The appellant was a businessman in Bloemfontein who had been involved in manufacturing trailers since approximately 1981, initially as a sole proprietor under the name SA Truck Bodies, and from 1 April 1995 through a company. The respondent was a partnership of chartered accountants that had served as the appellant's accountants since approximately 1982. In 1982, the appellant engaged Mr Daan Havenga, a partner in the respondent firm, to provide financial and management advice for his struggling business. During initial negotiations, Havenga mentioned he was a specialist in Decentralisation Board benefits (DSR-voordele) and that the appellant's business might qualify. The appellant instructed Havenga to investigate, and a successful application was made. Another successful application was made in January 1988 regarding an expansion. However, no applications were made for expansions between March 1989 and February 1995. In 1993, Havenga left the respondent and was replaced by Mr DA Forster, who had no knowledge of DSR-benefits. In 1995, when a consultant (Bronkhorst) was engaged to prepare a DSR application, he discovered that expansions during 1989-1995 had qualified for DSR-benefits but no applications had been made. The appellant sued the respondent for approximately R3.6 million, alleging breach of contract for failing to advise him continuously about DSR-benefits opportunities.
The appeal was dismissed with costs.
A tacit (stilswyende) term will only be implied into a contract where the court is satisfied that there was indeed an intention that the term be incorporated and that all parties to the contract had such intention. The 'officious bystander test' requires that if an outsider had asked the parties at the time of contract formation what would happen in a particular situation, both would reply promptly and unanimously that a particular consequence would follow. For a tacit term to be implied: (1) it must be capable of clear formulation; (2) both parties must, without hesitation, have agreed to it if asked; (3) if one party would need to consider the matter or seek clarification, the term fails the test. The appointment of a professional (such as an accountant) does not carry predefined obligations - the functions and duties depend on what is specifically instructed. Even where a professional has specialized knowledge in a particular area, this does not create an automatic ongoing duty to provide advice in that area unless specifically agreed. The conduct of parties after contract formation may be examined to determine whether it is consistent with the alleged implied term.
The court noted that DSR-benefits schemes (Schemes 3 and 4) operated from April 1982 to June 1990 and May 1991 to September 1996 respectively, providing incentives for industrial development in decentralized areas. Knowledge of DSR-benefits requirements did not form part of chartered accountants' training, though some individual accountants acquired expertise through seminars. The court observed that the Decentralisation Board had wide discretion in determining eligibility, and some rules were only known through continuous contact with the Board, requiring considerable expertise. The court commented that it would be unreasonable to conclude that Havenga would undertake a vague obligation to advise continuously without any reservation or inquiry, particularly given expert evidence that DSR-specialists would insist on contractual terms requiring clients to inform them early of planned expansions. The court noted that in 1982, when the contract was formed, the appellant's business was in financial difficulty, making it unlikely he would agree to an arrangement creating indefinite future financial obligations.
This case is significant for South African contract law and professional negligence law as it clarifies the strict requirements for establishing implied terms in contracts, particularly in professional service relationships. It emphasizes that professional appointments (such as accountants) do not carry predefined obligations beyond what is specifically instructed or clearly implied. The judgment reinforces the application of the 'officious bystander test' for tacit terms and confirms that such terms will only be recognized where there is a high degree of certainty that both parties intended the term to form part of their agreement. It is particularly relevant for professional liability cases involving accountants and other professionals, establishing that general retainer relationships do not automatically include obligations to provide proactive advice on specialized matters unless specifically agreed.