Grainco (Pty) Ltd v Van der Merwe and Others

Old GrainCo (Pty) Ltd, a successful grain commodities trading business founded by Van der Merwe and Kitshoff, sold its business as a going concern, including its goodwill, to BKB Limited in terms of an amalgamation agreement. The sellers under the agreement were Old GrainCo and BKB; Van der Merwe and Kitshoff were not parties to the sale, although they benefited indirectly as shareholders and were subject to an express restraint of trade for five years. After expiry of the restraint and their subsequent resignation from the reconstituted GrainCo, Van der Merwe and Kitshoff became shareholders in a competing company, Perdigon (Pty) Ltd, which solicited business from customers of GrainCo. GrainCo sought an interdict on the basis of an implied prohibition against canvassing customers following the sale of goodwill.

The appeal was dismissed with costs, including the costs of two counsel.

The case clarifies that the implied prohibition against canvassing customers after the sale of goodwill applies only to the seller of the business and cannot be extended to non-parties, even if they were shareholders or key individuals in the sold business. It reinforces the limits of implied terms in contracts and confirms the continuing authority of Becker while confining its application.