D & H Piping Systems (Pty) Ltd v Trans Hex Group Ltd and Another

The appellant, D & H Piping Systems (Pty) Ltd, manufactured concrete sewerage pipes and for over 30 years purchased dolomitic aggregate and sand from the respondent, Trans Hex Group Ltd. In 1998, pursuant to a bulk supply arrangement and subsequent individual delivery orders, the appellant used aggregate and sand supplied by the respondent to manufacture sewer pipes for a third-party customer. Some of the pipes later failed, allegedly due to a latent defect in the aggregate and sand, causing the appellant to incur losses exceeding R13 million. The appellant sued the respondent in contract for consequential damages, alleging that the respondent was a manufacturing seller liable for such loss, and disputing that the respondent’s standard terms and conditions (which excluded liability for consequential loss) were incorporated into the contracts.

The appeal was upheld. The finding of the court a quo that the respondent’s general terms and conditions were incorporated into the contracts was set aside, and the respondent was held to be a manufacturing seller potentially liable for consequential loss. The matter was allowed to proceed on the remaining issues, with costs awarded in favour of the appellant.

This case is significant for clarifying South African law on the incorporation of standard terms and conditions by course of dealing, reaffirming that delivery notes and invoices are not contractual documents. It also provides authoritative guidance on the concept of a manufacturing seller, holding that liability for consequential loss arising from latent defects does not depend on proof of special skill or expertise, thereby broadening potential contractual liability in sales of manufactured or produced goods.