Gridmark CC v Razia Trading CC

Gridmark CC sold its business, Yorkers Superette, to Razia Trading CC for R850 000, later reduced by addendum to R802 209.33. Razia paid the initial R500 000 but failed to pay the remaining balance in accordance with the agreed instalments. Various partial payments were made. A dispute arose over the outstanding balance. Razia offered to settle the balance by paying R150 000 in full and final settlement. Gridmark responded with a counter-offer requiring payment of R150 000 by a fixed earlier date, which Razia did not meet. Subsequent revised settlement proposals by Razia were expressly rejected by Gridmark. Despite this, Razia made further payments totalling R150 000 and then refused to pay more. Gridmark sued in the magistrates’ court for the outstanding amount. Razia raised a special plea that a compromise had been concluded. The magistrates’ court upheld the plea; the High Court dismissed Gridmark’s appeal. Gridmark then appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the Western Cape Division of the High Court was set aside and replaced with an order upholding the appeal, setting aside the magistrates’ court’s order, and dismissing the respondent’s special plea with costs.

The case reaffirms and clarifies South African contract law principles relating to compromise (settlement agreements), particularly the strict requirements for consensus and acceptance. It underscores that acceptance of payments does not, without more, constitute acceptance of a compromise where settlement offers have been clearly rejected.