Stellenbosch Farmers’ Winery Group Limited and Another v Martell & Cie SA and Others

Stellenbosch Farmers’ Winery (SFW) manufactured and marketed Martell cognac-style brandy in Southern Africa under a long-term, rolling franchise agreement with companies in the Seagrams group. The agreement required the parties annually to agree on sales objectives, achievement of which affected continuation or renegotiation of the contract. At a meeting on 17 April 1997, the parties orally agreed on the annual sales objective for the 1997/1998 fiscal year. A dispute later arose as to whether the agreed figure was 5 317 000 litres (as contended by SFW) or 5 366 000 litres (as contended by Seagrams). Actual sales achieved were 4 284 748 litres. If the lower target applied, SFW exceeded the 80% threshold and the contract continued; if the higher target applied, Seagrams was entitled to renegotiate and ultimately terminate the agreement. Seagrams purported to terminate the agreement and sought a declaratory order confirming termination. The Cape High Court found in favour of Seagrams, and SFW appealed to the Supreme Court of Appeal.

The appeal was upheld. The order of the Cape High Court was set aside and replaced with an order declaring that Seagrams was not entitled to terminate the agreement on the basis alleged.

The case is a leading South African authority on resolving disputes of fact, especially in the context of oral agreements. It is frequently cited for its structured articulation of the three-stage approach to factual disputes—credibility, reliability, and probabilities—and for affirming the importance of contemporaneous written confirmation in commercial dealings.