The
plaintiff in this case claims the delivery of 1,200 bags of PC15
cement or, in the alternative, damages for breach of contract
equivalent to the current market value of the cement, being
US$11,400=, and costs of suit.
The
defendant resists the claim on several grounds, to wit, that delivery
of the cement was conditional on the defendant receiving the same
from its supplier, that it was unable to deliver due to supervening
impossibility and that it is no longer able to deliver the cement and
has offered a refund to the plaintiff in the sum of ZW$336 million.
Evidence
for the Plaintiff
Elliot
Mutangadura, the plaintiff, testified as follows. In July 2007 he
approached the defendant to purchase various building materials. The
defendant then submitted a quotation on the 18th
of July 2007 listing those materials that it was able to supply -
including the cement in question [Exhibit 1]. At that time, PC15
cement was available on the market and also in the defendant's
warehouse (though he was not aware of the quantity thereof). This
was confirmed by the defendant's Branch Manager (Mavengere) as well
as its Sales Manager (Jongwe) without any condition as to having to
await delivery from the defendant's suppliers.
The
plaintiff then paid the full purchase price for all the materials in
six instalments amounting to $3.51 billion, as was confirmed in a
letter from Jongwe dated the 30th
of August 2007 [Exhibit 2]. In that letter, Jongwe also confirmed
that “we
had promised delivery early August.”
The defendant thereafter delivered all the purchased items - save for
the cement.
On
the 19th
of September 2007, Mavengere wrote a letter stating that the
defendant was “unable
to supply PC15 cement as per agreement”
and offered to supply masonry or other building materials equivalent
to the amount paid [Exhibit 3]. The plaintiff rejected the offer as
the PC15 cement was specifically required for the building work in
question.
On
the 21st
of September 2007 the plaintiff's lawyers wrote a letter of demand
to the defendant [Exhibit 5]. In response, on the 1st
of October, the defendant's lawyers offered a refund of the
original purchase price of $336 million [Exhibit 4]. The plaintiff
rejected this offer through a letter from his lawyers on the 9th
of October [Exhibit 6] because the money tendered was insufficient to
pay for 1,200 bags of cement at that time.
Subsequently,
from October 2007 to June 2008, the plaintiff sourced 1,200 bags of
cement, on loan, from his uncle's hardware business. The return of
the cement borrowed is now overdue. The requisite PC15 cement is
currently available on the market at US$9.50 to US$10 per bag.
Evidence
for the Defendant
Thomas
Jongwe was the Sales Manager of the defendant's Harare branch at
the relevant time. His evidence was as follows.
Before
giving the original quotation to the plaintiff, on the 18th
of July 2007, he made enquiries with the defendant's suppliers and
told the plaintiff that PC15 cement was available for supply to the
plaintiff. However, before the first payment was received, on the
20th
of July, he verbally informed the plaintiff that the cement was not
immediately available and would be sourced from Unichem, a supplier
in Bulawayo. He then placed an order for 1,200 bags with Unichem on
the 31st
of July [Exhibit 7]. Unichem did not have any clinker, a critical raw
material in cement, and he verbally informed the plaintiff of that
fact.
The
plaintiff made six payments in all, from the 20th
of July to the 16th
of August 2007, as shown on the receipts therefor [Exhibit 8]. There
was no indication on the receipts as to the specific items paid for.
The payments were made towards the total quotation amount, with
appropriation in respect of each item being made at the time of
invoicing. No invoice was raised for the cement as it was not in
stock to deliver. In accordance with the defendant's internal
accounting system, an invoice is raised after payment is received and
is given to the customer at the delivery point as a delivery note.
Under
cross-examination, Thomas Jongwe accepted that by the date of the
last payment, on the 16th
of August 2007, the plaintiff had discharged his obligation under the
contract. He also conceded that he made enquiries with the
defendant's suppliers and made certain that the cement was
available before issuing the quotation to the plaintiff. He further
confirmed that PC15 cement is presently available on the market.
Issues
for Determination
The
agreed issues for determination herein are as follows:
(a)
What terms and conditions were agreed to or can be implied from the
contract concluded between the parties?
(b)
Whether the defendant is liable for specific performance in terms of
the contract.
(c)
What amount of compensation, if any, is the defendant liable to pay
to the plaintiff?
Terms
and Conditions of Contract
The
evidence before the Court shows that after the plaintiff initially
approached the defendant, its Sales Manager, Thomas Jongwe, made
enquiries with the defendant's suppliers and received positive
confirmation as to the availability of PC15 cement. Jongwe then made
out the quotation [Exhibit 1] and upon handing it to the plaintiff on
the 18th
of July 2007 gave a firm assurance that the cement would be delivered
in early August.
At
that time, the defendant did not, as it contends, stipulate any
condition as to the fulfilment of the contract being subject to
delivery from its suppliers. Thereafter, the plaintiff paid the full
amount of the quotation in six instalments, beginning on the 20th
of July and finishing on the 16th
of August 2007. The defendant only raised the non-availability of
PC15 cement from its suppliers over one month after full payment had
been made and received.
All
the payments made by the plaintiff were towards the total quotation
and not towards any specific materials thereon. The defendant's
invoicing process involved the appropriation of the amounts paid to
particular items as and when delivery was effected and the invoices
served as delivery notes. However, this was quite clearly a process
that was internal to the defendant's accounting system and totally
irrelevant to the conclusion of the contract between the parties.
It
is quite clear from the foregoing that the contract in
casu
was concluded unconditionally on the 20th
of July 2007 when the defendant accepted the plaintiff's first
instalment as part payment towards the entire quotation - including
the PC15 cement. The terms and conditions of the contract were that
the defendant would deliver the cement in early August against
payment by the plaintiff of the full amount of the quotation in
instalments. In effect, the parties concluded an unconditional and
binding contract for the supply of 1,200 bags of cement to the
plaintiff in early August 2007.
Specific
Performance and Supervening Impossibility
The
defendant avers that at the end of August 2007 it was unable to
source PC15 cement from its suppliers because a requisite component
(clinker) was not available at that time. It therefore contends that
this market factor constituted a supervening event rendering
impossible the performance of the contract for the supply of PC15
cement.
It
is trite that a party to a binding agreement has the right to demand
from the other party, as far as it is possible, performance of his
undertaking in terms of the contract where he is in a position to do
so. Such specific performance can only be avoided in compelling
circumstances. In this respect, the onus lies on the party seeking to
avoid the contract to establish the facts and circumstances
justifying the court's exercise of its discretion to refuse
specific performance. See
International Trading (Pvt) Ltd v Nestle Zimbabwe (Pvt) Ltd
1993 (1) ZLR 21 (H)…,.
The
general rule in our law is that, if a supervening physical or legal
factor renders the performance of a contract impossible, through no
fault of the debtor, the obligations of the parties under the
contract are thereby extinguished and cannot be enforced. See
Beitbridge-Bulawayo
Railways (Pvt) Ltd v Commercial Union Insurance Company of Zimbabwe
Ltd
SC91-07.
However,
this general rule does not override the terms of the implications of
the contract. The court must have regard to, inter
alia,
the nature and circumstances of the contract and the nature of the
impossibility that is relied upon. If, for instance, it is
ascertained that the parties contemplated the situation that gives
rise to the impossibility and accepted the risk of the supervening
event, the general rule does not apply and the parties are bound to
perform their contract. See Beitbridge-Bulawayo
Railways (Pvt) Ltd v Commercial Union Insurance Company of Zimbabwe
Ltd
SC91-07; Bekker
N.O. v Duvenhage
1977 (3) SA 884 (ECD)…,.; Bischofberger
v Van Eyk
1981 (2) SA 607 (WLD)…,.; CHRISTIE: The
Law of Contract in South Africa
(3rd
ed.)…,.
There
is a further situation more pertinent to the facts in
casu
where the general rule does not override the obligation of the
parties to perform their contract. This arises where a party is only
temporarily disabled from fulfilling his contractual obligations, in
contradistinction to the position where the contract becomes finally
and completely impossible of performance. See Field
N.O. & Another v Compuserve (Pvt) Ltd
1990 (2) ZLR 253 (HC)…, citing Beretta
v Rhodesia Railways Ltd
1947 (2) SA 1075 (R)…., as follows:
“The
law is clear that when a contract becomes finally and completely
impossible of performance by reason of an act of State it is
discharged. Peters
Flamman & Co v Kokstad Municipality
1919 AD 427. But this does not cover the situation in which one party
is temporarily disabled from fulfilling his obligation.
It
is nowhere suggested that the immediate effect of such temporary
disability is to end the contract, and this is not surprising, for
any such suggestion would involve consequences so extreme as to be
unthinkable.”
On
the evidence before the Court, there is nothing to indicate that the
non-availability of clinker on the market was permanent and
irreversible. According to Thomas
Jongwe's
testimony, this non-availability only occurred towards the end of
August 2007 when the defendant's suppliers intimated their
inability to supply PC15 cement. This would mean that the defendant
was merely temporarily unable to source the 1,200 bags of cement and
deliver the same to the plaintiff. Certainly, there was no evidence
adduced to contradict the plaintiff's testimony that PC15 cement
was available on the market from October 2007 onwards. In any event,
the shortage of clinker on the market occurred one month after the
promised date of delivery, and, therefore, it could not and should
not have affected the defendant's undertaking to deliver the cement
to the plaintiff in early August 2007.
It
follows that the defendant's defence of supervening impossibility
cannot be sustained, either at the time when delivery of the cement
was to be effected as contemplated by the parties, i.e. in early
August 2007, or at any time from October 2007 onwards, when cement
was available on the market. It also follows that the defendant has
failed to establish any basis for declining specific performance and
must therefore be held bound to its undertaking to deliver PC15
cement to the plaintiff.
Quantum
of Damages
Assuming
that I am wrong in finding that the plaintiff is entitled to claim
specific performance on the facts in
casu,
it is necessary to consider the measure of damages properly due to
the plaintiff.
In
this regard, the defendant submits that the plaintiff should have
accepted the refund that was tendered by the defendant in October
2007. By refusing to accept that refund, so it is argued, the
plaintiff has failed to mitigate his damages and must therefore bear
the penalty of a commensurate reduction in the quantum of damages to
be awarded.
In
my view, these submissions are devoid of merit for several reasons.
It
cannot be disputed that the plaintiff's entitlement to damages must
entail him being placed in the position he would have been in but for
the defendant's breach of contract. The plaintiff's unchallenged
evidence was that in order to complete his building project he
borrowed the requisite cement and presently remains obligated to
replace the borrowed cement. More particularly, he rejected the
defendant's offer to refund the purchase price originally paid
specifically because the amount tendered would not have placed him in
the position he was in at the time that the contract was concluded
due to the hyper-inflationary economic environment that prevailed at
that time. No evidence was adduced on behalf of the defendant to
counter the plaintiff's testimony in the above respects.
I
accordingly find that the plaintiff did endeavour to mitigate his
loss and that his rejection of the refund offered by the defendant
was perfectly justifiable at the material time. Moreover, it is
common cause that the plaintiff duly performed his contractual
obligations and that the defendant has remained in possession and
beneficial use of the money paid by the plaintiff for the cement. It
also not disputed that the current minimum price for cement is
US$9.50 per bag.
In
the final analysis, the law requires that the plaintiff be put in a
position to purchase the cement that he requires at the current
minimum market price in order to meet his obligation to replace the
cement that he has borrowed. He is therefore entitled to the measure
of damages that he claims in the alternative.
Disposition
Although
the plaintiff's claim for damages was originally framed as an
alternative in the event of the claim for specific performance being
refused, I believe that it would be just and equitable, at this
juncture, having regard to the facts of this case and the
circumstances of both parties, to grant both an order for specific
performance and damages as alternative remedies.
In
the result, judgement is hereby entered in favour of the plaintiff as
against the defendant for:
(i)
The delivery of 1,200 bags of PC15 cement within 7 days of the
granting of this order, or, alternatively, the payment of damages for
breach of contract in the sum of US$11,400= being the current market
value of 1,200 bags of PC15 cement; and
(ii)
Costs of suit.
