African Information Technology Bridge 1 (Pty) Ltd v The Member of the Executive Council for Infrastructure Development (formerly part of Public Transport, Roads and Works) Gauteng Province

African Information Technology Bridge (Pty) Ltd (African Bridge) successfully completed a pilot project for the Gauteng Department of Transport and Public Works in conjunction with iNathi Technology Holdings (Pty) Ltd. The department invited three tenders (1417, 1418 and 1419) for six projects. Ms Rose-Dukhie, a director of African Bridge, was the sister of a senior manager in the department, which would have disqualified African Bridge from the tender process. To circumvent this, Mr Tucker, a director of both companies, changed the name of Crestwell Trading 9 (Pty) Ltd to African Information Technology Bridge 1 (Pty) Ltd (AITB 1) on 9 June 2006. AITB 1 signed bid documents on 10 June 2006. The bid documents contained information, tax numbers, and references relating to African Bridge, not AITB 1. The Departmental Acquisition Council (DAC) awarded the tenders to 'AITB Inathi JV' on 28 June 2006, intending to contract with African Bridge. Letters of acceptance were addressed to African Bridge. On 5 July 2006, an employee of AITB 1 requested that the letters be changed to reflect AITB 1 as the tenderer, which was done administratively. On 6 July 2006, agreements were signed which referred to African Bridge and not AITB 1; Mr Tucker signed on behalf of African Bridge. The department later discovered it had not contracted with African Bridge but with AITB 1. The department refused to continue and AITB 1 sued for breach of contract.

• Whether valid contracts were concluded between AITB 1 and the department in respect of the tenders
• Whether the department's mistake as to the identity of the contracting party (error in persona) constituted a justus error that vitiated consent
• Whether the agreements of 6 July 2006 constituted a valid counter-offer by the department to AITB 1
• Whether contracts arising from tender processes vitiated by mistake can be ratified or replaced by subsequent agreements

The appeal was dismissed with costs, including the costs of two counsel. The High Court's dismissal of the further claims by AITB 1 (except for a limited concession regarding partial work completed on tender 1417) was upheld.

Where a party to a tender deliberately misleads the procuring authority by submitting a bid in the name of one entity (AITB 1) while presenting information, track record, and credentials of another entity (African Bridge), creating the impression that the procuring authority is contracting with the established entity, the procuring authority's mistake as to the identity of the contracting party constitutes a fundamental and justus error in persona. Such an error vitiates consent and renders any purported contract void ab initio. A mistake is justus (reasonable) where it results from deliberate misrepresentation and confusion created by the other party. Subsequent agreements or administrative changes cannot ratify or replace a contract arising from a tender process vitiated by such fundamental mistake, particularly where the tender adjudication body never reconsidered the award to the actual bidder and the subsequent agreements still referred to the entity the procuring authority intended to contract with.

The court noted that Mr Tucker's actions in changing Crestwell's name to one closely resembling African Bridge (using the acronym AITB), using African Bridge's tax numbers and information in the bid documents, and signing agreements on behalf of African Bridge while claiming to represent AITB 1, were clearly deliberate attempts to mislead and confuse the department. The court observed that AITB 1 'simply did not qualify in any respect for the tender' and would not have been awarded it had the true facts been known. The court indicated that scope for a defence of unilateral mistake is very narrow where the other party has not made misrepresentations, but where misrepresentation exists, the test is whether the mistaken party was actually misled and whether a reasonable person would have been misled. The court also observed that even though the letters of award were administratively changed on 5 July 2006, the contracts presented the next day still referred to African Bridge, indicating the department's continued intention to contract with that entity.

This case is significant in South African contract and tender law for several reasons: (1) It confirms that a unilateral mistake as to the identity of the contracting party (error in persona), if fundamental and justus, will render a contract void ab initio; (2) It establishes that a mistake is justus where one party deliberately misleads the other party, creating confusion about a fundamental aspect of the contract such as the identity of the contracting party; (3) It clarifies that tender awards are subject to strict compliance with procurement procedures and cannot be circumvented by administrative changes or subsequent agreements; (4) It demonstrates the narrow scope for using shelf companies or name changes to circumvent tender disqualification criteria; (5) It reinforces that where contracts arise from tender processes, the tender adjudication body (DAC) must make the decision and subsequent purported contracts cannot replace or ratify invalid tender awards; (6) It illustrates the application of the test from Sonap Petroleum regarding whether a reasonable person would have been misled by a misrepresentation; (7) It emphasizes the importance of good faith and transparency in public procurement processes.