The respondent (plaintiff) owned a business plot in Gezina, Pretoria. In 1994, while living in Australia, he wished to redevelop the property by demolishing the existing building and erecting a new one. He engaged the appellant (defendant), represented by one Braudé, as a project manager to supervise the undertaking. The plaintiff's attorney sent a letter dated 12 September 1994 (Annexure A1) setting out proposed terms of a contract, including a maximum cost of R 1,616,500 and a fixed management fee of R 220,000, with completion by 15 May 1995. The defendant responded by letter dated 13 September 1994 (Annexure A5) accepting the terms 'in principle' with 'one or two comments', including a provision for BIFSA increases for price rises in materials and a note about VAT on the commission. The building was ultimately completed, but the plaintiff was dissatisfied with its quality, claiming it was delivered late, had serious defects, and there was a cost overrun. The plaintiff sued for approximately R 2 million in damages, alleging breach of contract by the defendant as project manager. The defendant defended, disputing that any contract had been concluded and denying it acted as project manager.
Appeal dismissed with costs, including costs of two counsel. Paragraphs 1, 2, and 5 of the trial court's order were confirmed subject to amendments: the words 'changes in design or' were deleted from the term referred to in paragraph 2, and the words 'including the costs of two counsel' were added at the end of paragraph 5.
Where a counter-offer contains language and context indicating that express notification of acceptance is not required (such as accepting terms 'in principle' with comments stated to be acceptable to all parties, and expressing thanks for being entrusted with the project), the offeror has impliedly dispensed with the requirement of communication of acceptance. In such circumstances, the offeree's silence and conduct in proceeding with performance of the contract constitutes tacit acceptance of the counter-offer, particularly where according to ordinary commercial practice and human expectation, firm repudiation would be the norm if the terms were not accepted. The failure to object places a duty on the offeree to speak if objecting, and silence is equivalent to consent when it is one's duty to speak.
The Court made observations about procedural deficiencies in the case, noting the 'nearly insoluble problems' caused by awkward pleadings, an ineffective pre-trial conference, an exception not taken at the proper stage, and two 'unwarranted and obfuscating' Rule 33(4) orders that resulted in a piecemeal approach to adjudication. Olivier JA quoted Lord Cairns LC in Brogden v Metropolitan Railway Co regarding the inherent difficulty and embarrassment in cases where courts must decide whether incomplete and informal documents constitute binding contracts. The Court noted that the defendant should have filed an exception to the particulars of claim rather than raising it orally at trial, and that the plaintiff's counsel surprisingly did not seek to amend pleadings when faced with the belated exception. The Court also observed that further agreements regarding design changes would have been reached (expressly or tacitly) as changes occurred, but these fell outside the scope of the present appeal due to the separation of issues ordered.
This case is significant in South African contract law for its application of the principles of tacit acceptance of counter-offers. It clarifies when notification of acceptance may be dispensed with, following the principle from Carlill v Carbolic Smoke Ball Company as adopted in South African law. The case demonstrates how the language and context of a counter-offer can indicate that express acceptance is not required, and how silence coupled with conduct (proceeding with performance) can constitute binding acceptance. It reinforces the principle that where according to ordinary commercial practice firm repudiation would be expected if an assertion was not accepted, silence and inaction may constitute admission or acceptance. The case also illustrates practical difficulties arising from inadequate pleadings, delayed exceptions, and inappropriate use of Rule 33(4) separation of issues orders.