. Whether (i) or (ii) depends on the intention of the parties, gathered from: - their conduct; - the terms of the agreement; - the surrounding circumstances. ...
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  • Spring '19
  • DR KRUGER

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