This is an appeal against the decision of the High Court
upholding the judgment of the Magistrates' Court.
The case revolves around the
difference between two computer terms “megabytes” and “megabits.”
On 12 April 2012, the
respondent sought fibre internet services for its two premises, being No.34
Martin Drive, Msasa, and No.19 Manyonga Close, Glen Lorne Harare, from the
appellant who is an internet service provider. The parties entered into some
form of agreement that was both verbal and written. The written contract was
not signed by both parties as there were some terms which needed to be clarified.
It is common cause that the
parties agreed on the following:
1. That the appellant would
install and provide internet service at No.34 Martin Drive, Masasa and No.19
Manyonga, Glen Lorne.
2. That the respondent would
pay the installation costs and service fees.
Believing the above-mentioned
terms and conditions to be valid, the respondent paid the appellant
installation costs and service fees. The appellant installed internet services
at the first premises (No.34 Martin Drive, Masasa) on or about 23 April 2012
and began digging trenches at the second premises (No.19 Manyonga Close, Glen
Lorne) in preparation for laying fibre optic cables.
When internet service was
installed at No.34 Martin Drive, the service speed of 5 megabytes per second
was not achieved.
The respondent complained
that in getting into the agreement, it wanted the appellant to provide internet
services with a speed of 5 megabytes per second. The appellant argued, in
return, that it had made it clear that the internet service it was providing had
a speed of 5 megabits per second.
Emails were exchanged but
the parties failed to agree.
The respondent cancelled the
agreement and issued summons in the Magistrates' Court to recover part of the
deposit it had paid in respect of installation of internet services at No.19
Manyonga Close, Glen Lorne, which was stopped due to the cancellation of the
contract before the installation of internet services. It also claimed a
proportionate share of the deposit for internet services which was not used at No.34
Martin Drive, Masasa due to the cancellation of the agreement.
The respondent argued that
the appellant failed to adhere to its obligation under the agreement by
providing internet service with a speed of less than 5 megabytes per second.
The appellant entered appearance to defend and pleaded that it fulfilled all
its obligations in terms of the agreement by providing internet service at a
speed of 5 megabits per second as per the contract. The appellant went further
and argued that in the event that the respondent wanted to terminate the
contract, it was supposed to give the appellant three months' notice in terms
of the contract.
The matter went for trial
before the Magistrates' Court.
The Magistrate's Court found
that the parties' minds were not ad idem when they purported to have entered
into the contract. It found the contract was void ab initio. It came to this conclusion on the basis that
there was confusion over the terms 'megabytes' and 'megabits' and as such there
was no valid contract between the parties.The magistrate therefore found in
favour of the respondent and granted its claim.
The appellant was aggrieved
by that decision.
It appealed to the High
Court, which dismissed the appeal. The High Court found that the magistrate had
correctly found that there had been no consensus ad idem between the parties.
Aggrieved by that decision,
the appellant appealed to this court. The appeal is premised on the following
grounds:
“1. The High Court, like the Magistrates Court before it,
erred in finding that the Appellant and the Respondent did not conclude a valid
and binding contract when both parties in their pleadings admitted to a valid
and binding contract.
2. The High Court further erred in failing to find that the
Respondent's unilateral mistake in believing that the (sic) 5 megabits were the
same as 5 megabytes, could not, in law, justify the cancellation of the
contract at the instance of the Respondent.
3. The High Court further erred in failing to find that the
Respondent admitted into entering (sic) a contract for the Appellant to supply
internet services at the speed of 5 megabits per second which was achieved. Accordingly,
therefore, the Respondent was not entitled to have cancelled the contract.
4. Consequently, the High Court erred in upholding the judgment
of the Magistrates Court finding the Appellant liable to the Respondent for the
sum of US$4,987=.”
ISSUES TO BE
DETERMINED
Even though the notice of appeal is premised on four
grounds of appeal, the sole issue for determination in this appeal is the
question whether or not there was a valid contract between the parties.
It is trite that for a contract to be valid there must be a
meeting of the minds of the parties. In short, the parties must have the same
mental conception of what they are agreeing to.
That is called consensus ad idem.
In the absence of consensus ad idem there can be no valid contract. In the case of Household Fire and Carriage Accident Insurance Co. Ltd v Grant
(1879) 4 Ex D 216, THESIGER LJ
said:
“Now, whatever in
abstract discussion may be said as to the legal notion of its being necessary,
in order to the effecting of a valid and binding contract, that the minds of the parties should be brought together at one and the
same moment, that notion is practically the foundation of English law upon the
subject of the formation of contracts.”…,.
In Smith
v Hughes
(1871) LR 6 QB 597, BLACKBURN J put it as follows:
“I apprehend that if one of the parties intends to make a
contract on one set of terms, and the other intends to make a contract on
another set of terms, or, as it is sometimes expressed, if the parties are not ad idem, there is no contract, unless the
circumstances are such as to preclude one of the parties from denying that he
has agreed to the terms of the other.”…,.
Applying the above principles to the facts, I find that
there can be no serious doubt that there was no meeting of minds in this
matter.
Although counsel for the appellant sought to argue that
there was a unilateral mistake on the part of the respondent, that argument is
flawed. The evidence led by the parties does not prove unilateral mistake. The
parties were clearly miles apart in their minds from the beginning. From the evidence, I find that there
was confusion between the respondent's representatives and the appellant's
sales representatives, headed by one Cleopatra Tshuma, the Sales and Marketing
Officer. The testimony of Cleopatra Tshuma herself, in the Magistrates' Court, makes that patently obvious. At p 43 of
the record, when she was being cross
examined, the following exchange took place between her and the respondent's
counsel in the Magistrates' Court:
“Q: Can you confirm this is the email my client wrote to
you. Exhibit 5?
A: Yes.
Q: You will note the Plaintiff's representatives referred
to megabytes.
A: Yes.
Q: Have a look at Exhibit 6. You agreed to the terms that
were raised by the Plaintiff?
A: Yes.
Q: Its common cause that the plaintiff is a layman, should
you not have raised an issue with the plaintiff to clarify the position?
A: As we had earlier discussed, I thought he also meant megabits not megabytes…..,. “
The confusion is obvious.
As if that was not enough, the testimony goes on, at p 45
of the record, where the following
appears:
“Q: The Plaintiff was acting on the assumption that he was
buying megabytes?
A: Probably, I do
not know what they were thinking….,.“
If the
appellant's representative did not know what the other party was agreeing to
then it cannot be said there was a meeting of minds of the parties. In fact, the
appellant's representative agrees that the respondent was most likely thinking
that it would get 'megabytes while 'megabits' were what the appellant was
offering.
An examination of
the emails which were referred to in cross examination proves the absence of consensus
ad idem between the parties. Exhibit
9, which…., contains the following email exchanges. The first is an email from
the respondent's representative, Mr Vikram Singh, stating what the respondent
required as the speed for the internet service.
“Dear Cleopatra
I have taken a look at your Service Level Agreement. There
are quite a few things I would like to change about it….,.
Minimum speeds at both sites should be 5MB and the cost for both packages to be USD5,000=.”
Note the use of
“MB” as opposed to “Mb”. According to the evidence on record, 'MB' stands for
megabytes while 'Mb' stands for megabits.
Later, when
problems had arisen and the respondent was complaining about internet speed, Cleopatra
Tshuma wrote back to the respondent's
representative, Mr Vikram Singh, as follows:
“Good day
How are you? I would like to clarify this. While we note
that he wrote 5MB, we assumed an
error on his part. I confirm that I meant the SLA.
Regards”
Indeed, Cleopatra
Tshuma made it clear that while they noted
that the respondent had written MB,
the appellant had assumed it was an error and Mr Singh had intended to write Mb. Mr Vikram Singh responded as
follows:
“Dear Cleo
There is no point at clarifying at this stage. We
understood 5MB all along and hence went
ahead with the contract. Besides the SLA was verbally discussed on several
occasions with you and Chris.
Regards”
It is clear that
the parties were miles apart as to what they thought they had agreed on. The
respondent thought it had agreed to acquire an internet speed of 5 megabytes
per second. The appellant noted this but chose to keep quiet, writing it off as
a typographic mistake when it was clearly not. The appellant did not bother to
clarify to the respondent the terminology used. The result was that both
parties proceeded with a contract on diametrically opposite terms from what the
other was thinking. This resulted in the confusion between the parties which is
apparent on the record.
There was
therefore no meeting of the minds and a contract could not have come into
existence.
I am aware that
the test for the meeting of the parties' minds should involve the effect of
their conduct on whether or not a contract came into existence.
Consensus ad idem
does not only take into account the subjective mental state of the parties,
which has been discussed above; it also takes into consideration the actions of
the parties to determine whether or not there was consensus ad idem. BLACKBURN
J in
Smith v
Hughes (1871) LR 6 QB 597, set
out his classic statement on the objective interpretation of people's conduct
when entering into a contract. Rejecting that one should merely look at what
people subjectively intended, he said:
“If, whatever a man's real intention may be, he so conducts
himself that a reasonable man would believe that he was assenting to the terms
proposed by the other party, and that other party upon that belief enters into
the contract with him, the man thus conducting himself would be equally bound
as if he had intended to agree to the other party's terms."
The same sentiments were expressed by WESSELS JA in South African Railways & Harbours v
National Bank of South Africa Ltd 1924
AD 704…, where he said:
“The law does not concern itself with the working of the
minds of parties to a contract but with the external manifestation of their
minds. Even therefore if from a philosophical standpoint the minds of the
parties do not meet, yet, if by their acts their minds seem to have met, the
law will, where fraud is not alleged, look to their acts and assume that their
minds did meet and that they contracted in accordance with what the parties
purport to accept as a record of their agreement. This is the only practical
way in which Courts of law can determine the terms of a contract.”
Now, keeping in mind the above dicta, the question remains: Did the parties in this case, in particular
the respondent, conduct itself in a manner that indicated that it had accepted
the terms of the contract?
The answer is in the negative.
The respondent's conduct was clearly not to accept any
speed of less than 5 megabytes.
When the Service Level Agreement was sent to the respondent
for its signature, it did not sign because it did not state that an internet
speed of 5 megabytes per second would be installed at each site. That conduct
proves that the respondent's mind was set on acquiring an internet service
speed of 5 megabytes per second at each site.
The moment the internet service was installed at No.34 Martin Drive, Masasa, the respondent
immediately complained that it was not getting the speed of 5 megabytes per
second it had contracted for. It cannot be said that this is the conduct of a
party who had accepted to be bound by the contract.
It, in fact, proves the opposite.
It is therefore established that there was no consensus ad
idem between the parties. The
court a quo therefore correctly upheld the decision of the Magistrates' Court.
Its decision is unassailable.
In the result, the appeal is dismissed with costs.
