Union Spinning Mills (Pty) Limited v Paltex Dye House (Pty) Limited and Another

Union Spinning Mills (the plaintiff) sold and delivered cotton yarn to Paltex Dye House and Paltex Knitting (the defendants) during 1991. The plaintiff sued for the unpaid purchase price. The defendants admitted receipt of the yarn but counterclaimed for damages, alleging that the yarn was defective and that they suffered consequential loss. A preliminary issue was separated for determination, namely which terms and conditions governed the contractual relationship. The plaintiff alleged that its standard terms and conditions, contained in written order confirmation documents posted to the defendants, applied and limited its liability. The defendants denied ever receiving these confirmation documents and contended that the contracts were oral, concluded through a broker (Ferguson), and not subject to the plaintiff’s standard terms. Extensive evidence was led regarding the plaintiff’s office practice for generating and posting confirmation documents and invoices, and the defendants’ handling of incoming mail.

The appeal was upheld and the judgment of the Full Court was set aside, with the effect that the trial court’s finding in favour of the plaintiff on the preliminary issue was restored, namely that the plaintiff’s standard terms and conditions governed the contractual relationship.

The case is an important authority in South African contract law on the incorporation of standard terms and conditions, particularly in commercial transactions conducted through written confirmations and established office practice. It affirms that proof of a consistent posting and administrative system, together with surrounding probabilities, can justify an inference of receipt and incorporation of contractual terms. The judgment also illustrates the approach of appellate courts to factual findings based on probabilities rather than demeanour.