Unica Iron and Steel (Pty) Ltd and Another v Mirchandani

The respondent, Mr Mirchandani, was a technical director of Unica Iron and Steel (Pty) Ltd, a company jointly run with the appellants. Following a breakdown in relations, the parties met on 28 September 2010 and negotiated the respondent’s exit. They reduced their agreement to a handwritten document (SM1), signed by all parties, providing for a ‘golden handshake’ including payment of R1.42 million net, transfer of a motor vehicle, and transfer of a residential property, in return for the respondent leaving the business and complying with certain obligations. The respondent ceased work, performed his obligations, and Unica partially performed by transferring the vehicle and paying R100 000, but later refused to perform fully, contending that SM1 was not a binding contract and was subject to a further formal agreement.

The appeal was dismissed with costs. The order of the Gauteng Division enforcing the agreement and granting specific performance in favour of the respondent was upheld, and the appellants’ counterclaim was dismissed.

The case is an important affirmation of South African contract law principles relating to intention to contract, particularly where parties sign an informal or non-lawyer-drafted document. It confirms that subsequent conduct is a powerful indicator of contractual intention and that agreements are not lightly treated as non-binding merely because the parties contemplated later formalisation.