Buffalo City Metropolitan Municipality v Metgovis (Pty) Limited

In 2008, Buffalo City Metropolitan Municipality and Metgovis (Pty) Ltd concluded a software licensing agreement for the Metval property valuation management system, which assisted the Municipality in maintaining its valuation roll. The agreement expired on 30 June 2011 but was automatically renewed and later expressly extended until 30 June 2013. When that date arrived, the Municipality had no replacement system in place, yet continued using Metgovis’ software and technical support from July to October 2013. Metgovis contended that the continued use of its system, occupation of municipal premises, and provision of support gave rise to a tacit month‑to‑month agreement on the same terms as the prior contract. The Municipality denied any such agreement and argued that, in any event, it would have been unlawful for non‑compliance with public procurement requirements. Metgovis sued for payment under contract, alternatively on the basis of unjustified enrichment.

The application for leave to appeal was dismissed, and the Municipality was ordered to pay the respondent’s costs in the Constitutional Court.

The case clarifies the limits of the Constitutional Court’s jurisdiction, confirming that disputes about the existence of tacit contracts based on factual findings do not, without more, raise constitutional matters. It also affirms that the existing common law on tacit contracts already accommodates constitutional requirements of lawfulness and public procurement, and need not be specially ‘enhanced’ for contracts involving organs of state.