Afgri Corporation Limited v Mathys Izak Eloff and Elsabe Eloff

On 26 December 2007, Dumela Farms Limited (Dumela) and the respondents (Mr and Ms Eloff, married in community of property) signed an acknowledgement of debt agreement. In terms thereof, Dumela acknowledged indebtedness to the appellant, Afgri Corporation Limited, in the amount of US$920,844.59. The respondents bound themselves jointly and severally as sureties and co-principal debtors for this amount. The debt arose from producers' goods supplied on credit to Dumela, a Zambian company through which the respondents conducted farming operations in Zambia. Dumela had delivered approximately 2,900 metric tons of white maize to the appellant, which in terms of a prior production agreement could have been used to settle the debt. However, at Dumela's request, the parties negotiated an extension of time for settlement and entered into the agreement that acknowledged the debt and provided additional security. The agreement explicitly stated that the maize remained Dumela's property, subject to an agricultural charge in favor of the appellant. On 6 February 2008, Dumela was placed under receivership in Zambia, and ultimately the appellant received no payment. The appellant sued the respondents as sureties.

• Whether the court a quo erred in dismissing the appellant's claim based on the acknowledgement of debt agreement
• Whether evidence contradicting the terms of a written agreement is admissible under the parol evidence rule
• Whether the appellant had become the owner of the maize before the acknowledgement of debt agreement was concluded
• Whether judgment can be granted in foreign currency (US dollars)

The appeal was upheld with costs. The order of the court a quo was set aside and replaced with judgment against the respondents jointly for: (1) payment of US$920,844.59; (2) interest on that amount compounded monthly at varying rates (14% per annum from 1 September 2007 to 18 February 2008; 13% per annum from 19 February 2008 to 10 November 2008; and 15% per annum from 11 November 2008 to date of payment); and (3) costs of suit.

Where parties have reduced their agreement to a written contract, the parol evidence rule renders evidence that contradicts, alters, adds to or varies the contents of the written document inadmissible. The written document is regarded as the exclusive memorial of the transaction between the parties. Evidence may only be admitted if it relates to a portion of the agreement that was not integrated into the written document. Where the written agreement embodies the whole arrangement between the parties, extrinsic evidence contradicting its terms cannot be admitted.

The court made the observation that even if Mr Eloff's evidence had been admissible, it appeared doubtful whether it would have been acceptable on the general probabilities arising from the matter. The court also noted that to the extent Mr Eloff's evidence reflected an interpretation of the production agreement, it would have been inadmissible on that ground as well. The court further confirmed, citing Standard Chartered Bank of Canada v Nedperm Bank Ltd 1994 (4) SA 747 (A), that South African courts have the power to grant judgment in foreign currency.

This case is significant for its application of the parol evidence rule in South African contract law. It confirms that where parties have reduced their agreement to writing, extrinsic evidence contradicting the terms of that written agreement is inadmissible. The judgment reinforces the principle that written contracts are regarded as the exclusive memorial of the transaction and parties are bound by what they have committed to writing. The case also confirms the power of South African courts to grant judgment in foreign currency where appropriate.