It was a further term of the Irrevocable Memorandum of
Understanding that the rights and obligations arising from the Irrevocable
Memorandum of Understanding would terminate upon the expiry of sixty (60) days
from the signing of the Irrevocable Memorandum of Understanding. The
relevant portion reads as follows:
“This agreement shall terminate upon the signature of ...
It was a further term of the Irrevocable Memorandum of
Understanding that the rights and obligations arising from the Irrevocable
Memorandum of Understanding would terminate upon the expiry of sixty (60) days
from the signing of the Irrevocable Memorandum of Understanding. The
relevant portion reads as follows:
“This agreement shall terminate upon the signature of a
Sale Agreement. In the event that a Sale Agreement is not entered into between
the parties within 60 days from the date of the signature of this agreement
then this agreement shall terminate and all rights and obligations flowing from
it shall fall away.”
Persuaded by the appellants' alleged lack of good faith in
their dealings with the respondent, the court a quo
went on to grant relief based on the Irrevocable Memorandum of Understanding.
The court found as follows….,:
“The respondents played a hide and seek game and
deliberately delayed the signing of the final contract until the 60 days had
elapsed and ultimately refused to sign the final agreement. They did not act in
good faith. I find therefore that that (sic) the respondents are in breach of
contract.”
The agreement was signed on 6 December 2014 and was to
expire on 4 February 2013. The application before the High Court was
brought on 18 February 2013. Beyond 4 February 2014, there were no rights
arising from the Irrevocable Memorandum of Understanding which could be
enforced by any of the parties. Thus, in terms of the same, the parties
agreed to an extinctive prescription of any cause of action arising from the Irrevocable
Memorandum of Understanding. The respondent should have sued the
appellants within that period, especially taking into account the fact that by
11 December 2013 it, the respondent, already had determined that the appellants
were reneging on the terms of the Irrevocable Memorandum of Understanding. It
could have resorted to the dispute resolution clause in the Irrevocable
Memorandum of Understanding. It was obvious that the Irrevocable
Memorandum of Understanding had terminated and the lack of good faith could not
give rise to a right upon which specific performance could be granted. The
court did not spell out the breach of contract that it alluded to in the
judgment.
On this aspect the court erred as well.
The right which the respondent seeks to enforce in these
proceedings was already lost when it sued. A court is not entitled to
enforce rights which stand lost by operation of law. See Airfield Investments (Pvt) Ltd v Minister of Lands, Agriculture and
Rural Resettlement and Others
SC36-04. I therefore find that
post 4 February 2013, the respondent had no cause of action as against the
appellants ex contractu.
On this basis alone, the appeal ought to
succeed.
