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Where the purchaser of an oil refinery sued the seller for breach of contract for $25 million damages resulting from a fire caused by various acts and omissions of the seller prior to the sale, the claim was not covered under the seller’s commercial general liability policy. The claim was not based on property damage but on damages arising from false representations and the failure to deliver what was bargained for. The typical liability policy covered…
The Supreme Court of Appeal has reaffirmed the principle that where a party alleges that a compromise (settlement) has been effected in an exchange of correspondence it must be proved that the offer of compromise was accepted. The acceptance must be absolute, unconditional and identical with the offer. Otherwise there is no consensus and no settlement. A settlement agreement is a form of contract and must comply with all general contractual requirements as regards consensus,…
The Supreme Court of Appeal has yet again reaffirmed the principles dealing with the interpretation of contracts. Interpretation of contracts is a unitary exercise which starts with the text to be interpreted and considers it within the contract as a whole, and in context. It requires consideration of text, context and purpose of the contract. The considerations include the nature, formality and quality of the drafting of the contract. The words in a document must…
The Supreme Court of Appeal has decried the growing tendency to lead evidence about what experts think a contract means and about the subjective intention of the parties and details of their negotiation. The written text must not be relegated, but must be considered having regard to the context in which the agreement was entered into. The point of departure is the language of the document in question. Evidence of the intention of the parties…
The Supreme Court of Appeal restated the principles on liability for unlawful competition by the use of the trade secrets of a competitor. Every person is entitled to freely carry on their trade or business in competition with rivals but the competition must remain within lawful bounds. If it involves a wrongful interference with another’s rights as a trader that is a wrong for which an action lies. Unlawful use of confidential information is such…
One of the major issues facing the law in an age of autonomous technology is the question of who is liable for damage caused by a machine or artificial intelligence either by physical injury or the failure of a contract. Insurers will have a major role to play. If a machine such as a driverless car causes damage or injury to third parties because of a defect that the vehicle owner could not possibly have…
The guarantor in Raubex Construction (Pty) Ltd v Bryte Insurance Company alleged that payment under a guarantee was not due because of fraud on the part of the beneficiary. A mere error, misunderstanding or oversight, however unreasonable, does not amount to fraud and is insufficient to show that the contentions of the beneficiary are deliberately incorrect. The guarantor has to go further and show that the representor advanced the contentions in bad faith knowing them…
The English Court of Appeal found that the plaintiff building society had not proved damages against its auditors who gave them incorrect information about how to treat long-term interest rate swaps on its balance sheet under the IFRS requirements. The swaps were not included on the balance sheet from 2005 till 2013, when they were swapped out, at a time when the swaps were ‘heavily out of the money’ (at a negative value due to…
An application for business rescue does not terminate the office of provisional liquidators nor does it result in the assets and management of the company in liquidation re-vesting in the directors of the company. Where a company had been liquidated, an application was made for business rescue in GCC Engineering v Lawrence Maroos. Although section 131(6) of the Companies Act says that a business rescue application suspends liquidation proceedings, it suspends the process of winding-up…
The Constitutional Court has reminded us in the context of mineral rights that a statutory provision must be interpreted in accordance with the spirit, purport and objects of the Bill of Rights (s 39(2)) and consistently with the Constitution and consistently with international law (s 233), and the courts must apply customary law when that law is applicable. The question in Maledu and others v Itereleng Bakgatla Mineral Resources (Pty) Ltd and Another was whether the respondents…